exhibit101.htm


    
      Exhibit
        10.1

      EXECUTION
        VERSION


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      STOCK
        PURCHASE AGREEMENT

      


      by
        and
        among

      


      PUGET
        ENERGY, INC.

      


      and

      


      THE
        PURCHASERS NAMED HEREIN

      


      Dated
        as
        of October 25, 2007

       

       

       

       

       

       

       

       

       

       

       

       

       

       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      
        	
                Table
                  of Contents

              
	 	 	
                Page

              
	
                ARTICLE
                  I. DEFINITIONS

              	
                1

              
	
                Section
                  1.1.

              	
                Definitions

              	
                1

              
	
                ARTICLE
                  II. PURCHASE AND SALE OF THE SECURITIES

              	
                7

              
	
                Section
                  2.1.

              	
                Issuance
                  and Sale of Securities

              	
                7

              
	
                Section
                  2.2.

              	
                Registration
                  Rights

              	
                7

              
	
                Section
                  2.3.

              	
                Closing
                  and Delivery

              	
                7

              
	
                ARTICLE
                  III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

              	
                8

              
	
                Section
                  3.1.

              	
                Shares

              	
                9

              
	
                Section
                  3.2.

              	
                WKSI
                  Status

              	
                9

              
	
                Section
                  3.3.

              	
                Investment
                  Company

              	
                9

              
	
                Section
                  3.4.

              	
                Authority;
                  Non-Contravention; Approvals; Compliance

              	
                9

              
	
                Section
                  3.5.

              	
                Litigation

              	
                11

              
	
                Section
                  3.6.

              	
                Brokers
                  and Finders

              	
                11

              
	
                Section
                  3.7.

              	
                Additional
                  Representations

              	
                11

              
	
                Section
                  3.8.

              	
                No
                  Other Representations of the Company

              	
                11

              
	
                ARTICLE
                  IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

              	
                11

              
	
                Section
                  4.1.

              	
                Organization
                  and Qualification

              	
                11

              
	
                Section
                  4.2.

              	
                Authority;
                  Non-Contravention; Approvals; Compliance

              	
                11

              
	
                Section
                  4.3.

              	
                Litigation

              	
                13

              
	
                Section
                  4.4.

              	
                No
                  Vote Required

              	
                13

              
	
                Section
                  4.5.

              	
                Ownership
                  of Company Stock

              	
                13

              
	
                Section
                  4.6.

              	
                Purchase
                  for Investment

              	
                13

              
	
                Section
                  4.7.

              	
                Approvals

              	
                13

              
	
                Section
                  4.8.

              	
                Trustee
                  Power

              	
                13

              
	
                Section
                  4.9.

              	
                No
                  Other Representations of the Purchasers

              	
                14

              
	
                ARTICLE
                  V. COVENANTS

              	
                14

              
	
                Section
                  5.1.

              	
                Registration
                  Rights

              	
                14

              
	
                Section
                  5.2.

              	
                Reservation
                  of Company Stock

              	
                14

              
	
                Section
                  5.3.

              	
                Listing
                  of Shares

              	
                14

              
	
                Section
                  5.4.

              	
                Regulatory
                  Matters

              	
                14

              
	
                Section
                  5.5.

              	
                Voting

              	
                15

              
	
                Section
                  5.6.

              	
                WKSI
                  Status

              	
                15

              
	
                Section
                  5.7.

              	
                Use
                  of Proceeds

              	
                15

              
	
                Section
                  5.8.

              	
                Expenses

              	
                15

              
	
                Section
                  5.9.

              	
                Confidentiality

              	
                15

              
	
                Section
                  5.10.

              	
                Public
                  Announcement

              	
                16

              
	
                Section
                  5.11.

              	
                Purchasers'
                  Obligations Several

              	
                16

              
	
                ARTICLE
                  VI. CONDITIONS TO CLOSING OF THE PURCHASERS

              	
                17

              
	
                Section
                  6.1.

              	
                Representations
                  and Warranties Correct

              	
                17

              
	
                Section
                  6.2.

              	
                Performance

              	
                17

              
	
                Section
                  6.3.

              	
                Regulatory
                  Consents

              	
                17

              
	
                Section
                  6.4.

              	
                Authorizations

              	
                17

              
	
                Section
                  6.5.

              	
                Company
                  Material Adverse Effect

              	
                17

              
	
                Section
                  6.6.

              	
                Opinion
                  of Company’s Counsel

              	
                18

              
	
                Section
                  6.7.

              	
                No
                  Injunction

              	
                18

              
	
                Section
                  6.8.

              	
                Merger
                  Agreement

              	
                18

              
	
                Section
                  6.9.

              	
                Compliance
                  Certificate

              	
                18

              
	
                ARTICLE
                  VII. CONDITIONS TO CLOSING OF THE COMPANY

              	
                18

              
	
                Section
                  7.1.

              	
                Representations

              	
                18

              
	
                Section
                  7.2.

              	
                Performance

              	
                18

              
	
                Section
                  7.3.

              	
                Regulatory
                  Consents

              	
                18

              
	
                Section
                  7.4.

              	
                Authorizations

              	
                19

              
	
                Section
                  7.5.

              	
                No
                  Injunction

              	
                19

              
	
                Section
                  7.6.

              	
                Compliance
                  Certificate

              	
                19

              
	
                ARTICLE
                  VIII. TRANSFER RESTRICTIONS

              	
                19

              
	
                Section
                  8.1.

              	
                Lock-up
                  Period

              	
                19

              
	
                Section
                  8.2.

              	
                Permitted
                  Transfers

              	
                19

              
	
                ARTICLE
                  IX. STANDSTILL

              	
                20

              
	
                Section
                  9.1.

              	
                Standstill

              	
                20

              
	
                ARTICLE
                  X. INDEMNIFICATION

              	
                21

              
	
                Section
                  10.1.

              	
                Company
                  Indemnification

              	
                21

              
	
                Section
                  10.2.

              	
                Investor
                  Indemnification

              	
                22

              
	
                Section
                  10.3.

              	
                Procedure

              	
                22

              
	
                Section
                  10.4.

              	
                Indemnification
                  Non-Exclusive

              	
                23

              
	
                Section
                  10.5.

              	
                Limitation
                  on Company Indemnification

              	
                23

              
	
                ARTICLE
                  XI. TERMINATION

              	
                23

              
	
                ARTICLE
                  XII. GENERAL PROVISIONS

              	
                23

              
	
                Section
                  12.1.

              	
                Survival
                  of Representations and Warranties

              	
                23

              
	
                Section
                  12.2.

              	
                Notices

              	
                24

              
	
                Section
                  12.3.

              	
                Entire
                  Agreement

              	
                24

              
	
                Section
                  12.4.

              	
                Severability

              	
                25

              
	
                Section
                  12.5.

              	
                Interpretation

              	
                25

              
	
                Section
                  12.6.

              	
                Counterparts;
                  Effect

              	
                25

              
	
                Section
                  12.7.

              	
                No
                  Third-Party Beneficiaries

              	
                25

              
	
                Section
                  12.8.

              	
                Trustee
                  Liability

              	
                25

              
	
                Section
                  12.9.

              	
                Governing
                  Law

              	
                25

              
	
                Section
                  12.10.

              	
                Venue

              	
                25

              
	
                Section
                  12.11.

              	
                Waiver
                  of Jury Trial and Certain Damages

              	
                26

              
	
                Section
                  12.12.

              	
                Assignment

              	
                26

              


      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    STOCK
      PURCHASE AGREEMENT

     

    This
      STOCK PURCHASE AGREEMENT, dated as of October 25, 2007 (this
“Agreement”), is entered into by and among Puget Energy, Inc., a
      Washington corporation (the “Company”), and the purchasers listed on
      Schedule 1 hereto (the “Purchasers”).

     

    RECITALS

     

    WHEREAS,
      the Company wishes to sell 12,500,000 (twelve million, five hundred thousand)
      shares of its common stock, par value $0.01 per share (the “Company Common
      Stock”), together with the associated preferred share purchase rights (the
“Rights”) (the number of such shares of Company Common Stock together
      with the associated Rights, the “Shares”), to the Purchasers, and the
      Purchasers wish to purchase the Shares.

     

    NOW,
      THEREFORE, the parties hereto agree as follows:

     

    ARTICLE
      I.

     

    DEFINITIONS

     

    Section
      1.1.  Definitions.  For
      purposes of this Agreement, the following terms shall have the following
      meanings:

     

    “2007
      WUTC Rate Case” means the filing of the proceeding at the WUTC expected to
      be initiated by Puget Sound Energy, Inc. in December 2007 to increase or
      otherwise change rates, charges or revenue requirements for transmission,
      distribution or generation services.

     

    “Affiliate”,
      with respect to any Person, shall have the meaning set forth in Rule 12b-2
      of
      the Exchange Act as in effect on the date hereof.

     

    “Agreement”
      has the meaning specified in the Introduction.

     

    “BCH”
      has the meaning specified in Section 4.23 of Exhibit B.

     

    “Blackout
      Notice” has the meaning specified in Section 2(c) of Exhibit A.

     

    “Blackout
      Period” has the meaning specified in Section 2(c) of Exhibit A.

     

    “Business
      Day” means a day (not being a Saturday or Sunday or a public holiday in
      Australia, Canada or the United States of America) on which banks are open
      for
      general business in New York City.

     

    “Closing”
      has the meaning specified in Section 2.3(a).

     

    “Closing
      Date” has the meaning specified in Section 2.3(a).

     

    “Code”
      has the meaning specified in Section 4.9 of Exhibit B.

     

    “Company”
      has the meaning specified in the Introduction.

     

    “Company
      Common Stock” has the meaning specified in the Recitals.

     

    “Company
      Disclosure Letter” means the letter, dated as of the date hereof, delivered
      by the Company to the Purchasers simultaneously with the execution and delivery
      of this Agreement.

     

    “Company
      Financial Statements” has the meaning specified in Section 4.5 of Exhibit
      B.

     

    “Company
      Hedging Guidelines” has the meaning specified in Section 4.20(a) of Exhibit
      B.

     

    “Company
      Material Adverse Effect” means any event, change or occurrence or
      development of a set of circumstances or facts, which, individually or together
      with any other event, change, occurrence or development, has or would have
      a
      material adverse effect on (x) the business, assets, liabilities, properties,
      financial condition or results of operations of the Company and the Company
      Subsidiaries taken as a whole or (y) the ability of the Company to consummate
      the transactions contemplated by, or to perform its obligations under, this
      Agreement; provided, however, that the term "Company Material
      Adverse Effect" shall not include (i) any such effect resulting from any change,
      including any change in law, rule, or regulation of any Governmental Authority,
      that applies generally to similarly situated Persons, (ii) any such effect
      relating to or resulting from general changes in the electric or natural gas
      utility industry, other than such effects having a disproportionate impact
      on
      the Company as compared to similarly situated Persons, (iii) any such effect
      relating to or resulting from the 2007 WUTC Rate Case before the WUTC, (iv)
      any
      such effect relating to or resulting from changes to accounting standards,
      principles or interpretations, (v) any such effect resulting from the
      announcement of the execution of the Merger Agreement or the consummation of
      the
      transactions contemplated thereby (except to the extent that the Company has
      made an express representation with respect to the effect of such consummation
      on the Company), including any such change resulting therefrom in the market
      value of the Company Common Stock or the Company's credit rating, or from any
      action, suit or proceeding relating to the Merger Agreement or the transactions
      contemplated thereby, including any such action, suit or proceeding alleging
      a
      breach of fiduciary duty in connection with the execution, delivery, approval
      or
      consummation of the transactions contemplated by the Merger Agreement, (vi)
      any
      such effect resulting from the replacement of the Designated Credit Agreements
      as contemplated by Section 7.17 of the Merger Agreement, or (vii) any such
      effect resulting from any action taken by any of the parties outside the
      ordinary course of its business that is required to be taken in order to comply
      with any provision of the Merger Agreement, including, to the extent applicable,
      Section 6.1 thereof.

     

    “Company
      Net Position” has the meaning specified in Section 4.20(a) of Exhibit
      B.

     

    “Company
      Parties” has the meaning specified in Section 10.2.

     

    “Company
      Plans” has the meaning specified in Section 4.10(a) of Exhibit
      B.

     

    “Company
      Preferred Stock” has the meaning specified in Section 4.3 of Exhibit
      B.

     

    “Company
      Reports” has the meaning specified in Section 4.5 of Exhibit B.

     

    “Company
      SEC Reports” has the meaning specified in Section 4.5 of Exhibit
      B.

     

     “Company
      Series R Preferred Stock” has the meaning specified in Section 4.3 of
      Exhibit B.

     

    “Company
      Stock Issuance Approvals” has the meaning specified in Section
      3.4(c).

     

    “Company
      Subsidiary” means a Subsidiary of the Company.

     

    “Contracts”
      has the meaning specified in Section 4.14 of Exhibit B.

     

     “Control”
      means the possession, direct or indirect, of the power to direct or cause the
      direction of the management and policies of a Person, whether through the
      ownership of securities, by contract or otherwise, which, for the avoidance
      of
      doubt, shall include through a Person’s capacity as general partner, trustee,
“Responsible Entity,” nominee, manager or adviser or otherwise.

     

    “Demand
      Notice” has the meaning specified in Section 2(b) of Exhibit A.

     

    “Department
      of Justice” means the United States Department of Justice.

     

    “Designated
      Credit Agreements” means the Company's credit agreements set forth on
      Section 1.1(a) of the Company Disclosure Letter.

     

    “Easement”
      has the meaning specified in Section 4.6(c) of Exhibit B.

     

    “Easement
      Real Property” has the meaning specified in Section 4.6(a) of Exhibit
      B.

     

    “Environmental
      Claim” has the meaning specified in Section 4.13(g)(i) of Exhibit
      B.

     

    “Environmental
      Laws” has the meaning specified in Section 4.13(g)(ii) of Exhibit
      B.

     

    “Environmental
      Permits” has the meaning specified in Section 4.13(b) of Exhibit
      B.

     

    “ERISA”
      has the meaning specified in Section 4.10(a) of Exhibit B.

     

    “ERISA
      Affiliate” has the meaning specified in Section 4.10(a) of Exhibit
      B.

     

     “Exchange
      Act” means the Securities Exchange Act of 1934, as amended, and the rules
      and regulations promulgated thereunder.

     

    “FERC”
      has the meaning specified in Section 4.23 of Exhibit B.

     

    “FPA”
      has the meaning specified in Section 4.5 of Exhibit B.

     

    “FTC”
      means the United States Federal Trade Commission.

     

    “Fund”
      means any unit trust, investment trust, investment company, limited partnership,
      general partnership or other collective investment scheme, pension fund,
      insurance company or any body corporate or other entity, in each case, the
      business, operations or assets of which are managed professionally for
      investment purpose.

     

    “GAAP”
      has the meaning specified in Section 4.5 of Exhibit B.

     

    “Governmental
      Authority” means any court, federal, state, local or foreign governmental or
      regulatory body (including a national securities exchange or other
      self-regulatory body), authority or other legislative, executive or judicial
      entity.

     

    “Hazardous
      Materials” has the meaning specified in Section 4.13(g)(iii) of Exhibit
      B.

     

    “HEDC”
      has the meaning specified in Section 4.23 of Exhibit B.

     

    “Hedging
      Contract” has the meaning specified in Section 4.14(b)(vii) of Exhibit
      B.

     

    “Holder”
      has the meaning specified in Section 10 of Exhibit A.

     

    “HSR
      Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
      amended.

     

    “Indemnified
      Party” has the meaning specified in Section 10.3.

     

    “Intellectual
      Property” has the meaning specified in Section 4.15(a) of Exhibit
      B.

     

    “Knowledge”
      means when referring to the knowledge of the Company or any Company Subsidiary
      the actual knowledge of the Company officers listed on Section 1.1(b) of the
      Company Disclosure Letter as would have been acquired in the prudent exercise
      of
      their duties.

