**EXHIBIT 10.108**

1995 LONG-TERMINCENTIVE COMPENSATION PLAN

(As Amended Through February 24, 1999)

**SECTION 1. PURPOSE**

     The purpose of the Puget Energy,Inc. 1995 Long-Term Incentive Compensation Plan (the “**Plan**”) isto enhance the long-term profitability and shareholder value of Puget Energy,Inc., a Washington corporation (the “**Company**”), by offeringincentives and rewards to those employees of the Company and its Subsidiaries(as defined in Section 5 of the Plan) who are key to the Company’sgrowth and success, and to encourage them to remain in the service of theCompany and its Subsidiaries and to acquire and maintain stock ownership in theCompany. 

**SECTION 2. ADMINISTRATION**

   ***2.1 Plan Administrator***

     The Plan shall be administered bya committee or committees (the “**Plan Administrator**”) (whichterm includes subcommittees) appointed by, and consisting of one or more membersof, the Company’s Board of Directors (the “**Board**”). TheBoard may delegate the responsibility for administering the Plan with respect todesignated classes of eligible Participants (as defined in Section 3 of thePlan) to different committees, subject to such limitations as the Board deemsappropriate. Committee members shall serve for such term as the Board maydetermine, subject to removal by the Board at any time. The composition of anycommittee responsible for administering the Plan with respect to officers anddirectors of the Company who are subject to Section 16 of the SecuritiesExchange Act of 1934, as amended (the “**Exchange Act**”), withrespect to securities of the Company shall comply with the requirements ofRule 16b-3 under Section 16(b) of the Exchange Act. 

   ***2.2 Administration and Interpretation   by the Plan Administrator***

     Except for the terms andconditions explicitly set forth in the Plan, the Plan Administrator shall haveexclusive authority, in its discretion, to determine all matters relating toAwards (as defined in Section 3 of the Plan) under the Plan, including theselection of individuals to be granted Awards, the type of Awards, the number ofshares of the Company’s common stock, par value $.01 per share (the“**Common Stock**”), subject to an Award, all terms, conditions,restrictions and limitations, if any, of an Award and the terms of anyinstrument that evidences the Award, and to authorize the Trustee (the“**Trustee**”) of the 1995 Long-Term Incentive Compensation PlanTrust, a trust established under the laws of the State of Washington (the“**Trust**”), to grant Awards. The Plan Administrator shall alsohave exclusive authority to interpret the Plan and may from time to time adoptand change, rules and regulations of general application for the Plan’sadministration. The Plan Administrator’s interpretation of the Plan and itsrules and regulations, and all actions taken and determinations made by the PlanAdministrator pursuant to the Plan, shall be conclusive and binding on allparties involved or affected. The Plan Administrator may delegate administrativeduties to such of the Company’s officers as it so determines. 

**SECTION 3. AWARDS**

   ***3.1 Form and Grant of Awards***

     The Plan Administrator shall havethe authority, in its sole discretion, to determine the type or types of awards(an “Award”) to be made under the Plan, which may include, but are notlimited to, Stock Awards, Performance Awards, Other Stock-Based Awards(including any Dividend Equivalent Rights granted in connection with suchAwards) as those terms are defined in Sections 6, 7, 8 and 9, respectively,of the Plan. Awards may be granted singly, in combination or in tandem so thatthe settlement or payment of one automatically reduces or cancels the other.Awards may also be made in combination or in tandem with, in replacement of, asalternatives to, or as the payment form for, grants or rights under any otheremployee or compensation plan of the Company. For purposes of the Plan, a“**Participant**” means an individual who is a Holder of an Awardor, as the context may require, any employee of the Company or a Subsidiary whohas been designated by the Plan Administrator as eligible to participate in thePlan, and a “**Holder**” means the Participant to whom an Award isgranted, or the personal representative of a Holder who has died. 

