Exhibit 10.40
 

 

 
PUGET SOUND ENERGY
 

 
DEFERRED COMPENSATION PLAN
 
FOR KEY EMPLOYEES
 

 

 

 

 

 
As Amended and Restated
 
Effective January 1, 2009

 
TABLE OF CONTENTS
 
 
Purpose

 
 
1.
Definitions 

 
 
2.
Selection; Enrollment; Participation 

 
 
2.1
Selection by Committee 

 
 
2.2
Enrollment Requirements 

 
 
2.3
Eligibility; Commencement of Participation 

 
 
3.
Deferrals; Employer Contributions; Limits 

 
 
3.1
Deferral Elections 

 
 
3.2
Withholding of Annual Deferral Amounts 

 
 
3.3
Annual Investment Plan Restoration Amount

 
 
3.4
Annual Cash Balance Restoration Amount 

 
 
3.5
SERP Rollover Amount 

 
 
3.6
Performance-Based Retirement Equivalent Amount 

 
 
4.
Vesting; Crediting; Taxes 

 
 
4.1
Vesting 

 
 
4.2
Crediting or Debiting of Account Balances 

 
 
4.3
FICA and Other Taxes 

 
 
4.4
Withholding on Payments 

 
 
5.
Interim Payments; Unforeseeable Financial Emergencies 

 
 
5.1
Interim Payments 

 
 
5.2
Other Benefits Take Precedence Over Interim Payments 

 
 
5.3
Payments and Cancellations for Unforeseeable Financial Emergencies 

 
 
6.
Retirement Benefit 

 
 
6.1
Retirement Benefit 

 
 
6.2
Payment of Retirement Benefit 

 
 
6.3
Death Prior to Completion of Retirement Benefit 

 
 
7.
Death Prior to Retirement 

 
 
7.1
Pre-Retirement Survivor Benefit 

 
 
7.2
Payment of Pre-Retirement Survivor Benefit

 
 
8.
Termination 

 
 
8.1
Termination Benefit 

 
 
8.2
Payment of Termination Benefit 

 
 
9.
Disability; Leave of Absence 

 
 
9.1
Disability Benefit 

 
 
9.2
Paid Leave of Absence 

 
 
10.
Beneficiary Designation 

 
         10.1
Beneficiary

 
         10.2
Change; Spousal Consent

 
         10.3
No Beneficiary Designation

 
         10.4
Doubt as to Beneficiary

 
         10.5
Discharge of Obligations

 
 
11.
Termination; Amendment or Modification 

 
         11.1
Termination

 
         11.2
Amendment

 
         11.3
Effect of Payment

 
 
12.
Administration 

 
         12.1
Committee Duties

 
         12.2
Administrative Committee; Agents

 
         12.3
Binding Effect of Decisions

 
         12.4
Indemnity of Committee and Administrative Committee

 
 
13.
Other Benefits and Agreements 

 
 
14.
Claims Procedures 

 
         14.1
Filing a Claim

 
         14.2
Claim Review

 
            14.3
Appeal

 
            14.4
Standard of Review

 
            14.5
Legal Action

 
 
15.
Trust 
 

 
            15.1
Establishment of the Trust

 
            15.2
Relationship of This Plan and the Trust

 
            15.3
Distributions from the Trust

 
 
16.
Miscellaneous 

 
            16.1
Status of Plan

 
            16.2
Unsecured General Creditor

 
            16.3
Employer's Liability

 
            16.4
Nonassignability

 
            16.5
Not a Contract of Employment

 
            16.6
Furnishing Information

 
           16.7
Captions

 
            16.8
Governing Law

 
            16.9
Notice

 
 
    16.10
Successors 

 
 
    16.11
Validity 

 
 
    16.12
Incompetence 

 
 
    16.13
Court Order 

 
 
    16.14
Insurance 

 
 
    16.15
Compliance with Code Section 409A 

 
 
 

 
 

 
PUGET SOUND ENERGY
 
DEFERRED COMPENSATION PLAN
 
FOR KEY EMPLOYEES
 
As Amended and Restated Effective January 1, 2009
 
 
Purpose

 
The growth and success of Puget Sound Energy, Inc. (the "Company") depends on
its ability to attract, motivate and retain key employees of the highest
competence, initiative, and ability.  The purpose of this Plan is to advance the
interests of the Company and its shareholders through a deferred compensation
program for a select group of management and highly compensated executive
officers.  This Plan shall be unfunded for tax purposes and for purposes of
Title I of ERISA.
 
This Plan was originally effective June 16, 1997.  This Plan was most recently
amended and restated effective January 1, 2003 and is now amended and restated
effective for all amounts deferred on or after January 1, 2005 that remain
unpaid as of January 1, 2009.  All amounts earned and vested as of December 31,
2004 shall continue to be governed by the terms of the Plan in place as of
December 31, 2004 in accordance with then applicable IRS guidance.  All amounts
earned or vested from January 1, 2005 through December 31, 2008 shall be
governed by this amendment and restatement, as modified by the operations of the
Plan during such period in accordance with Code Section 409A and then applicable
IRS guidance (including transition relief).  No amendment to this Plan on and
after January 1, 2009 is intended to, nor shall it be deemed to, apply to other
than the terms and conditions of this Plan in effect prior January 1, 2005
unless expressly provided by such amendment.
 
1.
Definitions

 
For purposes of this Plan, the following words and phrases shall have the
meanings indicated, unless a different meaning is clearly indicated by the
context:
 
 
1.1
Account Balance

 
"Account Balance" shall mean a credit on the records of the Employer equal to
the sum of the balances in a Participant's (i) Deferral Account, (ii) Company
Contribution Account, (iii) Investment Plan Restoration Matching Account,
(iv) Cash Balance Restoration Matching Account, and (v) Performance-Based
Retirement Equivalent Account.  The Account Balance, and each other specified
account balance, shall be a bookkeeping entry only and shall be utilized solely
for the determination of amounts due to a Participant or Beneficiary under this
Plan.
 
 
1.2
Annual Bonus

 
"Annual Bonus" shall mean compensation under an Employer's annual bonus or cash
incentive plans for services performed during any calendar year, excluding stock
compensation and any Long-Term Incentive Awards, whether or not paid in such
year or included on the federal income tax Form W-2 for such year.
 
 
1.3
Annual Cash Balance Restoration Amount

 
"Annual Cash Balance Restoration Amount" shall mean, for any Plan Year, the
amount determined in accordance with Section 3.4.
 
 
1.4
Annual Deferral Amount

 
"Annual Deferral Amount" shall mean that portion of Base Salary, Annual Bonus
and Long-Term Incentive Awards that a Participant defers in accordance with
Section 3 for any Plan Year.  If a Participant dies, Retires, suffers a
Disability (if deferrals cease in accordance with Section 9.1) or undergoes a
Termination of Employment during a Plan Year, the Annual Deferral Amount for the
year shall be the amount deferred prior to such event.
 
 
1.5
Annual Installment Method

 
"Annual Installment Method" shall mean yearly installments payable in
substantially equal number of shares as described in Sections 6 and 7.
 
 
1.6
Annual Investment Plan Restoration Amount

 
"Annual Investment Plan Restoration Amount" for any Plan Year shall mean the
amount determined in accordance with Section 3.3.
 
 
1.7
Base Salary

 
"Base Salary" shall mean cash compensation for services, excluding any Annual
Bonus, any Long-Term Incentive Award and any other bonuses, commissions,
overtime pay, fringe benefits, stock options, relocation expenses, incentive
payments, nonmonetary awards, directors fees and other fees, and automobile and
other allowances.  Base Salary shall be calculated before reduction for
compensation voluntarily deferred or contributed by the Participant pursuant to
this Plan or other qualified or nonqualified plans of any Employer and shall
include amounts excluded from compensation pursuant to Code Sections 125,
402(e)(3), 402(h), and 403(b).
 