     

    “Leased
      Real Property” has the meaning specified in Section 4.6(a) of Exhibit
      B.

     

    “Lien”
      has the meaning specified in Section 4.2(a) of Exhibit B.

     

    “Losses”
      has the meaning specified in Section 7(a) of Exhibit A.

     

    “Material
      Contract” has the meaning specified in Section 4.14 of Exhibit
      B.

     

    “MBL”
      means Macquarie Bank Limited and its Affiliates.

     

    “Merger
      Agreement” means the Agreement and Plan of Merger, dated as of the date
      hereof, by and among Parent, Padua Intermediate, Merger Sub and the
      Company.

     

    “Merger
      Sub” means Padua Merger Sub, Inc., a Washington corporation and a wholly
      owned subsidiary of Padua Intermediate.

     

     “Options”
      has the meaning specified in Section 4.10(m) of Exhibit B.

     

    “Owned
      Real Property” has the meaning specified in Section 4.6(a) of Exhibit
      B.

     

    “Padua
      Intermediate” means Padua Intermediate Holdings Inc., a Washington
      corporation and a wholly owned subsidiary of the Parent.

     

    “Parent”
      means Padua Holdings LLC, a Delaware limited liability corporation.

     

    “PBGC”
      has the meaning specified in Section 4.10(b) of Exhibit B.

     

    “Permitted
      Real Property Lien” has the meaning specified in Section 4.6(a) of Exhibit
      B.

     

    “Per
      Share Price” has the meaning specified in Section 2.1.

     

    “Person”
      means any natural person, corporation, general or limited partnership, limited
      liability company, joint venture, trust, association or entity of any
      kind.

     

    “Puget
      Sound Energy” means Puget Sound Energy, Inc., a Washington corporation and a
      wholly owned subsidiary of the Company.

     

     “PUHCA”
      has the meaning specified in Section 4.5 of Exhibit B.

     

    “PUHCA
      2005” has the meaning specified in Section 4.23 of Exhibit B.

     

     “Purchaser
      Parties” has the meaning specified in Section 10.1.

     

    “Purchaser
      Required Statutory Approvals” has the meaning specified in Section
      4.2(c).

     

    “Purchasers”
      has the meaning specified in the Introduction.

     

    “Purchaser’s
      Trust” has the meaning specified in Section 4.8.

     

    “Real
      Property” has the meaning specified in Section 4.6(a) of Exhibit
      B.

     

    “Real
      Property Lease” has the meaning specified in Section 4.6(c) of Exhibit
      B.

     

    “Registrable
      Shares” means the Shares that are not Transferable Shares, and any Company
      Common Stock or other securities of the Company or any successor entity which
      may be issued or distributed in respect of the Registrable Shares by way of
      stock dividend or stock split or other distribution, recapitalization, merger,
      conversion or reclassification.

     

    “Registration
      Rights” has the meaning specified in Section 2.2.

     

    “Related
      Fund” means, with respect to any Fund, any other Person or Fund or
      subsidiary of a Fund which is advised by, or the business, operations or assets
      of which are managed (whether solely or jointly with others) from time to time
      by or whose parent is managed by, the manager or adviser of the Fund (or a
      Person that, directly or indirectly through one or more intermediaries,
      Controls, is Controlled by, or is under common Control with, that manager or
      adviser); provided, however, (X) the term “adviser” shall mean an
      entity which provides a Person with advice in relation to the management of
      investments of that Person; (Y) the term “manager” with respect to any Fund
      shall mean any general partner, trustee, responsible entity, nominee, manager,
      adviser or other entity performing a similar function with respect to such
      Fund;
      and (Z) no Person which is or holds shares for a complying superannuation fund
      for the purposes of the Australian Superannuation Industry (Supervision) Act
      1996 shall deemed to be an affiliate of any Person which is or holds shares
      for
      any other such Fund by reason of this definition.

     

    “Release”
      has the meaning specified in Section 4.13(g)(iv) of Exhibit B.

     

    “Rights”
      has the meaning specified in the Recitals.

     

    “Rights
      Agreement” has the meaning specified in Section 4.12 of Exhibit
      B.

     

    “SEC”
      means the Securities and Exchange Commission.

     

    “Securities
      Act” means the Securities Act of 1933, as amended, and the rules and
      regulations promulgated thereunder.

     

    “Selling
      Stockholders” has the meaning specified in Section 3 of Exhibit
      A.

     

    “Shares”
      has the meaning specified in the Recitals.

     

    “Shelf
      Registration Statement” has the meaning specified in Section 2(a) of Exhibit
      A.

     

    “SOX”
      has the meaning specified in Section 4.5 of Exhibit B.

     

    “Standstill
      Period” means, with respect to any Purchaser, the period commencing on the
      date hereof and ending eighteen months after the date of the termination of
      the
      Merger Agreement.

     

    “Subsidiary”
      of a Person means any other Person of which at least a majority of the voting
      power represented by the outstanding capital stock or other voting securities
      or
      interests having voting power under ordinary circumstances to elect directors
      or
      similar members of the governing body of such corporation or entity or fifty
      percent (50%) or more of the equity interests in such corporation or entity
      shall at the time be owned or controlled, directly or indirectly, by such Person
      and/or by one or more of its Subsidiaries.

     

     “Tax
      Return” has the meaning specified in Section 4.9 of Exhibit B.

     

    “Taxes”
      has the meaning specified in Section 4.9 of Exhibit B.

     

     “Title
      IV Company Plan” has the meaning specified in Section 4.10(d) of Exhibit
      B.

     

    “Trade
      Secrets” has the meaning specified in Section 4.15(a) of Exhibit
      B.

     

    “Transfer”
      has the meaning specified in Section 8.1.

     

    “Transferable
      Shares” means all or a portion of the Shares that are eligible for resale
      pursuant to paragraph (k) of Rule 144 under the Securities Act (or any similar
      provision then in force).

     

    “Treasury
      Regulations” has the meaning specified in Section 4.9 of Exhibit
      B.

     

    “Violation”
      has the meaning specified in Section 3.4(b).

     

    “WARN
      Act” has the meaning specified in Section 4.11(e) of Exhibit B.

     

    “WUTC”
      means the Washington Utilities and Transportation Commission.

     

    ARTICLE
      II.

     

    PURCHASE
      AND SALE OF THE SECURITIES

     

    Section
      2.1.  Issuance
      and Sale of Securities.  Upon the terms and subject to the
      conditions of this Agreement, at the Closing, the Company agrees to issue,
      sell
      and deliver to each Purchaser, and each Purchaser severally agrees to purchase
      from the Company, the number of Shares set forth opposite each Purchaser’s name
      on Schedule 1 for a purchase price of $23.67 per Share (the “Per Share
      Price”).

     

    Section
      2.2.  Registration
      Rights.  The Purchasers shall have the rights to registration
      under the Securities Act of the Registrable Shares, on the terms and subject
      to
      the conditions set forth in Exhibit A (the “Registration Rights”);
provided, however, that such Registration Rights may not be
      exercised prior to the termination of the lock-up period contemplated by Section
      8.1.

     

    Section
      2.3.  Closing
      and Delivery.

     

    (a)  The
      consummation of the purchase and sale of the Shares hereunder (the
“Closing”) shall take place on the fourth Business Day immediately
      following the date on which the last of the conditions set forth in Articles
      VI
      and VII hereof is fulfilled or waived (other than any conditions that by their
      nature are to be satisfied at the Closing, but subject to the satisfaction
      or
      waiver of those conditions at the Closing) at 10:00 a.m., local time, at the
      offices of Latham & Watkins LLP, 885 Third Avenue, New York, New York 10022,
      or such other date, time and place as the Company and the Purchasers shall
      mutually agree in writing (the date of the Closing being the “Closing
      Date”).

     

    (b)  At
      the
      Closing, the Company shall deliver to each Purchaser one or more certificates,
      in such denominations and registered in such Purchaser’s name as set forth on
      Schedule 1, representing the number of Shares which such Purchaser is purchasing
      from the Company, against delivery to the Company of a wire transfer of
      immediately available funds in US dollars to the order of the Company in the
      aggregate amount equal to the Per Share Price times the relevant number of
      Shares to be purchased by such Purchaser in accordance with Section 2.1, and
      the
      Company shall register the Purchasers as the holders of the Shares in the
      register of holders of the Company Common Stock.

     

    Section
      2.4.  Restrictive
      Legend.  The certificates evidencing the Shares shall bear the
      following legend until such time as (i) such Shares are sold pursuant to an
      effective registration statement under the Securities Act, (ii) such Shares
      are
      eligible for resale in reliance on paragraph (k) of Rule 144 under the
      Securities Act, or (iii) the Purchaser or any transferee thereof delivers an
      opinion of counsel reasonably acceptable to the Company to the effect that
      such
      legend is no longer required under the Securities Act:

     

    THESE
      SECURITIES WERE SOLD IN A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE
      SECURITIES ACT OF 1933, AND MAY BE OFFERED OR SOLD ONLY IF REGISTERED UNDER
      THE
      SECURITIES ACT OF 1933 OR IF AN EXEMPTION FROM REGISTRATION IS
      AVAILABLE.  THESE  SECURITIES ARE SUBJECT TO THE PROVISIONS
      OF THE STOCK PURCHASE AGREEMENT, DATED AS OF OCTOBER 25, 2007, BY AND AMONG
      THE
      COMPANY AND THE PURCHASERS NAMED THEREIN AND MAY NOT BE SOLD OR TRANSFERRED
      EXCEPT IN ACCORDANCE THEREWITH.

     

    ARTICLE
      III.

     

    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY

     

    The
      Company represents and warrants to each Purchaser that except as set forth
      in
      (a) the Company Disclosure Letter, with specific reference to the particular
      Section or Subsection of this Agreement (or an exhibit hereto) to which the
      information set forth in such letter relates (it being agreed that disclosure
      of
      any item in any Section or Subsection of the Company Disclosure Letter shall
      be
      deemed disclosure with respect to any other Section or Subsection to which
      the
      relevance of such item is reasonably apparent), or (b) for purposes of Exhibit
      B
      and Section 3.4, the Company SEC Reports filed by the Company with, or furnished
      by the Company to, the SEC at any time on or after December 31, 2005 through
      the
      date hereof and publicly available on the website of the SEC through the
      Electronic Data Gathering, Analysis and Retrieval System prior to the date
      hereof, other than information in the "Risk Factors" or "Forward-Looking
      Statements" sections of such Company SEC Reports, and any other similar
      disclosures included in such Company SEC Reports that are predictive, cautionary
      or forward-looking in nature; provided, however, that nothing in the Company
      SEC
      Reports shall be deemed to qualify, or be deemed to have been disclosed for
      the
      purposes of, Exhibit B, Section 4.3:

     

    Section
      3.1.  Shares.  The
      Shares to be issued, sold and delivered pursuant to this Agreement have been
      duly authorized by all requisite action of the Company and, when issued, will
      be
      validly issued and outstanding, fully paid and nonassessable, and will not
      be
      subject to any preemptive rights of the holders of any other class or series
      of
      the capital stock of the Company.  Upon the issuance of the Shares,
      the Shares will be free and clear of all transfer restrictions and Liens of
      any
      nature whatsoever, with the exception of any restrictions on transferability
      set
      forth herein or under the Securities Act or any securities laws of any
      jurisdiction.

     

    Section
      3.2.  WKSI
      Status.  The Company is a “well-known seasoned issuer” and is not
      an “ineligible issuer” (as such terms are defined in Rule 405 under the
      Securities Act).

     

    Section
      3.3.  Investment
      Company.  The Company is not and, after giving effect to the
      offering and sale of the Shares and the application of the proceeds thereof,
      will not be an “investment company” or a company “controlled” by an “investment
      company,” as such terms are defined in the Investment Company Act of 1940, as
      amended.

     

    Section
      3.4.  Authority;
      Non-Contravention; Approvals; Compliance.

     

    (a)  Authority.  The
      Company has all requisite corporate power and authority to enter into this
      Agreement and, subject to the receipt of the applicable Company Stock Issuance
      Approvals, to consummate the transactions contemplated hereby.  The
      execution and delivery of this Agreement and the consummation by the Company
      of
      the transactions contemplated hereby have been duly authorized by all necessary
      corporate action on the part of the Company.  This Agreement has been
      duly executed and delivered by the Company and, assuming the due authorization,
      execution and delivery hereof by the other signatories hereto, constitutes
      the
      legal, valid and binding obligation of the Company enforceable against it in
      accordance with its terms, subject to bankruptcy, insolvency, fraudulent
      transfer, reorganization, moratorium and similar laws of general applicability
      relating to or affecting creditors’ rights and to general equity
      principles.

     

    (b)  Non-Contravention.  Except
      as set forth in Section 3.4(b)(i) of the Company Disclosure Letter, the
      execution and delivery of this Agreement by the Company does not, and the
      consummation of the transactions contemplated hereby will not, violate or result
      in a material breach of any provision of, constitute a material default (with
      or
      without notice or lapse of time or both) under, result in the termination or
      modification of, accelerate the performance required by, result in a right
      of
      termination, cancellation or acceleration of any obligation or the loss of
      a
      material benefit under, or result in the creation of any material Lien upon
      any
      of the properties or assets of the Company or any of the Company Subsidiaries
      (any such violation, breach, default, right of termination, modification,
      cancellation or acceleration, loss or creation is referred to herein as a
“Violation” with respect to the Company and such term when used in Article V has
      a correlative meaning with respect to the Purchasers) pursuant to any provisions
      of (i) any debt instruments relating to outstanding indebtedness for borrowed
      money in amounts in excess of $25 million, the articles of incorporation,
      by-laws or similar governing documents of the Company or any of the Company
      Subsidiaries, (ii) the preferred stock and preference stock of the Company
      and
      Puget Sound Energy, (iii) subject to obtaining the Company Stock Issuance
      Approvals, any statute, law, ordinance, rule, regulation, judgment, decree,
      order, injunction, writ, permit or license of any Governmental Authority
      applicable to the Company or any of the Company Subsidiaries or any of their
      respective properties or assets or (iv) subject to obtaining the third-party
      consents set forth in Section 3.4(b)(ii) of the Company Disclosure Letter,
      any
      Material Contract or material note, bond, mortgage, indenture, deed of trust,
      license, franchise, permit, concession, contract, lease or other instrument,
      obligation or agreement of any kind to which the Company or any of the Company
      Subsidiaries is a party or by which they or any of their respective properties
      or assets may be bound or affected, except in the case of clauses (iii) or
      (iv)
      for any such Violation which, individually or in the aggregate, would not
      reasonably be expected to result in a Company Material Adverse
      Effect.

     

    (c)  Statutory
      Approvals.  Except as described in Section 3.4(c) of the Company
      Disclosure Letter (the “Company Stock Issuance Approvals”), no
      declaration, report, filing or registration with, or notice to or authorization,
      consent or approval of, any Governmental Authority is necessary for the
      execution and delivery of this Agreement by the Company or the consummation
      by
      the Company of the transactions contemplated hereby, except those that the
      failure of which to obtain, individually or in the aggregate, would not
      reasonably be expected to result in a Company Material Adverse Effect (it being
      understood that references in this Agreement to “obtaining” such Company Stock
      Issuance Approvals shall mean making such declarations, filings or
      registrations; giving such notices; obtaining such authorizations, consents
      or
      approvals; and having such waiting periods expire as are necessary to avoid
      a
      violation of law).