   ***3.2 Acquired Company Awards***

     Notwithstanding anything in thePlan to the contrary, the Plan Administrator may grant Awards under the Plan insubstitution for awards issued under other plans, or assume under the Planawards issued under other plans, if the other plans are or were plans of otherentities (“**Acquired Entities**”) (or the parent of the AcquiredEntity) and the new Award is substituted, or the old award is assumed, by reasonof a merger, consolidation, acquisition of property or of stock, reorganizationor liquidation (the “**Acquisition Transaction**”). In the eventthat a written agreement pursuant to which the Acquisition Transaction iscompleted is approved by the Board and said agreement sets forth the terms andconditions of the substitution for or assumption of outstanding awards of theAcquired Entity, said terms and conditions shall be deemed to be the action ofthe Plan Administrator without any further action by the Plan Administrator,except as may be required for compliance with Rule 16b-3 under the ExchangeAct, and the persons holding such Awards shall be deemed to be Participants andHolders. 

   ***3.3 1995 Long-Term Incentive   Compensation Plan Trust***

     Awards may be, but need not be,paid to the Trustee, such payments to be used by the Trustee to purchase sharesof the Common Stock. Shares purchased by the Trustee pursuant to the terms ofthe Trust (“**Trustee Shares**”) shall be held for the benefit ofParticipants, and shall be distributed to Participants or their beneficiaries bythe Trustee at the direction of the Plan Administrator in accordance with theterms and conditions of the Awards. Awards may also be made in units that areredeemable (in whole or part) in Trustee Shares. 

**SECTION 4. STOCK SUBJECT TO THE PLAN**

   ***4.1 Authorized Number of Shares***

     Subject to adjustment from time totime as provided in Section 11.1 of the Plan, the maximum number of sharesof Common Stock that may be purchased by the Trustee as Trustee Shares forpurposes of the Plan shall be 500,000. Common Stock shall be purchased by theTrustee on the open market. The Company shall not issue any Common Stock underthe Plan to the Trust or to any Participant, nor shall the Company purchase anyTrustee Shares from the Trust. 

   ***4.2 Limitations***

     Subject to adjustment from time totime as provided in Section 11.1 of the Plan, no Awards denominated instock that constitute more than 40,000 shares of Common Stock shall be payableto any individual Participant in any one fiscal year of the Company, and noAwards denominated in cash that have an aggregate maximum dollar value in excessof $400,000 shall be payable to any individual Participant in any one fiscalyear of the Company, such limitations to be applied in a manner consistent withthe requirements of, and only to the extent required for compliance with, theexclusion from the limitation on deductibility of compensation underSection 162(m) of the Internal Revenue Code of 1986, as amended (the“**Code**”). 

   ***4.3 Reuse of Shares***

     Any shares of Common Stock thathave been made subject to an Award that cease to be subject to the Award (otherthan by reason of exercise or payment of the Award to the extent it is exercisedfor or settled in shares), including, without limitation, in connection with thecancellation of an Award and the grant of a replacement Award, shall again beavailable for issuance in connection with future grants of Awards under thePlan. Shares that are subject to tandem Awards shall be counted only once. 

**SECTION 5. ELIGIBILITY**

     Awards may be granted under thePlan to those officers and key employees (including directors who are alsoemployees) of the Company and its Subsidiaries as the Plan Administrator fromtime to time selects. For purposes of the Plan, “**Subsidiary**,”except as expressly provided otherwise, means any entity that is directly orindirectly controlled by the Company or in which the Company has a significantownership interest, as determined by the Plan Administrator, and any entity thatmay become a direct or indirect parent of the Company. 

**SECTION 6. STOCK AWARDS**

   ***6.1 Grant of Stock Awards***

     The Plan Administrator isauthorized to grant Awards of Common Stock (“**Stock Awards**”) toParticipants on such terms and conditions, and subject to such restrictions, ifany (whether based on performance standards, periods of service or otherwise),as the Plan Administrator shall determine, which terms, conditions andrestrictions shall be set forth in the instrument evidencing the Award (sharessubject to such restrictions are referred to herein as “**RestrictedStock**”). The terms, conditions and restrictions that the PlanAdministrator shall have the power to determine shall include, withoutlimitation, the manner in which shares subject to Stock Awards are held duringthe periods they are subject to restrictions and the circumstances under whichforfeiture of Restricted Stock shall occur by reason of termination of theHolder’s employment. 

