PUGET ENERGY, INC. RESTRICTED STOCK AWARD AGREEMENT
Exhibit
10.56
PUGET
ENERGY, INC.
TO: Xxxxxxxx
X. Xxxxxxx
We
are
pleased to inform you that you have been awarded by Puget Energy, Inc., a
Washington corporation (the "Company"), a restricted stock award (the
"Restricted Stock Award").
The
terms
of the Restricted Stock Award are as set forth in this Restricted Stock Award
Agreement (this "Agreement"). The Restricted Stock Award is granted under the
Company's Amended and Restated 1995 Long-Term Incentive Compensation Plan (the
"Plan") and, except as expressly provided otherwise herein, is limited by and
subject to the express terms and conditions of the Plan. Capitalized terms
that
are not defined in this Agreement but defined in the Plan have the meanings
given to them in the Plan.
The
basic
terms of the Restricted Stock Award are summarized as follows:
1. |
Number
of Shares: 10,000
|
2. |
Grant
Date: December
4, 2003
|
3. |
Fair
Market Value Per Share: $23.42
|
4. |
Vesting
|
The
Restricted Stock Award is subject to forfeiture upon varying circumstances
relating to your termination of employment with the Company. The restrictions
on
the shares will lapse and no longer be subject to forfeiture according to the
following schedule:
Date on Which Portion of Restricted
Stock
Award Is No Longer Subject
to
Forfeiture
|
% of Restricted Stock
Award
No Longer
Subject
to Forfeiture
|
One
year from Grant Date
|
20%
|
Two
years from Grant Date
|
40%
|
Three
years from Grant Date
|
60%
|
Four
years from Grant Date
|
80%
|
Five
years from Grant Date
|
100%
|
Shares
that have vested and are no longer subject to forfeiture according to the above
schedule are referred to herein as "Vested Shares." Shares that are not vested
and remain subject to forfeiture under the preceding schedule are referred
to
herein as "Unvested Shares." The Unvested Shares will vest (and to the extent
so
vested cease to be Unvested Shares remaining subject to forfeiture) in
accordance with the above schedule. Collectively, the Unvested Shares and the
Vested Shares are referred to herein as the "Shares."
5. |
Termination
of Employment; Change of
Control
|
5.1 |
Termination
of Employment
|
Except
as
provided in Sections 5.2 and 5.3 below, the portion of the Restricted Stock
Award subject to forfeiture shall be forfeited by you to the Company upon the
termination of your employment for any reason, including without limitation,
termination by the Company for Cause (as defined in the Agreement), voluntary
resignation by you or the occurrence of your death or Disability (as defined
in
the Agreement).
5.2 |
Change
of Control
|
Upon
a
Change of Control (as defined below) of the Company, the vesting of your
Restricted Stock Award will accelerate and become fully vested.
A
Change
of Control shall mean the occurrence of any one of the following actions or
events:
(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 20% or more of either (A) the Company's
outstanding common stock or (B) the Company's outstanding voting
securities; provided, however, that the following acquisitions shall
not
constitute a Change of Control: (x) any acquisition of securities by
the Company, (y) any acquisition of securities 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 (1), (2)
and (3) of subsection (iii) of this Section 6.2 are satisfied;
or
|
(ii)
|
A
"Board Change" that shall have occurred if a majority of the seats
on the
Board are occupied by individuals who were neither (1) nominated by a
majority of the Incumbent Directors nor (2) appointed by directors so
nominated ("Incumbent Director" means a member of the Board who has
been
either (x) nominated by a majority of the directors of the Company
then in office or (y) 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 Securities Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of
a Person
other than the Board); or
|
(iii)
|
Approval
by the shareholders of the Company of a Business Combination (which
means
(A) a reorganization, exchange of securities, merger, consolidation
or
other business combination involving the Company or (B) the sale
or other
disposition of all or substantially all the assets of the Company
or Puget
Sound Energy) 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 66-2/3% 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 common stock of the Company and
outstanding voting securities of the Company 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 of the Company and outstanding voting securities,
as the case may be, (2) no Person (excluding the Company and any
employee benefit plan (or related trust) of the Company or its affiliates)
beneficially owns, directly or indirectly, 20% 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 Company
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.