     

    (d)  Compliance.  Neither
      the Company nor any of the Company Subsidiaries is in violation of, is, to
      the
      knowledge of the Company, under investigation with respect to any violation
      of,
      or has been given notice of or been charged with any violation of, any law,
      statute, order, award, rule, regulation, ordinance or judgment of any
      Governmental Authority, except for any such violations which, individually
      or in
      the aggregate, would not reasonably be expected to result in a Company Material
      Adverse Effect.  The Company and the Company Subsidiaries have all
      permits, licenses, franchises and other governmental authorizations, consents
      and approvals necessary to conduct their businesses as presently conducted
      except those that the absence of which, individually and in the aggregate,
      would
      not reasonably be expected to result in a Company Material Adverse
      Effect.  Neither the Company nor any of the Company Subsidiaries is in
      breach or violation of or in default in the performance or observance of any
      term or provision of, and no event has occurred which, with lapse of time or
      action by a third party, would reasonably be expected to result in a default
      by
      the Company or any Company Subsidiary under (i) their respective articles of
      incorporation or by-laws or similar governing documents or (ii) any contract,
      commitment, agreement, indenture, mortgage, loan agreement, note, lease, bond,
      license, approval or other instrument to which it is a party or by which the
      Company or any Company Subsidiary is bound or to which any of their respective
      property is subject, except in the case of clause (ii) for possible violations,
      breaches or defaults which, individually or in the aggregate, would not
      reasonably be expected to result in a Company Material Adverse
      Effect.

     

    (e)  Board
      Approval.  The Board of Directors of the Company has taken all
      action so that the Parent and the Purchasers will not be prohibited from
      entering into or consummating a "significant business transaction" with the
      Company (as such term is used in Section 23B.19.010 et seq. of the Washington
      Business Corporation Act) as a result of the execution of this Agreement or
      the
      consummation of the transactions in the manner contemplated hereby, and has
      taken all other necessary action such that the consummation of the transactions
      contemplated by this Agreement shall not be otherwise restricted or delayed
      pursuant to Chapter 23B.19 of the Washington Business Corporation
      Act.

     

    Section
      3.5.  Litigation.  There
      is no suit, claim, action, proceeding or investigation pending or, to the
      knowledge Company, threatened against the Company that questions the validity
      or
      legality of this Agreement or any action required to be taken by the Company
      in
      connection with the consummation of the transactions contemplated hereby or
      which individually or in the aggregate with any other suits, claims, actions,
      proceedings or investigations would reasonably be expected to prevent,
      materially delay or materially impair the consummation of the transactions
      contemplated by this Agreement.

     

    Section
      3.6.  Brokers
      and Finders.  The Company has not entered into any agreement or
      arrangement entitling any agent, broker, investment banker, financial advisor
      or
      other firm or Person to any broker’s or finder’s fee or any other commission or
      similar fee in connection with any of the transactions contemplated by this
      Agreement, except Morgan Stanley & Co. Incorporated, whose fees and expenses
      will be paid by the Company in accordance with the Company’s agreement with such
      firm.  The Company has made available to the Purchasers disclosure
      regarding the amount of any such fee.

     

    Section
      3.7.  Additional
      Representations.  In addition to the representations and
      warranties of the Company set forth in Sections 3.1 through 3.6 of this Article
      III, the Company makes the representations and warranties set forth in Exhibit
      B
      to each Purchaser.

     

    Section
      3.8.  No
      Other Representations of the Company.  Except for the
      representations and warranties contained in this Article III and Exhibit B,
      neither the Company nor any other Person acting on behalf of the Company makes
      any representation or warranty, express or implied, regarding the Company or
      any
      Company Subsidiary.

     

    ARTICLE
      IV.

     

    REPRESENTATIONS
      AND WARRANTIES OF THE PURCHASERS

     

    Each
      Purchaser hereby severally represents and warrants to the Company as
      follows:

     

    Section
      4.1.  Organization
      and Qualification.  It is a corporation or other entity duly
      organized and validly existing under the laws of its jurisdiction of
      incorporation or organization, as the case may be.

     

    Section
      4.2.  Authority;
      Non-Contravention; Approvals; Compliance.

     

    (a)  Authority.  It
      has all requisite corporate or limited liability company power and authority
      to
      enter into this Agreement and, subject to the receipt of the applicable
      Purchaser Required Statutory Approvals, to consummate the transactions
      contemplated hereby.  The execution and delivery of this Agreement and
      the consummation by it of the transactions contemplated hereby have been duly
      authorized by all necessary corporate or limited liability company action on
      the
      part of such Purchaser.  This Agreement has been duly executed and
      delivered by such Purchaser and, assuming the due authorization, execution
      and
      delivery hereof by the other signatories hereto, constitutes the valid and
      binding obligation of such Purchaser enforceable against it in accordance with
      its terms, subject to bankruptcy, insolvency, fraudulent transfer,
      reorganization, moratorium and similar laws of general applicability relating
      to
      or affecting creditors’ rights and to general equity principles.

     

    (b)  Non-Contravention.  The
      execution and delivery of this Agreement by it does not, and the consummation
      of
      the transactions contemplated hereby will not, result in a Violation pursuant
      to
      any provisions of (i) the certificate of incorporation, certificate of
      formation, by-laws, limited liability company operating agreement or similar
      governing documents, as applicable, of such Purchaser and (ii) subject to
      obtaining the Purchaser Required Statutory Approvals, any statute, law,
      ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
      or license of any Governmental Authority applicable to such Purchaser or any
      of
      its properties or assets except in the case of clause (ii) for any such
      Violation which, individually or in the aggregate, would not reasonably be
      expected to prevent, materially delay or materially impair the consummation
      of
      the transactions contemplated by this Agreement.

     

    (c)  Statutory
      Approvals.  Except as set forth on Schedule 4.2(c) hereto (the
“Purchaser Required Statutory Approvals”), no declaration, report, filing
      or registration with, or notice to or authorization, consent or approval of,
      any
      Governmental Authority is necessary for the execution and delivery of this
      Agreement by such Purchaser, or the consummation by such Purchaser of the
      transactions contemplated hereby, except those that the failure of which to
      obtain, individually or in the aggregate (it being understood that references
      in
      this Agreement to “obtaining” such Purchaser Required Statutory Approvals shall
      mean making such declarations, filings or registrations; giving such notices;
      obtaining such authorizations, consents or approvals; and having such waiting
      periods expire as are necessary to avoid a violation of law), would not
      reasonably be expected to prevent, materially delay or materially impair the
      consummation of the transactions contemplated by this Agreement.

     

    (d)  Compliance.  Except
      as set forth in Schedule 4.2(d) hereto, such Purchaser is not in violation
      of,
      is not, to such Purchaser’s knowledge, under investigation with respect to any
      violation of, and has not been given notice of or been charged with any
      violation of, any law, statute, order, award, rule, regulation, ordinance or
      judgment of any Governmental Authority, except for any such violations which,
      individually or in the aggregate, would not reasonably be expected to prevent,
      materially delay or materially impair the consummation of the transactions
      contemplated by this Agreement.  Except as set forth in Schedule
      4.2(d) hereto, such Purchaser is not in breach or violation of or in default
      in
      the performance or observance of any term or provision of, and no event has
      occurred which, with lapse of time or action by a third party, would reasonably
      be expected to result in a default by such Purchaser under (i) its certificate
      of incorporation, certificate of formation, by-laws, limited liability company
      agreement or similar governing documents, as applicable, or (ii) any contract,
      commitment, agreement, indenture, mortgage, loan agreement, note, lease, bond,
      license, approval or other instrument to which it is a party or by which it
      is
      bound or to which any of its property is subject, except for possible
      violations, breaches or defaults which, individually or in the aggregate, are
      not reasonably likely to prevent, materially delay or materially impair the
      consummation of the transactions contemplated by this Agreement.

     

    Section
      4.3.  Litigation.  There
      is no suit, claim, action, proceeding or investigation pending or, to its
      knowledge, threatened against it that questions the validity or legality of
      this
      Agreement or any action required to be taken by it in connection with the
      consummation of the transactions contemplated hereby or which individually
      or in
      the aggregate with any other suits, claims, actions, proceedings or
      investigations would reasonably be expected to prevent, materially delay or
      materially impair the consummation of the transactions contemplated by this
      Agreement.

     

    Section
      4.4.  No
      Vote Required.  No vote of the holders of any class or series of
      the capital stock of such Purchaser is necessary to approve this Agreement
      or
      the transactions contemplated hereby.

     

    Section
      4.5.  Ownership
      of Company Stock.  As of the date hereof, neither such Purchaser
      nor any of its Affiliates (excluding for the purposes of this Section 4.5
      officers and directors of the Purchasers) beneficially owns (as defined in
      Rule
      13d-3 under the Exchange Act), directly or indirectly, shares of capital stock
      of the Company.  With respect to MBL, this representation shall be
      limited to the knowledge of the Corporate Finance Division of Macquarie
      Securities (USA) Inc.

     

    Section
      4.6.  Purchase
      for Investment.  It acknowledges that the Shares have not been
      registered under the Securities Act or under any state securities
      laws.  It (i) is acquiring the Shares pursuant to an exemption from
      registration under the Securities Act solely for investment with no present
      intention to distribute any of the Shares to any Person, (ii) will not sell
      or
      otherwise dispose of any of the Shares, except in compliance with the
      registration requirements or exemption provisions of the Securities Act and
      any
      other applicable securities laws, (iii) has such knowledge and experience in
      financial and business matters and in investments of this type that it is
      capable of evaluating the merits and risks of its investment in the Shares
      and
      of making an informed investment decision and (iv) is an accredited investor
      (as
      that term is defined in Rule 501 promulgated under the Securities
      Act).

     

    Section
      4.7.  Approvals.  As
      of the date hereof, none of such Purchaser’s officers (or persons holding a
      similar position) know of any facts or circumstances relating to such Purchaser
      or its Affiliates that are reasonably likely to prevent or materially delay
      the
      receipt of the Purchaser Required Statutory Approvals.

     

    Section
      4.8.  Trustee
      Power.  To the extent a Purchaser has entered into this Agreement
      in its capacity as a trustee or responsible entity for another entity (such
      other entity, the “Purchaser’s Trust”), such Purchaser (a) has full
      rights to indemnification or reimbursement from assets of such Purchaser’s Trust
      in connection with the performance of all of its obligations under this
      Agreement, including the payment or contribution of all funds required to be
      paid or contributed by such Purchaser hereunder, (b) no approval or consent
      by
      any Governmental Authority, third party or any other entity is necessary in
      order for such Purchaser to exercise its rights to indemnification or
      reimbursement from the assets of such Purchaser’s Trust in connection with the
      performance of its obligations under this Agreement, including the payment
      or
      contribution of all funds required to be paid or contributed by such Purchaser
      hereunder, and such Purchaser has not, and shall not, take or omit to take
      any
      action that would eliminate or limit such rights to indemnification or
      reimbursement, and (c) such Purchaser’s Trust has sufficient assets from which
      to satisfy all of such Purchaser’s obligations under this Agreement, including
      the payment or contribution of all funds required to be paid or contributed
      by
      such Purchaser hereunder.

     

    Section
      4.9.  No
      Other Representations of the Purchasers.  Except for the
      representations and warranties contained in this Article IV, neither such
      Purchaser nor any other Person acting on its behalf makes any representation
      or
      warranty, express or implied, regarding such Purchaser.

     

    ARTICLE
      V.

     

    COVENANTS

     

    Section
      5.1.  Registration
      Rights.  The Company and each of the Purchasers shall comply with
      the provisions contained in Exhibit A regarding the Registration
      Rights.

     

    Section
      5.2.  Reservation
      of Company Stock.  The Company shall reserve and keep available
      out of its authorized but unissued shares of Company Common Stock the Shares
      to
      be purchased and sold at the Closing.

     

    Section
      5.3.  Listing
      of Shares.  The Company shall cause the Shares to be listed on the
      New York Stock Exchange prior to the Closing Date.

     

    Section
      5.4.  Regulatory
      Matters.

     

    (a)  HSR
      Filings.  Each party hereto shall, as soon as reasonably
      practicable after the date hereof, file or cause to be filed with the FTC and
      the Department of Justice any notifications required to be filed under the
      HSR
      Act, and the rules and regulations promulgated thereunder, to the extent such
      act, rules or regulations require the filing of such notification with respect
      to such party and the transactions contemplated hereby.  Such parties
      will use their reasonable best efforts to respond on a timely basis to any
      requests for additional information made by either of such
      agencies.

     

    (b)  Other
      Regulatory Approvals.  Each party hereto shall cooperate and use
      its reasonable best efforts to promptly prepare and file all necessary
      documentation, to effect all necessary applications, notices, petitions, filings
      and other documents, and to use all commercially reasonable efforts to obtain
      all necessary permits, consents, approvals and authorizations of all
      Governmental Authorities necessary or advisable to obtain the Company Stock
      Issuance Approvals and the Parent Required Statutory Approvals.  Each
      party hereto shall cooperate and use all commercially reasonable efforts to
      obtain as promptly as reasonably practicable all necessary permits, consents,
      approvals and authorizations of all Governmental Authorities necessary or
      advisable to obtain the Company Stock Issuance Approvals and the Parent Required
      Statutory Approvals.  Each party shall have the right to review a
      reasonable time in advance and to provide comments on any such
      filing.

     

    (c)  Actions
      by Affiliates.  Notwithstanding any other provision of this
      Agreement, no Purchaser shall be required to, or to cause any portfolio company,
      investment fund or other Affiliate of any shareholder of such Purchaser or
      any
      director, officer, employee, general partner, limited partner, member or manager
      of any shareholder of such Purchaser to, take any action, undertake any
      divestiture or restrict its conduct other than, in accordance with the
      provisions of this Agreement, to provide responsive information reasonably
      required to make any submission or application to a Governmental Authority
      and
      to otherwise cooperate in connection with any such submission or application
      as
      is necessary and customary under the circumstances.

     

    Section
      5.5.  Voting.  Prior
      to the termination of the Merger Agreement, each Purchaser agrees that it shall
      vote all shares of Company Common Stock beneficially owned by it with respect
      to
      any matter to be voted on by the holders of the Company Common Stock either
      (i)
      pro rata in proportion to the votes cast by the holders of shares of Company
      Common Stock other than the Shares, or (ii) as recommended by the board of
      directors of the Company, if the board of directors has made a recommendation
      with respect to such matter, so long as such shares of Company Common Stock
      may
      be lawfully voted as so provided.

     

    Section
      5.6.  WKSI
      Status.  The Company shall use its reasonable best efforts to
      maintain its status as a “well-known seasoned issuer,” and shall not become an
“ineligible issuer” (as such terms are defined in Rule 405 under the Securities
      Act).

     

    Section
      5.7.  Use
      of
      Proceeds.  The Company shall use the net proceeds from the sale of
      the Shares to invest in Puget Sound Energy for capital expenditures, debt
      redemption and working capital.

     

    Section
      5.8.  Expenses.  The
      Company and the Purchasers shall each bear its own expenses and legal fees
      with
      respect to this Agreement and the transactions contemplated hereby.