   ***6.2 Issuance of Shares***

     Upon the satisfaction of anyterms, conditions and restrictions prescribed in respect to a Stock Award, orupon the Holder’s release from any terms, conditions and restrictions of aStock Award, as determined by the Plan Administrator, the Company shall deliver,as soon as practicable, to the Holder or, in the case of the Holder’sdeath, to the personal representative of the Holder’s estate or as theappropriate court directs, a stock certificate for the appropriate number ofshares of Common Stock. 

   ***6.3 Waiver of Restrictions***

     Notwithstanding any otherprovisions of the Plan, the Plan Administrator may, in its sole discretion,waive the forfeiture period and any other terms, conditions and restrictions onany Restricted Stock under such circumstances and subject to such terms andconditions as the Plan Administrator shall deem appropriate. 

**SECTION 7. PERFORMANCE AWARDS**

   ***7.1 Plan Administrator Authority***

     Awards made under thisSection 7 (“**Performance Awards**”) may be denominated incash, shares of Common Stock or any combination thereof. The Plan Administratoris authorized to grant Performance Awards and shall determine the nature, lengthand starting date of the performance period for each Performance Award and theperformance objectives to be used in valuing Performance Awards and determiningthe extent to which such Performance Awards have been earned. Performanceobjectives and other terms may vary from Participant to Participant and betweengroups of Participants. Performance objectives shall be based on profits, profitgrowth, profit-related return ratios, cash flow or total shareholder return,whether applicable to the Company or any relevant Subsidiary or business unit,comparisons with competitor companies or groups and with stock market indices,or any combination thereof, as the Plan Administrator deems appropriate.Additional performance measures may be used to the extent their use would complywith the exclusion from the limitation on deductibility of compensation underSection 162(m) of the Code. Performance periods may overlap and Participants mayparticipate simultaneously with respect to Performance Awards that are subjectto different performance periods and different performance factors and criteria.The Plan Administrator shall determine for each Performance Award the range ofdollar values or number of shares of Common Stock (which may, but need not, beshares of Restricted Stock pursuant to Section 6 of the Plan), or a combinationthereof, to be received by the Participant at the end of the performance periodif and to the extent that the relevant measures of performance for suchPerformance Awards are met. The performance measures must include a minimumperformance standard below which no payment will be made and a maximumperformance level above which no increased payment will be made, such limitationto be applied in a manner consistent with the requirements of, and to the extentrequired for compliance with, the exclusion from the limitation on deductibilityof compensation under Section 162(m) of the Code. The earned portion of aPerformance Award may be paid currently or on a deferred basis with suchinterest or earnings equivalent as may be determined by the Plan Administrator.Payment shall be made in the form of cash, whole shares of Common Stock (whichmay, but need not, be shares of Restricted Stock pursuant to Section 6 of thePlan), or any combination thereof, either in a single payment or in annualinstallments, all as the Plan Administrator shall determine. 

   ***7.2 Adjustment of Awards***

     The Plan Administrator may adjustthe performance goals and measurements applicable to Performance Awards to takeinto account changes in law and accounting and tax rules and to make suchadjustments as the Plan Administrator deems necessary or appropriate to reflectthe inclusion or exclusion of the impact of extraordinary or unusual items,events or circumstances, except that, to the extent required for compliance withthe exclusion from the limitation on deductibility of compensation underSection 162(m) of the Code, no adjustment shall be made that would resultin an increase in the compensation of any Participant whose compensation issubject to such limitation for the applicable year. The Plan Administrator alsomay adjust the performance goals and measurements applicable to PerformanceAwards and thereby reduce the amount to be received by any Participant pursuantto such Awards if and to the extent that the Plan Administrator deems itappropriate. 

