**Exhibit
10.55**
    
  
  **PUGET
SOUND ENERGY, INC.**
 
 **SUPPLEMENTAL
EXECUTIVE**
 **RETIREMENT
PLAN**
 
 
 
 
 
 
 
 
 
 
 **Amended
and Restated**
 **Effective
October 5, 2004**
 
 
 
    **CONTENTS**
  ARTICLE
I. ESTABLISHMENT AND PURPOSE
  ARTICLE
II. DEFINITIONS AND CONSTRUCTION
  ARTICLE
III. BENEFITS
  ARTICLE
IV. ADMINISTRATION
  ARTICLE
V. FUNDING OF THE PLAN
  ARTICLE
VI. AMENDMENT AND TERMINATION
  ARTICLE
VII. GENERAL PROVISIONS
  
  
   
   **PUGET
SOUND ENERGY, INC.**
 **SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN**
  **ARTICLE
I. ESTABLISHMENT AND PURPOSE**
  **1.1**  **Establishment
of Plan.** Puget
Sound Energy, Inc., a Washington corporation ("the Company"), established,
effective as of June 1, 1997 ("the Effective Date"), an unfunded
supplemental executive retirement plan to be known as the "Puget Sound Energy,
Inc. Supplemental Executive Retirement Plan" ("the Plan"). The Plan was most
recently amended and restated effective February 24, 1999.
  **1.2**  **Purpose.** The Plan
is established and is intended as an unfunded plan to be maintained for the
purpose of providing supplemental retirement income to a select group of
management personnel and highly compensated employees ("the Participants"), and
as such, it is intended that the Plan be exempt from Parts 2 through 4 of
Subtitle B of Title I of the Employee Retirement Income Security Act of 1974, as
amended. The Plan is not intended to satisfy the qualification requirements of
Internal Revenue Code Section 401.
  **ARTICLE
II. DEFINITIONS AND CONSTRUCTION**
  **2.1**  **Definitions.** When
used herein, the following terms shall have the meanings set forth below, unless
their context clearly indicates to the contrary:
  (a)  **"Actuarial
Equivalent"** means a
benefit payable at a particular time and in a particular form and manner and
which has the same value as the benefit which it replaces. For purposes of lump
sum payment calculations, such determination shall be made using the mortality
table prescribed by the Commissioner of Internal Revenue for purposes of Code
Section 417(e)(3)(A)(ii)(I) and in effect on the date as of which the
present value is being determined and an interest rate that is equal to the
average annual interest rate on 30-year Treasury securities, as specified by the
Commissioner of Internal Revenue for purposes of Code
Section 417(e)(3)(A)(ii)(II), for the September immediately preceding the
first day of the Plan Year that contains the date as of which the Participant's
Retirement Benefit is distributed or commences to be distributed. For purposes
of annuity payment calculations, such determination shall be made using the
following actuarial assumptions: (i) interest rate at eight percent (8%)
per annum compounded annually; and (ii) participant mortality rate pursuant
to the 1984 Unisex Pensioners Mortality Table.
  (b)  **"Affiliate"** means
any corporation, employer, trade, business, or other entity that, together with
the Company, is treated as a single employer under Code Section 414(b), (c), (m)
or (o).
  (c)  **"Beneficiary"** means
the person, trust, or other entity designated by the Participant pursuant to
Section 3.4 who is or may become entitled to receive a benefit under the
Plan in the event of the Participant's death.
  (d)  **"Board"** means
the Board of Directors of the Company.