|
6. |
Securities
Law Compliance
|
Notwithstanding
any other provision of this Letter Agreement, you may not sell the Shares unless
they are registered under the Securities Act or, if such Shares are not then
so
registered, the Company has determined that such sale would be exempt from
the
registration requirements of the Securities Act. The sale of the Shares must
also comply with other applicable laws and regulations governing the Shares,
and
you may not sell the Shares if the Company determines that such sale would
not
be in material compliance with such laws and regulations.
7. |
Transfer
Restrictions
|
Any
sale,
transfer, assignment, encumbrance, pledge, hypothecation, conveyance in trust,
gift, transfer by bequest, devise or descent, or other transfer or disposition
of any kind, whether voluntary or by operation of law, directly or indirectly,
of Unvested Shares shall be strictly prohibited and void; however, such
restrictions on transfer will not apply to a gratuitous transfer of the Shares;
provided, that you obtain the Company's prior written consent to such
transfer.
8. |
Section 83(b)
Election for Restricted Stock Award
|
You
understand that under Section 83(a) of the Code, the excess of the fair
market value of the Unvested Shares on the date the forfeiture restrictions
lapse over the amount paid for such Shares on the Grant Date will be taxed,
on
the date such forfeiture restrictions lapse, as ordinary income subject to
payroll and withholding tax and tax reporting, as applicable. For this purpose,
the term "forfeiture restrictions" means the right of the Company to receive
back any Unvested Shares upon termination of your employment with the Company.
You understand that you may elect under Section 83(b) of the Code to be
taxed at ordinary income rates on the fair market value of the Unvested Shares
at the time they are acquired, rather than when and as the Unvested Shares
cease
to be subject to the forfeiture restrictions. Such election (an "83(b)
Election") must be filed with the Internal Revenue Service within
30 days
from the
Grant Date of the Restricted Stock Award.
You
understand that (a) you will not be entitled to a deduction for any ordinary
income previously recognized as a result of the 83(b) Election if the Unvested
Shares are subsequently forfeited to the Company and (b) the 83(b) Election
may
cause you to recognize more compensation income than you would have otherwise
recognized if the value of the Unvested Shares subsequently
declines.
THE
FORM FOR MAKING AN 83(b) ELECTION IS ATTACHED TO THIS AGREEMENT AS EXHIBIT
B.
YOU UNDERSTAND THAT FAILURE TO FILE SUCH AN ELECTION WITHIN THE 30-DAY PERIOD
MAY RESULT IN THE RECOGNITION OF ORDINARY INCOME BY YOU AS THE FORFEITURE
RESTRICTIONS LAPSE.
You
further understand that an additional copy of such election form should be
filed
with your federal income tax return for the calendar year in which the date
of
this Agreement falls. You acknowledge that the foregoing is only a summary
of
the federal income tax laws that apply to the award of the Shares under this
Agreement and does not purport to be complete.
YOU
FURTHER ACKNOWLEDGE THAT THE COMPANY HAS DIRECTED YOU TO SEEK INDEPENDENT ADVICE
REGARDING THE APPLICABLE PROVISIONS OF THE CODE, THE INCOME TAX LAWS OF ANY
MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH YOU MAY RESIDE, AND THE TAX
CONSEQUENCES OF YOUR DEATH.
You
agree
to execute and deliver to the Company with this Agreement a copy of the
Acknowledgment and Statement of Decision Regarding Section 83(b) Election (the
"Acknowledgment") attached hereto as Exhibit A. You further agree that you
will execute and deliver to the Company with this Agreement a copy of the 83(b)
Election attached hereto as Exhibit B if you choose to make such an
election.