   ***7.3 Payout Upon Termination***

     The Plan Administrator shallestablish and set forth in each instrument that evidences a Performance Awardwhether the Award will be payable, and the terms and conditions of such payment,if a Holder ceases to be employed by the Company or its Subsidiaries, whichprovisions may be waived or modified by the Plan Administrator at any time. Ifnot so established in the instrument evidencing the Performance Award, the Awardwill be payable according to the following terms and conditions, which may bewaived or modified by the Plan Administrator at any time. If during aperformance period a Participant’s employment with the Company terminatesby reason of the Participant’s Retirement, Early Retirement at theCompany’s request, Disability, position elimination or death, suchParticipant shall be entitled to a payment with respect to each outstandingPerformance Award at the end of the applicable performance period(a) based, to the extent relevant under the terms of the Performance Award,on the Participant’s performance for the portion of such performance periodending on the date of termination and (b) prorated for the portion of theperformance period during which the Participant was employed by the Company, allas determined by the Plan Administrator. For purposes of the Plan,“Retirement” and “Disability” mean “retirement”and “disability” as those terms are defined in the Company’sInvestment Plan for Employees or other similar successor plan applicable tosalaried employees, and “Early Retirement” means “earlyretirement” as that term is defined by the Plan Administrator from time totime for purposes of the Plan. The Plan Administrator may provide for an earlierpayment in settlement of such Performance Award discounted at a reasonableinterest rate and otherwise in such amount and under such terms and conditionsas the Plan Administrator deems appropriate. Except as otherwise provided inSection 11 of the Plan or in the instrument evidencing the PerformanceAward, if during a performance period a Participant’s employment with theCompany terminates other than by reason of the Participant’s Retirement,Early Retirement at the Company’s request, Disability, position eliminationor death, then such Participant shall not be entitled to any payment withrespect to the Performance Awards relating to such performance period, unlessthe Plan Administrator shall otherwise determine. In case of termination of theHolder’s employment for Cause, the Performance Award shall automaticallyterminate upon first notification to the Holder of such termination, unless thePlan Administrator determines otherwise. For purposes of the Plan,“Cause” means dishonesty, fraud, misconduct, unauthorized use ordisclosure of confidential information or trade secrets, or conviction orconfession of a crime punishable by law (except minor violations), in each caseas determined by the Plan Administrator, whose determination shall be conclusiveand binding. If a Holder’s employment with the Company is suspended pendingan investigation of whether the Holder shall be terminated for Cause, all of theHolder’s rights under any Performance Award likewise shall be suspendedduring the period of investigation. A transfer of employment between or amongthe Company and its Subsidiaries shall not be considered a termination ofemployment. Unless the Plan Administrator determines otherwise, a leave ofabsence approved in accordance with Company procedures shall not be considered atermination of employment. 

**SECTION 8. OTHER STOCK-BASED AWARDS**

     The Plan Administrator may grantother Awards under the Plan (“Other Stock-Based Awards”) pursuant towhich shares of Common Stock (which may, but need not, be shares of RestrictedStock pursuant to Section 6 of the Plan) are or may in the future beacquired, or Awards denominated in stock units, including Awards valued usingmeasures other than market value. Such Other Stock-Based Awards may be grantedalone or in addition to or in tandem with any Award of any type granted underthe Plan and must be consistent with the Plan’s purpose. 

**SECTION 9. DIVIDEND EQUIVALENT RIGHTS**

     Any Awards under the Plan may, inthe Plan Administrator’s discretion, earn Dividend Equivalent Rights(“**Dividend Equivalent Rights**”). In respect of any Award that isoutstanding on the dividend record date for Common Stock, the Participant may becredited with an amount equal to the cash or stock dividends or otherdistributions that would have been paid on the shares of Common Stock covered bysuch Award had such covered shares been issued and outstanding on such dividendrecord date. The Plan Administrator shall establish such rules and proceduresgoverning the crediting of Dividend Equivalent Rights, including the timing,form of payment and payment contingencies of such Dividend Equivalent Rights, asit deems are appropriate or necessary. 

