Document:

Amended And Restated Change Of Control Agreement

     

    Exhibit
      10.3

     

    AMENDED
      AND RESTATED

    CHANGE
      OF CONTROL AGREEMENT

     

    

    This
      amended and restated AGREEMENT by and between Puget Sound Energy, Inc., a
      Washington corporation (the "Company"), and ___________________ (the
      "Executive"), is dated as of the ______ day of ______________________,
      2006.

    

    WHEREAS,
      the Company and the Executive are parties to a Change of Control Agreement
      dated
      as of ____________________ (the "Original Agreement");

    

    WHEREAS,
      the Company and the Executive desire to amend and restate the Original Agreement
      so that the Original Agreement will be replaced in its entirety with this
      Agreement;

    

    WHEREAS
      the Board of Directors of the Company (the "Board") has determined that it
      is in
      the best interests of the Company and its shareholders to ensure that the
      Company will have the continued dedication of the Executive, notwithstanding
      the
      possibility, threat or occurrence of a Change of Control (as defined in
      Section 2) of the Company, and the Board believes that it is imperative to
      diminish the inevitable distraction of the Executive by virtue of the personal
      uncertainties and risks created by a pending or threatened Change of Control
      and
      to encourage the Executive's full attention and dedication to the Company
      currently and in the event of any threatened or pending Change of Control,
      and
      to provide the Executive with compensation and benefits arrangements upon a
      Change of Control which ensure that the compensation and benefits expectations
      of the Executive will be satisfied, which are competitive with those of other
      corporations and which align the Executive's interests with those of the
      Company's shareholders. Therefore, in order to accomplish these objectives,
      the
      Board has caused the Company to enter into this Agreement.

    

    NOW,
      THEREFORE, THE PARTIES AGREE AS FOLLOWS:

     

    
      	
              1.

            	
              Certain
                Definitions

            

    

    

    (a) "Accrued
      Obligations" is defined in Section 6(a)(i).

    

    (b) "Affiliated
      Company" means any company controlled by, controlling or under common control
      with the Company.

    

    (c) "Annual
      Base Salary" means an annual base salary at least equal to 12 times the
      highest monthly base salary paid or payable to the Executive by the Company
      and
      its affiliated companies in respect to the 12-month period immediately preceding
      the month in which the Effective Date occurs.

    

    (d) "Annual
      Bonus" is defined in Section 4(b)(ii).

    

    (e) "Business
      Combination" means (i) a reorganization, exchange of securities, merger or
      consolidation of the Company or (ii) the sale or other disposition of all or
      substantially all the assets of the Company.

    

    (f) "Change
      of Control" is defined in Section 2.

    

    (g) The
      "Change of Control Period" means the period commencing on the date hereof and
      ending on the third anniversary of the date hereof; provided, however, that
      commencing on the first anniversary of the date hereof and on each successive
      anniversary (each a “Renewal Date”), the Change of Control Period shall be
      automatically extended so as to terminate three years from such Renewal Date,
      unless at least 60 days prior to the Renewal Date the Company gives notice
      to
      the Executive that the Change of Control Period shall not be so
      extended.

    

    (h) "Code"
      means the Internal Revenue Code of 1986, as amended.

    

    (i) "Date
      of
      Termination" is defined in Section 5(f).

    

    (j) "Disability"
      is defined in Section 5(a).

    

    (k) "Disability
      Effective Date" is defined in Section 5(a).

    

    (l) "Effective
      Date" means the first date during the Change of Control Period on which a Change
      of Control occurs. Anything in this Agreement to the contrary notwithstanding,
      if a Change of Control occurs and if the Executive's employment with the Company
      is terminated prior to the date on which the Change of Control occurs, and
      if it
      is reasonably demonstrated by the Executive that such termination of employment
      (i) was at the request of a third party who has taken steps reasonably
      calculated to effect the Change of Control or (ii) otherwise arose in
      connection with or anticipation of the Change of Control, then for all purposes
      of this Agreement the "Effective Date" shall mean the date immediately prior
      to
      the date of such termination of employment.

    

    (m) "Employment
      Period" is defined in Section 3.

    

    (n) "Exchange
      Act" means the Securities Exchange Act of 1934, as amended.

    

    (o) "Good
      Reason" is defined in Section 5(d).

     

    (p) "Incentive
      Plan" means the Company's 2005 Long-Term Incentive Plan or any successor
      plan.

    

    (q) "Incumbent
      Director" means a member of the Board who has been either (i) nominated by
      a majority of the directors of the Company then in office or (ii) appointed
      by directors so nominated, but excluding, for this purpose, any such individual
      whose initial assumption of office occurs as a result of either an actual or
      threatened election contest (as such terms are used in Rule 14a-11 of
      Regulation 14A promulgated under the Exchange Act) or other actual or
      threatened solicitation of proxies or consents by or on behalf of a Person
      other
      than the Board.

    

    (r) "Notice
      of Termination" is defined in Section 5(e).

    

    (s) "Other
      Benefits" is defined in Section 6(a)(iii).

    

    (t) "Outstanding
      Company Common Stock" means the shares of Common Stock of the Company ("Common
      Stock") outstanding at the time of the determination.