  (e)  **"Change
in Control"** means
the first to occur of any of the following events:
  (i)
    Any
      "person" (as that term is used in Section 13 and 14(d)(2) of the
      Securities Exchange Act of 1934 ("Exchange Act")) becomes the beneficial
      owner (as that term is used in Section 13(d) of the Exchange Act),
      directly or indirectly, of fifty percent (50%) or more of the Company's
      capital stock entitled to vote in the election of directors; provided,
      however, that the following acquisitions of beneficial ownership shall not
      constitute a Change of Control: (A) an acquisition by the Company or
      by any entity related to the Company within the meaning of Code Section
      414(b), (c), (m) or (o), (B) an acquisition by any employee benefit
      plan (or related trust) sponsored or maintained by the Company or by any
      such related entity, or (C) the acquisition of the Company's common
      stock by Puget Energy, Inc. pursuant to the plan of exchange effective
      January 1, 2001;
  (ii)
    During
      any period of not more than two consecutive years, not including any
      period prior to the adoption of this Plan, individuals who at the
      beginning of such period constitute the Board, and any new director (other
      than a director designated by a person who has entered into an agreement
      with the Company to effect a transaction described in clause (i), (iii),
      (iv) or (v) of this subsection (e)) whose election by the Board or
      nomination for election by the Company's stockholders was approved by a
      vote of at least three-fourths (3/4ths) of the directors then still in
      office who either were directors at the beginning of the period or whose
      election or nomination for election was previously so approved, cease for
      any reason to constitute at least a majority thereof;
  (iii)
    The
      shareholders of the Company approve any consolidation or merger of the
      Company, other than a consolidation or merger of the Company in which the
      holders of the common stock of the Company immediately prior to the
      consolidation or merger hold more than fifty percent (50%) of the common
      stock of the surviving corporation immediately after the consolidation or
      merger;
  (iv)
    The
      shareholders of the Company approve any plan or proposal for the
      liquidation or dissolution of the Company;
or
  (v)
    The
      shareholders of the Company approve the sale or transfer of all or
      substantially all of the assets of the Company to parties that are not
      within a "controlled group of corporations" (as defined in Code
      Section 1563) in which the Company is a
member.
  (f)  **"Code"** means
the Internal Revenue Code of 1986, as amended.
  (g)  **"Committee"** means
the Compensation and Retirement Committee of the Board or any other committee
designated by the Board to administer the Plan pursuant to Section 4.1
herein.
  (h)  **"Company"** means
Puget Sound Energy, Inc. or any successor thereto.
  (i)  **"Date
of Termination"** means
the date the Participant ceases to be employed by the Company or any of its
Affiliates.
  (j)  **"Deferred
Compensation Plan"** means
the nonqualified "Puget Sound Energy Deferred Compensation Plan for Key
Employees," as amended from time to time, or any successor thereto.
  (k)  **"Disability"** means a
physical or mental condition that entitles a Participant to benefits under the
Company's long-term disability plan.
  (l)  **"Early
Commencement Date"** means,
if properly elected by a Participant pursuant to Section 3.5(d), the first day
of any month commencing before the Participant attains age sixty-two (62), but
coincident with or following the later of the date the Participant attains age
fifty-five (55) or the Participant's Date of Termination.
  (m)  **"Earnings"** means
base salary and annual bonus paid by the Company and/or its Affiliates, before
any deferrals or reductions under a Code Section 401(k) plan, a Code
Section 125 cafeteria plan or a nonqualified deferred compensation plan,
but excluding long-term incentive compensation. A bonus will be included in
Earnings in the year in which it is paid, or in which it would have been paid
had it not been deferred. Amounts paid after the Participant ceases to be an
active Participant in the Plan shall not be taken into account, unless the
Committee specifically provides otherwise.
  (n)  **"ERISA"** means
the Employee Retirement Income Security Act of 1974, as amended from time to
time, or any successor thereto.
  (o)  **"Highest
Average Earnings"** means
the average of the highest three (3) calendar years' Earnings of the
Participant. The three years do not have to be consecutive, but they must be
among the last five (5) complete calendar years completed by the
Participant prior to his Date of Termination. If a Participant completes less
than three (3) complete calendar Years of Service prior to the date on which his
employment with the Company and its Affiliates terminates, then the average
shall be computed by adding together the Participant's monthly Earnings for all
of the calendar months during which he was employed by the Company and/or any of
its Affiliates, dividing the result by the number of months in such period and
multiplying that result by twelve (12).
  (p)  **"Normal
Commencement Date"** means
the first day of the month immediately following the Participant's Date of
Termination or, if later, the date on which the Participant attains age
sixty-two (62).
  (q)  **"Participant"** means
one of a select group of management personnel or highly compensated employees
designated by the Committee to participate in the Plan. A Participant shall
automatically cease to accrue additional benefits under the Plan at the time he
ceases to be a member of management or a highly compensated employee, as
determined by the Committee. In addition, the Committee may revoke the active
participation (and discontinue the benefit accruals) of any Participant at any
time and for any reason. Notwithstanding the foregoing, in no event shall the
revocation of a Participant's active participation in the Plan (or the cessation
of additional benefit accruals under the Plan) reduce the Retirement Benefit
previously accrued by such Participant prior to such revocation or
cessation.