9. |
Assignment
Separate From Certificate
|
As
security for the faithful performance of this Agreement, you agree, upon
execution of this Agreement, to deliver a stock power in the form attached
as
Exhibit C, executed by you and your spouse, if any (with
the transferee, certificate number, date and number of Shares left
blank),
along
with any certificate(s) evidencing shares issued to you, to the Secretary of
the
Company or its designee ("Escrow Holder"), who is hereby appointed to hold
such
stock power and any such certificate(s) in escrow and to take all such actions
and to effectuate all such transfers and/or releases of such Shares as are
in
accordance with the terms of this Agreement. You and the Company agree that
Escrow Holder shall not be liable to any party to this Agreement (or to any
other party) for any actions or omissions unless Escrow Holder is grossly
negligent relative thereto. Escrow Holder may rely on any letter, notice or
other document executed by any signature purported to be genuine and may rely
on
advice of counsel and obey any order of any court with respect to the
transactions contemplated in this Agreement. The Shares may be released from
escrow as they cease to be Unvested Shares.
10. |
Legends
|
You
understand and agree that the Unvested Shares are subject to forfeiture and
that
the certificate(s) representing the Unvested Shares will bear a legend in
substantially the following form:
"The
securities represented by this certificate are subject to certain restrictions
on transfer and forfeiture restrictions and may not be sold, assigned,
transferred, encumbered or in any way disposed of except as set forth in a
restricted stock award agreement between the issuer and the original recipient
of these shares, a copy of which may be obtained at the principal office of
the
issuer. Such transfer restrictions and forfeiture restrictions are binding
on
transferees of these shares."
11. |
Stop-Transfer
Notices
|
You
understand and agree that, in order to ensure compliance with the restrictions
referred to in this Agreement, the Company may issue appropriate "stop-transfer"
instructions to its transfer agent, if any, and that, if the Company transfers
its own securities, it may make appropriate notations to the same effect in
its
own records. The Company will not be required to (a) transfer on its books
any Shares that have been sold or transferred in violation of the provisions
of
this Agreement or (b) treat as the owner of the Shares, or otherwise accord
voting, dividend or liquidation rights to, any transferee to whom the Shares
have been transferred in contravention of this Agreement.
12. |
Independent
Tax Advice
|
You
acknowledge that determining the actual tax consequences to you of receiving
or
disposing of the Shares may be complicated. These tax consequences will depend,
in part, on your specific situation and may also depend on the resolution of
currently uncertain tax law and other variables not within the control of the
Company. You are aware that you should consult a competent and independent
tax
advisor for a full understanding of the specific tax consequences to you of
receiving or disposing of the Shares. Prior to executing this Agreement, you
either have consulted with a competent tax advisor independent of the Company
to
obtain tax advice concerning the Shares in light of your specific situation
or
have had the opportunity to consult with such a tax advisor but have chosen
not
to do so.
13. |
Withholding
and Disposition of Shares
|
You
agree
to make arrangements satisfactory to the Company for the payment of any federal,
state, local or foreign withholding tax obligations that arise either upon
receipt of the Shares or as the forfeiture restrictions on any Shares lapse.
In
accordance with the Plan, you may use Vested Shares as a means to pay any
applicable tax withholding obligations due hereunder.
14. |
General
Provisions
|
14.1 |
Notices
|
Any
notice required in connection with (a) the Company's forfeiture rights or
(b) the disposition of any Shares covered thereby will be given in writing
and will be deemed effective upon personal delivery or upon deposit in the
U.S.
mail, registered or certified, postage prepaid and addressed to the party
entitled to such notice at the address indicated in this Agreement or at such
other address as such party may designate by ten days' advance written notice
under this Section 15.1 to all other parties to this
Agreement.
14.2 |
No
Waiver
|
No
waiver
of any provision of this Agreement will be valid unless in writing and signed
by
the person against whom such waiver is sought to be enforced, nor will failure
to enforce any right hereunder constitute a continuing waiver of the same or
a
waiver of any other right hereunder.
14.3 |
Undertaking
|
You
hereby agree to take whatever additional action and execute whatever additional
documents the Company may deem necessary or advisable in order to carry out
or
effect one or more of the obligations or restrictions imposed on either you
or
the Shares pursuant to the express provisions of this Agreement.