    

    (u) "Outstanding
      Company Voting Securities" means the combined voting power of the outstanding
      voting securities of the Company entitled to vote generally in the election
      of
      directors at the time of the determination.

    

    (v) "Person"
      means any individual, entity or group (within the meaning of Section 13(d)(3)
      or
      14(d) of the Exchange Act).

    

    (w) "Retirement
      Plan" means the Company's qualified pension plan or any successor plan
      thereto.

    

    (x) "SERP"
      means the Company's Supplemental Executive Retirement Plan or any other
      supplemental and/or excess retirement plan or agreement of the Company and
      its
      affiliated companies providing benefits for the Executive.

    

    (y) "Welfare
      Benefit Continuation" is defined in Section 6(a)(ii).

     

    
      	
              2.

            	
              Change
                of Control

            

    

    

    For
      the
      purpose of this Agreement, a "Change of Control" means:

    

    (a) The
      acquisition by any Person of beneficial ownership (within the meaning of
      Rule 13d-3 promulgated under the Exchange Act) of (i) 30% or more of
      either (A) the Outstanding Company Common Stock or (B) the Outstanding
      Company Voting Securities; provided, however, that the following acquisitions
      of
      beneficial ownership shall not constitute a Change of Control: (x) any
      acquisition by the Company, (y) any acquisition by any employee benefit
      plan (or related trust) sponsored or maintained 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) of this Section 2 are satisfied; or

    

    (b) A
      "Board
      Change" which, for purposes of this Agreement, shall have occurred if a majority
      of the seats (other than vacant seats) on the Board are occupied by individuals
      who were neither (i) nominated by a majority of the Incumbent Directors nor
      (ii) appointed by directors so nominated; or

    

    (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
      Company Common Stock and Outstanding Company Voting Securities, respectively,
      immediately prior to such Business Combination in substantially the same
      proportion as their ownership, immediately prior to such Business Combination,
      of the Outstanding Company Common Stock and Outstanding Company Voting
      Securities, as the case may be, (ii) no Person (excluding the Company, any
      employee benefit plan (or related trust) of the Company or the corporation
      resulting from or effecting such Business Combination and any Person
      beneficially owning, immediately prior to such Business Combination, directly
      or
      indirectly, 30% or more of the Outstanding Company Common Stock or Outstanding
      Company Voting Securities, as the case may be) 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 at the time of the execution of the initial agreement or action of
      the
      Board providing for such Business Combination.

     

    
      	
              3.

            	
              Employment
                Period

            

    

    

    The
      Company hereby agrees to continue the Executive in its employ, and the Executive
      hereby agrees to remain in the employ of the Company, in accordance with the
      terms and provisions of this Agreement, for the period commencing on the
      Effective Date and ending on the second anniversary of such date (the
      "Employment Period"), in the executive capacity of
      _______________________________________ or a substantially comparable position
      of the Company and, subject to the general supervision of the Board as required
      by the Washington Business Corporation Act, such other duties and
      responsibilities as are not inconsistent with the express terms of this
      Agreement. The Company agrees that it will not take any action, or make any
      demands on the Executive, that may be deemed to arbitrarily, unreasonably or
      unnecessarily interfere with the performance of the services to be rendered
      by
      the Executive hereunder.

     

    
      	
              4.

            	
              Terms
                of Employment

            

    

    

    (a) Position
      and Duties.

     

     (i) During
      the Employment Period, (A) the Executive's position (including status,
      offices, titles and reporting requirements), authority, duties and
      responsibilities shall be in accordance with Section 3 and (B) the
      Executive's services shall be performed within the Seattle/Bellevue metropolitan
      area, except for required travel in the Company's business to the extent
      consistent with the Executive's duties in Section 3.

             
(ii) During
      the Employment Period, and excluding any periods of paid time off to which
      the
      Executive is entitled, the Executive agrees to devote reasonable attention
      and
      time during normal business hours to the business and affairs of the Company
      and, to the extent necessary to discharge the responsibilities assigned to
      the
      Executive hereunder, to use the Executive's reasonable best efforts to perform
      faithfully and efficiently such responsibilities. During the Employment Period
      it shall not be a violation of this Agreement for the Executive to
      (A) serve on corporate, civic or charitable boards or committees,
      (B) deliver lectures, fulfill speaking engagements or teach at educational
      institutions, or (C) manage personal investments, so long as such
      activities do not significantly interfere with the performance of the
      Executive's responsibilities as an employee of the Company in accordance with
      this Agreement. It is expressly understood and agreed that to the extent that
      any such activities have been conducted by the Executive prior to the Effective
      Date, the continued conduct of such activities (or the conduct of activities
      similar in nature and scope thereto) subsequent to the Effective Date shall
      not
      thereafter be deemed to interfere with the performance of the Executive's
      responsibilities to the Company.

    

    (b) Compensation.