  (r)  **"Participant
Year of Service"** means a
Year of Service performed while a Participant under this Plan or under such
other predecessor plans or agreements that the Committee shall
designate.
  (s)  **"Plan"** means
the "Puget Sound Energy, Inc. Supplemental Executive Retirement Plan" as set
forth in this document, together with any amendments hereto.
  (t)  **"Plan
Year"** means
the consecutive twelve (12) month period beginning each January 1 (or in the
case of the first Plan Year, beginning on the Effective Date) and ending the
following December 31.
  (u)  **"Retirement
Benefit"** means
the benefit to which the Participant is entitled under Article III herein
at the Participant's Normal Commencement Date.
  (v)  **"Retirement
Plan"** means
the "Retirement Plan for Employees of Puget Sound Energy, Inc."
  (w)  **"Supplemental
Retirement Benefit Plans"** means
the "Puget Sound Power & Light Company Supplemental Retirement Plan for
Officers" and the "Puget Sound Power & Light Company Supplemental Retirement
Plan for Director-Level Employees" effective as of October 1, 1991, and as the
same may thereafter be amended from time to time.
  (x)  **"Year
of Service"** means
twelve (12) consecutive months of employment with the Company or its Affiliates,
or with Washington Energy Company or Washington Natural Gas Company. No month of
employment shall be counted in more than one Year of Service.
  (y)  **"WNG
Nonqualified Retirement Benefits"** means
the nonqualified pension benefits provided under an employment agreement between
the Participant and Washington Energy Company or Washington Natural Gas Company.
  **2.2**  **Gender
and Number; Headings.** Except
when otherwise indicated by the context, any masculine terminology when used in
this Plan shall also include the feminine gender, and the definition of any term
in the singular shall also include the plural. Headings of Articles and Sections
herein are included solely for convenience, and if there is any conflict between
such headings and the text of the Plan, the text shall control.
  **ARTICLE
III. B** **ENEFITS**
  **3.1**  **Eligibility
for Benefits.**
  (a)  A
Participant whose employment with the Company and its Affiliates terminates (or
is terminated) for any reason other than death after he has completed five (5)
Participant Years of Service, shall be entitled to receive a Retirement Benefit
hereunder (calculated as described in Section 3.2) as of his Normal Commencement
Date. A Participant whose employment terminates or is terminated (voluntarily or
involuntarily) by the Company prior to his completion of five (5) Participant
Years of Service shall not be entitled to any benefit under the Plan. Any
benefit payable under the Plan following a Participant's death shall be governed
by Section 3.4.
  (b)  Notwithstanding
subsection (a) above, any Participant whose employment with the Company and
its Affiliates terminates (or is terminated) after a Change of Control shall be
entitled to receive a Retirement Benefit hereunder (calculated as described in
Section 3.2) as of his Normal Commencement Date, even if he has not completed
five (5) Participant Years of Service as of his Date of
Termination.
  **3.2**  **Amount
of Benefit.**
  (a)  Except as
provided otherwise in Section 3.5, the Retirement Benefit shall be a monthly
amount payable for the life of the Participant commencing as of the
Participant's Normal Commencement Date equal to (i) below minus the sum of (ii),
(iii), and (iv) below.
  (i)
    One-twelfth
      (1/12) of the Participant's Highest Average Earnings times Years of
      Service (not in excess of 15) times three and one-third percent
      (3-1/3%).
  (ii)
    The
      monthly amount payable (or that would be payable) under the Retirement
      Plan to the Participant as of the Normal Commencement Date were such
      payment made in the form of a Straight-Life Annuity (as defined in the
      Retirement Plan) commencing on such date).
  (iii)
    The
      monthly amount(s) of any WNG Nonqualified Retirement Benefits payable (or
      that would be payable) to the Participant as of his Normal Commencement
      Date in the form of a single life annuity for the life of the Participant
      (or if such benefits are paid or payable as of another date and/or in
      another form, the Actuarial Equivalent monthly amount of such benefit(s)
      calculated as a single life annuity payable for the life of the
      Participant and commencing as of the Participant's Normal Commencement
      Date).
  (iv)
    The
      Actuarial Equivalent monthly amount payable (or that would be payable) as
      of the Participant's Normal Commencement Date from any pension-type
      rollover accounts (including without limitation said accounts related to
      the Supplemental Retirement Benefit Plans, or the Annual Cash Balance
      Restoration Matching Account) within the Deferred Compensation
      Plan.
