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EXHIBIT 99.1
1995 LONG-TERM INCENTIVE COMPENSATION PLAN
SECTION 1. PURPOSE
The purpose of the Puget Energy, Inc. 1995 Long-Term Incentive Compensation
Plan (the "Plan") is to enhance the long-term profitability and shareholder
value of Puget Energy, Inc., a Washington corporation (the "Company"), by
offering incentives and rewards to those employees of the Company and its
Subsidiaries (as defined in Section 5 of the Plan) who are key to the Company's
growth and success, and to encourage them to remain in the service of the
Company and its Subsidiaries and to acquire and maintain stock ownership in the
Company.
SECTION 2. ADMINISTRATION
2.1 Plan Administrator
The Plan shall be administered by a committee or committees (the "Plan
Administrator") (which term includes subcommittees) appointed by, and consisting
of one or more members of, the Company's Board of Directors (the "Board"). The
Board may delegate the responsibility for administering the Plan with respect to
designated classes of eligible Participants (as defined in Section 3 of the
Plan) to different committees, subject to such limitations as the Board deems
appropriate. Committee members shall serve for such term as the Board may
determine, subject to removal by the Board at any time. The composition of any
committee responsible for administering the Plan with respect to officers and
directors of the Company who are subject to Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), with respect to
securities of the Company shall comply with the requirements of Rule 16b-3 under
Section 16(b) of the Exchange Act.
2.2 Administration and Interpretation by the Plan Administrator
Except for the terms and conditions explicitly set forth in the Plan, the
Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Awards (as defined in Section 3 of the Plan)
under the Plan, including the selection of individuals to be granted Awards, the
type of Awards, the number of shares of the Company's common stock, par value
$.01 per share (the "Common Stock"), subject to an Award, all terms, conditions,
restrictions and limitations, if any, of an Award and the terms of any
instrument that evidences the Award, and to authorize the Trustee (the
"Trustee") of the 1995 Long-Term Incentive Compensation Plan Trust, a trust
established under the laws of the State of Washington (the "Trust"), to grant
Awards. The Plan Administrator shall also have exclusive authority to interpret
the Plan and may from time to time adopt, and change, rules and regulations of
general application for the Plan's administration. The Plan Administrator's
interpretation of the Plan and its rules and regulations, and all actions taken
and determinations made by the Plan Administrator pursuant to the Plan, shall be
conclusive and binding on all parties involved or affected. The Plan
Administrator may delegate administrative duties to such of the Company's
officers as it so determines.
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SECTION 3. AWARDS
3.1 Form and Grant of Awards
The Plan Administrator shall have the authority, in its sole discretion, to
determine the type or types of awards (an "Award") to be made under the Plan,
which may include, but are not limited to, Stock Awards, Performance Awards,
Other Stock-Based Awards (including any Dividend Equivalent Rights granted in
connection with such Awards) as those terms are defined in Sections 6, 7, 8 and
9, respectively, of the Plan. Awards may be granted singly, in combination or in
tandem so that the settlement or payment of one automatically reduces or cancels
the other. Awards may also be made in combination or in tandem with, in
replacement of, as alternatives to, or as the payment form for, grants or rights
under any other employee or compensation plan of the Company. For purposes of
the Plan, a "Participant" means an individual who is a Holder of an Award or, as
the context may require, any employee of the Company or a Subsidiary who has
been designated by the Plan Administrator as eligible to participate in the
Plan, and a "Holder" means the Participant to whom an Award is granted, or the
personal representative of a Holder who has died.
3.2 Acquired Company Awards
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Awards under the Plan in substitution for awards issued
under other plans, or assume under the Plan awards issued under other plans, if
the other plans are or were plans of other entities ("Acquired Entities") (or
the parent of the Acquired Entity) and the new Award is substituted, or the old
award is assumed, by reason of a merger, consolidation, acquisition of property
or of stock, reorganization or liquidation (the "Acquisition Transaction"). In
the event that a written agreement pursuant to which the Acquisition Transaction
is completed is approved by the Board and said agreement sets forth the terms
and conditions of the substitution for or assumption of outstanding awards of
the Acquired Entity, said terms and conditions shall be deemed to be the action
of the Plan Administrator without any further action by the Plan Administrator,
except as may be required for compliance with Rule 16b-3 under the Exchange Act,
and the persons holding such Awards shall be deemed to be Participants and
Holders.