     

    (i) Base
      Salary.
      During
      the Employment Period, the Executive shall receive an annual base salary
      ("Annual Base Salary"), which shall be paid in equal installments on a monthly
      basis, at least equal to 12 times the highest monthly base salary paid or
      payable to the Executive by the Company and its affiliated companies in respect
      of the 12-month period immediately preceding the month in which the Effective
      Date occurs. For purposes of this Agreement, Annual Base Salary shall not
      include any payments by the Company on the Executive's behalf pursuant to any
      incentive, savings or retirement plans, any welfare benefit plans or any fringe
      benefit plans, in each case, of the Company or any affiliated company, of the
      type identified in paragraphs (iii) through (vii) of this Section 4(b), or
      any reimbursement of expenses by the Company or any affiliated company in
      accordance with paragraph (v) of this Section 4(b). During the
      Employment Period, the Annual Base Salary shall be reviewed at least annually
      and shall be increased at any time and from time to time as shall be
      substantially consistent with increases in base salary generally awarded in
      the
      ordinary course of business to other peer executives of the Company and its
      affiliated companies. Any increase in Annual Base Salary shall not serve to
      limit or reduce any other obligation to the Executive under this Agreement.
      Annual Base Salary shall not be reduced after any such increase, and the term
      Annual Base Salary as utilized in this Agreement shall refer to Annual Base
      Salary as so increased.

     

    (ii) Annual
      Bonus.
      In
      addition to Annual Base
      Salary, the Executive shall be eligible to receive, for each fiscal year ending
      during the Employment Period, a target annual bonus (the “Annual Bonus”) in cash
      at least equal to the greater of (A) the Executive’s target annual bonus in
      effect on the Effective Date and (B) the average (annualized for any fiscal
      year
      in which the Executive has been employed by the Company for less than 12 full
      months) target bonus for which the Executive was eligible in the three fiscal
      years immediately preceding the fiscal year in which the Effective Date occurs.
      Each such Annual Bonus earned shall be paid no later than the 15th day of the
      third month of the fiscal year next following the fiscal year for which the
      Annual Bonus is earned unless the Executive shall have timely elected to defer
      the receipt of such Annual Bonus in accordance with the terms of the Company's
      then applicable deferred compensation plan. 

     

    (iii) Incentive,
      Savings and Retirement Plans.

     

    (A) During
      the Employment Period, the Executive shall be entitled to participate in all
      incentive, savings and retirement plans, practices, policies and programs
      applicable generally to other peer executives of the Company and its affiliated
      companies (including, without limitation, the plans in effect on the date of
      this Agreement or any successor plans), but in no event shall such plans,
      practices, policies and programs (except the Company's qualified pension plans)
      provide the Executive with incentive opportunities (measured with respect to
      both regular and special incentive opportunities, to the extent, if any, that
      such distinction is applicable), savings opportunities and retirement benefit
      opportunities, in each case, that are less favorable, in the aggregate, than
      the
      most favorable of those provided by the Company and its affiliated companies
      for
      the Executive under such plans, practices, policies and programs as in effect
      at
      any time during the 90-day period immediately preceding the Effective Date
      or,
      if more favorable to the Executive, those provided generally at any time after
      the Effective Date to other executives of the Company and its affiliated
      companies. 

     

    (B) Upon
      the
      Effective Date the Executive shall become vested under the Company's
      Supplemental Executive Retirement Plan ("SERP") so that the Executive shall
      be
      entitled to receive a Retirement Benefit (as defined in the SERP) at age 62
      or,
      at the election of the Executive if the Executive's termination of employment
      occurs on or after attaining age 55, at any age between 55 and 62 a Retirement
      Benefit reduced one-third percent (1/3%) for each month that benefits commence
      prior to the beginning of the month coincident with or next following the date
      the Executive would attain age 62. All other terms and conditions of the SERP
      shall apply.

     

    (iv) Equity
      Incentive Plans.

     

    (A) Any
      outstanding stock options or stock appreciation rights issued to the Executive
      under the Company's existing plans or any successor plan shall become fully
      vested and exercisable on the Effective Date. All restrictions on shares of
      restricted stock issued to the Executive shall lapse.

     

    (B) with
      respect to all performance awards granted to the Executive pursuant to the
      Incentive Plan or any successor plan that are outstanding immediately prior
      to
      the Effective Date, the Company shall issue to the Executive within 30 days
      after the Effective Date:

     

    (i) cash
      equal to the higher of (1) the average of the last sale prices of the
      Company's (or its successor's) Common Stock on the New York Stock Exchange
      in
      each of the twenty business days preceding the Effective Date or (2) the
      highest price per share actually paid for any of the Company Common Stock in
      connection with the Change in Control, multiplied by an aggregate number of
      shares of the Company's Common Stock (or, if the event that triggered the
      Effective Date is a Business Combination, the equivalent number of shares of
      the
      then outstanding common stock of the corporation resulting from or effecting
      such Business Combination into which such shares of Common Stock have been
      converted) equal to the greater of (x) the total number of the shares payable
      at
      the target award level upon full vesting of each such performance award and
      (y)
      such higher number of shares payable upon full vesting of each such award if
      the
      Company achieved for each four-year award cycle the percentile ranking against
      the comparable universe of EEI companies which the Company had achieved for
      the
      applicable cycle during the period commencing upon the starting year of such
      cycle and ending with the fiscal quarter immediately preceding the Effective
      Date; and

     

    (ii) cash
      equal to the amount of the dividend equivalents associated with the number
      of
      shares determined under subparagraph (i) above, in accordance with the Incentive
      Plan.