     

    Section
      5.9.  Confidentiality.  Notwithstanding
      any other agreements between the Purchasers and any of their Affiliates, on
      the
      one hand, and the Company, on the other hand, the Purchasers shall not, without
      the consent of the Company, disclose to any Person non-public or confidential
      information concerning the business or affairs of the Company and will hold
      all
      such information in the strictest confidence; provided, however,
      that the Purchasers may disclose any such information:

     

    (i)  to
      any
      Affiliate of the Purchasers or to the stockholders of the Purchasers or of
      any
      such Affiliate; provided, that the disclosure of such information is the
      subject of and protected by a binding confidentiality agreement or obligation
      on
      comparable terms to the provisions of the Nondisclosure Agreement, dated July
      20, 2007, entered into by and between the Company and Macquarie Securities
      (USA)
      Inc. (the “Confidentiality Agreement”);

     

    (ii)  to
      credit
      rating agencies;

     

    (iii)  to
      the
      extent such disclosure is required under applicable law, including under
      securities laws (in particular, those relating to continuous disclosure)
      or  under the rules and regulations of any national securities
      exchange (or comparable international securities exchange) or over-the-counter
      market which are applicable to the Purchaser or its Affiliates;

     

    (iv)  to
      a
      proposed permitted transferee of Shares that agrees to be bound by a written
      confidentiality agreement on comparable terms to the provisions of the
      Confidentiality Agreement; provided that such confidentiality agreement
      shall not be required to include a standstill provision unless after giving
      effect to such transfer, the transferee, its affiliates and the other members
      of
      any group of which such transferee is a member, would own 5% or more of the
      Company Common Stock;

     

    (v)  in
      any
      case where a Purchaser is or holds the Shares for the benefit of a private
      equity, infrastructure or any other investment fund, to the manager of and
      investors in such fund (including but not limited to limited partners,
      shareholders and beneficiaries of such fund); provided, that the
      disclosure of such information is the subject of and protected by a written
      confidentiality agreement on comparable terms to the provisions of the
      Confidentiality Agreement; and providedfurther that this provision
      shall not prohibit such fund from providing its investors with routine reports
      and other periodic information about the fund’s investments;

     

    (vi)  to
      representatives of the Purchasers (including but not limited to financial
      advisors, legal counsel and agents); provided, that the disclosure of
      such information is protected by an obligation of confidentiality;

     

    (vii)  that
      has
      come into the public domain through no fault of the disclosing
      Purchaser;

     

    (viii)  to
      a
      proposed purchaser or transferee of equity interests in the Parent and to
      representatives (including but not limited to financial advisors, legal counsel
      and agents) of such proposed purchaser or transferee; provided, that the
      disclosure of such information is the subject of and protected by a written
      confidentiality agreement on comparable terms to the provisions of the
      Confidentiality Agreement, or, in the case of its representatives, is protected
      by an obligation of confidentiality; and

     

    (ix)  in
      such
      other circumstances as may be agreed by the Company in writing from time to
      time.

     

    Section
      5.10.  Public
      Announcement.  Except as may be required by law or by obligations
      pursuant to any listing agreement with or rules of any national securities
      exchange, the Company and the Purchasers shall consult with each other prior
      to
      issuing any press release or otherwise making public announcements with respect
      to the transactions contemplated by this Agreement.  Each of the
      Company and the Purchasers agrees that it will, to the extent practicable,
      provide the other, reasonably in advance of its use, with drafts of any press
      release or other widely disseminated presentation or other information, in
      each
      case relating to the transactions contemplated by this Agreement, and give
      reasonable consideration to the comments of the other thereon.  In
      connection with the foregoing, the Company and the Purchasers may share any
      such
      drafts with their respective investors and representatives provided that
      any such investors or representatives are bound by an obligation to maintain
      the
      confidentiality of such information sufficient to satisfy the requirements
      of
      Regulation FD promulgated under the Securities Act.  Each of the
      Company and the Purchasers will advise the other in advance of the timing of
      any
      such press release, presentation or other information relating to the
      transactions contemplated by this Agreement and will provide the other with
      a
      final copy of the same simultaneously with its public release.

     

    Section
      5.11.  Purchasers’
      Obligations Several.  The covenants of the Purchasers in this
      Agreement are several and not joint or joint and several.

     

    ARTICLE
      VI.

     

    CONDITIONS
      TO CLOSING OF THE PURCHASERS

     

    Each
      Purchaser’s obligations to purchase the Shares at the Closing is subject to the
      satisfaction or waiver by such Purchaser on or prior to the Closing Date of
      each
      of the following conditions:

     

    Section
      6.1.  Representations
      and Warranties Correct.  The representations and warranties made
      by the Company in Article III and Exhibit B hereof shall be true and correct
      as
      of the date of this Agreement and as of the Closing Date as though made on
      and
      as of the Closing Date (except to the extent any such representation or warranty
      expressly speaks as of an earlier date), except for such failures of
      representations or warranties to be true and correct (without giving effect
      to
      any materiality qualification or standard contained in any such representations
      and warranties) which, individually or in the aggregate, have not resulted
      in
      and would not reasonably be expected to result in a Company Material Adverse
      Effect.

     

    Section
      6.2.  Performance.  All
      covenants, agreements and conditions contained in this Agreement to be performed
      or complied with by the Company on or prior to the Closing Date shall have
      been
      performed or complied with in all material respects.

     

    Section
      6.3.  Regulatory
      Consents.  All notices, reports and other filings required to be
      made prior to the Closing by the Company or any of its subsidiaries with, and
      all consents, registrations, approvals, permits and authorizations required
      to
      be obtained prior to the Closing by the Company or any of its subsidiaries
      from,
      any Governmental Authority in connection with the execution and delivery of
      this
      Agreement and the consummation of the transactions contemplated hereby by the
      Company shall have been made or obtained and shall be effective on and as of
      the
      Closing Date.

     

    Section
      6.4.  Authorizations.  All
      other authorizations, approvals or permits, if any, of any Governmental
      Authority or regulatory body that are required in connection with the lawful
      issuance and sale of the Shares pursuant to this Agreement shall have been
      duly
      obtained and shall be effective on and as of the Closing Date, other than any
      failures to obtain such authorizations, approvals or permits that would not
      reasonably be expected to adversely affect the Company in any material respect
      and except for such failures as would not prevent or materially hinder or delay
      the consummation of the purchases contemplated hereby.

     

    Section
      6.5.  Company
      Material Adverse Effect.  No Company Material Adverse Effect shall
      have occurred that is continuing.

     

    Section
      6.6.  Opinion
      of Company’s Counsel.  The Purchasers shall have received from
      outside counsel to the Company an opinion addressed to the Purchasers, dated
      the
      Closing Date, in form and substance reasonably satisfactory to the Purchasers,
      to the effect set forth in Exhibit C.

     

    Section
      6.7.  No
      Injunction.  No temporary restraining order or preliminary or
      permanent injunction or other order by any court of competent jurisdiction
      preventing consummation of the transactions contemplated by this Agreement
      shall
      have been issued and be continuing in effect, and such transactions shall not
      have been prohibited under any applicable federal or state law or
      regulation.

     

    Section
      6.8.  Merger
      Agreement.  The Merger Agreement shall be in full force and effect
      and shall not have been terminated.

     

    Section
      6.9.  Compliance
      Certificate.  The Company shall have delivered to the Purchasers a
      certificate of the Chief Executive Officer or President of the Company, dated
      as
      of the Closing Date, to the effect that the conditions set forth in Sections
      6.1, 6.2, 6.3 and 6.4 have been satisfied.  Such certificate shall be
      substantially in the form set forth in Exhibit D.

     

    ARTICLE
      VII.

     

    CONDITIONS
      TO CLOSING OF THE COMPANY

     

    The
      Company’s obligation to sell the Shares at the Closing is subject to the
      satisfaction or waiver by the Company on or prior to the Closing Date of each
      of
      the following conditions:

     

    Section
      7.1.  Representations.  The
      representations and warranties made by the Purchasers in Article IV hereof
      shall
      be true and correct as of the date of this Agreement and as of the Closing
      Date
      as though made on and as of the Closing Date (except to the extent any such
      representation or warranty expressly speaks as of an earlier date) except for
      such failures of representations or warranties to be true and correct (without
      giving effect to any materiality qualification or standard contained in any
      such
      representations and warranties) which, individually or in the aggregate, have
      not resulted in and would not reasonably be expected to result in a any material
      adverse effect on the ability of any Purchaser to consummate the transaction
      contemplated by this Agreement.

     

    Section
      7.2.  Performance.  All
      covenants, agreements and conditions contained in this Agreement to be performed
      or complied with by each Purchaser on or prior to the Closing Date shall have
      been performed or complied with in all material respects.

     

    Section
      7.3.  Regulatory
      Consents.  All notices, reports and other filings required to be
      made prior to the Closing by the Purchasers or any of their respective
      subsidiaries with, and all consents, registrations, approvals, permits and
      authorizations required to be obtained prior to the Closing by the Purchasers
      or
      any of their respective subsidiaries from, any Governmental Authority in
      connection with the execution and delivery of this Agreement and the
      consummation of the transactions contemplated hereby by the Purchasers shall
      have been made or obtained and shall be effective on and as of the Closing
      Date.

     

    Section
      7.4.  Authorizations.  All
      other authorizations, approvals or permits, if any, of any Governmental
      Authority or regulatory body that are required in connection with the lawful
      issuance and sale of the Shares pursuant to this Agreement shall have been
      duly
      obtained and shall be effective on and as of the Closing Date, other than any
      failures to obtain such authorizations, approvals or permits that would not
      reasonably be expected to adversely affect the Company in any material respect
      and except for such failures as would not prevent or materially hinder or delay
      the consummation of the purchases contemplated hereby.

     

    Section
      7.5.  No
      Injunction.  No temporary restraining order or preliminary or
      permanent injunction or other order by any court of competent jurisdiction
      preventing consummation of the Merger shall have been issued and be continuing
      in effect, and the Merger and the other transactions contemplated hereby shall
      not have been prohibited under any applicable federal or state law or
      regulation.

     

    Section
      7.6.  Compliance
      Certificate.  Each Purchaser shall have delivered to the Company a
      certificate of an executive officer of such Purchaser, dated as of the Closing
      Date, to the effect that the conditions set forth in Sections 7.1, 7.2 and
      7.3
      have been satisfied.  Such certificate shall be substantially in the
      form set forth in Exhibit E.

     

    ARTICLE
      VIII.

     

    TRANSFER
      RESTRICTIONS

     

    Section
      8.1.  Lock-up
      Period.  Except as permitted by Section 8.2, the Purchasers shall
      not (i) sell, contract to sell, sell any option or contract to purchase,
      purchase any option or contract to sell, grant any option, right or warrant
      to
      purchase, lend, or otherwise transfer or dispose of, directly or indirectly,
      any
      Shares (each, a “Transfer”) or (ii) enter into any swap or other
      arrangement that transfers to another the economic consequences of ownership
      of
      the Shares prior to the earlier of (A) the consummation of the transactions
      contemplated by the Merger Agreement; or (B) the termination of the Merger
      Agreement.

     

    Section
      8.2.  Permitted
      Transfers.  The restrictions on transfer in Section 8.1 shall not
      apply to the following Transfers of Shares (each of which exceptions shall
      be
      separate and not reduce the scope or availability of any other
      exception):

     

    (a)  (i)
      to
      the Company, (ii) to any other Purchaser or to any Affiliate or to any Related
      Fund of any Purchaser, (iii) to any party to the Merger Agreement or (iv) to
      any
      equity holder or investor in Parent; provided, in each case (other than a
      transfer to the Company), that the transferee agrees in writing to the covenants
      applicable to a Purchaser in Article V, the standstill provisions applicable
      to
      a Purchaser in Article IX and the restrictions on further transfers of such
      securities to the extent provided in this Article VIII; or

     

    (b)  in
      sales
      pursuant to Rule 144 under the Securities Act.

     

    Any
      transfer made pursuant to this Section 8.2 shall comply with all applicable
      federal and state securities laws and regulations.

     

    ARTICLE
      IX.

     

    STANDSTILL

     

    Section
      9.1.  Standstill.

     

    (a)  During
      the Standstill Period, except as provided in Section 9.1(b), and except in
      respect of the transactions contemplated by this Agreement and by the Merger
      Agreement, each Purchaser that individually or as part of a “group” (as defined
      in the Exchange Act) holds 2% or more of the outstanding shares of Company
      Common Stock (collectively, the “Standstill Entity”) agrees that so long
      as such Standstill Entity holds 2% or more of the outstanding shares of Company
      Common Stock it will not, directly or indirectly, nor will it authorize or
      direct any of its officers, employees, agents and other representatives to,
      in
      each case, unless specifically consented to by the Board of Directors of the
      Company:

     

    (i)  form,
      join, or in any way become a member of a “group” (as defined in the Exchange
      Act) with any other Person (other than its Affiliates or any other member of
      the
      Standstill Entity) with respect to any voting securities of the
      Company;

     

    (ii)  acquire
      or agree, offer, seek or propose to acquire, or cause to be acquired, beneficial
      ownership of, or participate in an acquisition of, any securities or property
      of
      the Company or any of its Subsidiaries, or any options, warrants or other rights
      (including, without limitation, any convertible or exchangeable securities)
      to
      acquire any such securities (except pursuant to a stock dividend, stock split,
      reclassification, recapitalization or other similar event by the Company that
      does not increase the percentage ownership of the outstanding shares of Company
      Common Stock held by such Standstill Entity);

     

    (iii)  seek
      to
      propose or propose, whether alone or in concert with others, any tender offer,
      exchange offer, merger, business combination, restructuring, liquidation,
      dissolution, recapitalization or similar transaction involving the
      Company;

     

    (iv)  make,
      or
      in any way participate in, any “solicitation” of “proxies” (as such terms are
      used in the proxy rules of the SEC) with respect to the voting of any securities
      of the Company or seek to advise or influence any Person with respect to the
      voting of any securities of the Company;

     

    (v)  nominate
      any Person as a Director of the Company’s Board of Directors or seek the removal
      of any Person as a Director of the Company’s Board of Directors, or propose any
      matter to be voted upon by the shareholders of the Company or seek to call
      a
      meeting of the shareholders of the Company, or otherwise seek to control the
      management or Board of Directors of the Company; or

     

    (vi)  take
      any
      action with respect to or publicly announce or disclose any intention, plan
      or
      arrangement inconsistent with the foregoing.

     

    (b)  Nothing
      contained in Section 9.1(a) shall be deemed in any way to prohibit or limit
      any
      transactions in the ordinary course of business and on arm’s length terms
      between the Company and the Company Subsidiaries, on the one hand, and a
      Purchaser and its Affiliates, on the other hand, or in any way limit the full
      voting rights or free transferability of the Shares.

     

    (c)  Notwithstanding
      anything to the contrary herein, in the case of MBL, the restrictions in this
      Section 9.1 shall only apply to (i) the Corporate Finance division of MBL,
      (ii)
      any other division of MBL that beneficially owns Shares or has received
      non-public or confidential information regarding the Company or any of its
      Subsidiaries in connection with the negotiation or performance of this Agreement
      or the Merger Agreement and (iii) any other Person that is a Related Fund of
      MBL, in each case that beneficially owns Shares or has received non-public
      or
      confidential information regarding the Company or any of its Subsidiaries in
      connection with the negotiation or performance of this Agreement or the Merger
      Agreement.

     

    (d)  Notwithstanding
      anything to the contrary herein, in the case of CPP Investment Board (USRE
      II)
      Inc. the restrictions in this Section 9.1 shall only apply to CPP Investment
      Board (USRE II) Inc., any other Person that is an Affiliate of CPP Investment
      Board (USRE II) Inc. and any funds or similar vehicles managed by CPP Investment
      Board (USRE II) Inc. or by an Affiliate of CPP Investment Board (USRE II) Inc.,
      in each case that beneficially owns Shares or has received non-public or
      confidential information regarding the Company or any of its Subsidiaries in
      connection with the negotiation or performance of this Agreement or the Merger
      Agreement.

     

    ARTICLE
      X.

     

    INDEMNIFICATION

     

    Section
      10.1.  Company
      Indemnification.  The Company covenants and agrees to indemnify
      and save and hold harmless the Purchasers, together with their respective
      officers, directors, partners, shareholders, members, employees, trustees,
      Affiliates, beneficial owners, attorneys and representatives (collectively,
      the
“Purchaser Parties”), from and against any and all losses, costs,
      expenses, liabilities, claims or legal damages (including, without limitation,
      reasonable fees and disbursements of accountants and a single counsel selected
      by holders of a majority of the Shares at such time and their costs and expenses
      incident to any actual or threatened claim, suit, action or proceeding, whether
      incurred in connection with a claim against the Company or a third party claim)
      incurred by the Purchaser Parties, up to the amount equal to the purchase price
      paid or to be paid by such Purchaser under this Agreement, arising out of or
      resulting from:

     

    (a)  any
      inaccuracy in or breach of any representation, warranty, covenant or agreement
      made by the Company in this Agreement (including those in Exhibit B) or in
      any
      writing delivered pursuant to this Agreement; or

     

    (b)  the
      failure of the Company to perform or observe fully any covenant, agreement
      or
      provision to be performed or observed by it pursuant to this Agreement;
provided, that the indemnity agreement contained in this Section 10.1
      shall not apply to amounts paid in settlement of any such loss, claim, damage,
      liability or action if such settlement is effected without the consent of the
      Company (which consent shall not be unreasonably withheld).

