First Amendment Employement Agreement




 

Exhibit
10.3

 

PUGET
SOUND ENERGY, INC.

 

PUGET
ENERGY, INC.

 

FIRST
AMENDMENT TO AGREEMENT

 

FIRST
AMENDMENT TO AGREEMENT (this "Amendment"), effective as of May 12, 2005, amends
the agreement (the "Agreement"), dated as of January 1, 2002, between Puget
Sound Energy, Inc. ("PSE") and Puget Energy, Inc. ("Puget Energy"), both
Washington corporations (PSE and Puget Energy, collectively, the "Company"), and
Stephen P. Reynolds ("Executive").

 

WHEREAS,
since January 1, 2002, Executive has been employed by the Company as its
President and Chief Executive Officer pursuant to the Agreement; and


 

WHEREAS,
the Agreement provides, among other things, for certain equity-based awards to
Executive; and

 

WHEREAS,
the Company desires to be assured of Executive's experience, skills, knowledge
and background for the benefit of the Company, and the efficient achievement of
the long-term strategy of the Company; and 

 

WHEREAS,
the Company therefore wishes to (i) grant to Executive a performance-based
restricted stock award that will vest on the date of the 2008 Annual
Shareholders Meeting contingent on the achievement of specified performance
goals and Executive's continued employment with the Company as Chief Executive
Officer until at least that date; (ii) extend the post-termination exercise
period of Executive's outstanding stock options contingent on Executive's
continued employment with the Company as Chief Executive Officer until at least
the date of the 2008 Annual Shareholders Meeting; (iii) accelerate the vesting
of the last vested installment of certain of Executive's outstanding restricted
stock awards to the date of the 2008 Annual Shareholders Meeting; (iv)
accelerate the vesting of the last vested installment of certain of Executive's
outstanding restricted stock unit awards to the date of the 2008 Annual
Shareholders Meeting; and (v) accelerate the vesting of the last vested
installment of Executive's performance-based retirement stock equivalent account
to the date of the 2008 Annual Shareholders Meeting;

 

NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein, the Company and Executive agree as follows:

 

1.  AWARD OF
PERFORMANCE-BASED RESTRICTED STOCK. The Company will grant to Executive a
performance-based restricted stock award for 40,000 shares of Puget Energy
common stock. The award granted under this Section 1 will vest in one
installment on the date of the 2008 Annual Shareholders Meeting, subject to the
certification by the Company's Compensation and Leadership Development Committee
on or prior to the date of the 2008 Annual Shareholders Meeting that the
performance goals specified in the award agreement, in the form attached to this
Amendment as Exhibit A, have been satisfied and Executive's continued employment
with the Company as Chief Executive Officer until at least that
date.

 

2. EXTENSION
OF STOCK OPTION POST-TERMINATION EXERCISE PERIOD. The Company will amend
Executive's outstanding stock options granted January 7, 2002 (the "Stock
Options") to extend the post-termination exercise period of the Stock Options to
January 7, 2012, provided Executive remains employed by the Company as Chief
Executive Officer at least until the date of the 2008 Annual Shareholders
Meeting.

 

3. ACCELERATION
OF VESTING OF RESTRICTED STOCK AWARD. The Company will amend Executive's
outstanding restricted stock award granted January 8, 2004 (the "Restricted
Stock Award") to accelerate the vesting of the installment of the Restricted
Stock Award that would have vested on January 8, 2009, so that such installment
will vest on the date of the 2008 Annual Shareholders Meeting, provided
Executive remains employed by the Company as Chief Executive Officer at least
until that date.

 

4. ACCELERATION
OF VESTING OF RESTRICTED STOCK UNIT AWARD. The Company will amend Executive's
outstanding restricted stock unit award granted January 8, 2004 (the "Restricted
Stock Unit Award") to accelerate the vesting of the installment of the
Restricted Stock Unit Award that would have vested on January 8, 2009, so that
such installment will vest on the date of the 2008 Annual Shareholders Meeting,
provided Executive remains employed by the Company as Chief Executive Officer at
least until that date.

 

5. ACCELERATION
OF VESTING OF PERFORMANCE-BASED RETIREMENT STOCK EQUIVALENT ACCOUNT. Section
4(d) of the Agreement with respect to Executive's Performance-Based Retirement
Equivalent Stock Account is hereby amended to accelerate the vesting of the
installment of such account that would have vested on January 1, 2009, so that
such installment will vest on the date of the 2008 Annual Shareholders Meeting,
provided Executive remains employed by the Company as Chief Executive Officer at
least until that date.

 

6. EFFECTIVENESS.
Except as expressly modified by this Amendment, all provisions of the Agreement,
the Stock Options, the Restricted Stock Award and the Restricted Stock Unit
Award shall continue in full force and effect. This Amendment shall be effective
as of the date first set forth above.

 

7. CONFLICTS.
In the event of any conflict between the terms of this Amendment and the
provisions of the Agreement, the Stock Options, the Restricted Stock Award, the
Restricted Stock Unit Award or any other plan, program, policy, contract,
arrangement or agreement between Executive and the Company, the terms of this
Amendment will be controlling.

 

8. 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/ Phyllis J. Campbell

	 	
      Phyllis
      J. Campbell

       

      Title:
      Chair, Compensation and Leadership Development Committee, Puget Sound
      Energy, Inc. Board of Directors










	 	 
      PUGET
      ENERGY, INC.

       

       

      By:
      /s/ Phyllis J. Campbell

	 	
      Phyllis
      J. Campbell

       

      Title:
      Chair, Compensation and Leadership Development Committee, Puget Energy,
      Inc. Board of Directors

       











	 	 
      EXECUTIVE

       

      /s/ Stephen P. Reynolds

	 	
      Stephen
      P. Reynolds