     

    (v) Welfare
      Benefit Plans.
      During
      the Employment Period, the Executive and/or the Executive's family, as the
      case
      may be, shall be eligible for participation in and shall receive all benefits
      under welfare benefit plans, practices, policies and programs provided by the
      Company and its affiliated companies (including, without limitation, medical,
      dental, disability, salary continuance, life, group life, accidental death
      and
      travel accident insurance plans and programs) to the extent applicable generally
      to other peer executives of the Company and its affiliated companies, but in
      no
      event shall such plans, practices, policies and programs provide the Executive
      with benefits that are less favorable, in the aggregate, than the most favorable
      of such plans, practices, policies and programs in effect for the Executive
      at
      any time during the 90-day period immediately preceding the Effective Date
      or,
      if more favorable to the Executive, those provided generally at any time after
      the Effective Date to other peer executives of the Company and its affiliated
      companies.

     

    (vi) Expenses.
      During
      the Employment Period, the Executive shall be entitled to receive prompt
      reimbursement for all reasonable business expenses incurred by the Executive
      in
      accordance with the most favorable policies, practices and procedures of the
      Company and its affiliated companies in effect for the Executive at any time
      during the 90-day period immediately preceding the Effective Date or, if more
      favorable to the Executive, as in effect generally at any time thereafter with
      respect to other peer executives of the Company and its affiliated
      companies.

     

    (vii) Fringe
      Benefits.
      During
      the Employment Period, the Executive shall be entitled to fringe benefits in
      accordance with the most favorable plans, practices, programs and policies
      of
      the Company and its affiliated companies in effect for the Executive at any
      time
      during the 90-day period immediately preceding the Effective Date or, if more
      favorable to the Executive, as in effect generally at any time thereafter with
      respect to other peer executives of the Company and its affiliated
      companies.

     

    (viii) Office
      and Support Staff.
      During
      the Employment Period, the Executive shall be entitled to an office or offices
      of a size and with furnishings and other appointments, and to personal
      secretarial and other assistance, at least equal to the most favorable of the
      foregoing provided to the Executive by the Company and its affiliated companies
      at any time during the 90-day period immediately preceding the Effective Date
      or, if more favorable to the Executive, as provided generally at any time
      thereafter with respect to other peer executives of the Company and its
      affiliated companies.

    

    (ix) Vacation.
      During
      the Employment Period, the Executive shall be entitled to paid vacation in
      accordance with the most favorable plans, policies, programs and practices
      of
      the Company and its affiliated companies as in effect for the Executive at
      any
      time during the 90-day period immediately preceding the Effective Date or,
      if
      more favorable to the Executive, as in effect generally at any time thereafter
      with respect to other peer executives of the Company and its affiliated
      companies.

     

    
      	
              5.

            	
              Termination
                of Employment

            

    

    

    (a) Death
      or Disability.
      The
      Executive's employment shall terminate automatically upon the Executive's death
      during the Employment Period. If the Company determines in good faith that
      the
      Disability of the Executive has occurred during the Employment Period (pursuant
      to the definition of Disability set forth below), it may give to the Executive
      written notice in accordance with Section 12(b) of its intention to
      terminate the Executive's employment. In such event, the Executive's employment
      with the Company shall terminate effective on the 30th
      day
      after receipt of such notice by the Executive (the "Disability Effective Date"),
      provided that, within the 30 days after such receipt, the Executive shall not
      have returned to full-time performance of the Executive's duties. For purposes
      of this Agreement, "Disability" shall mean the absence of the Executive from
      the
      Executive's duties with the Company on a full-time basis for 120 consecutive
      business days as a result of incapacity due to mental or physical illness which
      is determined to be total and permanent by a physician selected by the Company
      or its insurers and acceptable to the Executive or the Executive's legal
      representative (such agreement as to acceptability not to be unreasonably
      withheld).

    

    (b) Cause.
      The
      Company may terminate the Executive's employment during the Employment Period
      for Cause. For purposes of this Agreement, "Cause" shall mean (i) the
      willful and continued failure by Employee to substantially perform his duties
      with the Company (other than any such failure resulting from incapacity due
      to
      physical or mental illness), for a period of 30 days after written notice of
      demand for substantial performance has been delivered to Employee by the Board
      of Directors which specifically identifies the manner in which the Board
      believes that Employee has not substantially performed his duties, or
      (ii) the willful engaging by Employee in gross misconduct materially and
      demonstrably injurious to the Company, as determined by the Board of Directors
      after notice to Employee and an opportunity for a hearing. No act, nor failure
      to act, on Employee's part shall be considered "willful" unless he has acted
      or
      failed to act with an absence of good faith and without a reasonable belief
      that
      his action or failure to act was in the best interests of the
      Company.

    

    (c) Without
      Cause.
      The
      Company may terminate the Executive's employment at any time during the
      Employment Period without Cause.