3.3 1995 Long-Term Incentive Compensation Plan Trust
Awards may be, but need not be, paid to the Trustee, such payments to be
used by the Trustee to purchase shares of the Common Stock. Shares purchased by
the Trustee pursuant to the terms of the Trust ("Trustee Shares") shall be held
for the benefit of Participants, and shall be distributed to Participants or
their beneficiaries by the Trustee at the direction of the Plan Administrator in
accordance with the terms and conditions of the Awards. Awards may also be made
in units that are redeemable (in whole or part) in Trustee Shares.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 Authorized Number of Shares
Subject to adjustment from time to time as provided in Section 11.1 of the
Plan, the maximum number of shares of Common Stock that may be purchased by the
Trustee as Trustee Shares for purposes of the Plan shall be 500,000. Common
Stock shall be purchased by the Trustee on the open market. The Company shall
not issue any Common Stock under the Plan to the Trust or to any Participant,
nor shall the Company purchase any Trustee Shares from the Trust.
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4.2 Limitations
Subject to adjustment from time to time as provided in Section 11.1 of the
Plan, no Awards denominated in stock that constitute more than 40,000 shares of
Common Stock shall be payable to any individual Participant in any one fiscal
year of the Company, and no Awards denominated in cash that have an aggregate
maximum dollar value in excess of $400,000 shall be payable to any individual
Participant in any one fiscal year of the Company, such limitations to be
applied in a manner consistent with the requirements of, and only to the extent
required for compliance with, the exclusion from the limitation on deductibility
of compensation under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code").
4.3 Reuse of Shares
Any shares of Common Stock that have been made subject to an Award that
cease to be subject to the Award (other than by reason of exercise or payment of
the Award to the extent it is exercised for or settled in shares), including,
without limitation, in connection with the cancellation of an Award and the
grant of a replacement Award, shall again be available for issuance in
connection with future grants of Awards under the Plan. Shares that are subject
to tandem Awards shall be counted only once.
SECTION 5. ELIGIBILITY
Awards may be granted under the Plan to those officers and key employees
(including directors who are also employees) of the Company and its Subsidiaries
as the Plan Administrator from time to time selects. For purposes of the Plan,
"Subsidiary," except as expressly provided otherwise, means any entity that is
directly or indirectly controlled by the Company or in which the Company has a
significant ownership interest, as determined by the Plan Administrator, and any
entity that may become a direct or indirect parent of the Company.
SECTION 6. STOCK AWARDS
6.1 Grant of Stock Awards
The Plan Administrator is authorized to grant Awards of Common Stock
("Stock Awards") to Participants on such terms and conditions, and subject to
such restrictions, if any (whether based on performance standards, periods of
service or otherwise), as the Plan Administrator shall determine, which terms,
conditions and restrictions shall be set forth in the instrument evidencing the
Award (shares subject to such restrictions are referred to herein as "Restricted
Stock"). The terms, conditions and restrictions that the Plan Administrator
shall have the power to determine shall include, without limitation, the manner
in which shares subject to Stock Awards are held during the periods they are
subject to restrictions and the circumstances under which forfeiture of
Restricted Stock shall occur by reason of termination of the Holder's
employment.
6.2 Issuance of Shares
Upon the satisfaction of any terms, conditions and restrictions prescribed
in respect to a Stock Award, or upon the Holder's release from any terms,
conditions and restrictions of a Stock Award, as determined by the Plan
Administrator, the Company shall deliver, as soon as practicable, to the Holder
or, in the case of the Holder's death, to the personal representative of the
Holder's estate
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or as the appropriate court directs, a stock certificate for the appropriate
number of shares of Common Stock.
6.3 Waiver of Restrictions
Notwithstanding any other provisions of the Plan, the Plan Administrator
may, in its sole discretion, waive the forfeiture period and any other terms,
conditions and restrictions on any Restricted Stock under such circumstances and
subject to such terms and conditions as the Plan Administrator shall deem
appropriate.
SECTION 7. PERFORMANCE AWARDS
7.1 Plan Administrator Authority
Awards made under this Section 7 ("Performance Awards") may be denominated
in cash, shares of Common Stock or any combination thereof. The Plan
Administrator is authorized to grant Performance Awards and shall determine the
nature, length and starting date of the performance period for each Performance
Award and the performance objectives to be used in valuing Performance Awards
and determining the extent to which such Performance Awards have been earned.