  (b)  The
benefits accrued under the Supplemental Retirement Benefit Plans as of
May 31, 1997 by all participants therein who were at least fifty-one (51)
years of age on May 31, 1997 were transferred to this Plan. The Retirement
Benefit calculated under subsection (a) immediately above for any
Participant shall be paid in lieu of any benefit transferred from a Supplemental
Retirement Benefit Plan to the Plan on behalf of such Participant.
Notwithstanding the foregoing, if the accrued benefit transferred from a
Supplemental Retirement Benefit Plan to this Plan on behalf of a Participant is
greater than the benefit calculated above for such Participant, then such
Participant's Retirement Benefit shall be equal to such transferred
benefit.
  **3.3**  **Disability.** If the
Participant suffers a Disability while he is an employee of the Company or its
Affiliates, then for purposes of Section 3.1 and Section 3.2, his Highest
Average Earnings shall be determined as of the date he incurred his Disability
and his Participant Years of Service, and Years of Service shall be determined
as if he remained employed until his Normal Commencement Date (or Early
Commencement Date, if he elects to commence his Retirement Benefit as of such
date) or the end of his Disability, whichever is earlier. If the Participant is
reemployed after his Disability ends, then for purposes of Section 3.1 and
Section 3.2, his Highest Average Earnings shall be determined as of the date of
his subsequent termination of employment and excluding the period of Disability,
and his Years of Service and Participant Years of Service shall be determined by
adding his period of employment following rehire to the period determined in
accordance with the preceding sentence.
  **3.4**  **Death.**
  (a)  If the
Participant dies (i) while he is actively participating in the Plan or
after he has completed five (5) Participant Years of Service and (ii) such
death occurs on or before the date on which his Retirement Benefit is
distributed (or commences to be distributed), his Beneficiary shall be eligible
for a benefit under this Section 3.4(a); provided that such benefit shall be
payable only to a Beneficiary who is the spouse of the Participant on the date
of death. The spouse Beneficiary shall receive an amount that is the lump-sum
Actuarial Equivalent as of his Normal Commencement Date of the benefit that
would have been payable to the spouse Beneficiary under the fifty percent (50%)
joint and survivor form of payment described in the second sentence of
Section 3.5(a), which benefit shall be calculated by assuming that the
Participant had died the day after his Normal Commencement Date and by using the
actual Participant Years of Service and actual Years of Service completed by the
Participant. (If the Participant is not actively employed immediately prior to
the date of death on account of Disability, the actual years will include the
years of Disability). In addition, if the Participant dies before attaining age
sixty-two (62), the lump sum amount shall be reduced one-third percent (1/3%)
for each month between the date of death and the date the Participant would have
attained age sixty-two (62). Such lump sum shall be paid as soon as
administratively practicable. A benefit shall not be payable pursuant to this
Section 3.4 with respect to a Participant who dies while he is not actively
participating in the Plan and before he has completed five (5) Participant Years
of Service.
  (b)  If the
Participant dies after the date on which his Retirement Benefit is distributed
(or commences to be distributed), his Beneficiary may receive a benefit if the
form in which the Participant's Retirement Benefit is being paid provides for
such benefit.
  (c)  The
Participant shall designate his Beneficiary or Beneficiaries who, upon his
death, will receive payments that otherwise would have been paid to him under
the Plan. All Beneficiary designations shall be in writing and on a form
prescribed by the Committee for such purpose, and any such designation shall
only be effective if and when delivered to the Committee during the lifetime of
the Participant. The Participant may from time to time during his lifetime
change a designated Beneficiary or Beneficiaries by filing a new beneficiary
designation form with the Committee. If a designated Beneficiary dies after the
Participant, but before all death benefit payments relating to such Beneficiary
have been paid, the remainder of such death benefit payments shall be continued
to such Beneficiary's estate. In the event the Participant shall fail to
designate a Beneficiary or Beneficiaries with respect to any death benefit
payments, or if for any reason such designation shall be ineffective, in whole
or in part, or if no designated Beneficiary survives the Participant, any
payment that otherwise would have been paid to such Participant shall be paid to
his estate, and in such event, his estate shall be his Beneficiary with respect
to such payments.