     

    Section
      10.2.  Investor
      Indemnification.  Each Purchaser severally covenants and agrees to
      indemnify and save and hold harmless the Company, together with its officers,
      directors, shareholders, employees, Affiliates, attorneys and representatives
      (collectively, the “Company Parties”), from and against any and all
      losses, costs, expenses, liabilities, claims or legal damages (including,
      without limitation, reasonable fees and disbursements of accountants and a
      single counsel and its costs and expenses incident to any actual or threatened
      claim, suit, action or proceeding, whether incurred in connection with a claim
      against the Purchaser or a third party claim) incurred by the Company Parties,
      up to the amount equal to the purchase price paid or to be paid by such
      Purchaser under this Agreement, arising out of or resulting from:

     

    (a)  any
      inaccuracy in or breach of any representation, warranty, covenant or agreement
      made by such Purchaser in this Agreement or in any writing delivered pursuant
      to
      this Agreement; or

     

    (b)  the
      failure of such Purchaser to perform or observe fully any covenant, agreement
      or
      provision to be performed or observed by it pursuant to this Agreement;
      provided, that the indemnity agreement contained in this Section 10.2 shall
      not
      apply to amounts paid in settlement of any such loss, claim, damage, liability
      or action if such settlement is effected without the consent of the Purchaser
      (which consent shall not be unreasonably withheld).

     

    Section
      10.3.  Procedure.  Any
      Person entitled to be indemnified pursuant to Section 10.1 or 10.2 (each, an
      “Indemnified Party”) shall notify the relevant Purchaser or the Company,
      as the case may be, in writing of any action against such Indemnified Party
      in
      respect of which the other party is or may be obligated to provide
      indemnification on account of Section 10.1 or 10.2, promptly after the receipt
      of notice.  The omission of any Indemnified Party so to notify the
      other party of any such action shall not relieve such other party from any
      liability which it may have to such Indemnified Party except to the extent
      the
      other party shall have been materially prejudiced by the omission of such
      Indemnified Party so to notify it.  In case any such action shall be
      brought by a third party against any Indemnified Party and it shall notify
      the
      other party of the commencement thereof, the other party shall be entitled
      to
      participate therein and, to the extent that such other party may wish, to assume
      the defense thereof, with counsel reasonably satisfactory to such Indemnified
      Party, and after notice from it to such Indemnified Party of its election so
      to
      assume the defense thereof, the other party will not be liable to such
      Indemnified Party under Section 10.1 or 10.2 for any legal or other expense
      subsequently incurred by such Indemnified Party in connection with the defense
      thereof, or for any settlement thereof entered into without the consent of
      the
      other party; provided, however, that if (i) the other party shall
      elect not to assume the defense of such claim or action or (ii) the Indemnified
      Party reasonably determines (x) that there may be a conflict between the
      positions of the other party and of the Indemnified Party in defending such
      claim or action or (y) that there may be legal defenses available to such
      Indemnified Party different from or in addition to those available to the other
      party, then separate counsel for the Indemnified Party shall be entitled to
      participate in and conduct the defense, in the case of clauses (i) and (ii)(x),
      or such different defenses, in the case of clause (ii)(y), and the other party
      shall be liable for any reasonable legal or other expenses incurred by the
      Indemnified Party in connection with the defense.

     

    Section
      10.4.  Indemnification
      Non-Exclusive.  The foregoing indemnification provisions are in
      addition to, and not in derogation of, any statutory, equitable or common-law
      remedy any party may have for breach of representation, warranty, covenant
      or
      agreement.

     

    Section
      10.5.  Limitation
      on Company Indemnification.  No payment shall be due or payable by
      the Company in respect of any indemnification obligation hereunder unless and
      until the Merger Agreement has been terminated in accordance with the terms
      thereof.

     

    ARTICLE
      XI.

     

    TERMINATION

     

    This
      Agreement may be terminated (i) at any time prior to the Closing Date by mutual
      written agreement of the Company and the Purchasers, (ii) by the Purchasers
      if
      the Closing shall not have occurred and the Merger Agreement shall have been
      terminated (other than any termination of the Merger Agreement by the Company
      pursuant to Section 9.1(f) thereof), (iii) by the Company if the Closing shall
      not have occurred and the Merger Agreement shall have been terminated by the
      Company pursuant to Section 9.1(f) thereof or (iv) by the Company or by the
      Purchasers who have agreed to purchase 90% of the Shares if the Closing shall
      not have occurred on or prior to January 31, 2008; provided, that the
      right to terminate this Agreement shall not be available to any party whose
      failure to fulfill any of its obligations under this Agreement shall have
      proximately contributed to the failure of the Closing to occur; and
provided, further, that if on January 31, 2008 the conditions to the
      Closing set forth in Sections 6.3 or 7.3 shall not have been fulfilled but
      all
      other conditions to the Closing shall be fulfilled or shall be capable of being
      fulfilled, then such termination date shall be extended to March 31,
      2008.  In the event of the termination of this Agreement pursuant to
      this Article XI, this Agreement shall forthwith become null and void and have
      no
      effect, without any liability on the part of any Purchaser or the Company and
      each of their respective officers, directors, partners, shareholders, members,
      employees, trustees, Affiliates, beneficial owners, attorneys and
      representatives and all rights and obligations of any party hereto shall cease,
      except for the agreements contained in Sections 5.8 and 5.9 and Articles X
      and
      XII; provided, however, that nothing contained in this Article XI
      shall relieve any party from liabilities or damages (i) arising out of any
      fraud
      or willful breach by such party of any of its representations, warranties,
      covenants or other agreements contained in this Agreement (including those
      in
      Exhibit B) or (ii) as otherwise provided in the Merger Agreement.

     

    ARTICLE
      XII.

     

    GENERAL
      PROVISIONS

     

    Section
      12.1.  Survival
      of Representations and Warranties.  The representations and
      warranties of the parties in this Agreement shall survive the Closing and the
      payment for and delivery of the Shares, but shall not survive the Effective
      Time
      under the Merger Agreement, if the Merger shall be consummated; provided,
      that, the Company shall not be liable to any Purchaser for any breach of any
      representation or warranty unless and until the Merger Agreement has been
      terminated in accordance with its terms.

     

    Section
      12.2.  Notices.  All
      notices and other communications hereunder shall be in writing and shall be
      deemed given (a) when delivered personally, (b) when sent by reputable overnight
      courier service or (c) when telecopied or emailed (which is confirmed by copy
      sent within one Business Day by a reputable overnight courier service) to the
      parties at the following addresses (or at such other address for a party as
      shall be specified by like notice):

     

    (i)           If
      to the Company, to:

     

    Padua

    10885
      NE
      4th Street, Suite 1200

    Bellevue,
      Washington 98004

    Attn:  Senior
      Vice President and General Counsel

    Telephone:  (425)
      462-3005

    Telecopy:  (425)
      462-3300

    Email:  jennifer.o'connor@pse.com

     

    with
      a
      copy to:

     

    Dewey
      & LeBoeuf LLP

    1301
      Avenue of the Americas

    New
      York,
      New York 10019

    Attn:  William
      S. Lamb, Esq.

               
Frederick
      J. Lark, Esq.

    Telephone:  (212)
      424-8170

    Telecopy:  (212)
      424-8500

    Email:  blamb@dl.com

                fjlark@dl.com

     

    and

    


    (ii)           if
      to the Purchasers, to the addresses set forth on Schedule 1;

     

    with
      a
      copy to:

     

    Latham
      & Watkins LLP

    53rd
      at
      Third

    885
      Third
      Avenue

    New
      York,
      New York 10022-4834

    Attn:  Edward
      Sonnenschein, Esq.

               David
      Kurzweil, Esq.

    Telephone:  (212)
      906-1200

    Telecopy:  (212)
      751-4864

    Email:  ted.sonnenschein@lw.com

               
david.kurzweil@lw.com

     

    Section
      12.3.  Entire
      Agreement.  This Agreement and the Merger Agreement are being
      entered into simultaneously but are separate transactions.  Except as
      expressly set forth in this Agreement, the provisions of the Merger Agreement
      are not intended to, and in no way, modify or supplement the terms of this
      Agreement.  This Agreement, together with the exhibits hereto and the
      Company Disclosure Letter delivered together herewith, supersede all other
      prior
      agreements and understandings, both written and oral, between the parties with
      respect to the subject matter hereof; provided that nothing in this Agreement
      shall affect the obligations of any party hereto pursuant to the Confidentiality
      Agreement.

     

    Section
      12.4.  Severability.  Any
      term or provision of this Agreement that is held by a court of competent
      jurisdiction or other authority to be invalid, void or unenforceable in any
      situation in any jurisdiction shall not affect the validity or enforceability
      of
      the remaining terms and provisions hereof or the validity or enforceability
      of
      the offending term or provision in any other situation or in any other
      jurisdiction.  If the final judgment of a court of competent
      jurisdiction or other authority declares that any term or provision hereof
      is
      invalid, void or unenforceable, the parties agree that the court making such
      determination shall have the power to reduce the scope, duration, area or
      applicability of the term or provision, to delete specific words or phrases,
      or
      to replace any invalid, void or unenforceable term or provision with a term
      or
      provision that is valid and enforceable and that comes closest to expressing
      the
      intention of the invalid or unenforceable term or provision.

     

    Section
      12.5.  Interpretation.  When
      a reference is made in this Agreement to Sections, Schedules or Exhibits, such
      reference shall be to a Section, Schedule or Exhibit of this Agreement,
      respectively, unless otherwise indicated.  The table of contents and
      headings contained in this Agreement are for reference purposes only and shall
      not affect in any way the meaning or interpretation of this
      Agreement.  Whenever the words “include,” “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words
      “without limitation,” if they are not already followed by such
      words.

     

    Section
      12.6.  Counterparts;
      Effect.  This Agreement may be executed by facsimile and in one or
      more counterparts, each of which shall be deemed to be an original, but all
      of
      which together shall constitute one and the same agreement.

     

    Section
      12.7.  No
      Third-Party Beneficiaries.  Except as otherwise provided in
      Article X, this Agreement shall be binding upon and inure solely to the benefit
      of each party hereto and each permitted assignee hereof, and nothing in this
      Agreement, express or implied, is intended to confer upon any other Person
      any
      rights or remedies of any nature whatsoever under or by reason of this
      Agreement.

     

    Section
      12.8.  Trustee
      Liability.  Each of the parties hereto covenants, agrees and
      acknowledges the terms of liability with respect to trustees and responsible
      entities attached hereto as Exhibit F.

     

    Section
      12.9.  Governing
      Law.  This Agreement shall be governed by and construed in
      accordance with the laws of the State of Washington applicable to contracts
      entered into and to be performed entirely within such State.

     

    Section
      12.10.  Venue.  Each
      of the parties hereto irrevocably agrees that any legal action or proceeding
      with respect to this Agreement or the transactions contemplated hereby or for
      recognition and enforcement of any judgment in respect hereof or thereof,
      brought by any other party hereto or its successors or assigns shall be brought
      and determined only in a federal or state court located in and for Seattle,
      Washington.  Each of the parties hereto hereby irrevocably submits
      with regard to any such action or proceeding for itself and in respect of its
      property, generally and unconditionally, to the personal jurisdiction of the
      aforesaid court.  Each of the parties hereto hereby irrevocably
      waives, and agrees not to assert, by way of motion, as a defense, counterclaim
      or otherwise, in any action or proceeding with respect to this Agreement, or
      the
      transactions contemplated hereby (i) any claim that it is not personally subject
      to the jurisdiction of the above-named courts for any reason other than the
      failure to serve in accordance with Section 12.2, (ii) that it or its property
      is exempt or immune from jurisdiction of such court or from any legal process
      commenced in such courts (whether through service of notice, attachment prior
      to
      judgment, attachment in aid of execution of judgment, execution of judgment
      or
      otherwise) and (iii) to the fullest extent permitted by the applicable law,
      that
      (x) the suit, action or proceeding in such court is brought in an inconvenient
      forum, (y) the venue of such suit, action or proceeding is improper and (z)
      this
      Agreement or the subject mater hereof, may not be enforced in or by such
      courts.

     

    Section
      12.11.  Waiver
      of Jury Trial and Certain Damages.  EACH PARTY TO THIS AGREEMENT
      WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, (A) ANY RIGHT IT
      MAY
      HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING
      OUT
      OF OR RELATING TO THIS AGREEMENT, WHETHER IN TORT OR IN CONTRACT, AND (B) ANY
      RIGHT IT MAY HAVE TO RECEIVE DAMAGES FROM ANY OTHER PARTY BASED ON ANY THEORY
      OF
      LIABILITY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL (INCLUDING LOST PROFITS)
      OR
      PUNITIVE DAMAGES.

     

    Section
      12.12.  Assignment.  Except
      as provided in Section 8.2, neither this Agreement nor any of the rights,
      interests or obligations hereunder shall be assigned by any party hereto
      (whether by operation of law or otherwise) without the prior written consent
      of
      the other party; provided, however, that any Purchaser may,
      without the consent of the Company, assign its Registration Rights to any
      permitted transferee of its Shares.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
      duly
      authorized officers of the parties hereto as of the date first written
      above.

     

     

    PUGET
      ENERGY, INC.

     

     

    
      	
              By: 
                /s/Stephen P. Reynolds

            	 
	
              Name: 
                Stephen P. Reynolds

            	 
	Title: 
              Chairman, President and CEO	 


    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    MACQUARIE
      INFRASTRUCTURE PARTNERS A, L.P., by its general partner
MACQUARIE INFRASTRUCTURE PARTNERS U.S. GP LLC, by its manager
      and attorney-in-fact MACQUARIE
      INFRASTRUCTURE PARTNERS INC.

     

    
      	
              By: 
                /s/Robert Lawsky

            	 
	Name: 
              Robert Lawsky	 
	
              Title: 
                Assistant Secretary

            	 


    

     

    
      	
              By: 
                /s/Mark Wong

            	 
	
              Name: 
                Mark Wong

            	 
	
              Title: 
                Treasurer

            	 


    

     

    MACQUARIE
      INFRASTRUCTURE PARTNERS CANADA, L.P., by its general partner MACQUARIE
      INFRASTRUCTURE PARTNERS CANADA GP LTD,
      by its manager and attorney-in-fact MACQUARIE
      INFRASTRUCTURE PARTNERS INC.

     

    
      	
              By: 
                /s/Robert Lawsky

            	 
	
              Name: 
                Robert Lawsky

            	 
	
              Title: 
                Assistant Secretary

            	 


    

     

    


    
      	
              By: 
                /s/Mark Wong

            	 
	
              Name: 
                Mark Wong

            	 
	
              Title: 
                Treasurer

            	 


    

     

    MACQUARIE
      INFRASTRUCTURE PARTNERS INTERNATIONAL, L.P.,
      by its general partner MACQUARIE
      INFRASTRUCTURE PARTNERS U.S. GP LLC,
      by its manager and attorney-in-fact MACQUARIE
      INFRASTRUCTURE PARTNERS INC.

     

    
      	
              By: 
                /s/Robert Lawsky

            	 
	
              Name: 
                Robert Lawsky

            	 
	
              Title: 
                Assistant Secretary

            	 


    

     

    
      	
              By: 
                /s/Mark Wong

            	 
	
              Name: 
                Mark Wong

            	 
	
              Title: 
                Treasurer

            	 


    

    

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    PADUA
      MG HOLDINGSINC.