Performance objectives and other terms may vary from Participant to Participant
and between groups of Participants. Performance objectives shall be based on
profits, profit growth, profit-related return ratios, cash flow or total
shareholder return, whether applicable to the Company or any relevant Subsidiary
or business unit, comparisons with competitor companies or groups and with stock
market indices, or any combination thereof, as the Plan Administrator deems
appropriate. Additional performance measures may be used to the extent their use
would comply with the exclusion from the limitation on deductibility of
compensation under Section 162(m) of the Code. Performance periods may overlap
and Participants may participate simultaneously with respect to Performance
Awards that are subject to different performance periods and different
performance factors and criteria. The Plan Administrator shall determine for
each Performance Award the range of dollar values or number of shares of Common
Stock (which may, but need not, be shares of Restricted Stock pursuant to
Section 6 of the Plan), or a combination thereof, to be received by the
Participant at the end of the performance period if and to the extent that the
relevant measures of performance for such Performance Awards are met. The
performance measures must include a minimum performance standard below which no
payment will be made and a maximum performance level above which no increased
payment will be made, such limitation to be applied in a manner consistent with
the requirements of, and to the extent required for compliance with, the
exclusion from the limitation on deductibility of compensation under Section
162(m) of the Code. The earned portion of a Performance Award may be paid
currently or on a deferred basis with such interest or earnings equivalent as
may be determined by the Plan Administrator. Payment shall be made in the form
of cash, whole shares of Common Stock (which may, but need not, be shares of
Restricted Stock pursuant to Section 6 of the Plan), or any combination thereof,
either in a single payment or in annual installments, all as the Plan
Administrator shall determine.
7.2 Adjustment of Awards
The Plan Administrator may adjust the performance goals and measurements
applicable to Performance Awards to take into account changes in law and
accounting and tax rules and to make such adjustments as the Plan Administrator
deems necessary or appropriate to reflect the inclusion or exclusion of the
impact of extraordinary or unusual items, events or circumstances, except that,
to the extent required for compliance with the exclusion from the limitation on
deductibility of
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compensation under Section 162(m) of the Code, no adjustment shall be made that
would result in an increase in the compensation of any Participant whose
compensation is subject to such limitation for the applicable year. The Plan
Administrator also may adjust the performance goals and measurements applicable
to Performance Awards and thereby reduce the amount to be received by any
Participant pursuant to such Awards if and to the extent that the Plan
Administrator deems it appropriate.
7.3 Payout Upon Termination
The Plan Administrator shall establish and set forth in each instrument
that evidences a Performance Award whether the Award will be payable, and the
terms and conditions of such payment, if a Holder ceases to be employed by the
Company or its Subsidiaries, which provisions may be waived or modified by the
Plan Administrator at any time. If not so established in the instrument
evidencing the Performance Award, the Award will be payable according to the
following terms and conditions, which may be waived or modified by the Plan
Administrator at any time. If during a performance period a Participant's
employment with the Company terminates by reason of the Participant's
Retirement, Early Retirement at the Company's request, Disability, position
elimination or death, such Participant shall be entitled to a payment with
respect to each outstanding Performance Award at the end of the applicable
performance period (a) based, to the extent relevant under the terms of the
Performance Award, on the Participant's performance for the portion of such
performance period ending on the date of termination and (b) prorated for the
portion of the performance period during which the Participant was employed by
the Company, all as determined by the Plan Administrator. For purposes of the
Plan, "Retirement" and "Disability" mean "retirement" and "disability" as those
terms are defined in the Company's Investment Plan for Employees or other
similar successor plan applicable to salaried employees, and "Early Retirement"
means "early retirement" as that term is defined by the Plan Administrator from
time to time for purposes of the Plan. The Plan Administrator may provide for an
earlier payment in settlement of such Performance Award discounted at a
reasonable interest rate and otherwise in such amount and under such terms and
conditions as the Plan Administrator deems appropriate. Except as otherwise
provided in Section 11 of the Plan or in the instrument evidencing the
Performance Award, if during a performance period a Participant's employment
with the Company terminates other than by reason of the Participant's
Retirement, Early Retirement at the Company's request, Disability, position
elimination or death, then such Participant shall not be entitled to any payment
with respect to the Performance Awards relating to such performance period,
unless the Plan Administrator shall otherwise determine. In case of termination
of the Holder's employment for Cause, the Performance Award shall automatically
terminate upon first notification to the Holder of such termination, unless the
Plan Administrator determines otherwise.