**SECTION 10. ASSIGNABILITY**

     No Performance Award, OtherStock-Based Award or Dividend Equivalent Right granted under the Plan may beassigned or transferred by the Holder other than by will or by the laws ofdescent and distribution and, during the Holder’s lifetime, such Awards maybe exercised only by the Holder. Notwithstanding the foregoing, and to theextent permitted by Rule 16b-3 under the Exchange Act, the PlanAdministrator, in its sole discretion, may permit such assignment, transfer andexercisability and may permit a Holder of such Awards to designate a beneficiarywho may exercise the Award or receive compensation under the Award after theHolder’s death. 

**SECTION 11. ADJUSTMENTS**

   ***11.1 Adjustment of Shares***

     In the event that at any time orfrom time to time a stock dividend, stock split, spin-off, combination orexchange of shares, recapitalization, merger, consolidation, distribution toshareholders other than a normal cash dividend, or other change in theCompany’s corporate or capital structure results in (a) theoutstanding shares, or any securities exchanged therefor or received in theirplace, being exchanged for a different number or class of securities of theCompany or of any other corporation or (b) new, different or additionalsecurities of the Company or of any other corporation being received by theholders of shares of Common Stock, then the Plan Administrator, in its solediscretion, shall make such equitable adjustments as it shall deem appropriateunder the circumstances in (i) the maximum number of and class ofsecurities subject to the Plan as set forth in Section 4.1 of the Plan,(ii) the maximum number and class of securities and dollar amount subjectto Awards that may be paid to any individual Participant as set forth inSection 4.2 of the Plan, and (iii) the number and class of securitiesthat are subject to any outstanding Award and the per share price of suchsecurities, without any change in the aggregate price to be paid therefor. Thedetermination by the Plan Administrator as to the terms of any of the foregoingadjustments shall be conclusive and binding. 

   ***11.2 Change of Control***

     Except as otherwise provided inthe instrument that evidences an Award, in the event of any Change of Control(as defined below), each outstanding Stock Award shall automatically accelerateso that each such Award shall, immediately prior to the specified effective datefor the Change of Control, become 100% vested and all restrictions on shares ofrestricted stock awarded under the Plan shall lapse, except that suchacceleration will not occur in the case of a specific Award if in the opinion ofthe Company’s accountants such Award was made in contemplation of theChange of Control and, acceleration of such Award would render unavailable“pooling of interest” accounting for a merger that would otherwisequalify for such accounting treatment. 

     With respect to all Awards grantedpursuant to the Plan that are accelerated, the Company shall issue to the Holderwithin 30 days after the Effective Date, (or if required by “pooling ofinterest” accounting, within 20 days after financial results covering atleast 30 days of post-merger combined operations have been published): 

     (a) cash equal to the higher of(1) the average of the last sale prices of the Company’s Common Stock onthe New York Stock Exchange in each of the twenty business days preceding theEffective Date or (2) the highest price per share actually paid for any of theCompany Common Stock in connection with the Change in Control, multiplied by theaggregate number of shares of the Company’s Common Stock (or, if the eventthat triggered the Effective Date is a Business Combination, the equivalentnumber of shares of the then outstanding common stock of the corporationresulting from or effecting such Business Combination into which such shares ofCommon Stock have been converted) equal to the greater of (x) the total numberof the shares payable at the target Award level upon full vesting of each suchAward and (y) such higher number of shares payable upon full vesting of eachsuch Award if the Company achieved for each outstanding Award cycle theperformance measures which the Company had achieved for the applicable cycleduring the period commencing upon the starting year of such cycle and endingwith the fiscal quarter immediately preceding the Effective Date; and 

     (b) cash equal to the amount ofthe Dividend Equivalents associated with the number of shares determined undersubparagraph (a) above, in accordance with the Plan. 

