Document:

Amendment No. One to 2005 Long-Term Incentive Plan

    EXHIBIT
      10.1

    

    PUGET
      ENERGY, INC.

    

    AMENDMENT
      NO. ONE TO 

    2005
      LONG-TERM INCENTIVE PLAN

    

    This
      Amendment No. One is made to the Puget Energy, Inc. 2005 Long-Term Incentive
      Plan (the "Plan"). This amendment becomes effective February 9, 2006. All terms
      defined in the Plan shall have the same meanings when used herein. All
      provisions of the Plan not amended by this Amendment No. One shall remain in
      full force and effect.

    

    1. Subsection
      (c) of the Definition of Change of Control in Appendix A to the 2005 Long-Term
      Incentive Plan shall be replaced in its entirety by the following:

    

    (c) Consummation
      of a Business Combination unless immediately following such Business
      Combination, (i) more than 60% of the then-outstanding shares of common
      stock of the corporation resulting from or effecting such Business Combination
      and the combined voting power of the then-outstanding voting securities of
      such
      corporation entitled to vote generally in the election of directors is then
      beneficially owned, directly or indirectly, by all or substantially all the
      individuals and entities who were the beneficial owners of the outstanding
      Common Stock immediately prior to such Business Combination in substantially
      the
      same proportion as their ownership, immediately prior to such Business
      Combination, of the outstanding Common Stock, (ii) no Entity (excluding the
      Company or any employee benefit plan (or related trust) of the Company or the
      corporation resulting from or effecting such Business Combination) beneficially
      owns, directly or indirectly, 30% or more of, respectively, the then-outstanding
      shares of common stock of the corporation resulting from or effecting such
      Business Combination or the combined voting power of the then-outstanding voting
      securities of such corporation entitled to vote generally in the election of
      directors, and (iii) at least a majority of the members of the board of
      directors of the corporation resulting from or effecting such Business
      Combination were Incumbent Directors of the Company at the time of the execution
      of the initial agreement or action of the Board providing for such Business
      Combination.

    

    Puget
      Energy, Inc. has caused this Amendment to be executed on the date indicated
      below.

     

    PUGET
      ENERGY, INC.

     

    

     

    By:
      /s/
      Stephen E. Frank

     

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

     

    

    Dated:
      February
      9, 2006Second Amendment To Agreement

    EXHIBIT
      10.2

    

    PUGET
      ENERGY, INC.

    PUGET
      SOUND ENERGY, INC.

    

    SECOND
      AMENDMENT TO AGREEMENT

    

    SECOND
      AMENDMENT TO AGREEMENT (this "Amendment"), effective as of February 9, 2006,
      amends the agreement (the "Agreement"), dated as of January 1, 2002 and amended
      as of May 10, 2005, between Puget Sound Energy, Inc. ("PSE") and Puget Energy,
      Inc. ("Puget Energy"), both Washington corporations (PSE and Puget Energy,
      collectively, the "Company"), and Stephen P. Reynolds
      ("Executive").

     

    WHEREAS,
      the Company and Executive wish to conform the definition of Change in Control
      in
      the Agreement to the definition on Change of Control in the PSE amended and
      restated form of Change of Control Agreement for PSE executive officers and
      in
      the PE amended 2005 Long-Term Incentive Plan by changing the definition of
      Change of Control in the Agreement to include (i) the acquisition of 30% rather
      than 20% of PE common stock or voting power and (ii) consummation rather than
      shareholder approval of a Business Combination, with a carve out for continuing
      ownership of 60% rather than 66-2/3%; and

     

    WHEREAS,
      the Company and Executive also wish to amend the Agreement in certain respects
      to reflect the provisions of Section 409A of the Internal Revenue Code, as
      amended, and any regulations and other guidance issued thereunder;

     

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

     

    
      	1.  	
              The
                second paragraph of Section 7, which begins "Executive may, by giving
                written notice to the Company..." shall be deleted in its
                entirety

            

    

     

    
      	2.  	
              Section
                7(e)(i) shall be replaced in its entirety by the following:
                

            

    

     

    (i) The
      acquisition by any individual, entity or group of beneficial ownership (within
      the meaning of Rule 13d-3 promulgated under the Securities Exchange Act) of
      30%
      or more of either (A) the outstanding Puget Energy common stock or (B) the
      outstanding Puget Energy voting securities; provided, however, that the
      following acquisitions shall not constitute a Change of Control: (x) any
      acquisition of securities by Puget Energy, (y) any acquisition of securities
      by
      any employee benefit plan (or related trust) sponsored or maintained by Puget
      Energy or any corporation controlled by Puget Energy, or (z) any acquisition
      by
      any corporation pursuant to a business combination, if, following such business
      combination, the conditions described in clauses (1), (2) and (3) of subsection
      (iii) of this Section 7(e) are satisfied; or