 
1.8
Beneficiary

 
"Beneficiary" shall mean one or more individuals, trusts, estates or other
entities, designated in accordance with Article 10 to receive benefits under
this Plan upon the death of a Participant.
 
 
1.9
Board

 
"Board" shall mean the board of directors of the Company.
 
   1.10
Cash Balance Plan

 
"Cash Balance Plan" shall mean the Retirement Plan for Employees of Puget Sound
Energy, Inc., originally known as the Retirement Plan for Employees of Puget
Sound Power & Light Company, established by Puget Sound Power & Light Company in
1958, as amended and restated effective March 1, 1997 and since amended.
 
    1.11
Cash Balance Restoration Account

 
"Cash Balance Restoration Account" shall mean an account on the books of the
Employer that reflects (i) the sum of the Participant's Annual Cash Balance
Restoration Amounts, plus (ii) amounts credited to the Participant's Cash
Balance Restoration Account in accordance with the crediting provisions of this
Plan, less (iii) all distributions made to the Participant or the Participant's
Beneficiary from the Participant's Cash Balance Restoration Account.
 
    1.12
Claimant

 
"Claimant" shall have the meaning set forth in Section 14.1.
 
    1.113
Code

 
"Code" shall mean the Internal Revenue Code of 1986, as it may be amended from
time to time.
 
    1.14
Committee

 
"Committee" shall mean the committee described in Article 12, and, if an
Administrative Committee has been appointed pursuant to Section 12.2 shall
include such Administrative Committee.
 
    1.15
Company

 
"Company" shall mean Puget Sound Energy, Inc., a Washington corporation, and any
successor to all or substantially all of the Company's assets or business.
 
    1.16
Company Contribution Account

 
"Company Contribution Account" shall mean an account on the books of the Company
that reflects (i) the sum of the Participant's Annual Company Contribution
Amounts, plus (ii) amounts credited to the Participant's Company Contribution
Account in accordance with the crediting provisions of this Plan, less (iii) all
distributions made to the Participant or the Participant's Beneficiary from the
Participant's Company Contribution Account.
 
    1.17
Company Stock Fund

 
"Company Stock Fund" shall mean the Measurement Fund that corresponds to the
fair market value of Stock.  Reallocation of a Participant's existing Account
Balance to, and investment of new contributions in, the Company Stock Fund shall
cease as of such date preceding the Exchange as is designated by the
Committee.  Immediately following the reallocation contemplated by Section
4.2(e), the Company Stock Fund shall cease to be offered as a Measurement Fund
under the Plan.
 
    1.18
Deferral Account

 
"Deferral Account" shall mean an account on the books of the Company that
reflects (i) the sum of a Participant's Annual Deferral Amounts, plus
(ii) amounts credited to the Participant's Deferral Account in accordance with
the applicable crediting provisions of this Plan, less (iii) all distributions
made to the Participant or the Participant's Beneficiary from the Participant's
Deferral Account.
 
    1.19
Disabled; Disability

 
"Disabled" shall mean a Participant who is "disabled" within the meaning of Code
Section 409A and meets one of the following requirements:
 
 
(a)
He or she is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months; or

 
 
(b)
He or she is, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, is receiving income
replacement benefits for a period of not less than 3 months under an accident
and health plan covering employees of the Employer; or

 
 
(c)
He or she has been determined to be totally disabled by the Social Security
Administration or Railroad Retirement Board; or

 
 
(d)
He or she is determined to be disabled in accordance with the Employer's group
long-term disability plan, provided that such plan's definition complies with
Treasury Regulation Section 1.409A-3(i)(4).

 
    1.20
Disability Benefit

 
"Disability Benefit" shall mean the benefit set forth in Section 9.1.
 
    1.21
Employee

 
"Employee" shall mean an individual who is an employee of any Employer.
 
    1.22
Employer

 
"Employer" shall mean the Company and shall include any of its affiliates that,
together with the Company, is treated as a single employer under Code Section
414(b) or (c).
 
    1.23
ERISA

 
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
 
1.24     Exchange
 
"Exchange" means the exchange of shares of Puget Energy, Inc. for cash, as
contemplated in that Agreement and Plan of Merger by and among Puget Energy,
Inc., Padua Holdings LLC, Padua Intermediate Holdings Inc. and Padua Merger Sub
Inc. dated as of October 25, 2007.
 
    1.25
Exchange Act

 
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
 
    1.26
Fair Market Value

 
"Fair Market Value" shall mean the average of the daily high and low per share
trading prices for the Stock as reported daily by the New York Stock Exchange in
The Wall Street Journal or similar readily available source, for a single
trading day.
 
    1.27
Fixed Amount Installment Method

 
"Fixed Amount Installment Method" shall mean installment payments of a fixed
amount selected by the Participant as prescribed in Sections 6 and 7.  The fixed
payments shall be paid until the Participant's Account Balance reaches zero.
 
    1.28
Interim Payment

 
"Interim Payment" shall mean the payment described in Section 5.1.

    1.29
Investment Plan

 
"Investment Plan" shall mean the Investment Plan for Employees of Puget Sound
Energy, Inc., formerly known as the Investment Plan for Employees of Puget Sound
Power & Light Company, originally adopted effective August 1, 1970, as amended
and restated, as adopted by the Company effective January 1, 2005 and since
amended.
 
    1.30
Investment Plan Restoration Account

 
"Investment Plan Restoration Account" shall mean (i) the sum of a Participant's
Annual Investment Plan Restoration Amounts, plus (ii) amounts credited to the
Participant's Investment Plan Restoration Account in accordance with the
applicable crediting provisions of this Plan, less (iii) all distributions made
to the Participant or the Participant's Beneficiary from the Participant's
Investment Plan Restoration Account.
 
    1.31
Long-Term Incentive Award

 
"Long-Term Incentive Award" shall mean amounts paid or payable to a Participant
under the Company's 2005 Long-Term Incentive Plan or any successor plan thereto.
 
    1.32
Measurement Funds

 
"Measurement Funds" shall mean the funds described in Section 4.2.
 
    1.33
Monthly Installment Method

 
"Monthly Installment Method" shall mean a monthly installment payment over the
number of months selected by the Participant in accordance with Articles 6 and
7, calculated as provided in this Section 1.33.  The monthly installment shall
be calculated by multiplying this balance by a fraction, the numerator of which
is one and the denominator of which is the remaining number of monthly payments
due the Participant.  By way of example, if the Participant elects a 120-month
Monthly Installment Method, the first payment shall be 1/120 of the Account
Balance, calculated as described in this definition.  The following month, the
payment shall be 1/119 of the Account Balance, calculated as described in this
definition.
 
    1.34
Participant

 
"Participant" shall mean an Employee who is selected to participate in this Plan
and who elects to participate in this Plan in accordance with Section 2.  Status
as a Participant shall continue for as long as the individual has an Account
Balance under this Plan, even if the Participant is no longer an Employee.  A
spouse or former spouse of a Participant shall not be treated as a Participant
even if such spouse has an interest in the Participant's benefits under this
Plan.
 
    1.35
Performance-Based Retirement Equivalent Account

 
"Performance-Based Retirement Equivalent Account" shall mean an account on the
books of the Company that reflects (i) the sum of a Participant's
Performance-Based Retirement Equivalent Amount, plus (ii) amounts credited in
accordance with the applicable crediting provisions of this Plan, less (iii) all
distributions made to the Participant or the Participant's Beneficiary from such
account.
 
    1.36
Performance-Based Retirement Equivalent Amount

 
"Performance-Based Retirement Equivalent Amount" shall mean, for any Plan Year,
the amount determined in accordance with Section 3.6.
 