  **3.5**  **Payment
of Benefits.**
  (a)  Normal
Form of Payment . Except
as provided in Section 3.5(b), the Retirement Benefit of a Participant who is
not married on the date as of which such benefit is paid or commences to be paid
shall be distributed to the Participant in the form of a single life, monthly
annuity payable for the life of the Participant. Except as provided in
Section 3.5(b), the Retirement Benefit of a Participant who is married on
the date as of which such benefit is paid or commences to be paid shall be
distributed in the form of a monthly annuity (that is the Actuarial Equivalent
of the amount determined under Section 3.2) providing for monthly payments
to the Participant for the remainder of his life and, following the
Participant's death, monthly payments to the Participant's surviving spouse (if
any), for the remainder of her life, in an amount equal to fifty percent (50%)
of the monthly amount payable to the Participant.
  (b)  Alternate
Forms of Payment . At any
time that is at least one year before the Participant's Date of Termination, the
Participant may request to receive, or to transfer, the Actuarial Equivalent
value of the Retirement Benefit in one of the methods identified below in lieu
of the normal form of payment described in Section 3.5(a):
  (1)  Lump sum,
paid at a specified date or dates following the Date of
Termination;
  (2)  Straight-life
annuity, beginning at a specified date following the Date of
Termination;
  (3)  Optional
joint and survivor annuity (100%, 50% or 25%), beginning at a specified date
following the Date of Termination; and
  (4)  Transfer
of Actuarial Equivalent lump-sum value of the Retirement Benefit to the Deferred
Compensation Plan (and thereafter treated as a voluntary deferral thereunder),
completed as soon as administratively reasonable following the Date of
Termination.
  The terms
and conditions of the optional joint and survivor annuity form of payment shall
be the same as those for the corresponding annuity under Section 6.6 (or its
successor) of the Retirement Plan. No alternate form of payment shall be
approved that provides for payment of benefits prior to the month following the
month in which the Participant attains age 55. Any request to elect or change an
alternate form of payment within one (1) year of the Participant's Termination
Date shall be null and void; provided, however, that the Board may, in its sole
discretion, waive such one (1) year period with respect to any Participant if
the Board determines that such Participant's circumstances are unusual enough to
warrant such waiver.
  (c)  Early
Commencement Form of Payment . A
Participant whose Date of Termination occurs on or after attaining age 55 is
eligible for payment in accordance with this Section 3.5(c). Any benefit (other
than a benefit payable on account of death or Disability) that becomes payable
prior to the Participant's Normal Commencement Date shall equal the Retirement
Benefit set forth under Section 3.2(a), except that the payment calculated under
Section 3.2(a)(i) shall be further reduced (prior to applying the reductions of
Sections 3.2(a)(ii) through (iv)) by one-third of one percent (.33%) for each
month that benefits commence prior to the beginning of the month coincident with
or next following the date the Participant would attain age sixty-two (62). The
reductions of Section 3.2(a)(ii) through (iv) shall be similarly calculated
based on said early commencement distribution date, notwithstanding any
provision of Section 3.2(a) to the contrary. Except as provided in
Section 3.5(b), the Retirement Benefit of a Participant who is married on
the date as of which such benefit is paid or commences to be paid shall be
distributed in the form of a monthly annuity (that is the Actuarial Equivalent
of the amount determined under Section 3.2) providing for monthly payments
to the Participant for the remainder of his life and, following the
Participant's death, monthly payments to the Participant's surviving spouse (if
any), for the remainder of her life, in an amount equal to fifty percent (50%)
of the monthly amount payable to the Participant.
  (d)  Distribution
Date . Payment
of Retirement Benefits shall commence as of the Participant's Normal
Commencement Date, except in the case of Disability or death, or if the
Committee has approved an alternate form of payment under Section 3.5(b).
If an alternate form of payment has been approved, payment of Retirement
Benefits shall commence at the time approved by the Committee. A Participant
eligible for early commencement of Retirement Benefits under Section 3.5(c), may
elect on 30 days' written notice to the Committee an Early Commencement Date,
which at the Participant's election may result in an Early Commencement Date
that is on or after the date on which the Participant attains age 55 but before
the date on which the Participant attains age 62. Any such election shall be
irrevocable. Retroactive elections are not permitted. Except in the case of
death or Disability, payment shall not commence prior to the Participant
attaining age 55.