    

      (d) Good
      Reason.
      The
      Executive's employment may be terminated during the Employment Period by the
      Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
      mean

     

    (i) the
      assignment to the Executive of any duties inconsistent with the Executive's
      position (including status, offices, titles and reporting requirements),
      authority, duties or responsibility as contemplated by Sections 3 and 4(a)
      or any other action by the Company which results in a diminution in such
      position, authority, duties or responsibilities, excluding for this purpose
      an
      isolated, insubstantial and inadvertent action not taken in bad faith and which
      is remedied by the Company promptly after receipt of notice thereof given by
      the
      Executive;

     

    (ii) any
      failure by the Company to comply with any of the provisions of Section 4(b),
      other than an isolated, insubstantial and inadvertent failure not taken in
      bad
      faith and which is remedied by the Company promptly after receipt of notice
      thereof given by the Executive;

     

    (iii) the
      Company's requiring to be based at any location other than that described in
      Section 4(a)(i)(B);

     

    (iv) any
      purported termination by the Company of the Executive's employment otherwise
      than as expressly permitted by this Agreement; or

     

    (v) any
      failure by the Company to comply with and satisfy Section 11(c), provided
      that such successor has received at least ten days' prior written notice from
      the Company or the Executive of the requirements of
      Section 11(c).

    

    For
      purposes of this Section 5(c), any good faith determination of Good Reason
      made by the Executive shall be conclusive.

     

    (e) Notice
      of Termination.
      Any
      termination by the Company for Cause or without Cause or by the Employee for
      Good Reason shall be communicated by Notice of Termination to the other party
      hereto given in accordance with Section 12(b). For purposes of this
      Agreement, a "Notice of Termination" means a written notice which
      (i) indicates the specific termination provision in this Agreement relied
      upon, (ii) to the extent applicable, sets forth in reasonable detail the
      facts and circumstances claimed to provide a basis for termination of the
      Executive's employment under the provision so indicated and (iii) if the
      Date of Termination (as defined below) is other than the date of receipt of
      such
      notice, specifies the termination date (which date shall be not more than
      15 days after the giving of such notice). The failure by the Executive or
      the Company to set forth in the Notice of Termination any fact or circumstance
      which contributes to a showing of Good Reason or Cause shall not waive any
      right
      of the Executive or the Company hereunder or preclude the Executive or the
      Company from asserting such fact or circumstance in enforcing the Executive's
      or
      the Company's rights hereunder.

    

    (f) Date
      of Termination.
      "Date
      of Termination" means (i) if the Executive's employment is terminated by
      the Company, whether for Cause or without Cause, or by the Executive for Good
      Reason, the date of receipt of the Notice of Termination or any later date
      specified therein, as the case may be, and (ii) if the Executive's
      employment is terminated by reason of death or Disability, the Date of
      Termination shall be the date of death of the Executive or the Disability
      Effective Date, as the case may be.

     

    6. Obligations
      of the Company Upon Termination

    

    (a) Good
      Reason; Without Cause; Death or Disability.
      If,
      during the Employment Period, the Company shall terminate the Executive's
      employment without Cause or for Death or Disability or the Executive shall
      terminate employment for Good Reason:

    

    (i)
      the
      Company shall pay to the Executive in a lump sum in cash within 30 days
      after the Date of Termination the aggregate of the following
      amounts:

     

    (A) the
      sum
      of (1) the Executive's Annual Base Salary through the Date of Termination,
      (2) a pro rata portion of the Executive’s Annual Bonus for the year in which the
      Date of Termination occurs, based on the number of days of employment that
      year
      up to the Date of Termination divided by 365 days,) and (3) any accrued paid
      time off pay, in each case to the extent not theretofore paid (the sum of the
      amounts described in clauses (1), (2) and (3) shall be hereinafter referred
      to as the "Accrued Obligations"); and

     

    (B) the
      amount equal to the sum of (x) Annual Base Salary and (y) the Annual Bonus
      for
      which the Executive was eligible for the year in which the Date of Termination
      occurs; and

     

    (C) if
      Executive executes a release of in the form set forth in Exhibit I attached
      hereto, and said release of claims becomes effective by its terms, the
      additional amount equal to two times the sum of (x) Annual Base Salary and
      (y)
      the Annual Bonus for which the Executive was eligible for the year in which
      the
      Date of Termination occurs; and

     

    (D) a
      separate lump-sum supplemental retirement benefit equal to the difference
      between (1) the actuarial equivalent (utilizing for this purpose the
      actuarial assumptions utilized with respect to the Retirement Plan during the
      90-day period immediately preceding the Effective Date) of the benefit payable
      under the Retirement Plan and any SERP providing benefits for the Executive
      that
      the Executive would receive if the Executive's employment continued at the
      compensation level provided for in Sections 4(b)(i) and (ii) for the
      remainder of the Employment Period, assuming for this purpose that all accrued
      normal and early retirement benefits are fully vested and that benefit accrual
      formulas are no less advantageous to the Executive than those in effect during
      the 90-day period immediately preceding the Effective Date, and (2) the
      actuarial equivalent (utilizing for this purpose the actuarial assumptions
      utilized with respect to the Retirement Plan during the 90-day period
      immediately preceding the Effective Date) of the Executive's actual benefit
      (paid or payable), if any, under the Retirement Plan and the SERP;
      and