    1.37
Plan

 
"Plan" shall mean this Deferred Compensation Plan for Key Employees, as it may
be amended from time to time.
 
    1.38
Plan Year

 
"Plan Year" shall mean, except for the first Plan Year, a period beginning on
January 1 of each year and continuing through December 31 of such year.
 
    1.39
Pre-Retirement Survivor Benefit

 
"Pre-Retirement Survivor Benefit" shall mean the benefit set forth in Article 7.
 
    1.40
Retirement, Retire(s), Retired

 
"Retirement," "Retire(s)" or "Retired" shall mean, with respect to an Employee,
Termination of Employment on or after the earlier of the attainment of (a) age
62 or (b) age 55 with 5 Years of Service.
 
    1.41
Retirement Benefit

 
"Retirement Benefit" shall mean the benefit set forth in Article 6.
 
    1.42
Section 16 Insider

 
"Section 16 Insider" shall mean any participant who is, with respect to the
Company, subject to Section 16 of the Exchange Act.
 
    1.43
SERP Rollover Account

 
"SERP Rollover Account" shall mean an account on the books of the Company that
reflects (i) a Participant's SERP Rollover Amounts, plus (ii) amounts credited
to the Participant's SERP Rollover Account in accordance with the applicable
crediting provisions of this Plan, less (iii) all distributions made to the
Participant or the Participant's Beneficiary from the Participant's SERP
Rollover Account.
 
    1.44
SERP Rollover Amount

 
"SERP Rollover Amount" for any Plan Year shall mean the amount determined in
accordance with Section 3.5.
 
    1.45
Specified Amount Installment Method

 
"Specified Amount Installment Method" means installment payments according to a
schedule prepared by the Participant and in a form and amount acceptable to the
Company's Executive Plans Committee.  The amounts of each installment payment
need not be equal.  Installment payments shall continue until the earlier of
(a) the exhaustion of the Participant's Account Balance, and (b) the period
elected by the Participant.  The installment payments shall be made monthly for
cash amounts and annually for stock amounts.
 
    1.46
Specified Employee

 
"Specified Employee" means a "key employee" (as defined in Code Section 416(i)
without regard to Code Section 416(i)(5)) of the Employer.  For purposes of this
Plan, a Participant is a key employee if he or she meets the requirements of
Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the
regulations thereunder and disregarding Code Section 416(i)(5)) at any time
during the 12-month period ending on an identification date.  If a Participant
is a key employee as of an identification date, he or she is treated as a
Specified Employee for the 12-month period beginning on the first day of the
fourth month following the identification date.  The Committee may designate any
date in a calendar year as the identification date provided that it uses the
same identification date with respect to all arrangements, and any change to the
identification date may not be effective for a period of 12 months.  If no
identification date is designated, the identification date is December 31.  The
Committee may prospectively designate an identification date through a
separately adopted document.
 
    1.47
Stock

 
"Stock" shall mean the common stock of the Company's parent, Puget Energy, Inc.,
that is traded on the New York Stock Exchange or the common stock of any
successor to Puget Energy, Inc. that is publicly traded.  All references in this
Plan to "Puget Energy, Inc." shall be deemed to include its successor.  To the
extent such successor's stock is traded on an exchange other than the New York
Stock Exchange, all references in the Plan to "New York Stock Exchange" shall be
deemed to include such other exchange.
 
    1.48
Stock Fund

 
"Stock Fund" shall mean the Measurement Fund that corresponds to the fair market
value of Stock.
 
    1.49
Termination Benefit

 
"Termination Benefit" shall mean the benefit set forth in Article 8.
 
    1.50
Termination of Employment

 
"Termination of Employment" shall mean a "separation from service" as an
Employee within the meaning of Code Section 409A, voluntarily or involuntarily,
for any reason other than Disability, death or an authorized leave of absence.
 
    1.51
Trust

 
"Trust" shall mean one or more trusts established pursuant to that certain
Master Trust Agreement, dated as of June 16, 1997, between the Company and The
Bank of New York as trustee, as amended from time to time.
 
    1.52
Trustee

 
"Trustee" shall mean the financial institution acting at the time as trustee of
the Trust.
 
    1.53
Unforeseeable Financial Emergency

 
"Unforeseeable Financial Emergency" shall mean, as defined by Code Section 409A,
a severe financial hardship of the Participant resulting from an illness or
accident of the Participant, the Participant's spouse or dependent (as defined
in Code Section 152, without regard to Sections 152(b)(1), (b)(2) and
(d)(1)(B)); loss of the Participant's property due to casualty (including the
need to rebuild a home following damage to a home not otherwise covered by
insurance, for example, as a result of a natural disaster); or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant.  For example: (a) imminent foreclosure of
or eviction from the Participant's primary residence may constitute an
Unforeseeable Emergency; (b) the need to pay for medical expenses, including
nonrefundable deductibles, as well as for the costs of prescription drug
medication, may constitute an Unforeseeable Emergency; (c) the need to pay for
the funeral expenses of a spouse, a Beneficiary, or a dependent (as defined in
Code Section 152, without regard to Sections 152(b)(1), (b)(2) and (d)(1)(B))
may also constitute an Unforeseeable Emergency; and (d) the purchase of a home
and the payment of college tuition are not Unforeseeable Emergencies.
 
    1.54
Years of Service

 
"Years of Service" shall mean the total number of years in which one or more
Employers have employed a Participant.  For purposes of this definition, a year
of employment shall be a 365-day period (or 366-day period in the case of a leap
year) that, for the first year of employment, commences on the Employee's date
of hiring and that, for any subsequent year, commences on the anniversary of
that hiring date.  Any partial year of employment shall not be counted.
 
2.
Selection; Enrollment; Participation

 
 
2.1
Selection by Committee

 
Participation in this Plan shall be limited to a select group of management and
highly compensated Employees chosen for participation by the Committee in its
sole discretion.
 
 
2.2
Enrollment Requirements

 
Each Employee selected for participation in this Plan shall complete and return
to the Committee an election form, a beneficiary designation form and such other
material as the Committee may request, within 30 days after selection to
participate.
 
 
2.3
Eligibility; Commencement of Participation

 
An Employee selected to participate in this Plan shall commence participation on
the first day of the month following the month in which the Employee properly
completes all enrollment requirements.  An Employee who does not complete the
requirements within the time required in Section 2.2 shall not be eligible to
participate in this Plan until the first day of the Plan Year following delivery
to and acceptance by the Committee of the required forms.
 
3.
Deferrals; Employer Contributions; Limits

 
 
3.1
Deferral Elections

 
An Employee first selected to participate in this Plan may make an irrevocable
election to defer all or a designated portion of Base Salary, Annual Bonus and
any Long-Term Incentive Award (to the extent determined by the Committee) that
may be otherwise payable for such Plan Year.  The election shall be effective
only with respect to compensation paid for services performed during the Plan
Year after such election.  The Participant must deliver a completed election
form to the Committee within 30 days after selection, in order to participate
for such Plan Year.
 
For each succeeding Plan Year, the Participant may make an irrevocable election
to defer all or a designated portion of Base Salary, Annual Bonus and any
Long-Term Incentive Award (to the extent determined by the Committee) that may
be otherwise payable for such Plan Year by delivering to the Committee a new
election form by December 31 of the preceding Plan Year, or such earlier
deadline set by the Committee.  If no election form is timely delivered to the
Committee for any Plan Year, the Participant's Annual Deferral Amount for that
Plan Year shall be zero.
 
 
3.2
Withholding of Annual Deferral Amounts

 
Base Salary, Annual Bonus and Long-Term Incentive Awards deferred under this
Plan shall be withheld at the time they otherwise would be paid to the
Participant, whether or not this occurs during the Plan Year itself.
 