14.4 |
Entire
Contract
|
This
Agreement, the Plan and the Agreement constitute the entire contract between
the
parties hereto with regard to the subject matter hereof. This Agreement is
made
pursuant to the provisions of the Plan and will in all respects be construed
in
conformity with the express terms and provisions of the Plan.
14.5 |
Successors
and Assigns
|
The
provisions of this Agreement will inure to the benefit of, and be binding on,
the Company and its successors and assigns and you and your legal
representatives, heirs, legatees, distributees, assigns and transferees by
operation of law, whether or not any such person will have become a party to
this Agreement and agreed in writing to join herein and be bound by the terms
and conditions hereof.
14.6 |
Shareholder
of Record
|
You
will
be recorded as a shareholder of the Company and will have, subject to the
provisions of this Agreement and the Plan, all the rights of a shareholder
with
respect to the Shares.
14.7 |
Counterparts
|
This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original, but which, upon execution, will constitute one and the
same
instrument.
14.8 |
Governing
Law
|
This
Agreement will be governed by and construed in accordance with the laws of
the
State of Washington.
IN
WITNESS WHEREOF, the parties have executed this Agreement dated December 4,
2003.
PUGET
ENERGY, INC.
|
||
By:
|
/s/
Xxxxxxxx Xxxxxxxx
|
|
Xxxxxxxx
Xxxxxxxx
|
||
Title:
|
Vice
President, Human Resources & Labor
Relations
|
XXXXXXXX
X. XXXXXXX
|
/s/
Xxxxxxxx Xxxxxxx
|
||
Printed
Name:
|
Xxxxxxxx
Xxxxxxx
|
By
her
signature below, the spouse of the recipient of the Restricted Stock Award,
if
he is legally married as of the date of execution of this Agreement,
acknowledges that she has read this Agreement and the Plan and is familiar
with
the terms and provisions of this Agreement and the Plan, and agrees to be bound
by all the terms and conditions of this Agreement and the Plan.
Dated:
|
12-14-03
|
||
/s/
Xxxxxxxxx Xxxxxxx Xxxxxxx
|
|||
Spouse's
Signature
|
|||
Xxxxxxxxx
Xxxxxxx Xxxxxxx
|
|||
Printed
Name
|
By
his
signature below, recipient represents that he is not legally married as of
the
date of executing this Agreement.
Dated:
________________________________
Recipient's
Signature ______________________
EXHIBIT
A
ACKNOWLEDGMENT
AND STATEMENT OF DECISION REGARDING SECTION 83(b)
ELECTION
The
undersigned, a recipient of 10,000 shares of Common Stock of Puget Energy,
Inc.,
a Washington corporation (the "Company"), pursuant to a restricted stock award
granted under the terms of the Company's Amended and Restated Long-Term
Incentive Compensation Plan (the "Plan"), hereby states as follows:
1. The
undersigned acknowledges receipt of a copy of the Restricted Stock Award
Agreement and Plan relating to the offering of such shares. The undersigned
has
carefully reviewed the Plan and the Restricted Stock Award Agreement pursuant
to
which the award was granted.
2. The
undersigned either (check
and complete as applicable)
(a)
|
has
consulted, and has been fully advised by, the undersigned's own tax
advisor, ________________________, whose business address is
_________________________, regarding the federal, state and local
tax
consequences of receiving shares under the Plan, and particularly
regarding the advisability of making an election pursuant to
Section 83(b) of the Internal Revenue Code of 1986, as amended (the
"Code"), and pursuant to the corresponding provisions, if any, of
applicable state law, or
|
(b)
X
has
knowingly chosen not to consult such a tax advisor.
3. The
undersigned hereby states that the undersigned has decided (check
as applicable)
(a)
|
to
make an election pursuant to Section 83(b) of the Code, and is
submitting to the Company, together with the undersigned's executed
Restricted Stock Award Agreement, an executed form entitled "Election
Under Section 83(b) of the Internal Revenue Code of 1986",
or
|
(b)
X
not
to
make an election pursuant to Section 83(b) of the Code.