     

    3. Section
      7(e)(iii) of the Agreement shall be replaced in its entirety by the following:
      

     

    (iii) Consummation
      of a Business Combination (which means (A) a reorganization, exchange of
      securities, merger, consolidation or other business combination involving Puget
      Energy or (B) the sale or other disposition of all or substantially all the
      assets of Puget Energy or PSE) unless after giving effect to such Business
      Combination and any equity financing completed or contemplated in connection
      with or as a result of such Business Combination, (1) more than 60% of,
      respectively, the then outstanding shares of common stock of the corporation
      resulting from or effecting such Business Combination and the combined voting
      power of the then outstanding voting securities of such corporation entitled
      to
      vote generally in the election of directors is then beneficially owned, directly
      or indirectly, by all or substantially all the individuals and entities who
      were
      the beneficial owners, respectively, of the outstanding Puget Energy common
      stock and outstanding Puget Energy voting securities immediately prior to such
      Business Combination in substantially the same proportion as their ownership,
      immediately prior to such Business Combination, of the outstanding Puget Energy
      common stock and outstanding Puget Energy voting securities, as the case may
      be,
      (2) no Person (excluding Puget Energy and any employee benefit plan (or related
      trust) of Puget Energy or its affiliates) beneficially owns, directly or
      indirectly, 30% or more of, respectively, the then outstanding shares of common
      stock of the corporation resulting from or effecting such Business Combination
      or the combined voting power of the then outstanding voting securities of such
      corporation entitled to vote generally in the election of directors, and (3)
      at
      least a majority of the members of the board of directors of the corporation
      resulting from or effecting such Business Combination were Incumbent Directors
      at the time of the execution of the initial agreement or action of the Board
      providing for such Business Combination.

     

    4. The
      first
      sentence of the first paragraph of Section 12, shall be replaced in its entirety
      by the following:

     

    The
      amounts specified in this Agreement, other than any payments which Executive
      has
      elected to receive in the form of a monthly annuity or has elected to defer
      under a deferred compensation plan, shall be paid by the Company no more than
      30
      days after the date of termination or, in the case of payments due under Section
      7(e)(A), Change in Control.

     

    5. The
      following new Section 23 shall be added to the Agreement:

     

    Section
      409A

     

    Notwithstanding
      anything to the contrary in this Agreement, any cash payments otherwise due
      to
      Executive under this Agreement on or within the six-month period following
      Executive’s termination will accrue during such six-month period and will become
      payable in a lump sum payment on the date six (6) months and one (1) day
      following the date of Executive’s termination, provided, however, that such cash
      severance payments will be paid earlier, at the times and on the terms set
      forth
      in the applicable provisions of this Agreement, if the Company reasonably
      determines that the imposition of additional tax under Section 409A of the
      Internal Revenue Code of 1986, as amended (the "Code"), will not apply to an
      earlier payment of such cash severance payments. In addition, this Agreement
      (and any stock options granted pursuant hereto) will be deemed amended to the
      extent necessary to avoid the imposition of any additional tax on (or income
      recognition prior to payment to or, in the case of stock options, exercise
      by)
      Executive under Code Section 409A, including any temporary or final
      Treasury Regulations and guidance promulgated thereunder, and the parties agree
      to cooperate with each other and to take reasonably necessary steps in this
      regard.

     

    6. COUNTERPARTS.
      This Amendment may be executed in counterparts, each of which shall be deemed
      to
      be an original. 

    

    IN
      WITNESS WHEREOF, the parties have executed this Amendment as of the date first
      written above. 

     

    PUGET
      SOUND ENERGY, INC.

     

    By:
      /s/
      Stephen E. Frank

                           
      Stephen E. Frank

                                        Title:
      Chair,
      Compensation and Leadership 

                                        Development
      Committee, Puget Sound Energy, Inc. Board of Directors

     

    

     

    PUGET
      ENERGY, INC.

     

    By:
      :
      /s/
      Stephen E. Frank 

       Stephen
      E. Frank

      
Title:
      Chair, Compensation and Leadership 

      
      Development Committee, Puget Energy, Inc. Board of Directors

     

    

     

    EXECUTIVE

     

          /s/
      Stephen P. Reynolds

               
Stephen
      P.
      Reynolds

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