 
3.3
Annual Investment Plan Restoration Amount

 
A Participant's Annual Investment Plan Restoration Amount for any Plan Year
shall be equal to the reduction in Employee contributions to the Investment Plan
that are attributable to the Participant's election to defer Base Salary or
Annual Bonus under this Plan (but only if such election included a "spillover"
election from the Investment Plan to this Plan pursuant to Treasury Regulation
Section 1.409A-3(j)(5)), credited monthly as an employer contribution, plus an
amount equal to the sum of (i) Employer matching contributions that would have
been credited to the Participant's account under the Investment Plan but for the
reduction in Employee contributions to that Plan or the timing and amount of the
Participant's deferrals under the Investment Plan, (ii) Employer required
contributions that would have been credited to the Participant's account under
the Investment Plan but for the reduction in Employee compensation due to
deferrals hereunder, and (iii) Employer required contributions that would have
been credited to the Participant's account under the Investment Plan but for the
limitations in Code Section 401(k)(3) and may have been credited monthly.  If a
Participant is not an Employee as of the first and last days of a Plan Year
(unless due to Retirement or death), any Annual Investment Plan Restoration
Amount for such Plan Year and not previously credited shall be zero.  If a
Participant Retires or dies during a Plan Year, any Annual Investment Plan
Restoration Amount not previously credited shall be credited with a prorated
amount, based on the Participant's contributions through the date of Retirement
or death.
 
 
3.4
Annual Cash Balance Restoration Amount

 
If a Participant is eligible to participate in the Cash Balance Plan and
contributions to his or her account under such Plan, or his or her accrued
benefit under such Plan, are reduced for any Plan Year in order to satisfy the
limitations in Code Section 415(e), or if contributions to the Participant's
account under the Cash Balance Plan are reduced in any Plan Year as a result of
the Participant's election to defer Base Salary or Annual Bonus under this Plan,
then in any such case the Participant's Cash Balance Restoration Account shall
be credited as an employer contribution with an amount that is equal to or (as
determined by the Committee in its discretion) is the actuarial equivalent of
such reductions.  The amount so credited shall be the Annual Cash Balance
Restoration Amount for that Participant.  If a Participant is not employed by an
Employer as of the last day of a Plan Year other than by reason of Retirement or
death, the Annual Cash Balance Restoration Amount for such Plan Year shall be
zero.  If a Participant Retires or dies during a Plan Year, the Annual Cash
Balance Restoration Amount shall be credited with a prorated amount based on the
Participant's deferred Base Salary or Annual Bonus for such Plan Year through
the date of Retirement or death.
 
 
3.5
SERP Rollover Amount

 
If elected by a Participant according to the terms of the Company's Supplemental
Executive Retirement Plan, the SERP Rollover Amount, if any, shall be credited
to the Participant's SERP Rollover Account as of the date of retirement.  The
SERP Rollover Amount shall be paid pursuant to the Participant's payment
election based on the same terms and conditions as applicable to Retirement
Benefits under Section 6.2, with a Participant's initial payment election made
within 30 days of the Participant's initial eligibility under the SERP or on or
before December 31, 2008 in accordance with Code Section 409A and all applicable
transition guidance thereunder.
 
 
3.6
Performance-Based Retirement Equivalent Amount

 
For each Plan Year, a Participant's Performance-Based Retirement Equivalent
Amount shall be calculated and credited as an employer contribution to the
Participant's Performance-Based Retirement Equivalent Account in accordance with
the Participant's employment agreement or other agreement with the Employer, as
applicable.  The Employer may credit different amounts for different
Participants.  A credit awarded to one Participant shall not bind the Employer
to credit any amount to any other Participant.  The Participant's
Performance-Based Retirement Equivalent Account shall vest over a period and in
such manner as provided under the Participant's employment agreement or other
agreement with the Employer, as applicable.  To the extent a Participant is not
fully vested in his or her Performance-Based Retirement Equivalent Account at
the time of his or her Termination of Employment, death or Disability, or upon
the termination of this Plan, all unvested amounts therein shall be forfeited
and neither the Participant nor his or her Beneficiary shall have any further
interest in such amounts.
 
4.
Vesting; Crediting; Taxes

 
 
4.1
Vesting

 
Except as set forth in Section 3.6, a Participant's Account Balance shall at all
times be fully vested; provided, however, that any portion of the Participant's
Account Balance attributable to a deferral of benefits from a Company benefit
plan other than this Plan shall be nonforfeitable to the same extent, and under
the same terms and conditions, as set forth in the vesting provisions of such
other Company benefit plan.
 
 
4.2
Crediting or Debiting of Account Balances

 
Amounts shall be credited or debited to a Participant's Account Balance in
accordance with the following rules and such other rules and procedures as the
Committee may establish in its discretion:
 
 
(a)
Selection of Measurement Funds

 
In connection with an initial deferral election a Participant shall select one
or more Measurement Funds to be used to determine the amounts to be credited to
the Account Balance; provided, however, that the Performance-Based Retirement
Equivalent Amount shall be credited only to the Company Stock Fund and may not
thereafter be reallocated to any other Measurement Fund.  A Participant may
change a selection by submitting a new election to the Committee on a form
approved by the Committee.  Any such selection shall take effect in the calendar
quarter next succeeding the quarter in which the election form is received by
the Committee, and shall continue in effect thereafter until changed in
accordance with this Section 4.2(a).  The Participant shall specify, in
increments of 10%, the percentage of the Account Balance to be allocated to any
Measurement Fund.  However, if a Participant is in payment status under the
Monthly Installment Method or the Annual Installment Method, he or she shall
only be allowed to reallocate funds to or from his or her Company Stock Fund
account by December 31 of any Plan Year, to be effective the following
January 1.  Participants who are Section 16 Insiders may reallocate funds to or
from their Company Stock Fund account only in accordance with the foregoing
provisions of this Section 4.2(a), Company policies on insider trading and in
compliance with the rules for "Discretionary Transactions" as defined in
Rule 16b-3 (or any successor provision) under the Exchange Act.
 
Notwithstanding the foregoing, a Participant's direction to credit future
contributions in the Company Stock Fund shall become ineffective as of the date
specified by the Committee in connection with the Exchange and the portion of
future contributions to which such direction applies shall thereafter be
credited in such Measurement Funds as the Committee shall specify until such
time as the Participant changes such direction with respect to future
contributions.
 
 
(b)
Crediting of Measurement Funds

 
The Committee may, in its sole discretion, discontinue, substitute or add any
Measurement Funds, but at least two Measurement Funds will always be
available.  Deferrals of Long-Term Incentive Awards shall be credited to Company
Stock Fund accounts in the form of stock units equal in number to (i) the number
of shares of Stock payable and (ii) the number of shares that could be purchased
with any cash amount so allocated, based on the Fair Market Value of the Stock
on the date the account is so credited.  Performance-Based Retirement Equivalent
Amounts shall be credited to Company Stock Fund accounts in the form of stock
units equal in number to that which is determined under the terms of a
Participant's employment agreement or other agreement with the Employer, as
applicable.
 
A Participant's Account Balance, other than amounts allocated to the Company
Stock Fund, shall be credited or debited on a daily basis based on the
performance of each Measurement Fund selected by the Participant.  Performance
shall be determined by the Committee in its sole discretion as if (i) the
Participant's Account Balance were invested in the Measurement Funds selected by
the Participant, in the percentages applicable during such calendar quarter, as
of the close of business on the first business day of such calendar quarter, at
the closing price on such date, (ii) the portion of the Annual Deferral Amount
that was actually deferred during any calendar quarter was invested in the
Measurement Funds selected by the Participant, in the percentages applicable to
such calendar quarter, no later than the close of business on the tenth business
day after the day on which such amounts are actually deferred through reductions
in payroll, at the closing price on such date, and (iii) any distribution made
to a Participant that decreases such Participant's Account Balance was withdrawn
from the Measurement Funds, in the percentages applicable to such calendar
quarter, no earlier than the valuation date described in this Section 4.2(b), at
the closing price on such date.  The Annual Investment Plan Restoration Amount,
and Annual Cash Balance Restoration Amount shall be credited to a Participant's
Account Balances for purposes of this Section 4.2(b) as of the close of business
on the first business day in February of the Plan Year following the Plan Year
to which they relate.
 