4. Neither
the Company nor any subsidiary or representative of the Company has made any
warranty or representation to the undersigned with respect to the tax
consequences of the undersigned's acquisition of shares under the Plan or of
the
making or failure to make an election pursuant to Section 83(b) of the Code
or the corresponding provisions, if any, of applicable state law.
Dated:
12-14-03
|
/s/
Xxxxxxxx Xxxxxxx
Recipient
|
Xxxxxxxx
Xxxxxxx
Print
Name
|
|
Dated:
12-14-03
|
/s/
Xxxxxxxxx Xxxxxxx Xxxxxxx
Spouse
of Recipient
|
Xxxxxxxxx
Xxxxxxx Xxxxxxx
Print
Name
|
EXHIBIT
B
ELECTION
UNDER SECTION 83(b)
OF
THE INTERNAL REVENUE CODE OF 1986
The
undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code, to include in taxpayer's gross income for the current
taxable year the amount of any compensation taxable to taxpayer in connection
with taxpayer's receipt of the property described below:
1.
|
The
name, address, taxpayer identification number and taxable year of
the
undersigned are as follows:
|
NAME
OF
TAXPAYER: ____________________________________
NAME
OF
SPOUSE: _______________________________________
ADDRESS:
______________________________________________
IDENTIFICATION
NO. OF TAXPAYER: ________________________
IDENTIFICATION
NO. OF SPOUSE: ___________________________
TAXABLE
YEAR: ___________
2.
|
The
property with respect to which the election is made is described
as
follows: 50,000 shares of the Common Stock of Puget Energy, Inc.,
a
Washington corporation (the
"Company").
|
3.
|
The
date on which the property was transferred is: January 8, 2002.
|
4.
|
The
property is subject to the following
restrictions:
|
The
property is subject to a forfeiture right pursuant to which the Company can
reacquire the Shares if for any reason taxpayer's services with the Company
are
terminated. The Company's right to receive back the shares lapses in a series
of
installments over a five-year period ending on January 1, 2007.
5.
|
The
aggregate fair market value at the time of transfer, determined without
regard to any restriction other than a restriction which by its terms
will
never lapse, of such property is: $1,137,000.00 (one million one
hundred
thirty seven thousand dollars)
|
6.
|
The
amount (if any) paid for such property is:
$0.00
|
The
undersigned has submitted a copy of this statement to the person for whom the
services were performed in connection with the undersigned's receipt of the
above-described property. The undersigned is the person performing the services
in connection with the transfer of said property.
The
undersigned understands that the foregoing election may not be revoked except
with the consent of the Commissioner of Internal Revenue.
Dated:
_______________
|
____________________
Taxpayer
|
Dated:
_______________
|
/s/
Xxxxxxxxx Xxxxxxx Xxxxxxx
Spouse
of Taxpayer
|
DISTRIBUTION
OF COPIES
1.
|
File
original with the Internal Revenue Service Center where the taxpayer's
income tax return will be filed. Filing must be made by no later
than 30
days after the date the property was
transferred.
|
2.
|
Attach
one
copy
to the taxpayer's income tax return for the taxable year in which
the
property was transferred.
|
3.
|
Mail
one copy to the Company at the following
address:
|
EXHIBIT
C
STOCK
POWER AND ASSIGNMENT
SEPARATE
FROM CERTIFICATE
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
_____________________, _________ shares of the Common Stock of Puget Energy,
Inc., a Washington corporation, standing in the undersigned's name on the books
of said corporation represented by Certificate No. ___ delivered herewith,
and does hereby irrevocably constitute the Secretary of said corporation as
attorney-in-fact, with full power of substitution, to transfer said stock on
the
books of said corporation.
Dated:
______________________________
Signature:
___________________________
Please
print name: _____________________
Spouse's
signature, if any: _______________
Please
print name: _____________________
Please
see Section 10 of the Restricted Stock Award Agreement for information on
completing this form.