  The same
distribution date applies (as applicable) if a Participant timely elects, in
writing, to transfer any Retirement Benefits to the Deferred Compensation Plan
in lieu of payment; provided, however, the Participant must elect such a
transfer at least one (1) year prior to the Participant's Date of
Termination in accordance with such rules as the Committee may establish. Any
change to such an election within one (1) year of the Participant's Date of
Termination shall be null and void, unless the change consists of an irrevocable
rescission of the election. Notwithstanding the foregoing, the Committee may, in
its sole discretion, waive the one (1) year election period with respect to
a Participant whose employment is terminated involuntarily by the Company or
whose employment is terminated as a result of Disability within one (1) year
after the Participant files a proper election under this paragraph.
  **3.6**  **Suspension
of Benefits.** If a
Participant who is receiving benefits under this Plan following an Early
Commencement Date is at any time employed directly or indirectly as an employee
or director or agent of, or as an independent contractor or consultant for, an
electric or gas utility (including any federal, state or municipal utility
authority or district) serving retail customers within Washington or Oregon, or
a person or entity supplying or seeking to supply electric power or natural gas
to retail customers within Washington or Oregon, then all benefits payable to
the Participant under this Plan shall be suspended during the period of such
employment; and any benefits received by the Participant during the period of
such employment shall be repaid to the Company. If the employment is
subsequently terminated, benefits hereunder shall resume, but they shall not be
adjusted to reflect the period of suspension. The Committee shall have authority
to waive any of the provisions of this Section 3.6, and to establish the
conditions of any such waiver.
  **ARTICLE
IV. A** **DMINISTRATION**
  **4.1**  **Administration.** This
Plan shall be administered by the Committee or any individuals) or committee(s)
appointed by the Committee. The Committee shall administer this Plan as an
unfunded plan which is not intended to meet the qualification requirements of
Code Section 401. The Committee shall have the full power and authority
(discretionary and otherwise) to interpret, construe, and administer this Plan
in its sole discretion and to make final and binding determinations for all
parties. The Committee shall establish and maintain such accounts or records as
the Committee may from time to time consider necessary or convenient for the
administration of the Plan.
  **4.2**  **Claims
Procedure.** A
Participant or Beneficiary, as applicable, who feels he is entitled to greater
benefits than he is receiving (or has received) under the Plan may file a
written claim with the Company's Qualified Plans Committee (the "QPC"), which
shall consider such claim and notify the claimant in writing of it decision with
respect thereto within ninety (90) days (or within such longer period not to
exceed one hundred eighty (180) days, as the QPC determines is necessary to
review the claim, provided that the QPC notifies the claimant in writing of the
extension within the original ninety (90) day period). If the claim is denied,
in whole or in part, the claimant may appeal such denial to the Committee,
provided he does so in writing within sixty (60) days of receiving the QPC's
determination. The Committee shall consider the appeal and notify the claimant
in writing of its decision with respect thereto within sixty (60) days (or
within such longer period not to exceed one hundred twenty (120) days as the
Committee determines is necessary to review the appeal, provided that the
Committee notifies the claimant in writing of the extension within the original
sixty (60) day period).
  **4.3**  **Finality
of Determination.** The
determination of the Committee with respect to any question arising out of or in
connection with the administration, interpretation, and application of the Plan
shall be final, binding, and conclusive upon all persons and shall be given the
greatest deference permitted by law.
  **4.4**  **Expenses.** The
expenses of administering this Plan shall be borne by the Company.
  **4.5**  **Indemnification
and Exculpation.** The
members of the Committee, its agents and officers, directors, and employees of
the Company or any of its Affiliates shall be indemnified and held harmless by
the Company against and from any and all loss, cost, liability, or expense that
may be imposed upon or reasonably incurred by them in connection with or
resulting from any claim, action, suit, or proceeding to which they may be a
party or in which they may be involved by reason of any action taken or failure
to act under this Plan, and against and from any and all amounts paid by them in
settlement (with the Company's written approval) or paid by them in satisfaction
of a judgment in any such action, suit, or proceeding; provided, however, that
the foregoing provision shall not be applicable to any person if the loss, cost,
liability, or expense is due to such person's gross negligence or willful
misconduct.