Prior to the Exchange, a Participant's Account Balance that is allocated to the
Company Stock Fund shall be credited with stock units at the time they would
have been paid if the shares would have been held by the Participant, with
additional stock units equal in number to the number of shares of Stock that
could be purchased with the amount of any cash dividends or other distributions
that would be payable on the number of shares of Stock that equals the number of
stock units in such account.  The number of stock units credited to a
Participant's Account Balance shall be appropriately adjusted to reflect
(i) Stock splits, Stock dividends and other like adjustments in such Account
Balance that were allocated to the Company Stock Fund, and (ii) any
distributions made to a Participant that decrease the portion of such Account
Balance allocated to the Company Stock Fund.  Following the Exchange, the
provisions of Section 4.2(e) shall apply.
 
 
(c)
Form and Amount of Payment

 
Prior to the Exchange, a Participant's Account Balance that is allocated to the
Company Stock Fund shall be payable only in Stock, plus cash for any fractional
shares, and the remainder of the Participant's Account Balance shall be paid in
cash.  After the Exchange, the Participant's Account Balance shall be paid only
in cash, including with respect to the future payment of any Retirement Benefits
or other distributions that commenced prior to the Exchange.
 
Lump sum payments are valued as of the valuation date immediately preceding the
following: (i) the Participant's date of Termination, date of Retirement, death
or Disability, (ii) the first business day for the appropriate Plan Year for
deferrals designated as Interim Payments, or (iii) when approved by the
Committee for payments due to Unforeseeable Financial Emergencies pursuant to
Section 5.3.  All other payments are valued as of the valuation date immediately
preceding the date on which the payment is processed.
 
 
(d)
No Actual Investment

 
The Measurement Funds are to be used for measurement purposes only.  A
Participant's selection of a Measurement Fund and the crediting or debiting of
amounts to a Participant's Account Balance based on such selection shall not be
considered or construed as an actual investment in any such Measurement
Fund.  If the Company or the Trustee, in its discretion, invests assets in any
or all of the Measurement Funds, no Participant shall have any rights in or to
such investments.  Without limiting the foregoing, a Participant's Account
Balance shall at all times be a bookkeeping entry only and shall not represent
any investment made on his or her behalf by the Company or the Trust.  With
respect to Account Balances and other rights under this Plan, the Participant
shall at all times be and remain an unsecured general creditor of the Company.
 
(e)           Crediting of Company Stock Fund After the Exchange
 
Notwithstanding Section 4.2(b) or any other provision herein to the contrary,
reallocation of a Participant's Account Balance to, and investment of new
contributions in, the Company Stock Fund shall cease as of such date preceding
the Exchange as is designated by the Committee.  Immediately following the
reallocation contemplated by this Section 4.2(e), the Company Stock Fund shall
cease to be offered as a Measurement Fund under the Plan.
 
As soon as administratively practicable after the Exchange, the portion of a
Participant's Account Balance that is invested in the Company Stock Fund
(including any Stock dividends credited after the Exchange) shall be reallocated
among the remaining Measurement Funds in accordance with investment directions
provided by the Participant expressly for such purpose or, to the extent such
investment directions are not received by the Committee (or its delegate) by the
date specified by the Committee, to the fund or funds specified by the
Committee.
 
 
4.3
FICA and Other Taxes

 
The Employer shall withhold from all forms of compensation related to deferrals
under this Plan, in any reasonable manner determined by the Employer, the
Participant's share of FICA and other employment or self-employment taxes that
may be required to be withheld.
 
 
4.4
Withholding on Payments

 
The Employer or the Trustee shall withhold from any payments made to a
Participant or Beneficiary all federal, state and local income, employment and
other taxes required to be withheld from such payments, in amounts and in a
manner determined in the discretion of the Employer and the Trust.  In
accordance with applicable law, the Employer may withhold from any distribution
under this Plan any amount owed by the Participant to any Employer, but in no
event more than $5,000 per year and as otherwise limited by Code Section 409A.
 
5.
Interim Payments; Unforeseeable Financial Emergencies

 
 
5.1
Interim Payments

 
A Participant may irrevocably elect, by December 31st of the year preceding the
Plan Year covered by this election, to receive an Interim Payment from this Plan
with respect to any Annual Deferral Amount for such Plan Year.  The Interim
Payment shall be an amount that is equal to the Annual Deferral Amount plus
amounts credited or debited in the manner provided in Section 4.2 on that
amount, determined at the time that the Interim Payment becomes payable.  Each
such Interim Payment shall be paid in a lump sum within 60 days after the last
day of any Plan Year designated by the Participant that is at least two Plan
Years after the Plan Year in which the Annual Deferral Amount is deferred.  For
example, if a two-year Interim Payment is elected for Annual Deferral Amounts
that are deferred in the Plan Year commencing January 1, 2009, the two-year
Interim Payment would become payable during a 60-day period commencing
January 1, 2012.
 
 
5.2
Other Benefits Take Precedence Over Interim Payments

 
Payments for reason of Termination of Employment, Retirement, death, Disability
or an Unforeseeable Financial Emergency take precedence over Interim
Payments.  Payments under those circumstances may be made from Annual Deferral
Amounts that otherwise would be payable as Interim Payments.
 
 
5.3
Payments and Cancellations for Unforeseeable Financial Emergencies

 
If a Participant experiences an Unforeseeable Financial Emergency, the
Participant may request a partial or full payment from the Plan.  Such payment
shall not exceed the lesser of the Participant's Account Balance or the amount
reasonably necessary to satisfy the Unforeseeable Financial Emergency (which may
include amounts necessary to pay any Federal, state, or local income taxes or
penalties reasonably anticipated from the distribution).  A payment on account
of an Unforeseeable Financial Emergency will not be made to the extent that such
emergency is or may be relieved through reimbursement or compensation from
insurance or otherwise, by liquidation of the Participant's assets, to the
extent the liquidation of such assets would not cause severe financial hardship,
or by cancellation of deferrals under this Plan.  If the Committee approves such
a request, the Participant's deferral election then in place shall be cancelled
for the remainder of the Plan Year effective on the date of approval and any
payment shall be made within 60 days of the date of approval.
 
6.
Retirement Benefit

 
 
6.1
Retirement Benefit

 
A Participant who Retires shall receive his or her vested Account Balance as a
Retirement Benefit.
 
 
6.2
Payment of Retirement Benefit

 
 
(a)
Timing and Form

 
A Participant may elect at the same time as his or her initial deferral
election, in a manner determined by the Committee, to receive Retirement
Benefits in a lump sum, under the Fixed Amount Installment Method, Annual
Installment Method, Monthly Installment Method or Specified Amount Installment
Method of not more than 20 years (240 months); provided, however, that to the
extent a Participant receives Retirement Benefits in Stock from the Company
Stock Fund, a Participant may elect to receive such Retirement Benefits only in
a lump sum or under the Annual Installment Method or Specified Amount
Installment Method for the same period that benefits from the other Measurement
Funds are elected and paid.  The election may be changed in accordance with
subsection (b) below.  The election most recently accepted by the Committee
shall govern the payment of the Retirement Benefit.  If a Participant does not
make any election with respect to the payment of the Retirement Benefit, then
such benefit shall be payable in a lump sum.  The lump sum payment shall be made
no later than 60 days after the date the Participant Retires.  Installment
payments shall commence no later than 60 days after the Participant Retires;
however, any annual distributions from the Company Stock Fund shall be
distributed in the subsequent year in January.  Notwithstanding the foregoing
sentence to the contrary, to the extent the payment of Retirement Benefits
commenced prior to the Exchange and remain outstanding at the time of the
Exchange, future payments of the Participant's Account Balance converted from
the Company Stock Fund to another Measurement Fund in accordance with Section
4.2(a) shall thereafter be paid in cash on a monthly basis throughout the year
in which payment would otherwise have been made in Company Stock in January of
such year.
 