For purposes of the Plan, "Cause" means dishonesty, fraud, misconduct,
unauthorized use or disclosure of confidential information or trade secrets, or
conviction or confession of a crime punishable by law (except minor violations),
in each case as determined by the Plan Administrator, whose determination shall
be conclusive and binding. If a Holder's employment with the Company is
suspended pending an investigation of whether the Holder shall be terminated for
Cause, all of the Holder's rights under any Performance Award likewise shall be
suspended during the period of investigation. A transfer of employment between
or among the Company and its Subsidiaries shall not be considered a termination
of employment. Unless the Plan Administrator determines otherwise, a leave of
absence approved in accordance with Company procedures shall not be considered a
termination of employment.
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SECTION 8. OTHER STOCK-BASED AWARDS
The Plan Administrator may grant other Awards under the Plan ("Other Stock-
Based Awards") pursuant to which shares of Common Stock (which may, but need
not, be shares of Restricted Stock pursuant to Section 6 of the Plan) are or may
in the future be acquired, or Awards denominated in stock units, including
Awards valued using measures other than market value. Such Other Stock-Based
Awards may be granted alone or in addition to or in tandem with any Award of any
type granted under the Plan and must be consistent with the Plan's purpose.
SECTION 9. DIVIDEND EQUIVALENT RIGHTS
Any Awards under the Plan may, in the Plan Administrator's discretion, earn
Dividend Equivalent Rights ("Dividend Equivalent Rights"). In respect of any
Award that is outstanding on the dividend record date for Common Stock, the
Participant may be credited with an amount equal to the cash or stock dividends
or other distributions that would have been paid on the shares of Common Stock
covered by such Award had such covered shares been issued and outstanding on
such dividend record date. The Plan Administrator shall establish such rules and
procedures governing the crediting of Dividend Equivalent Rights, including the
timing, form of payment and payment contingencies of such Dividend Equivalent
Rights, as it deems are appropriate or necessary.
SECTION 10. ASSIGNABILITY
No Performance Award, Other Stock-Based Award or Dividend Equivalent Right
granted under the Plan may be assigned or transferred by the Holder other than
by will or by the laws of descent and distribution and, during the Holder's
lifetime, such Awards may be exercised only by the Holder. Notwithstanding the
foregoing, and to the extent permitted by Rule 16b-3 under the Exchange Act, the
Plan Administrator, in its sole discretion, may permit such assignment, transfer
and exercisability and may permit a Holder of such Awards to designate a
beneficiary who may exercise the Award or receive compensation under the Award
after the Holder's death.
SECTION 11. ADJUSTMENTS
11.1 Adjustment of Shares
In the event that at any time or from time to time a stock dividend, stock
split, spin-off, combination or exchange of shares, recapitalization, merger,
consolidation, distribution to shareholders other than a normal cash dividend,
or other change in the Company's corporate or capital structure results in (a)
the outstanding shares, or any securities exchanged therefor or received in
their place, being exchanged for a different number or class of securities of
the Company or of any other corporation or (b new, different or additional
securities of the Company or of any other corporation being received by the
holders of shares of Common Stock, then the Plan Administrator, in its sole
discretion, shall make such equitable adjustments as it shall deem appropriate
under the circumstances in (i) the maximum number of and class of securities
subject to the Plan as set forth in Section 4.1 of the Plan, (ii) the maximum
number and class of securities and dollar amount subject to Awards that may be
paid to any individual Participant as set forth in Section 4.2 of the Plan, and
(iii) the number and class of securities that are subject to any outstanding
Award and the per share price of such securities, without any change in the
aggregate price to be paid therefor. The determination by the Plan Administrator
as to the terms of any of the foregoing adjustments shall be conclusive and
binding.
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11.2 Corporate Transaction
Except as otherwise provided in the instrument that evidences an Award, in
the event of any Corporate Transaction (as defined below), each Stock Award that
is at the time outstanding shall automatically accelerate so that each such
Award shall, immediately prior to the specified effective date for the Corporate
Transaction, become 100% vested, except that such acceleration will not occur if
in the opinion of the Company's accountants it would render unavailable "pooling
of interest" accounting for a Corporate Transaction that would otherwise qualify
for such accounting treatment. Such Award shall not so accelerate, however, if
and to the extent: (a) such Award is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation or parent thereof
or to be replaced with a comparable award for the purchase of shares of the
capital stock of the successor corporation or its parent corporation, (b) such
Award is to be replaced with a cash incentive program of the successor
corporation that preserves the value existing at the time of the Corporate
Transaction and provides for subsequent payout in accordance with the same
vesting schedule applicable to such Award, or (c) the acceleration of such Award
is subject to other limitations imposed by the instrument evidencing the Award.