     

    (ii) for
      the
      remainder of the Employment Period, or such longer period as any plan, program,
      practice or policy may provide, the Company shall continue benefits to the
      Executive and/or the Executive's family at least equal to those that would
      have
      been provided to them in accordance with the plans, programs, practices and
      policies described in Sections 4(b)(v) and 4(b)(vii) if the Executive's
      employment had not been terminated in accordance with the most favorable plans,
      practices, programs or policies of the Company and its affiliated companies
      as
      in effect and applicable generally to other executives and their families during
      the 90-day period immediately preceding the Effective Date or, if more favorable
      to the Executive, as in effect generally at any time thereafter with respect
      to
      other peer executives of the Company and its affiliated companies and their
      families; provided, however, that if the Executive becomes re-employed with
      another employer and is eligible to receive medical or other welfare benefits
      under another employer-provided plan, the medical and other welfare benefits
      described herein shall be secondary to those provided under such other plan
      during such applicable period of eligibility (such continuation of such benefits
      for the applicable period herein set forth shall be hereinafter referred to
      as
      "Welfare Benefit Continuation") and the Executive shall no longer be entitled
      to
      receive fringe benefits from the Company. For purposes of determining
      eligibility of the Executive for retiree benefits pursuant to such plans,
      practices, programs and policies, the Executive shall be considered to have
      remained employed until the end of the Employment Period and to have retired
      on
      the last day of such period; provided, however, that the Executive shall be
      entitled to the more favorable of the retiree benefits in effect on the Date
      of
      Termination or the retiree benefits in effect on the date that would have been
      the last date of the Employment Period if the Executive had remained employed;
      and

    

    (iii) to
      the
      extent not theretofore paid or provided, the Company shall timely pay or provide
      to the Executive and/or the Executive's family any other amounts or benefits
      required to be paid or provided or which the Executive and/or the Executive's
      family is eligible to receive pursuant to this Agreement and under any plan,
      program, policy or practice or contract or agreement of the Company and its
      affiliated companies as in effect and applicable generally to other peer
      executives and their families during the 90-day period immediately preceding
      the
      Effective Date or, if more favorable to the Executive, as in effect generally
      thereafter with respect to other peer executives of the Company and its
      affiliated companies and their families (such other amounts and benefits shall
      be hereinafter referred to as the "Other Benefits").

     

    (b) Death.
      If the
      Executive's employment is terminated by reason of the Executive's death during
      the Employment Period, this Agreement shall terminate without further
      obligations to the Executive's legal representatives under this Agreement,
      other
      than for payment of Accrued Obligations (which shall be paid to Executive's
      estate or beneficiary, as applicable, in a lump sum in cash within 30 days
      of the Date of Termination) and the timely payment or provision of the Welfare
      Benefit Continuation and Other Benefits.

    

    (c) Disability.
      If the
      Executive's employment is terminated by reason of the Executive's Disability
      during the Employment Period, this Agreement shall terminate without further
      obligations to the Executive, other than for payment of Accrued Obligations
      (which shall be paid to Executive in a lump sum in cash within 30 days of
      the Date of Termination) and the timely payment or provision of the Welfare
      Benefit Continuation and Other Benefits.

    

    (d) Cause;
      Other Than for Good Reason.
      If the
      Executive's employment shall be terminated for Cause during the Employment
      Period, this Agreement shall terminate without further obligations to the
      Executive other than the obligation to pay the Executive's Annual Base Salary
      through the Date of Termination, plus the amount of any compensation previously
      deferred by the Executive, in each case to the extent theretofore unpaid. If
      the
      Executive terminates employment during the Employment Period other than for
      Good
      Reason, this Agreement shall terminate without further obligations to the
      Executive other than for Accrued Obligations and the timely payment or provision
      of Other Benefits. In such case all Accrued Obligations shall be paid to the
      Executive in a lump sum in cash within 30 days of the Date of
      Termination.

     

    
      	
              7.

            	
              Nonexclusivity
                of Rights

            

    

     

    Nothing
      in this Agreement shall prevent or limit the Executive's continuing or future
      participation in any written plan provided by the Company or any of its
      affiliated companies for executives generally and for which the Executive may
      qualify, nor shall anything herein limit or otherwise affect such rights as
      the
      Executive may have under any written contract with the Company or any of its
      affiliated companies. Amounts that are vested benefits or that the Executive
      is
      otherwise entitled to receive under any such plan or contract with the Company
      or any of its affiliated companies at or subsequent to the Date of Termination
      shall be payable in accordance with such plan or contract or agreement except
      as
      explicitly modified by this Agreement.

     

    
      	
              8.

            	
              Full
                Settlement; Resolution of
                Disputes

            

    

    

    (a) The
      Company's obligation to make the payments provided for in this Agreement and
      otherwise to perform its obligations hereunder shall not be affected by any
      set-off, counterclaim, recoupment, defense or other claim, right or action
      that
      the Company may have against the Executive or others. In no event shall the
      Executive be obligated to seek other employment or take any other action by
      way
      of mitigation of the amounts payable to the Executive under any of the
      provisions of this Agreement, and, except as provided in Section 6(b), such
      amounts shall not be reduced whether or not the Executive obtains other
      employment. The Company agrees to pay promptly upon invoice, to the full extent
      permitted by law, all legal fees and expenses that the Executive may incur
      as a
      result of any contest (regardless of the outcome thereof) by the Company, the
      Executive or others of the validity or enforceability of, or liability under,
      any provision of this Agreement or any guarantee of performance thereof
      (including as a result of any contest by the Executive about the amount of
      any
      payment pursuant to this Agreement).