 
(b)
Subsequent Payment Elections

 
A Participant may elect to delay a payment or to change the form of payment of
his or her vested Account Balance only under the following conditions:
 
 
(1)
The election does not take effect until as least 12 months after the date on
which the election is made; and

 
 
(2)
With respect to elections related to payments made for reasons other than on
account of death, Disability or an Unforeseeable Financial Emergency, the
payment with respect to which such election is made shall be deferred for a
period of not less than five years from the date such payment would otherwise
have been paid (or in the case of any method of installment payments, each of
which are treated as a single payment for purposes of Code Section 409A, five
years from the date the first amount was scheduled to be paid).  Any such
election may be made only two times by the Participant covering each specific
class year of deferrals.

 
 
(c)
Required Delay in Payment to Specified Employees

 
In the case of any Specified Employee, payments due upon Termination of
Employment or Retirement shall not be made before the date that is six months
after the date of such Termination or Retirement.  In the case of any method of
installment payments, payments due upon Termination of Employment or Retirement
shall be delayed by six months from the date the first amount was scheduled to
be paid.
 
 
6.3
Death Prior to Completion of Retirement Benefit

 
If a Participant dies after Retirement but before the Retirement Benefit is paid
in full, the unpaid Retirement Benefit payments shall be paid to the
Participant's Beneficiary within 60 days after the date of the Participant's
death.  Payment shall be made in the same manner and in the same amounts as the
benefit would have been paid to the Participant had the Participant survived.
 
7.
Death Prior to Retirement

 
 
7.1
Pre-Retirement Survivor Benefit

 
The Participant's Beneficiary shall receive a Pre-Retirement Survivor Benefit
equal to the Participant's vested Account Balance, if the Participant dies
before Retirement.
 
 
7.2
Payment of Pre-Retirement Survivor Benefit

 
A Participant may elect at the same time as his or her initial election, in a
manner determined by the Committee, whether the Pre-Retirement Survivor Benefit
shall be paid to his or her Beneficiary in a lump sum or pursuant to the Fixed
Amount Installment Method, Annual Installment Method, Monthly Installment Method
or Specified Amount Installment Method of not more than 20 years (240 months);
provided, however, that to the extent a Beneficiary receives Retirement Benefits
in Stock from the Company Stock Fund, a Participant may elect to have such
Retirement Benefits paid to his or her Beneficiary only in a lump sum or under
the Annual Installment Method or Specified Amount Installment Method for the
same period that benefits from other Measurement Funds are elected and
paid.  The Participant may change this election to any allowable alternative
payment period by submitting a new election to the Committee, in a form approved
by the Committee; provided that the election complies with Section 6.2(b).  The
election most recently accepted by the Committee prior to the Participant's
death shall govern the payment of the Participant's Pre-Retirement Survivor
Benefit.  If a Participant does not make any election with respect to the
payment of the Pre-Retirement Survivor Benefit, then such benefit shall be paid
in a lump sum.  A lump sum payment shall be made no later than 60 days after the
Participant's death.
 
8.
Termination

 
 
8.1
Termination Benefit

 
A Participant who is not eligible for a Retirement Benefit or Disability Benefit
shall receive a Termination Benefit, which shall be equal to the Participant's
vested Account Balance.  Any nonvested balances or restricted shares in the
Company Stock Fund shall be forfeited.
 
 
8.2
Payment of Termination Benefit

 
At the time of a Participant's Termination of Employment, his or her Account
Balance shall be paid in a lump sum (the "Termination Benefit").  Such lump sum
payment shall be made no later than 60 days after the date of Termination of
Employment.
 
9.
Disability; Leave of Absence

 
 
9.1
Disability Benefit

 
If the Committee determines that a Participant is Disabled, he or she shall
receive a Disability Benefit equal to his or her vested Account Balance at the
time of the Committee's determination.  The Disability Benefit shall be paid in
a lump sum within 60 days of the Committee's determination.
 
 
9.2
Paid Leave of Absence

 
A Participant who is on a paid leave of absence shall continue to be considered
employed by the Employer, and deferrals shall continue to be withheld during
such paid leave of absence in accordance with Section 3.2.
 
10.
Beneficiary Designation

 
    10.1
Beneficiary

 
Each Participant shall have the right to designate one or more Beneficiaries
(including primary and contingent Beneficiaries) to receive any benefits payable
under this Plan.  The Beneficiary may be the same as or different from the
Beneficiary designated under any other plan in which the Participant
participates.
 
    10.2
Change; Spousal Consent

 
A Participant shall have the right to change a Beneficiary by completing a new
beneficiary designation on a form approved by the Committee.  If the Participant
designates someone other than his or her spouse as a Beneficiary, the spouse
must consent to the designation in writing on a form approved by the Committee,
and the signed consent form must be returned to the Committee.  The Committee
shall be entitled to rely on the last Beneficiary designation filed by the
Participant and accepted by the Committee prior to the Participant's death.
 
    10.3
No Beneficiary Designation

 
If a Participant fails to designate a Beneficiary or if all designated
Beneficiaries predecease the Participant or die prior to complete distribution
of the Participant's benefits, then the Participant's designated Beneficiary
shall be deemed to be his or her surviving spouse.  If the Participant has no
surviving spouse, the benefits remaining under this Plan to be paid to a
Beneficiary shall be payable to the executor or personal representative of the
Participant's estate.
 
    10.4
Doubt as to Beneficiary

 
If the Committee has any doubt as to the proper Beneficiary to receive payments
pursuant to this Plan, it shall have the right to withhold payments until the
matter is resolved to the Committee's satisfaction.
 
    10.5
Discharge of Obligations

 
The payment of benefits under this Plan to a Beneficiary shall fully and
completely discharge all Employers and the Committee from all further
obligations under this Plan with respect to the Participant and any other
Beneficiary.
 
11.
Termination; Amendment or Modification

 
    11.1
Termination

 
Although each Employer anticipates that it will continue this Plan for an
indefinite period of time, it reserves the right to terminate this Plan at any
time.  Upon termination, the vested Account Balances of the affected
Participants shall be paid to the extent permissible under the requirements of
Code Section 409A.
 
    11.2
Amendment

 
The Company may, at any time, amend or modify this Plan in whole or in part;
provided, that no amendment or modification shall decrease or restrict the value
of a Participant's Account Balance in existence at the time the amendment or
modification is made, calculated as if the Participant had experienced a
Termination of Employment as of the effective date of the amendment or
modification or, if the amendment or modification occurs after the date upon
which the Participant was eligible to Retire.  The amendment or modification of
this Plan shall not affect any Participant or Beneficiary who has become
entitled to the payment of benefits under this Plan as of the date of the
amendment or modification.
 
    11.3
Effect of Payment

 
The full payment of the applicable benefit under Article 5, 6, 7 or 8 or Section
9.2 shall completely discharge all obligations of the Employers and the
Committee to a Participant and his or her designated Beneficiaries under this
Plan.
 