     

    
      	
              By: 
                /s/Christine Rivera

            	 
	
              Name: 
                Christine Rivera

            	 
	
              Title: 
                Secretary

            	 


    

     

     

    
      	
              By: 
                /s/Robinson Kupchak

            	 
	
              Name: 
                Robinson Kupchak

            	 
	
              Title: 
                Director

            	 


    

      


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    MACQUARIE
      FSS INFRASTRUCTURE TRUST

     

    
      
        	 By: 
                MACQUARIE SPECIALISED ASSET MANAGEMENT LIMITED in its
                capacity as responsible entity of MACQUARIE FSS INFRASTRUCTURE
                TRUST


      

    

     

    
      
        
          	
                  By: 
                    /s/David Luboff

                	 
	
                  Name: 
                    David Luboff

                	 
	
                  Title: 
                    Attorney

                	 


        

      

       

       

    

    CPP
      INVESTMENT BOARD (USRE II) INC.

     

    
      
        	
                By: 
                  /s/Mark D. Wiseman

              	 
	
                Name: 
                  Mark D. Wiseman

              	 
	
                Title: 
                  Authorized Signatory

              	 


      

    

     

    
      
        
          	
                  By: 
                    /s/Graeme F. Bevans

                	 
	
                  Name: 
                    Graeme F. Bevans

                	 
	
                  Title: 
                    Authorized Signatory

                	 


        

      

       

    

    
      

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

     

    
      6860141
        CANADA, INC. as Trustee of the
PADUA INVESTMENT TRUST

    

     

    
      
        	
                By: 
                  /s/Lincoln Webb

              	 
	
                Name: 
                  Lincoln Webb

              	 
	
                Title: 
                  President

              	 


      

    

     

    
       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    PIP2PX
      (PAD) LTD

    
       

      
        
          	
                  By: 
                    /s/William McKenzie

                	 
	
                  Name: 
                    William McKenzie

                	 
	
                  Title: 
                    Director

                	 


        

      

       

      
         

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    PIP2GV
      (PAD) LTD

     

    
      
        	
                By: 
                  /s/William McKenzie

              	 
	
                Name: 
                  William McKenzie

              	 
	
                Title: 
                  Director

              	 


      

    

     

    
      
        

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

        

      

    

    SCHEDULE
      1

     

    PURCHASERS
      AND PURCHASED SHARES. NAME AND ADDRESS OF PURCHASER

     

    
      	
              
                Name
                  and Address of Purchaser

              

            	
              
                Number
                  of Shares of Company Common Stock Purchased

              

            	
              
                Total
                  Purchase Price

              

            
	
              
                MACQUARIE
                  INFRASTRUCTURE PARTNERS A, L.P.

                 

                125
                  West 55th Street, L22,

                New
                  York, New York 10019

                Attention:      Chris
                  Leslie

                Telephone:    
                  1(212) 231-1686

                Telecopy:      
                  1(212) 231-1828

                Email:              Chris.leslie@macquarie.com

                 

              

            	
              
                1,753,788

              

            	
              
                $41,512,161.96

              

            
	
              
                MACQUARIE
                  INFRASTRUCTURE PARTNERS INTERNATIONAL, L.P.

                 

                125
                  West 55th Street, L22,

                New
                  York, New York 10019

                Attention:      Chris
                  Leslie

                Telephone:     1(212)
                  231-1686

                Telecopy:       1(212)
                  231-1828

                Email:              Chris.leslie@macquarie.com

                 

              

            	
              
                1,830,864    

              

            	
              
                $43,336,550.88

              

            
	
              
                MACQUARIE
                  INFRASTRUCTURE PARTNERS CANADA, L.P.

                 

                125
                  West 55th Street, L22,

                New
                  York, New York 10019

                Attention:      Chris
                  Leslie

                Telephone:    
                  1(212) 231-1686

                Telecopy:       1(212)
                  231-1828

                Email:              Chris.leslie@macquarie.com

                 

              

            	
              
                393,158

              

            	
              
                $9,306,049.86

              

            
	
              
                PADUA
                  MG HOLDINGS, INC.

                125
                  West 55th Street, L22,

                New
                  York, New York 10019

                Attention:      Robinson
                  Kupchak

                Telephone:     1(212)
                  231-1685

                Telecopy:       1(212)
                  231-1717

                Email:              Robinson.Kupchak@macquarie.com

                 

              

            	
              
                1,988,905

              

            	
              
                $47,077,381.35

              

            
	
              
                MACQUARIE
                  FSS INFRASTRUCTURE TRUST

                Lvl
                  11, 1 Martin Place

                Sydney
                  NSW 2000

                Australia

                Attention:      David
                  Luboff

                Telephone:     (61)
                  2-8232-3422

                Telecopy:       (61)
                  2-8232-4713

              

              
                Email:.            
                  david.luboff@macquarie.com

              

              
                 

              

            	
              
                465,404

              

            	
              
                $11,016,112.68

              

            
	
              
                CPP
                  INVESTMENT BOARD (USRE II) INC.

                One
                  Queen Street East, Suite 2600

                P.O.
                  Box 101

                Toronto,
                  Ontario

                M5C
                  2W5

                Attention:      Graeme
                  Bevans

                Telephone:     416-868-4075

                Telecopy:       416.868.4755

                Email:              gbevans@cppib.ca

                 

              

            	
              
                3,517,612

              

            	
              
                $83,261,876.04

              

            
	
              
                PADUA
                  INVESTMENT TRUST

                c/o
                  its  Trustee 6860141 Canada Inc.

                British
                  Columbia Investment Management Corporation

                Sawmill
                  Point, Suite 301-2940 Jutland Road

                Victoria,
                  British Columbia Canada V8T 5K6

                Attention:      Lincoln
                  Webb

                Telephone:     1(250)
                  387-7556

                Telecopy:       1(250)
                  387-2770

                Email:              Lincoln.webb@bcimc.com

                 

              

            	
              
                1,758,806

              

            	
              
                $41,630,938.02

              

            
	
              
                PIP2PX
                  (PAD) LTD

                340
                  Terrace Building

                9515-197
                  Street

                Edmonton,
                  Alberta

                T5K
                  2C3

                Attention:      Bill
                  McKenzie

                Telephone:     1(780)
                  427-6468

                Telecopy:   
                     1(780) 422-0257

                Email:              bill.mckenzie@gov.ab.ca

                 

              

            	
              
                490,707

              

            	
              
                $11,615,034.69

              

            


    

    
      	
              
                PIP2GV
                  (PAD) LTD

                340
                  Terrace Building

                9515-197
                  Street

                Edmonton,
                  Alberta

                T5K
                  2C3

                Attention:      Bill
                  McKenzie

                Telephone:    
                  1(780) 427-6468

                Telecopy:       1(780)
                  422-0257

                Email:              bill.mckenzie@gov.ab.ca

                 

              

            	
              
                300,756

              

            	
              
                $7,118,894.52

              

            


    

    


     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      A

     

    REGISTRATION
      RIGHTS

     

    Section
      1.                      Effectiveness
      of Registration Rights.  The registration rights pursuant to
      Sections 2 and 3 hereof shall become effective on the Closing Date.

     

    Section
      2.                      Registration
      Rights Generally.

     

    (a)           Shelf
      Registration.  The Company shall cause to be filed or become
      effective, no later than ten (10) business days after the termination of the
      Merger Agreement, a registration statement (the “Shelf Registration
      Statement”) filed with the SEC on Form S-3 (or any successor form) and such
      other documents as may be necessary to permit offerings and sales of Registrable
      Shares by Holders pursuant to Rule 415 under the Securities
      Act.  Subject to Section 2(c), the Company shall maintain such Shelf
      Registration Statement effective and current until the earlier of (i) the time
      all Registrable Shares are sold pursuant to such registration statement and
      (ii)
      the time when all Shares are Transferable Shares.  The Company shall
      supplement and amend the Shelf Registration Statement if required by the rules,
      regulations or instructions applicable to the registration form used for such
      Shelf Registration Statement or if required by the Securities Act.

     

    (b)           Contingent
      Demand Registration.  Subject to Section 10, in the event that the
      Company has failed to or is unable to file and maintain a Shelf Registration
      Statement as contemplated by Section 2(a) and until such failure or inability
      is
      remedied, one or more Holders holding individually or in the aggregate at least
      10% of the Registrable Shares outstanding as of the Closing Date shall have
      the
      right to make a written demand upon the Company (a “DemandNotice”)
      to have the Company as promptly as practical register under the Securities
      Act
      for offer and sale all Registrable Shares specified to the Company by such
      Holders within ten (10) business days of the date of the Demand Notice, and
      the
      Company agrees to so register such Registrable Shares.  If a Demand
      Notice has been made on the Company, no subsequent Demand Notice may be made
      on
      the Company for ninety (90) days unless the Company has failed to comply with
      its obligations with respect to the Demand Notice.  The Holders shall
      have the right to exercise registration rights pursuant to this Section 2(b)
      up
      to six (6) times; provided, however, that any such exercise shall relate to
      not
      less than 300,000 shares of Company Common Stock.

     

    (c)           Blackout
      Period.  Notwithstanding Section 2(a) above, if the Company shall
      furnish to the Holders a certificate signed by the Chief Executive Officer
      of
      the Company (each, a “Blackout Notice”) stating that there is a
      reasonable likelihood that such disclosure, such registration statement or
      related prospectus to be filed, amended or supplemented, or any other action
      to
      be taken in connection with the prospectus, would materially and adversely
      affect or interfere with any financing, acquisition, merger, disposition of
      assets (outside the ordinary course of business), corporate reorganization
      or
      other similar transaction involving the Company, the Company shall be entitled
      to suspend the use of the registration statement or delay the delivery or
      filing, but not the preparation, of any amendment or supplement to the
      registration statement or otherwise delay the completion of any sale of
      Registrable Shares pursuant to the registration statement for a reasonable
      period of time, but not to exceed thirty (30) days (the “Blackout
      Period”) within the ninety (90) day period beginning on the first day of a
      Blackout Period; provided, however, that the Company shall not deliver a
      Blackout Notice more than twice in any 365-day period; and provided, further,
      that any Blackout Period shall only be effective when and for so long as other
      holders, if any, of registration rights with respect to the Company’s securities
      are restricted from exercising their registration rights to the same or greater
      extent as the Holders.  Upon receipt of a Blackout Notice, the Holders
      shall not effect sales of Registrable Shares pursuant to the registration
      statement.  The Company shall promptly deliver written notice to the
      Holders of the expiration or earlier termination of any Blackout
      Period.

     

    Section
      3.                      Incidental
      Registration Rights.  Subject to Section 10, for a period of two
      (2) years following the termination of the Merger Agreement, in the event that
      the Company has failed to or is unable to file and maintain a Shelf Registration
      Statement as contemplated by Section 2(a) and until such failure or inability
      is
      remedied, if the Company proposes to register (including for this purpose a
      registration effected by the Company for security holders of the Company other
      than any Holder) any Company Common Stock for sale under the Securities Act
      or
      effect or participate in an offering of Company Common Stock under the
      Securities Act (other than (i) pursuant to Section 2 hereof, (ii) securities
      to
      be issued pursuant to a stock option or other employee benefit or similar plan,
      or (iii) securities proposed to be issued in exchange for securities or assets
      of, or in connection with a merger or consolidation with, another corporation)
      the Company shall, as promptly as practicable, give written notice to the
      Holders of the Company’s intention to effect such registration or effect or
      participate in such an offering.  If, within ten (10) days after
      receipt of such notice, any Holder submits a written request to the Company
      specifying the amount of Registrable Shares that it proposes to sell or
      otherwise dispose of in accordance with this Section 3, the Company shall use
      its reasonable best efforts to include the Registrable Shares specified in
      the
      contemplated offering.  If the offering is to be made by or through
      underwriters, the Company, any selling Holder and such underwriter shall execute
      an underwriting agreement in customary form; provided, however, that if the
      Company and any selling Holder are advised in writing in good faith by the
      lead
      underwriter of the Company’s securities that the amount to be sold by Persons
      other than the Company (collectively, “Selling Stockholders”) is greater
      than the amount that can be offered without adversely affecting the offering
      (taking into consideration the interests of the Company and the Holders), the
      Company may reduce the amount offered for the accounts of Selling Stockholders
      (including such holders of Registrable Shares) to a number reasonably deemed
      satisfactory by such lead underwriter; provided that the shares that shall
      be
      excluded shall be excluded in the following order: (i) first, securities held
      by
      any Persons not having any contractual or incidental “piggy-back” rights in
      respect of the offering contemplated by this Section 3, (ii) second, Registrable
      Shares held by the Holders sought to be included in the offering pursuant to
      this Section 3 and Company Common Stock sought to be included in such offering
      by Persons having contractual or incidental “piggy-back” rights, (iii) third,
      Company Common Stock sought to be offered and sold by other Persons having
      demand rights with respect to such an offering and (iv) fourth, Company Common
      Stock sought to be sold by the Company.  Any reduction of the number
      of Registrable Shares indicated under (ii) shall be made on a pro rata basis
      based upon the aggregate number of shares of Company Common Stock sought to
      be
      registered pursuant to this section by the relevant Holders and other
      Persons.

     

    Section
      4.                      Underwriting
      and Broad Distribution.

     

    (a)           At
      the request of any Holder, with respect to a sale of Registrable Shares by
      such
      Holder, the Company shall enter into an underwriting, agency, placement,
      subscription or other agreement, in usual and customary form and substance
      (including but not limited to usual and customary indemnities, the provision
      by
      independent counsel to the Company of customary opinions and the provision
      of
      customary certificates by officers of the Company and the provision by the
      Company’s independent accountants of customary comfort letters as reasonably
      requested by such Holder and the lead underwriters of such offering) with
      managing underwriters to be selected by such Holder and not disapproved by
      the
      Company acting reasonably, and the Company shall perform its obligations in
      connection therewith.

     

    (b)           The
      Company shall be required to enter into an underwriting, agency, placement,
      subscription or other agreement pursuant to Section 4(a) only if such
      Registrable Shares are to be offered and sold in a manner intended to result
      in
      a broad distribution within or outside the United States (simultaneously or
      both), such that no single purchaser of the Registrable Shares will acquire
      in
      such offering more than two percent of the Company Common Stock outstanding
      at
      the time of such purchase and sale.

     

    Section
      5.                      Registration
      Mechanics.