The determination of Award comparability under clause (a) above shall be made by
the Plan Administrator, and its determination shall be conclusive and binding.
All such Awards shall terminate and cease to remain outstanding immediately
following the consummation of the Corporate Transaction, except to the extent
assumed by the successor corporation or its parent corporation. Any such Awards
that are assumed or replaced in the Corporate Transaction and do not otherwise
accelerate at that time shall be accelerated in the event the Holder's
employment should subsequently terminate within two years following such
Corporate Transaction, unless such employment is terminated by the Company for
Cause or by the Holder voluntarily without Good Reason (as defined below).
For purposes of the Plan, "Corporate Transaction" means any of the
following events:
(a) Approval by the holders of Common Stock of any merger or consolidation
of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of Common Stock are converted into cash,
securities or other property, other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have substantially the
same proportionate ownership of common stock of the surviving corporation
immediately after the merger;
(b) Approval by the holders of Common Stock of any sale, lease, exchange
or other transfer in one transaction or a series of related transactions of all
or substantially all of the Company's assets other than a transfer of the
Company's assets to a majority-owned subsidiary (as the term "subsidiary" is
defined for purposes of Section 422 of the Code) of the Company; or
(c) Approval by the holders of Common Stock of any plan or proposal for
the liquidation or dissolution of the Company.
Also for purposes of the Plan, "Good Reason" means the occurrence of any of
the following events or conditions:
(a) a change in the Holder's status, title, position or responsibilities
(including reporting responsibilities) that, in the Holder's reasonable
judgment, represents a substantial reduction of the status, title, position or
responsibilities as in effect immediately prior thereto; the assignment to the
Holder of any duties or responsibilities that, in the Holder's reasonable
judgment, are inconsistent with such status, title, position or
responsibilities; or any removal of the Holder from or failure to
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reappoint or reelect the Holder to any of such positions, except in connection
with the termination of the Holder's employment for Cause, for Disability or as
a result of his or her death, or by the Holder other than for Good Reason;
(b) a reduction in the Holder's annual base salary;
(c) the Company's requiring the Holder (without the Holder's consent) to
be based at any place outside a 35-mile radius of his or her place of employment
prior to a Corporate Transaction, except for reasonably required travel on the
Company's business that is not materially greater than such travel requirements
prior to the Corporate Transaction;
(d) the Company's failure to (i) continue in effect any material
compensation or benefit plan (or the substantial equivalent thereof) in which
the Holder was participating at the time of a Corporate Transaction, including,
but not limited to, the Plan, or (ii) provide the Holder with compensation and
benefits at least equal (in terms of benefit levels and/or reward opportunities)
to those provided for under each employee benefit plan, program and practice as
in effect immediately prior to the Corporate Transaction (or as in effect
following the Corporate Transaction, if greater);
(e) any material breach by the Company of any provision of the Plan; or
(f) any purported termination of the Holder's employment for Cause by the
Company that does not comply with the terms of the Plan.
11.3 Further Adjusting of Awards
Without limiting the preceding Section 11.2 of the Plan, and subject to the
limitations set forth in Section 7 of the Plan, the Plan Administrator shall
have the discretion, exercisable at any time before a sale, merger,
consolidation, reorganization, liquidation or change in control of the Company,
as defined by the Plan Administrator, to take such further action as it
determines to be necessary or advisable, and fair and equitable to Participants,
with respect to Awards. Such authorized action may include (but shall not be
limited to) establishing, amending or waiving the type, terms, conditions or
duration of, or restrictions on, Awards so as to provide for earlier, later,
extended or additional time for exercise, payment or settlement or lifting
restrictions, differing methods for calculating payments or settlements,
alternate forms and amounts of payments and settlements and other modifications,
and the Plan Administrator may take such actions with respect to all
Participants, to certain categories of Participants or only to individual
Participants. The Plan Administrator may take such actions before or after
granting Awards to which the action relates and before or after any public
announcement with respect to such sale, merger, consolidation, reorganization,
liquidation or change in control that is the reason for such action.