12.
Administration

 
    12.1
Committee Duties

 
This Plan shall be administered by a Committee, which shall consist of the
Board, or such committee as the Board may appoint.  Members of the Committee may
be Participants.  The Committee shall have the discretion and authority, subject
to Section 11.2, to make amendments to this Plan, or in its discretion it may
recommend amendments to the Board for its action.  The Committee shall have the
discretion and authority to make, amend, interpret and enforce appropriate rules
and regulations for the administration of this Plan and to decide or resolve, in
its discretion, any and all questions involving interpretation of this
Plan.  Any individual serving on the Committee who is a Participant shall not
vote or act on any matter relating solely to himself or herself.  When making a
determination or calculation, the Committee shall be entitled to rely on
information furnished by a Participant or the Company.
 
    12.2
Administrative Committee; Agents

 
The Committee may, from time to time, appoint an Administrative Committee and
delegate to the Administrative Committee such duties and responsibilities (but
not the authority to amend this Plan) with respect to this Plan as the Committee
may determine.  The Committee, and the Administrative Committee, may employ
agents and delegate to them such duties as either Committee sees fit (including
acting through a duly appointed representative) and may from time to time
consult with counsel who may be counsel to the Company.
 
    12.3
Binding Effect of Decisions

 
The decisions or actions of the Committee, and of the Administrative Committee,
with respect to the administration, interpretation and application of this Plan
and the rules and regulations hereunder shall be final and conclusive and shall
be binding on all persons having any interest in this Plan.
 
    12.4
Indemnity of Committee and Administrative Committee

 
The Company shall indemnify and hold harmless the members of the Committee and
the Administrative Committee, and any agent or employee to whom the duties of
the Committee or the Administrative Committee may be delegated, against any and
all claims, losses, damages, expenses or liabilities arising from any action or
failure to act with respect to this Plan, except in the case of willful
misconduct by the Committee, the Administrative Committee or any of their
members or any such agent or employee.
 
13.
Other Benefits and Agreements

 
The benefits provided for a Participant and Participant's Beneficiary under this
Plan are in addition to any other benefits available to such Participant under
any other plan or program of the Participant's Employer.  This Plan shall not
supersede, modify or amend any other such plan or program except as may
otherwise be expressly provided.
 
14.
Claims Procedures

 
    14.1
Filing a Claim

 
A Participant or a Beneficiary, or the authorized representative of either (the
"Claimant"), who believes that he or she is then entitled to benefits hereunder
may file a written claim for such benefits with the Vice President of Human
Resources.  The Vice President of Human Resources may prescribe a form for
filing such claims, and, if it does so, a claim will not be deemed properly
filed unless such form is used, but the Secretary of the Vice President of Human
Resources shall provide a copy of such form to any person whose claim for
benefits is improper solely for this reason.
 
    14.2
Claim Review

 
Claims that are properly filed will be reviewed by the Vice President of Human
Resources, which will make its decision with respect to such claim and notify
the Claimant in writing of such decision within 90 days (45 days in the case of
a claim related to a Participant's Disability) after its receipt of the written
claim; provided that the 90-day period (45-day period in the case of a claim
related to a Participant's Disability) can be extended for up to an additional
90 days (30 days in the case of a claim related to a Participant's Disability)
if the Vice President of Human Resources determines that special circumstances
require an extension of time to process the claim and the Claimant is notified
of the extension, and the reasons therefor, prior to the commencement of the
extension.  If the claim is wholly or partially denied, the written response to
the Claimant shall include:
 
 
(a)
the specific reason or reasons for the denial;

 
 
(b)
reference to the specific Plan provisions on which the denial is based;

 
 
(c)
a description of any additional information necessary for the Claimant to
perfect his or her claim and an explanation why such information is necessary;

 
 
(d)
a description of this Plan's claim appeal procedure (and the time limits
applicable thereto), as set forth in Section 14.3;

 
 
(e)
a statement of the Claimant's right to bring a civil action under ERISA
following an adverse determination on appeal; and

 
 
(f)
in the case of an adverse benefit determination related to the Participant's
Disability:

 
 
(i)
if an internal rule, guideline, protocol or other similar criterion was relied
upon in making the adverse determination, either the specific rule, guideline,
protocol or other similar criterion; or a statement that such a rule, guideline,
protocol or similar criterion was relied upon in making the adverse
determination and that a copy of such rule, guideline, protocol or other
criterion will be provided free of charge to the Claimant upon request; or

 
 
(ii)
if the adverse benefit determination is based on a medical necessity or
experimental treatment or similar exclusion or limit, either an explanation of
the scientific or clinical judgment for the determination, applying the terms of
this Plan to the Claimant's medical circumstances, or a statement that such
explanation will be provided free of charge upon request.

 
    14.3
Appeal

 
If the claim is denied in whole or in part, the Claimant may appeal such denial
by filing a written request for appeal with the Administrative Committee within
60 days (180 days in the case of a claim related to the Participant's
Disability) of receiving written notice that the claim has been denied.  Such
written request for appeal should include:
 
 
(a)
a statement of the grounds on which the appeal is based;

 
 
(b)
reference to the specific Plan provisions that support the claim;

 
 
(c)
the reason or argument why the Claimant believes the claim should be granted and
evidence supporting each reason or argument; and

 
 
(d)
any other comments, documents, records or other information relating to the
claim that the Claimant wishes to include.

 
Appeals will be considered by the Administrative Committee, which will take into
account all comments, documents, records and other information submitted by the
Claimant relating to the claim, without regard to whether such information was
submitted or considered by the Vice President of Human Resources in making its
initial determination.  The Administrative Committee will make its decision with
respect to any appeal, and notify the Claimant in writing of such decision,
within 60 days (45 days in the case of a claim related to the Participant's
Disability) after the its receipt of the written request for appeal; provided
that the 60-day period (45-day period in the case of a claim related to the
Participant's Disability) can be extended for up to an additional 60 days
(45 days in the case of a claim related to the Participant's Disability) if the
Administrative Committee determines that special circumstances require an
extension of time to process the appeal and the Claimant is notified of the
extension, and the reasons therefor, prior to the commencement of the
extension.  During the appeal period, the Claimant will be provided, upon
request and free of charge, reasonable access to, and copies of, documents,
records and other information relevant to his or her claim.
 
In the event the claim is denied on appeal, the written denial will include:
 
 
(a)
the specific reason or reasons for the denial;

 
 
(b)
reference to the specific Plan provisions on which the denial is based;

 
 
(c)
a statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant to his or her claim;

 
 
(d)
a statement of the Claimant's right to bring a civil action under ERISA; and

 
 
(e)
in the case of an adverse benefit determination related to the Participant's
Disability:

 
 
(i)
if an internal rule, guideline, protocol or other similar criterion was relied
upon in making the adverse determination, either the specific rule, guideline,
protocol or other similar criterion; or a statement that such a rule, guideline,
protocol or similar criterion was relied upon in making the adverse
determination and that a copy of such rule, guideline, protocol or other
criterion will be provided free of charge to the Claimant upon request; or

 
 
(ii)
if the adverse benefit determination is based on a medical necessity or
experimental treatment or similar exclusion or limit, either an explanation of
the scientific or clinical judgment for the determination, applying the terms of
this Plan to the Claimant's medical circumstances, or a statement that such
explanation will be provided free of charge upon request.

 
    14.4
Standard of Review

 
Any further review, judicial or otherwise, of the Administrative Committee's
decision on the Claimant's claim will be limited to whether, in the particular
circumstances, the Administrative Committee abused its discretion.  In no event
will such further review, judicial or otherwise, be on a de novo basis, because
the Administrative Committee has discretionary authority to determine
eligibility for benefits and to construe and interpret the terms and provisions
of this Plan.
 
    14.5
Legal Action

 
Compliance with the foregoing provisions of this Article 14 is a mandatory
prerequisite to a Claimant's right to commence any legal action with respect to
any claim for benefits under this Plan.  If a Claimant wishes to file a court
action after exhausting the foregoing procedures, the Claimant must file such
action in a court of competent jurisdiction within 180 days after the date of
the Committee's written denial of the appeal.  Court actions may not be
commenced after such 180-day period.
 