     

    (a)           Company
      Obligations.  In connection with any registration of Registrable
      Shares pursuant to Section 2 or 3, the Company shall:

     

    (i)           prepare
      and file with the SEC such amendments and supplements to such registration
      statement and the prospectus used in connection with such registration statement
      as may be necessary to comply with the provisions of the Securities Act and
      the
      rules promulgated thereunder with respect to the sale or other disposition
      of
      all of the securities proposed to be registered by such registration
      statement;

     

    (ii)           furnish
      to the Holders such number of copies of any prospectus (including preliminary,
      amended and supplemental prospectuses and any “issuer free writing prospectuses”
(as such term is defined in Rule 433 under the Securities Act)) and conformed
      copies of the registration statement (including amendments or supplements
      thereto and, in each case, all exhibits) and such other documents as it may
      reasonably request, but only while the Company   shall be
      required under the provisions hereof to cause the registration statement to
      remain effective;

     

    (iii)           (A)           use
      its best efforts to register or qualify the Registrable Shares covered by such
      registration statement under such other securities or blue sky laws of such
      jurisdictions as the Holders or any underwriter shall reasonably request, and
      do
      any and all other acts and things which may be necessary or advisable to enable
      such Holders or any underwriter to consummate the disposition of Registrable
      Shares in such jurisdictions and (B) keep such registration or qualification
      in
      effect for so long as the registration statement remains in effect; provided,
      however, that the Company shall not be obligated to qualify to do business
      as a
      foreign corporation under the laws of any jurisdiction in which it shall not
      then be qualified or to file any general consent to service of process in any
      jurisdiction in which such a consent has not been previously filed;

     

    (iv)           use
      commercially reasonable efforts to furnish, or cause to be furnished, to the
      Holders, addressed to them, (A) an opinion of counsel for the Company, dated
      the
      date of the closing under the underwriting agreement relating to any
      underwritten offering, and (B) a “cold comfort” letter signed by the independent
      public accountants who have certified the Company’s financial statements
      included in such registration statement, covering substantially the same matters
      with respect to such registration statement (and the prospectus included
      therein) and, in the case of such accountants’ letter, with respect to events
      subsequent to the date of such financial statements, as are customarily covered
      in opinions of issuer’s counsel and in accountants’ letters delivered to
      underwriters in underwritten public offerings of securities and such other
      matters as such Holders may reasonably request;

     

    (v)           use
      its reasonable best efforts to cause all Registrable Shares proposed to be
      registered by such registration statement to be registered with or approved
      by
      such other federal or state government agencies or authorities as may be
      necessary in the opinion of counsel to the Company to enable the Holders to
      consummate the disposition of such Registrable Shares;

     

    (vi)           within
      a reasonable time before each filing of the registration statement or prospectus
      or amendments or supplements thereto with the SEC, furnish to one counsel
      selected by the Holders copies of such documents proposed to be filed, which
      documents shall be subject to the reasonable approval of such counsel, and
      promptly provide such counsel with all written comments from the SEC with
      respect to such documents;

     

    (vii)           make
      available to the Holders, any underwriter participating in any disposition
      pursuant to a registration statement, and any attorney, accountant or other
      agent or representative retained by any selling Holder or underwriter, upon
      request, all financial and other records, pertinent corporate documents and
      properties of the Company and Company Subsidiaries, including access to due
      diligence meetings involving the senior executives of the Company, as shall
      be
      reasonably necessary to enable the Holders, representatives of the Holders
      and
      the underwriters to conduct reasonable due diligence and cause the Company’s
      officers, directors and employees to supply all information reasonably requested
      by any such person in connection with such registration statement subject,
      in
      each case, to such confidentiality agreements as the Company shall reasonably
      request and that in the case of the Holders, this obligation shall only apply
      to
      one attorney, accountant or other representative designated by the Requesting
      Holders;

     

    (viii)          make
      available executive officers and other members of senior management of the
      Company (including the principal executive and financial officers of the
      Company) at “road shows” or other investor presentations conducted in connection
      with offerings of Registrable Shares;

     

    (ix)           notify
      the Holders any time a prospectus relating to the offering of Registrable Shares
      is required to be delivered or filed under the Securities Act upon discovery
      that, or upon the occurrence of any event as a result of which, the prospectus
      included in such registration statement, as then in effect, includes an untrue
      statement of a material fact or omits to state any material facts required
      to be
      stated therein or necessary to make the statements therein not misleading,
      in
      light of the circumstances under which they were made, and (subject to the
      good
      faith determination of the board of directors of the Company as to whether
      to
      cease all sales under such registration statement), at the request of the
      Holders prepare and furnish to it a reasonable number of copies of a supplement
      to or an amendment of such prospectus as may be necessary so that, as thereafter
      delivered to the purchasers of such securities, such prospectus shall not
      include an untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein or necessary to make the statements therein not
      misleading, in the light of the circumstances under which they were
      made;

     

    (x)           use
      reasonable efforts to comply with all applicable rules and regulations of the
      SEC; and

     

    (xi)           cause
      the Registrable Shares covered by such registration statement to be listed
      on
      the New York Stock Exchange and on any other principal securities exchange
      on
      which Company securities of the same class as the Registrable Shares are then
      listed.

                                

            (b) Holder
      Obligations.  Each
      Holder agrees that:

     

    (i)  it
      shall
      be a condition precedent to the obligations of the Company to complete the
      registration pursuant hereto with respect to any Holder’s Registrable Shares
      that the Holder shall furnish to the Company such information regarding Holder,
      the Registrable Shares held by Holder and the intended method of disposition
      of
      the Registrable Shares held by the Holder as shall be reasonably required to
      effect the registration of such Registrable Shares and shall execute such
      documents in connection with such registration as the Company may reasonably
      request.  At least ten (10) days prior to the first anticipated filing
      date of the registration statement, the Company shall notify the Holders of
      the
      information the Company requires from each Holder (the “Requested
      Information”) if any of such Holder’s Registrable Shares are eligible for
      inclusion in the registration statement.  If at least two (2) business
      days prior to the filing date the Company has not received the Requested
      Information from any such Holder (at such time Holder becoming a
“Non-Responsive Holder”), then the Company may file the registration
      statement without including the Non-Responsive Holder’s Shares but shall not be
      relieved of its obligation to file a registration statement with the SEC
      relating to the Shares of Non-Responsive Holder promptly after Non-Responsive
      Holder provides the Requested Information;

     

    (ii)  it
      shall
      not prepare or use any Free Writing Prospectus (as such term is defined in
      Rule
      405 under the Securities Act) unless any and all issuer information included
      therein has been approved by the Company (such approval not to be unreasonably
      withheld);

     

    (iii)  as
      promptly as practicable after becoming aware of such event, it shall notify
      the
      Company of the occurrence of any event, as a result of which the prospectus
      included in a registration statement, as then in effect, includes an untrue
      statement of a material fact or omits to state a material fact required to
      be
      stated therein or necessary to make the statements therein, in light of the
      circumstances under which they were made, not misleading; and

     

    (iv)  upon  receipt
      of any notice from the Company of the occurrence of any event of the kind
      described in Section 5(a)(ix), it will forthwith discontinue its disposition
      of
      Registrable Shares pursuant to the registration statement relating to such
      Registrable Shares until it receives copies of the supplemented or amended
      prospectus contemplated by Section 5(a)(ix) and, if so directed by the Company,
      it will deliver to the Company all copies then in their possession of the
      prospectus relating to such Registrable Shares, current at the time of receipt
      of such notice.  If a Holder’s disposition of Registrable Shares in
      connection with a Demand Notice is discontinued pursuant to the foregoing
      sentence, unless the Company thereafter extends the effectiveness of the
      registration statement to permit dispositions of Registrable Shares by any
      selling Holders at least thirty (30) consecutive days and for an aggregate
      of
      one hundred and eighty (180) days, whether or not consecutive, the registration
      statement shall not be counted for purposes of determining whether the Holders
      have exercised a Demand Notice pursuant to Section 2(b).

     

    Section
      6.                      Expenses.  The
      Company shall pay or cause to be paid all of the Company’s fees and expenses in
      connection with any registration and sale of Registrable Shares pursuant to
      the
      Registration Rights (including, without limitation, all registration and filing
      fees, all printing costs, all fees and expenses of counsel and independent
      accountants for the Company, all fees and expenses of complying with securities
      or blue sky laws).

     

    Section
      7.                      Indemnification
      and Contribution.

     

    (a)           Indemnification
      by the Company.  With respect to any offering and sale registered
      pursuant to these Registration Rights, the Company agrees to indemnify and
      hold
      any selling Holder, each underwriter, if any, of the Registrable Shares under
      such registration, and each Person who controls any of the foregoing within
      the
      meaning of Section 15 of the Securities Act, and any directors and officers
      of
      the foregoing, harmless against any and all losses, claims, damages, or
      liabilities (including reasonable legal fees and other reasonable expenses
      incurred in the investigation and defense thereof) to which they or any of
      them
      may become subject under the Securities Act or otherwise (collectively
“Losses”), insofar as any such Losses shall arise out of or shall be
      based upon (i) any untrue statement or alleged untrue statement of a material
      fact contained in the registration statement relating to the sale of such
      Registrable Shares, or the omission or alleged omission to state therein a
      material fact required to be stated therein or necessary to make the statements
      therein not misleading, (ii) any untrue statement or alleged untrue statement
      of
      a material fact contained in the prospectus relating to the sale of such
      Registrable Shares, or the omission or alleged omission to state therein a
      material fact necessary in order to make the statements therein, in light of
      the
      circumstances under which they were made, not misleading, or (iii) any violation
      or alleged violation by the Company of the Securities Act, the Exchange Act,
      any
      applicable state securities law or any rule or regulation promulgated under
      the
      Securities Act, the Exchange Act or any applicable state securities law;
      provided, however, that the indemnification contained in this Section 7 shall
      not apply to such Losses which shall arise out of or shall be based upon any
      such untrue statement, or any such omission or alleged omission, which shall
      have been made in reliance upon and in conformity with information furnished
      in
      writing to the Company by any selling Holder or any underwriter, as the case
      may
      be, specifically for use in connection with the preparation of the registration
      statement or prospectus contained in the registration statement or any such
      amendment thereof or supplement therein.

     

    (b)           Indemnification
      by the Holders.  In the case of each offering and sale registered
      pursuant to this Article II, any selling Holder and each underwriter, if any,
      participating therein shall severally indemnify and hold harmless the Company
      and each Person, if any, who controls the Company within the meaning of Section
      15 of the Securities Act, and the directors and officers of the Company, with
      respect to any statement in or omission from such registration statement or
      prospectus contained in such registration statement (as amended or as
      supplemented, if amended or supplemented as aforesaid) if such statement or
      omission shall have been made in reliance upon and in conformity with
      information furnished in writing to the Company by any selling Holder or such
      underwriter, as the case may be, specifically for use in connection with the
      preparation of such registration statement or prospectus contained in the
      registration statement or any such amendment thereof or supplement
      thereto.

     

    (c)           Notice.  Each
      party indemnified under this Section 7 shall promptly after receipt of notice
      of
      the commencement of any claim against such indemnified party in respect of
      which
      indemnity may be sought hereunder, notify the indemnified party in writing
      of
      the commencement thereof.  The failure of any indemnified party to
      notify an indemnifying party shall not relieve the indemnifying party from
      any
      liability in respect of such action which it may have to such indemnified party
      on account of the indemnity contained in this Section 7, unless (and only to
      the
      extent) the indemnifying party was prejudiced by such failure, and in no event
      shall such failure relieve the indemnifying party from any other liability
      which
      it may have to such indemnified party.  In case any action in respect
      of which indemnification may be sought hereunder shall be brought against any
      indemnified party and it shall notify an indemnifying party of the commencement
      thereof, the indemnifying party shall be entitled to participate therein and,
      to
      the extent that it may desire, jointly with any other indemnifying party
      similarly notified, to assume the defense thereof through counsel reasonably
      satisfactory to the indemnified party, and after notice from the indemnifying
      party to such indemnified party of its election to assume the defense thereof,
      the indemnifying party shall not be liable to such indemnified party under
      this
      Section 7 for any legal or other expenses subsequently incurred by such
      indemnified party in connection with the defense thereof, other than reasonable
      costs of investigation (unless such indemnified party reasonably objects to
      such
      assumption on the grounds that there may be defenses available to it which
      are
      different from or in addition to those available to such indemnifying party
      in
      which event the indemnifying party shall not be entitled to assume the defense
      thereof with respect to such defenses).  No indemnifying party shall,
      without the prior written consent of the indemnified party, effect any
      settlement of any claim or pending or threatened proceeding in respect of which
      the indemnified party is or could have been a party and indemnity could have
      been sought hereunder by such indemnified party, unless such settlement includes
      an unconditional release of such indemnified party from all liability arising
      out of such claim or proceeding.

     

    (d)           Contribution.  If
      the indemnification provided for in this Section 7 is unavailable to an
      indemnified party or is insufficient to hold such indemnified party harmless
      from any Losses in respect of which this Section 7 would otherwise apply by
      its
      terms (other than by reason of exceptions provided herein), then each applicable
      indemnifying party, in lieu of indemnifying such indemnified party, shall
      contribute to the amount paid or payable by such indemnified party as a result
      of such Losses, in such proportion as is appropriate to reflect the relative
      fault of the indemnifying party, on the one hand, and such indemnified party,
      on
      the other hand, in connection with the offering to which such contributions
      relates as well as any other relevant equitable considerations.  The
      relative fault shall be determined by reference to, among other things, each
      party’s relative knowledge and access to information concerning the matter with
      respect to which the claim was asserted, and the opportunity to correct and
      prevent any statement or omission.  The amount paid or payable by a
      party as a result of any Losses shall be deemed to include any legal or other
      fees or expenses incurred by such party in connection with any investigation
      or
      proceeding to the extent such party would have been indemnified for such
      expenses if the indemnification provided for in this Section 7 was available
      to
      such party.  The parties hereto agree that it would not be just and
      equitable if contribution pursuant to this Section 7(d) were determined by
      pro
      rata allocation or by any other method of allocation that does not take account
      of the equitable considerations referred to in the preceding
      paragraph.  No person guilty of fraudulent misrepresentation (within
      the meaning of Section 11(f) of the Securities Act) shall be entitled to
      contribution from any person who was not guilty of such fraudulent
      misrepresentation.

     

    Section
      8.                                Exchange
      Act Reports.  With a view to making available to the Holders the
      benefits of Rule 144 and any other rule or regulation of the SEC that may at
      any
      time permit an Investor to sell securities of the Company to the public without
      registration, the Company agrees to use its reasonable best efforts
      to:

     

    (a)           make
      and keep public information available, as those terms are understood and defined
      in Rule 144, at all times, and take all action as may be required as a condition
      to the availability of Rule 144;

     

    (b)           so
      long as a Holder owns any Registrable Shares, furnish to any Holders upon its
      reasonable written request a written statement certifying the Company’s
      compliance with the reporting requirements of Rule 144 or any similar rule,
      and
      a copy of the most recent annual, periodic or current report of the Company
      filed pursuant to the Exchange Act and such other reports and documents as
      reasonably requested by such Holder in availing itself of any rule or regulation
      of the SEC allowing the sale of the Registrable Shares without
      registration;

     

    (c)           file
      with the SEC in a timely manner all reports and other documents required of
      the
      Company under the Securities Act and the Exchange Act; and

     

    (d)           facilitate
      and expedite transfers of Registrable Shares sold pursuant to SEC Rule 144,
      including providing timely notice to its transfer agent to expedite such
      transfers.

     

    Section
      9.                      Other
      Agreements.

     

    (a)           The
      Company shall not grant, and has not granted, any other Person rights to
      register securities of the Company on terms that would be reasonably likely
      to
      restrict the ability of the Company fully to perform its obligations to the
      Holders in connection with the Registration Rights.

     

    (b)           The
      Company shall not amend any registration rights agreement with any other Person
      nor shall the Company waive any provision under any registration rights
      agreement that it would be entitled to waive thereunder if such waiver would
      be
      reasonably likely to adversely affect any Holder’s Registration
      Rights.

     

    Section
      10.                                Benefits
      of Registration Rights.  The Purchasers and any permitted holder
      of the Shares under the Stock Purchase Agreement may exercise and have the
      benefits of the Registration Rights initially granted to the Purchasers
      hereunder in such manner and in such proportion as shall be determined by such
      Purchaser (such Purchaser and such holders exercising Registration Rights each
      shall be termed a “Holder” hereunder); provided, that each Holder shall also be
      subject to the obligations provided hereunder.

     

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B


    ADDITIONAL
      REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     

    Section
      1.                      [Intentionally
      Omitted]

     

    Section
      2.                      [Intentionally
      Omitted]

     

    Section
      3.                      [Intentionally
      Omitted]

     

    Section
      4.1.                                Organization
      and Qualification.  The Company and each of the Company
      Subsidiaries is a corporation, limited liability company or limited partnership
      duly organized, validly existing and in good standing, as applicable, under
      the
      laws of its jurisdiction of incorporation or organization.  The
      Company and each of the Company Subsidiaries has all requisite power and
      authority to own, lease and operate its assets and properties to the extent
      owned, leased and operated and to carry on its business as it is now being
      conducted and is duly qualified and in good standing to do business in each
      jurisdiction in which the nature of its business or the ownership or leasing
      of
      its assets and properties makes such qualification necessary other than in
      such
      jurisdictions where the failure to be so qualified or in good standing would
      not, individually or in the aggregate, reasonably be expected to result in
      a
      Company Material Adverse Effect.  

     

    Section
      4.2.                                Subsidiaries;
      Corporate Documents.