     For the purpose of this Plan, a“Change of Control” means: 

     (a) The acquisition by any Personof beneficial ownership (within the meaning of Rule 13d-3 promulgated under theExchange Act) of (i) 20% or more of the outstanding Company Common Stock;provided, however, that the following acquisitions of beneficial ownership shallnot constitute a Change of Control: (x) any acquisition by the Company, (y) anyacquisition by any employee benefit plan (or related trust) sponsored ormaintained by the Company or any corporation controlled by the Company, or (z)any acquisition by any corporation pursuant to a Business Combination, if,following such Business Combination, the conditions described in clauses (i),(ii) and (iii) of subsection (c) below are satisfied; or 

     (b) A “Board Change”which, for purposes of this Agreement, shall have occurred if a majority of theseats (other than vacant seats) on the Board of the Company or its successor areoccupied by individuals who were neither (i) nominated by a majority of theIncumbent Directors of the Company nor (i) appointed by directors so nominated;or 

     (c) Approval by applicableregulatory agencies of a Business Combination unless immediately following suchBusiness Combination, (i) more than 60% of the then outstanding shares of commonstock of the corporation resulting from or effecting such Business Combinationand the combined voting power of the then outstanding voting securities of suchcorporation entitled to vote generally in the election of directors is thenbeneficially owned, directly or indirectly, by all or substantially all theindividuals and entities who were the beneficial owners of the outstandingCompany Common Stock immediately prior to such Business Combination issubstantially the same proportion as their ownership, immediately prior to suchBusiness Combination, of the outstanding Company Common Stock, (ii) no Person(excluding the Company or any employee benefit plan (or related trust) of theCompany or the corporation resulting from or effecting such BusinessCombination) beneficially owns, directly or indirectly, 20% or more of,respectively, the then outstanding shares of common stock of the corporationresulting from or effecting such Business Combination or the combined votingpower of the then outstanding voting securities of such corporation entitled tovote generally in the election of directors, and (iii) at least a majority ofthe members of the board of directors of the corporation resulting from oreffecting such Business Combination were Incumbent Directors of the Company atthe time of the execution of the initial agreement or action of the Boardproviding for such Business Combination. 

     “Business Combination”means (a) a merger or consolidation, exchange of securities or reorganization ofthe Company or (b) the sale or other disposition of substantially all the assetsof the Company. “Incumbent Direct” means a member of the Board who hasbeen either (a) nominated by a majority of the directors of the Company then inoffice or (b) appointed by directors so nominated, but excluding for thispurpose any such individual whose initial assumption of office occurs as aresult of either an actual or threatened election contest (as such terms areused in Rule 14a-11 of Regulation 14A under the Exchange Act) or other actual orthreatened solicitation of proxies or consents by or on behalf of a Person otherthan the Board. “Person” means any individual, entity or group (withinthe meaning of Section 13(d)(3) or 14(d) of the Exchange Act). 

     Any specific Awards that do notaccelerate (because the Company’s independent accountants have determinedthat such acceleration would render pooling of interest accounting unavailableor because the instrument evidencing the Award specifically provided thatacceleration of such Award shall not occur upon a change of control) shall beassumed by the successor company or parent thereof or shall be replaced with acomparable award of equivalent value and with the same vesting schedule. Anysuch Awards that are assumed or replaced shall be accelerated in the event theHolder’s employment should subsequently terminate within two yearsfollowing the Change of Control, unless employment is terminated by the Companyfor Cause or voluntarily by the Holder without Good Reason. 