15.
Trust

 
    15.1
Establishment of the Trust

 
Each Employer shall at least annually transfer to the Trust such assets as it
determines, in its sole discretion, are necessary to provide, on a present value
basis, for its liabilities under this Plan.
 
    15.2
Relationship of This Plan and the Trust

 
The provisions of this Plan shall govern the rights of a Participant to receive
distributions pursuant to this Plan.  The provisions of the Trust shall govern
the rights of the Employers, Participants and the creditors of the Employers to
the assets transferred to the Trust.  Each Employer shall remain liable to carry
out its obligations under this Plan.
 
    15.3
Distributions from the Trust

 
Each Employer's obligations under this Plan may be satisfied with Trust assets
distributed pursuant to the terms of the Trust, and any such distribution shall
reduce pro tanto the Employer's obligations under this Plan.
 
16.
Miscellaneous

 
    16.1
Status of Plan

 
This Plan is intended to be a plan that is not qualified within the meaning of
Code Section 401(a) and that "is unfunded and is maintained by an employer
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees" within the meaning of ERISA
Sections 201(2), 301(a)(3) and 401(a)(1).  This Plan shall be administered and
interpreted in a manner consistent with that intent.
 
    16.2
Unsecured General Creditor

 
Participants and their Beneficiaries, heirs, successors and assigns shall have
no legal or equitable rights, interests or claims in any property or assets of
any Employer or of the Trust.  For purposes of the payment of benefits under
this Plan, any and all of an Employer's assets including any assets of the Trust
shall be, and remain, the general, unpledged unrestricted assets of the
Employer.  An Employer's obligation under this Plan shall consist solely of an
unfunded and unsecured promise to pay money in the future.
 
    16.3
Employer's Liability

 
An Employer's liability for the payment of benefits shall be defined only by
this Plan.  No Employer shall have any obligation to a Participant under this
Plan except as expressly provided in this Plan.
 
    16.4
Nonassignability

 
Neither a Participant nor a Beneficiary nor any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate, alienate or convey in advance of
actual receipt the amounts, if any, payable hereunder, or any part thereof.  All
of such rights are expressly declared to be unassignable and
nontransferable.  None of the amounts payable under this Plan shall, prior to
actual payment, be subject to seizure, attachment, garnishment or sequestration
for the payment of any debts, judgments, alimony or separate maintenance owed by
a Participant or any other person, be transferable by operation of law in the
event of a Participant's or any other person's bankruptcy or insolvency or be
transferable to a spouse as a result of a property settlement or otherwise,
except to the extent required by a court order as described in Section 16.13 of
this Plan.
 
    16.5
Not a Contract of Employment

 
The terms and conditions of this Plan shall not be deemed to constitute a
contract of employment between any Employer and the Participant.  Such
employment is an "at will" employment relationship that can be terminated at any
time for any reason, or for no reason, with or without cause, and with or
without notice, unless expressly provided otherwise in a written employment
agreement.  Nothing in this Plan shall be deemed to give a Participant the right
to be retained in the service of any Employer or to interfere with the right of
any Employer to discipline or discharge the Participant at any time.
 
    16.6
Furnishing Information

 
A Participant or Beneficiary shall cooperate with the Committee by furnishing
any and all information requested by the Committee and shall take such other
actions as may be requested in order to facilitate the administration of this
Plan and the payments of benefits hereunder, including, but not limited to,
taking such physical examinations as the Committee may deem necessary.
 
    16.7
Captions

 
The captions of the articles, sections and paragraphs of this Plan are for
convenience only and shall not control or affect the meaning or construction of
any of its provisions.
 
    16.8
Governing Law

 
Subject to ERISA, the provisions of this Plan shall be construed and interpreted
according to the internal laws of the State of Washington without regard to its
conflicts of laws principles.
 
    16.9
Notice

 
Any notice or filing required or permitted to be given to the Committee under
this Plan shall be sufficient if in writing and hand-delivered, or sent by
registered or certified mail, to the address below:
 
Vice President, Human Resources
 
Puget Sound Energy, Inc.
 
P.O. Box 90868
 
Bellevue, WA 98009-0868
 
Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification.  Any notice or filing required or permitted to be
given to a Participant under this Plan shall be sufficient if in writing and
hand-delivered, or sent by mail, to the last known address of the Participant.
 
    16.10
Successors

 
The provisions of this Plan shall bind and inure to the benefit of the Company,
the Employers and their successors and assigns and the Participant and the
Participant's designated Beneficiaries.
 
    16.11
Validity

 
If any provision of this Plan shall be found to be illegal or invalid for any
reason, such illegality or invalidity shall not affect the remaining parts
hereof, but this Plan shall be construed and enforced as if such illegal or
invalid provision had never been inserted herein.
 
    16.12
Incompetence

 
If the Committee determines in its discretion that a benefit under this Plan is
to be paid to a minor, a person declared incompetent or to a person incapable of
handling the disposition of that person's property, the Committee may direct
payment of such benefit to the guardian, legal representative or person having
the care and custody of such minor, incompetent or incapable person.  The
Committee may require proof of minority, incompetence, incapacity or
guardianship, as it may deem appropriate, prior to distribution of the
benefit.  Any payment of a benefit shall be a payment for the account of the
Participant and the Participant's Beneficiary, as the case may be, and shall be
a complete discharge of any liability under this Plan for such payment amount.
 
    16.13
Court Order

 
The Committee is authorized to make any payments directed by court order.  If a
court determines that a spouse or former spouse of a Participant has an interest
in the Participant's benefits under this Plan in connection with a property
settlement or otherwise, the Committee, in its sole discretion, shall have the
right, notwithstanding any election made by a Participant, to immediately
distribute the spouse's or former spouse's interest in the Participant's
benefits under this Plan to that spouse or former spouse.
 
    16.14
Insurance

 
The Employers, on their own behalf or on behalf of the Trustee, and, in their
sole discretion, may apply for and procure insurance on the life of any
Participant, in such amounts and in such forms as the Trust may choose.  The
Employers or the Trustee, as the case may be, shall be the sole owner and
beneficiary of any such insurance.  The Participant shall have no interest
whatsoever in any such policy or policies, and at the request of the Employers
shall submit to medical examinations and supply such information and execute
such documents as may be required by the insurance company or companies to whom
the Employers have applied for insurance.
 
    16.15
Compliance with Code Section 409A

 
The Plan is intended to comply with the requirements of Code Section 409A
(including current IRS guidance) and to conform to the current operation of the
Plan.  Notwithstanding any provision to the contrary, the Plan shall be
interpreted, operated and administered in a manner consistent with this
intention, so as to avoid the predistribution inclusion in income of amounts
deferred under the Plan and the imposition of any additional tax or interest
thereon.  In addition, the Plan shall be deemed to be amended, and any deferrals
and distributions hereunder shall be deemed to be modified, to the extent
permitted by and necessary to comply with Code Section 409A and to avoid or
mitigate the imposition of additional taxes under Code Section
409A.  Notwithstanding the foregoing, no provision of the Plan shall be
interpreted or construed to transfer any liability for failure to comply with
Code Section 409A from a Participant or any other individual to the Company or
any of its affiliates, employees or agents.
 
[Signature appears on following page.]
 

 

 

 
IN WITNESS WHEREOF, the Company has signed this Plan document as of the date
indicated below.
 
PUGET SOUND ENERGY, INC.

 
By: /s/ Jennifer L. O’Connor
 
Title: Senior Vice President, General Counsel, Coporate Secretary, and Chief
Ethics & Compliance Officer
 
Dated: December 19, 2008