  **ARTICLE
V. FUNDING OF THE P** **LAN**
  All
amounts paid under this Plan shall be paid from the general assets of the
Company. Benefits shall be reflected on the accounting records of the Company,
but neither this Plan nor the maintenance of such accounting records shall be
construed to affect, require, or prohibit the creation of a trust, custodial
account, or escrow account with respect to the Participant. The Participant
shall not have any right, title, or interest whatsoever in or to any investment
reserves, accounts, or funds that the Company may purchase, establish, or
accumulate to aid in providing the unfunded benefit payments described in the
Plan. Nothing contained in this Plan, and no action taken pursuant to its
provisions, shall create, or be construed to create, a trust or fiduciary
relationship of any kind between the Company, the Board, the Committee or the
QPC and any Participant or any other person. Participants and Beneficiaries
shall have the status of general unsecured creditors of the
Company.
  **ARTICLE
VI. AMENDMENT AND TERMINATION**
  The Board
or such person or persons, including the Committee, as may be designated by the
Board may amend, modify, or terminate this Plan at any time and in any manner;
provided, however, that no amendment, modification, or termination shall reduce
benefits accrued prior to such action. In the event of a termination of the Plan
pursuant to this Article VI, no further benefits shall accrue under this
Plan, but amounts which are then payable shall continue to be an obligation of
the Company and shall be paid as scheduled.
  **ARTICLE
VII. GENERAL P** **ROVISIONS**
  **7.1**  **Nonalienation.** No
benefit payable at any time under the Plan shall be subject in any manner to
voluntary or involuntary alienation, sale, transfer, assignment, pledge,
attachment, garnishment, or encumbrance of any kind, and shall not be subject to
or reached by any legal or equitable process (including execution, garnishment,
attachment, pledge, or bankruptcy) in satisfaction of any debt, liability, or
obligation, prior to receipt. Any attempt to alienate, sell, transfer, assign,
pledge, or otherwise encumber any such benefit, whether presently or thereafter
payable, shall be void. Notwithstanding the foregoing provisions of this Section
7.1, the Company shall have the right to offset the benefit amount payable under
the Plan by any and all amounts representing debts or other obligations owed to
the Company or any of its Affiliates by the Participant.
  **7.2**  **Severability.** In the
event any provision of this Plan shall be held invalid or illegal for any
reason, such illegality or invalidity shall not affect the remaining parts of
this Plan, but this Plan shall be construed and enforced as if the illegal or
invalid provision had never been inserted, and the Board and any other person
authorized to amend the Plan in accordance with Section 6.1 shall have the
privilege and opportunity to correct and remedy such questions of illegality or
invalidity, in whatever manner they deem appropriate in their discretion, by
amendment as provided in this Plan.
  **7.3**  **Employer-Employee
Relationship.** The
establishment of this Plan shall not be construed as conferring any legal or
other rights upon the Participant for a continuation of employment, nor shall it
interfere with the rights of the Company and its Affiliates to discharge the
Participant or otherwise act with relation to him. The Company and its
Affiliates may take any action (including discharge) with respect to the
Participant and may treat such person without regard to the effect which such
action or treatment might have upon such person as the Participant under this
Plan.
  **7.4**  **Incompetence.** Every
person receiving or claiming benefits under the Plan shall be conclusively
presumed to be mentally competent until the date on which the Committee receives
a written notice, in a form and manner acceptable to the Committee, that such
person is incompetent, and that a guardian, conservator, or other person legally
vested with the care of such person's person or estate has been appointed;
provided, however, that if the Committee shall find that any person to whom a
benefit is payable under the Plan is unable to care for such person's affairs
because of incompetency, any payment due (unless a prior claim therefor shall
have been made by a duly appointed legal representative) may be paid to a third
party as the Committee deems appropriate. Any such payment so made shall be a
complete discharge of liability therefor under the Plan.
  **7.5**  **Binding
on Company, Participant, and Their Successors.** This
Plan shall be binding upon and inure to the benefit of the Company, its
successors, and assigns and the Participant, his heirs, executors,
administrators, and legal representatives.
  **7.6**  **Withholdings
and Deductions.** The
Company may withhold from any payment of benefits hereunder any taxes required
to be withheld and such sum as the Company may reasonably estimate to be
necessary to cover any taxes which may be assessed with regard to benefits
provided under the Plan. In addition, the Company may deduct from any payment of
benefits hereunder any amounts owed by the Participant to the Company or any of
its Affiliates.
  **7.7**  **Applicable
Law.** This
Plan shall be governed and construed in accordance with the laws of the State of
Washington to the extent not preempted by federal law.