     Also for purposes of the Plan,“Good Reason” means the occurrence of any of the following events orconditions: 

     (a) a change in theHolder’s status, title, position or responsibilities (including reportingresponsibilities) that, in the Holder’s reasonable judgment, represents asubstantial reduction of the status, title, position or responsibilities as ineffect immediately prior thereto; the assignment to the Holder of any duties orresponsibilities that, in the Holder’s reasonable judgment, areinconsistent with such status, title, position or responsibilities; or anyremoval of the Holder from or failure to reappoint or reelect the Holder to anyof such positions, except in connection with the termination of theHolder’s employment for Cause, for Disability or as a result of his or herdeath, or by the Holder other than for Good Reason; 

     (c) the Company’srequiring the Holder (without the Holder’s consent) to be based at anyplace outside a 35-mile radius of his or her place of employment prior to aChange of Control, except for reasonably required travel on the Company’sbusiness that is not materially greater than such travel requirements prior tothe Change of Control; 

     (d) the Company’sfailure to (i) continue in effect any material compensation or benefit plan(or the substantial equivalent thereof) in which the Holder was participating atthe time of a Change of Control, including, but not limited to, the Plan, or(ii) provide the Holder with compensation and benefits at least equal (interms of benefit levels and/or reward opportunities) to those provided for undereach employee benefit plan, program and practice as in effect immediately priorto the Change of Control (or as in effect following the Change of Control, ifgreater); 

     (f) any purported terminationof the Holder’s employment for Cause by the Company that does not complywith the terms of the Plan. 

   ***11.3 Further Adjustment of Awards***

     Without limiting the precedingSection 11.2 of the Plan, and subject to the limitations set forth inSection 7 of the Plan, the Plan Administrator shall have the discretion,exercisable at any time before a sale, merger, consolidation, reorganization,liquidation or change in control of the Company, as defined by the PlanAdministrator, to take such further action as it determines to be necessary oradvisable, and fair and equitable to Participants, with respect to Awards. Suchauthorized action may include (but shall not be limited to) establishing,amending or waiving the type, terms, conditions or duration of, or restrictionson, Awards so as to provide for earlier, later, extended or additional time forexercise, payment or settlement or lifting restrictions, differing methods forcalculating payments or settlements, alternate forms and amounts of payments andsettlements and other modifications, and the Plan Administrator may take suchactions with respect to all Participants, to certain categories of Participantsor only to individual Participants. The Plan Administrator may take such actionsbefore or after granting Awards to which the action relates and before or afterany public announcement with respect to such sale, merger, consolidation,reorganization, liquidation or change in control that is the reason for suchaction. 

   ***11.4 Limitations***

     The grant of Awards will in no wayaffect the Company’s right to adjust, reclassify, reorganize or otherwisechange its capital or business structure or to merge, consolidate, dissolve,liquidate or sell or transfer all or any part of its business or assets. 

**SECTION 12. WITHHOLDING OF TAXES**

     The Company may require the Holderto pay to the Company the amount of any withholding taxes that the Company isrequired to withhold with respect to the grant, exercise, payment or settlementof any Award. In such instances, the Plan Administrator may, in its discretionand subject to the Plan and applicable law, permit the Holder to satisfywithholding obligations, in whole or in part, by paying cash, by electing tohave the Company withhold shares of Common Stock or by transferring shares ofCommon Stock to the Company, in such amounts as are equivalent to the FairMarket Value of the withholding obligation. For purposes of the Plan, “FairMarket Value” means the mean of the high and low per share trading pricesfor the Common Stock as reported in *The Wall Street Journal*for the NewYork Stock Exchange --Composite Transactions (or similar successor consolidatedtransactions reports) for a single trading day. 

**SECTION 13. AMENDMENT AND TERMINATION OF PLAN**

   ***13.1 Amendment of Plan***

     The Plan may be amended by theshareholders of the Company. The Board may also amend the Plan in such respectsas it shall deem advisable; however, to the extent required for compliance withRule 16b-3 under the Exchange Act or any applicable law or regulation,shareholder approval will be required for any amendment that will(a) increase the total number of shares that may be used in payment ofAwards under the Plan, (b) materially modify the class of persons eligibleto receive Awards, (c) materially increase the benefits accruing toParticipants under the Plan, or (d) otherwise require shareholder approvalunder any applicable law or regulation. 