    

    (b) If
      there
      shall be any dispute between the Company and the Executive (i) in the event
      of any termination of the Executive's employment by the Company, whether such
      termination was (A) in connection with or in anticipation of a Change of
      Control under clauses (i) or (ii) of Section 1(l), or (B) for Cause,
      or (ii) in the event of any termination of employment by the Executive,
      whether Good Reason existed, then, unless and until there is a final,
      nonappealable judgment by a court of competent jurisdiction declaring that
      such
      termination was not in connection with or in anticipation of a Change of Control
      or for Cause or that the determination by the Executive of the existence of
      Good
      Reason was not made in good faith, the Company shall pay all amounts, and
      provide all benefits, to the Executive and/or the Executive's family or other
      beneficiaries, as the case may be, that the Company would be required to pay
      or
      provide pursuant to Section 6(a) as though such termination were by the
      Company without Cause or by the Executive with Good Reason; provided, however,
      that the Company shall not be required to pay any disputed amounts pursuant
      to
      this paragraph except upon receipt of an undertaking by or on behalf of the
      Executive to repay all such amounts to which the Executive is ultimately
      adjudged by such court not to be entitled.

     

    
      	
              9.

            	
              Excise
                Taxes

            

    

    

    Notwithstanding
      any other provisions of this Agreement, if any payments or distributions in
      the
      nature of compensation are made to or for the benefit of the Executive, whether
      paid or payable pursuant to this Agreement or otherwise (including the vesting
      of stock options, the lapse of restrictions on restricted stock and any other
      events that result in a "payment in the nature of compensation" within the
      meaning of Section 280G of the Code) are characterized as Excess Parachute
      Payments within the meaning of Section 280G of the Code or any successor
      provision, then the Company shall pay to the Executive an additional amount
      equal to the excise taxes imposed by Section 4999 of the Code or any
      successor provision on the Executive's Excess Parachute Payments, plus an amount
      equal to the federal and (if applicable) state income and excise taxes,
      including without limitation FICA and Medicare taxes or other taxes which will
      be payable by Employee as a result of this additional payment.

     

    
      	
              10.

            	
              Confidential
                Information

            

    

    

    The
      Executive shall hold in a fiduciary capacity for the benefit of the Company
      all
      secret or confidential information, knowledge or data relating to the Company
      or
      any of its affiliated companies, and their respective businesses, that shall
      have been obtained by the Executive during the Executive's employment by the
      Company or any of its affiliated companies and that shall not be or become
      public knowledge (other than by acts by the Executive or representatives of
      the
      Executive in violation of this Agreement). After termination of the Executive's
      employment with the Company, the Executive shall not, without the prior written
      consent of the Company or as may otherwise be required by law or legal process,
      communicate or divulge any such information, knowledge or data to anyone other
      than the Company and those designated by it. In no event shall an asserted
      violation of the provisions of this Section 10 constitute a basis for
      deferring or withholding any amounts otherwise payable to the Executive under
      this Agreement.

    

     

    
      	
              11.

            	
              Section
                409A

            

    

     

    Notwithstanding
      anything to the contrary in this Agreement, any cash payments otherwise due
      to
      the Executive under this Agreement on or within the six-month period following
      the 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 the 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, will not apply to an earlier payment
      of such cash severance payments. In addition, this Agreement will be deemed
      amended, to the extent necessary to avoid imposition of any additional tax
      or
      income recognition prior to actual payment to the 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.

     

    
      	
              12.

            	
              Successors

            

    

    

    (a) This
      Agreement is personal to the Executive and without the prior written consent
      of
      the Company shall not be assignable by the Executive otherwise than by will
      or
      the laws of descent and distribution. This Agreement shall inure to the benefit
      of and be enforceable by the Executive's legal representatives.

    

    (b) This
      Agreement shall inure to the benefit of and be binding on the Company and its
      successors and assigns.

    

    (c) The
      Company will require any successor (whether direct or indirect, by purchase,
      merger, consolidation or otherwise) to all or substantially all the business
      and/or assets of the Company to assume expressly and agree to perform this
      Agreement in the same manner and to the same extent that the Company would
      be
      required to perform it if no such succession had taken place. As used in this
      Agreement, Company shall mean the Company as hereinbefore defined and any
      successor to its business and/or assets as aforesaid that assumes and agrees
      to
      perform this Agreement by operation of law, or otherwise.

     

    
      	
              13.

            	
              Miscellaneous

            

    

    

    (a) This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      state of Washington, without reference to principles of conflict of laws. The
      captions of this Agreement are not part of the provisions hereof and shall
      have
      no force or effect. This Agreement may not be amended or modified otherwise
      than
      by a written agreement executed by the parties hereto or their respective
      successors and legal representatives.