11.4 Limitations
The grant of Awards will in no way affect the Company's right to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
SECTION 12. WITHHOLDING OF TAXES
The Company may require the Holder to pay to the Company the amount of any
withholding taxes that the Company is required to withhold with respect to the
grant, exercise, payment or
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settlement of any Award. In such instances, the Plan Administrator may, in its
discretion and subject to the Plan and applicable law, permit the Holder to
satisfy withholding obligations, in whole or in part, by paying cash, by
electing to have the Company withhold shares of Common Stock or by transferring
shares of Common Stock to the Company, in such amounts as are equivalent to the
Fair Market Value of the withholding obligation. For purposes of the Plan, "Fair
Market Value" means the mean of the high and low per share trading prices for
the Common Stock as reported in The Wall Street Journal for the New York Stock
Exchange--Composite Transactions (or similar successor consolidated transactions
reports) for a single trading day.
SECTION 13. AMENDMENT AND TERMINATION OF PLAN
13.1 Amendment of Plan
The Plan may be amended by the shareholders of the Company. The Board may
also amend the Plan in such respects as it shall deem advisable; however, to the
extent required for compliance with Rule 16b-3 under the Exchange Act or any
applicable law or regulation, shareholder approval will be required for any
amendment that will (a) increase the total number of shares that may be used in
payment of Awards under the Plan, (b) materially modify the class of persons
eligible to receive Awards, (c) materially increase the benefits accruing to
Participants under the Plan, or (d) otherwise require shareholder approval under
any applicable law or regulation.
13.2 Termination of Plan
The Company's shareholders or the Board may suspend or terminate the Plan
at any time. The Plan will have no fixed expiration date.
13.3 Consent of Holder
The amendment or termination of the Plan shall not, without the consent of
the Holder of any Award under the Plan, alter or impair any rights or
obligations under any Award theretofore granted under the Plan.
SECTION 14. GENERAL
14.1 Notification
The Plan Administrator shall promptly notify a Participant of an Award, and
a written grant shall promptly be executed and delivered by or on behalf of the
Company.
14.2 Continued Employment:Rights in Awards
Neither the Plan, participation in the Plan as a Participant nor any action
of the Plan Administrator taken under the Plan shall be construed as giving any
Participant or employee of the Company any right to be retained in the employ of
the Company or limit the Company's right to terminate the employment of the
Participant.
14.3 Registration; Certificates for Shares
The Company shall be under no obligation to any Participant to register for
offering or resale under the Securities Act of 1933, as amended, or register or
qualify under state securities laws, any
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shares of Common Stock, security or interest in a security paid or issued under,
or created by, the Plan. The Company may issue certificates for shares with such
legends and subject to such restrictions on transfer and stop-transfer
instructions as counsel for the Company deems necessary or desirable for
compliance by the Company with federal and state securities laws.
14.4 No Rights as a Shareholder
No Performance Award, Other Stock-Based Award or Dividend Equivalent Right
shall entitle the Holder to any dividend (except to the extent provided in an
Award of Dividend Equivalent Rights), voting or other right of a shareholder
unless and until the date of issuance under the Plan of the shares that are the
subject of such Award, free of all applicable restrictions.
14.5 Compliance with Laws and Regulations
It is the Company's intention that, so long as any of the Company's equity
securities are registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, the Plan shall comply in all respects with Rule 16b-3 under the Exchange
Act and, if any Plan provision is later found not to be in compliance with Rule
16b-3, the provision shall be deemed null and void, and in all events the Plan
shall be construed in favor of its meeting the requirements of Rule 16b-3.
Notwithstanding anything in the Plan to the contrary, the Board, in its sole
discretion, may bifurcate the Plan so as to restrict, limit or condition the use
of any provision of the Plan to Participants who are officers or directors
subject to Section 16 of the Exchange Act without so restricting, limiting or
conditioning the Plan with respect to other Participants.
14.6 Unfunded Plan
The Plan is intended to constitute an "unfunded" plan. Nothing contained
herein shall require the Company to segregate any monies or other property, or
shares of Common Stock, or to create any trusts, or to make any special deposits
for any immediate or deferred amounts payable to any Participant, and no
Participant shall have any rights that are greater than those of a general
unsecured creditor of the Company.
14.7 Governing Law
The Plan and all interpretations of its provisions shall be governed by the
laws of the state of Washington and applicable federal laws.
14.8 Severability
If any provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Award under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator's determination, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
person or Award, and the remainder of the Plan and any such Award shall remain
in full force and effect.
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SECTION 15. EFFECTIVE DATE
The Plan's effective date is the date on which it is adopted by the Board,
so long as it is approved by the Company's shareholders, to the extent required
for compliance with Rule 16b-3 under the Exchange Act and Section 162(m) of the
Code, at the next annual meeting of the Company's shareholders after adoption of
the Plan by the Board.