   ***13.2 Termination of Plan***

     The Company’s shareholders orthe Board may suspend or terminate the Plan at any time. The Plan will have nofixed expiration date. 

   ***13.3 Consent of Holder***

     The amendment or termination ofthe Plan shall not, without the consent of the Holder of any Award under thePlan, alter or impair any rights or obligations under any Award theretoforegranted under the Plan. 

**SECTION 14. GENERAL**

   ***14.1 Notification***

     The Plan Administrator shallpromptly notify a Participant of an Award, and a written grant shall promptly beexecuted and delivered by or on behalf of the Company. 

   ***14.2 Continued Employment; Rights in   Awards***

     Neither the Plan, participation inthe Plan as a Participant nor any action of the Plan Administrator taken underthe Plan shall be construed as giving any Participant or employee of the Companyany right to be retained in the employ of the Company or limit theCompany’s right to terminate the employment of the Participant. 

   ***14.3 Registration; Certificates for   Shares***

     The Company shall be under noobligation to any Participant to register for offering or resale under theSecurities Act of 1933, as amended, or register or qualify under statesecurities laws, any shares of Common Stock, security or interest in a securitypaid or issued under, or created by, the Plan. The Company may issuecertificates for shares with such legends and subject to such restrictions ontransfer and stop-transfer instructions as counsel for the Company deemsnecessary or desirable for compliance by the Company with federal and statesecurities laws. 

   ***14.4 No Rights as a Shareholder***

     No Performance Award, OtherStock-Based Award or Dividend Equivalent Right shall entitle the Holder to anydividend (except to the extent provided in an Award of Dividend EquivalentRights), voting or other right of a shareholder unless and until the date ofissuance under the Plan of the shares that are the subject of such Award, freeof all applicable restrictions. 

   ***14.5 Compliance With Laws and   Regulations***

     It is the Company’s intentionthat, so long as any of the Company’s equity securities are registeredpursuant to Section 12(b) or 12(g) of the Exchange Act, the Plan shallcomply in all respects with Rule 16b-3 under the Exchange Act and, if any Planprovision is later found not to be in compliance with Rule 16b-3, theprovision shall be deemed null and void, and in all events the Plan shall beconstrued in favor of its meeting the requirements of Rule 16b-3.Notwithstanding anything in the Plan to the contrary, the Board, in its solediscretion, may bifurcate the Plan so as to restrict, limit or condition the useof any provision of the Plan to Participants who are officers or directorssubject to Section 16 of the Exchange Act without so restricting, limitingor conditioning the Plan with respect to other Participants. 

   ***14.6 Unfunded Plan***

     The Plan is intended to constitutean “unfunded” plan. Nothing contained herein shall require the Companyto segregate any monies or other property, or shares of Common Stock, or tocreate any trusts, or to make any special deposits for any immediate or deferredamounts payable to any Participant, and no Participant shall have any rightsthat are greater than those of a general unsecured creditor of the Company. 

   ***14.7 Governing Law***

     The Plan and all interpretationsof its provisions shall be governed by the laws of the state of Washington andapplicable federal laws. 

   ***14.8 Severability***

     If any provision of the Plan orany Award is determined to be invalid, illegal or unenforceable in anyjurisdiction, or as to any person, or would disqualify the Plan or any Awardunder any law deemed applicable by the Plan Administrator, such provision shallbe construed or deemed amended to conform to applicable laws, or, if it cannotbe so construed or deemed amended without, in the Plan Administrator’sdetermination, materially altering the intent of the Plan or the Award, suchprovision shall be stricken as to such jurisdiction, person or Award, and theremainder of the Plan and any such Award shall remain in full force and effect. 

**SECTION 15. EFFECTIVE DATE**

     The Plan’s effective date isthe date on which it is adopted by the Board, so long as it is approved by theCompany’s shareholders, to the extent required for compliance with Rule16b-3 under the Exchange Act and Section 162(m) of the Code, at the next annualmeeting of the Company’s shareholders after adoption of the Plan by theBoard.