    

    (b) All
      notices and other communications hereunder shall be in writing and shall be
      given by hand delivered to the other party or by registered or certified mail,
      return receipt requested, postage prepaid, addressed as follows:

    

    If
      to the
      Executive:

    

    Name:
      _________________________________

    Title:   
      _________________________________ 

    Puget
      Sound Energy, Inc., PSE-12

    P.
      O. Box
      97034

    Bellevue,
      WA 98009-9734

    

    If
      to the
      Company:

     

    Puget
      Sound Energy, Inc.

    P.
      O. Box
      97034 

    Bellevue,
      WA 98009-9734

     

    or
      to
      such other address as either party shall have furnished to the other in writing
      in accordance herewith. Notice and communications shall be effective when
      actually received by the addressee.

    

    (c) The
      invalidity or unenforceability of any provision of this Agreement shall not
      affect the validity or enforceability of any other provision of this
      Agreement.

    

    (d) The
      Company may withhold from any amounts payable under this Agreement such federal,
      state or local taxes as shall be required to be withheld pursuant to any
      applicable law or regulation.

    

    (e) The
      Executive's or the Company's failure to insist on strict compliance with any
      provision hereof or any other provision of this Agreement or the failure to
      assert any right the Executive or the Company may have hereunder, including
      without limitation the right of the Executive to terminate employment for Good
      Reason pursuant to Section 5(c)(i)-(v), shall not be deemed to be a waiver
      of such provision or right or any other provision or right of this
      Agreement.

    

    (f) The
      Executive and the Company acknowledge that, except as may otherwise be provided
      under any other written agreement between the Executive and the Company, the
      employment of the Executive by the Company is "at will" and, prior to the
      Effective Date, may be terminated by either the Executive or the Company at
      any
      time. Moreover, if prior to the Effective Date, the Executive's employment
      with
      the Company terminates, then the Executive shall have no further rights under
      this Agreement.

    

    (g) This
      Agreement may be executed in counterparts, each of which counterparts shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument.

    

    IN
      WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and,
      pursuant to authorization from the Board, the Company has caused this Agreement
      to be executed in its name and on its behalf, all as of the day and year first
      above written.

     

     

     

    
      	
            	 PUGET SOUND ENERGY, INC.	 
	 	 	 
	 	 __________________________________________	 
	 	 Name: ____________________________________	 
	  	 Title: ______________________________________	 

    

    
       

    

     

    
      	
            	 EXECUTIVE	 
	 	 	 
	 	 __________________________________________	 
	 	 Name: ____________________________________	 
	  	 Title: ______________________________________EX 10.1

     

     

    EXHIBIT
      10.1

     

     

     

    
      
        
        

      

      
        EX
          - 1 - 10.1

        
          

        

      

      
        
        

      

    

     

    

      SALE
        AND PURCHASE AGREEMENT

      

      

      January
        20, 2006

      

      Mr.
        Peter
        Wilson

      Sterling
        Grant Capital Inc.

      69
        Glenmore Dr.

      West
        Vancouver, BC

      V75
        1A5

      

      

      Subject: Clovelly
        South (the "Project")

      

      Dear
        Sir,

      

      This
        letter will confirm our agreement to sell and transfer a 5% (five percent)
        working interesting in the Project currently owned by Sterling Grant (the
        "Interest"), to Texhoma Energy, Inc. ("Texhoma"), under the following terms
        and
        conditions:

      

      1. The
        transfer shall occur on or before the commencement of drilling of
        the Clovelly
        South exploration well and be subject to the approval of ORX 

       Resources,
        Inc. the Operator. 

      

      2. Texhoma
        accepts responsibility to fun the work program for the Project  which
        will be performed in accordance with the Joint Operating  Agreement:

      

      3. Texhoma
        is already a participant in the Project and accepts the additional interest
        without the requirement for further documentation or due diligence:

      

      4. Sterling
        Grant warrants the Interest is free of any liens, claims or  liabilities:

      

      5. The
        Consideration for the Interest will be the issue of two million
        common  shares
        in
        the issued capital of Texhoma and the payment of US$15,000  (fifteen
        thousand United 

      States
        dollars):

      

      

       

      
 

      

                                                                            Texhoma
          Energy, Inc.
          TXHE:OTCBB

                                                                             120,
          2411 Fountainview
          Drive

                                                                             Houston,
          TX 77057

        

                                                                            Investor
          Relations:
          1-866-685-8943

                                                                            Fax:
          604-688-4725

      

    

     

    
      
        
        

      

      
        EX
          - 2 - 10.1

        
          

        

      

      
        
        

      

    

     

    

     

     

     

    Signed: /s/ Frank A. Jacobs                                   Accepted:
/s/Mr.
      Peter Wilson

    Frank A. Jacobs, Executive
      Chairman                                                                  
Mr. Peter Wilson

    Texhoma Energy,
      Inc.                                                                                          
Sterling Grant

     

     

    Witness:_______________________                            Witness:_______________________

     

    Date: January 20,
      2006                                                                                             
Date: January 20, 2006

     

    
      
        
        

      

      
        EX
          - 3 - 10.1

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