     

    (a)  Section
      4.2(a)(i) of the Company Disclosure Letter sets forth a complete list, as of
      the
      date hereof, of all of the Company Subsidiaries and their respective
      jurisdictions of incorporation or organization and the jurisdictions in which
      they are qualified to do business, and Section 4.2(a)(ii) of the Company
      Disclosure Letter sets forth each of the Company's Subsidiaries and the
      ownership interest of the Company in each such Subsidiary, as well as the
      ownership interest of any other Person or Persons in each such Subsidiary,
      and
      the Company's or its Subsidiaries' capital stock, equity interest or other
      direct or indirect ownership interest in any other Person other than securities
      in a publicly traded company held for investment by the Company or any of its
      Subsidiaries and consisting of less than 1% of the outstanding capital stock
      of
      such company.  The Company does not own, directly or indirectly, any
      minority interest in any Person that requires an additional filing by the
      Purchasers under the HSR Act.  Except as set forth in Section 4.2 of
      the Company Disclosure Letter, all of the issued and outstanding shares of
      capital stock or other securities of each Company Subsidiary are duly
      authorized, validly issued, fully paid and nonassessable, and are owned,
      directly or indirectly, beneficially and of record by the Company free and
      clear
      of any mortgages, liens, security interests, pledges, charges, easements, rights
      of way, options, claims, restrictions or encumbrances of any kind (each a "Lien"
      or collectively, the "Liens").

     

    (b)  Prior
      to
      the date hereof, the Company has made available to the Parent true, complete
      and
      correct copies of the Company's and its Subsidiaries' articles of incorporation
      and by-laws or comparable governing documents, each current as of the date
      hereof, and each as so made available is in full force and effect.

     

    Section
      4.3.                               Capitalization.

     

    (a)  The
      authorized capital stock of the Company consists of 250,000,000 shares of
      Company Common Stock, par value $0.01 per share; and 50,000,000 shares of
      preferred stock, par value $0.01 per share ("Company Preferred Stock"), of
      which
      2,000,0000 shares have been designated Series R Participating Cumulative
      Preferred Stock ("Company Series R Preferred Stock").  At the close of
      business on October 23, 2007, (i) 117,176,878 shares of Company Common Stock
      were issued and outstanding and (ii) no shares of Company Series R Preferred
      Stock were issued or outstanding.  Except for issuances pursuant to
      Company Plans and other issuances not in excess of 5,000 shares of Company
      Common Stock in the aggregate, from the close of business on October 23, 2007
      to
      the date hereof, the Company has not issued any shares of Company Common
      Stock.  All outstanding shares of Company Common Stock have been duly
      authorized and are validly issued, fully paid and nonassessable.  As
      of the date hereof, the Company has no capital stock or other securities
      (including securities convertible into, or exercisable or exchangeable for,
      capital stock) of the Company reserved for issuance and there are no preemptive
      or other outstanding rights, options, warrants, calls, conversion rights, stock
      appreciation rights, redemption rights, repurchase rights, commitments,
      arrangements, agreements or rights of any character to which the Company or
      any
      Company Subsidiary is a party or by which any of them are bound obligating
      the
      Company or any Company Subsidiary to issue, deliver or sell, or cause to be
      issued, delivered or sold, additional shares of capital stock or other
      securities or rights (including securities or rights convertible into, or
      exercisable or exchangeable for, additional shares of capital stock) of the
      Company or any Company Subsidiary, or obligating the Company or any Company
      Subsidiary to grant, extend or enter into any such preemptive or other
      outstanding rights, options, warrants, calls, conversion rights, stock
      appreciation rights, redemption rights, repurchase rights, commitments,
      arrangements, agreements or rights.  The Company does not have
      outstanding any bonds, debentures, notes or other obligations the holders of
      which have the right to vote (or convertible into or exercisable for securities
      having the right to vote) with the stockholders of the Company on any
      matter.

     

    (b)  The
      authorized capital stock of Puget Sound Energy consists of (i) 150,000,000
      shares of common stock, par value $10.00 per share, of which 85,903,791 shares
      are issued and outstanding and all of which are duly authorized, validly issued,
      fully paid and nonassessable and owned by the Company free and clear of any
      Liens, (ii) 13,000,000 shares of preferred stock, par value $25.00 per share,
      none of which are issued or outstanding, (iii) 3,000,000 shares of preferred
      stock, par value $100.00 per share, of which, as of the close of business on
      October 23, 2007, (A) 14,583 shares designated 4.84% Preferred Stock were issued
      and outstanding and (B) 4,311 shares designated 4.70% Preferred Stock were
      issued and outstanding, and (iv) 700,000 shares of preference stock, par value
      $50.00 per share, none of which are issued or outstanding.

     

    Section
      4.4.                                [Intentionally
      Omitted]

     

    Section
      4.5.                                Reports
      and Financial Statements.  Since December 31, 2004, the Company
      and the Company Subsidiaries have filed or furnished, as applicable, on a timely
      basis (taking into account all applicable grace periods) all forms, statements,
      certifications, reports and documents required to be filed or furnished by
      them
      under the Securities Act, the Exchange Act, the Public Utility Holding Company
      Act of 1935, as amended and in effect prior to its repeal effective February
      8,
      2006 ("PUHCA"), the Energy Policy Act of 2005, the Federal Power Act of 1935,
      as
      amended (the "FPA"), the Communications Act of 1934 and applicable state public
      utility laws and regulations (collectively, the "Company
      Reports").  The Company Reports have complied, as of their respective
      dates, or if not yet filed or furnished, will comply, with all applicable
      requirements of the appropriate statutes and the rules and regulations
      thereunder, except for such failures which, individually or in the aggregate,
      would not reasonably be expected to result in a Company Material Adverse
      Effect.  As of their respective dates, (or, if amended prior to the
      date hereof, as of the date of such amendment), each form, certification,
      report, schedule, registration statement, definitive proxy statement or other
      document filed with or furnished to the SEC after December 31, 2004 by the
      Company or Puget Sound Energy (the "Company SEC Reports"), did not, or if not
      yet filed or furnished, will not, contain any untrue statement of a material
      fact or omit to state a material fact required to be stated therein or necessary
      to make the statements therein, in light of the circumstances under which they
      were made, not misleading.  Each of the Company SEC Reports, at the
      time of its filing or being furnished, complied in all material respects, or
      if
      not yet filed or furnished, will comply in all material respects, with the
      applicable requirements of the Securities Act, the Exchange Act and the
      Sarbanes-Oxley Act of 2002 ("SOX") and any rules and regulations promulgated
      thereunder applicable to the Company SEC Reports.  The Company is in
      compliance in all material respects with the applicable listing and corporate
      governance rules and regulations of the New York Stock Exchange.  Each
      of the audited consolidated financial statements and unaudited interim financial
      statements of the Company included in or incorporated by reference into the
      Company SEC Reports (including the related notes and schedules) (collectively,
      the "Company Financial Statements") has been, and in the case of Company SEC
      Reports filed after the date hereof will be, prepared in accordance with United
      States generally accepted accounting principles ("GAAP"), consistently applied
      during the periods involved (except as may be indicated therein or in the notes
      thereto and subject, in the case of unaudited statements, to normal year-end
      audit adjustments) and fairly presents, or, in the case of Company SEC Reports
      after the date hereof, will fairly present, the consolidated financial position
      of the Company and the Company Subsidiaries as of the dates thereof and the
      results of its operations and cash flows for the periods then ended, subject,
      in
      the case of the unaudited interim financial statements, to normal year-end
      audit
      adjustments.

     

    Section
      4.6.                               Real
      Property.

     

    (a)  The
      Company or Puget Sound Energy has  (x) valid title to all real
      property owned in fee by Company or Puget Sound Energy (the "Owned Real
      Property") (y) valid title to the leasehold estate (as lessee) in all real
      property and interests in real property leased or subleased by Company or Puget
      Sound Energy as lessee or sublessee (the "Leased Real Property"), and (z) valid
      title to the easements in all real property and interests in real property
      over
      which the Company or Puget Sound Energy has easement (the "Easement Real
      Property" and, together with the Owned Real Property and Leased Real Property,
      the "Real Property"), in each case free and clear of all Liens, except the
      following ("Permitted Real Property Liens"):

     

    (i)  Liens
      that secure indebtedness as reflected on the Company Financial Statements or
      indebtedness listed on Section 4.6 of the Company Disclosure
      Letter;

     

    (ii)  easements,
      covenants, conditions, rights of way, encumbrances, restrictions, defects of
      title and other similar matters, including matters that an accurate survey
      ALTA
      survey would disclose, whether or not of public record or which may be asserted
      by persons in possession of Real Property, or claiming to be in possession
      thereof (other than such matters that, individually or in the aggregate,
      materially adversely impair the current use of the Real Property by the Company
      or Puget Sound Energy);

     

    (iii)  zoning,
      planning, building and other applicable laws regulating the use, development
      and
      occupancy of real property and permits, consents and rules under such
      laws;

     

    (iv)  Liens
      that have been placed by a third party on the fee title of Leased Real Property
      or Easement Real Property that are subordinate to the rights therein of the
      Company or Puget Sound Energy or that, if foreclosed, would not materially
      adversely impair the conduct of the business of the Company or Puget Sound
      Energy as presently conducted;

     

    (v)  Liens
      that, individually or in the aggregate, do not materially adversely impair
      the
      continued use or operation of the specific parcel of Real Property to which
      they
      relate or the conduct of the business of the Company and Puget Sound Energy
      as
      presently conducted;

     

    (vi)  subleases
      identified in Section 4.6 of the Company Disclosure Letter;

     

    (vii)  Indian
      treaty or aboriginal rights other than the rights reasonably necessary for
      the
      conduct of the business of the Company and Puget Sound Energy as presently
      conducted over land within the boundaries of any recognized Indian reservation
      or over land  known by the Company or Puget Sound Energy (whether by
      actual or constructive knowledge from recorded documents) to be claimed under
      Indian treaties or as aboriginal rights;

     

    (viii)  equitable
      servitudes for hunting and fishing in favor of Indian tribes;

     

    (ix)  any
      of
      the following:  (aa) unpatented mining claims; (bb) reservations or
      exceptions in patents or in Acts authorizing the issuance thereof; or
      (cc)  water rights, claims or title to water, whether or not the
      matters excepted under (aa), (bb), or (cc) are shown by the public records;
      and
      any prohibition or limitation on the use, occupancy or improvement of the land,
      which arises from the rights of the public or riparian owners to use any waters
      which may cover the land or to use any portion of the land which is now or
      may
      formerly have been covered by water (other than the matters described in this
      subsection (ix) that, individually or in the aggregate, materially adversely
      impair the current use of the Real Property by the Company or Puget Sound
      Energy);

     

    (x)  questions
      as to whether Puget Sound Energy's  title or right to use (a) railroad
      rights of way, or (b) utility corridors that purports to be Owned Real Property
      is actually Easement Real Property because such title or right traces from
      rights denominated by deed as a "right-of-way" or similar term;

     

    (xi)  Liens
      that, to the knowledge of the Company, could be remedied by exercise of the
      authority to acquire property or rights therein by eminent domain for an amount
      of compensation that would not result in a Company Material Adverse Effect;
      and

     

    (xii)  such
      other matters that, individually or in the aggregate, would not reasonably
      be
      expected to result in a Company Material Adverse Effect.

     

    (b)  Neither
      Company nor Puget Sound Energy is obligated under, or a party to, any option,
      right of first refusal or other contractual right or obligation to sell, assign
      or dispose of any Real Property or any portion thereof or interest therein
      that,
      in each case, is valued in excess of $5,000,000 (or $1,000,000 if the Owned
      Real
      Property is otherwise used or useful in the utility operations of Puget Sound
      Energy), or that, if such sale, assignment or disposition is consummated, could
      individually or in the aggregate materially adversely impair the conduct of
      the
      business of the Company or Puget Sound Energy as presently
      conducted.

     

    (c)  (i)  Each
      lease or sublease for real property under which Company or Puget Sound Energy
      is
      a lessee or sublessee (each, a "Real Property Lease") and each easement or
      subeasement for real property under which the Company or Puget Sound Energy
      owns
      an easement interest (each, an "Easement") is, to the knowledge of the Company,
      in full force and effect and is the valid and binding obligation of the Company
      or Puget Sound Energy, enforceable against the Company or Puget Sound Energy
      in
      accordance with its terms and, to the knowledge of the Company, the other party
      or parties thereto, subject to Permitted Real Property Liens, subject to the
      effect of any applicable bankruptcy, insolvency, reorganization, moratorium
      or
      similar laws affecting rights of creditors generally and subject to the effect
      of general principles of equity (regardless of whether considered in a
      proceeding at law or in equity), (ii) no notices of default under any Real
      Property Lease or Easement have been received by the Company or Puget Sound
      Energy that have not been resolved, (iii) neither the Company nor Puget Sound
      Energy is in default in any material respect under any Real Property Lease,
      and,
      to the knowledge of the Company, no landlord, sublandlord, land owner or the
      owner of an easement who has granted a subeasement thereunder is in default
      in
      any material respect, and (iv) no event has occurred which, with notice, lapse
      of time or both, would constitute a breach or default under any Real Property
      Lease or Easement by the Company or Puget Sound Energy, except in each case
      ((c)(i), (ii), (iii) and (iv)), as do not materially adversely impair the use
      or
      occupancy of the Real Property or prevent, materially delay or materially impair
      the consummation of the transactions contemplated by this
      Agreement.

     

    (d)  With
      respect to the Real Property, neither Company nor Puget Sound Energy has
      received any written notice of, nor to the knowledge of the Company does there
      exist as of the date of this Agreement, any pending, threatened or contemplated
      condemnation (other than condemnations in connection with municipal road
      improvement projects, state highway improvement projects or other public
      transportation projects) or similar proceedings, or any sale or other
      disposition of any Real Property or any part thereof in lieu of condemnation
      that, individually or in the aggregate, would reasonably be expected to
      materially adversely impair the use, occupancy or value of any Real
      Property.  The Company and Puget Sound Energy have lawful rights of
      use and access to all land and other real property rights, subject to Permitted
      Real Property Liens, necessary to conduct their businesses substantially as
      presently conducted.  No affiliate of the Company other than Puget
      Sound Energy controls rights with respect to land and other real property rights
      necessary to conduct the businesses of the Company and Puget Sound Energy
      substantially as presently conducted.

     

    (e)  Each
      of
      the Company Subsidiaries other than Puget Sound Energy has good and
      marketable title to all fee real property, valid title to
      all leasehold estates and valid title to all easements of such Company
      Subsidiary, free and clear of all Liens other than Permitted Real Property
      Liens, except where the failure to do so, individually or in the aggregate,
      would not reasonably be expected to result in a Company Material Adverse
      Effect.

     

    Section
      4.7.                                Internal
      Controls and Procedures.  The Company has established and
      maintains "disclosure controls and procedures" (as defined in Rules 13a-15(e)
      and 15d-15(e) promulgated under the Exchange Act) that are reasonably designed
      (but without making any representation or warranty as to the effectiveness
      of
      any such controls or procedures so designed) to ensure that material information
      (both financial and non-financial) relating to the Company and the Company
      Subsidiaries required to be disclosed by the Company in the reports that it
      files or submits under the Exchange Act is recorded, processed, summarized
      and
      reported within the time periods specified in the rules and forms of the SEC,
      and that such information is accumulated and communicated to the Company's
      principal executive officer and principal financial officer, or persons
      performing similar functions, as appropriate, to allow timely decisions
      regarding required disclosure and to make the certifications of the "principal
      executive officer" and the "principal financial officer" of the Company required
      by Section 302 of SOX with respect to such reports.  Each of the
      principal executive officer of the Company and the principal financial officer
      of the Company (or each former principal executive officer of the Company and
      each former principal financial officer of the Company, as applicable) has
      made
      all certifications required by Sections 302 and 906 of SOX and the rules and
      regulations promulgated thereunder with respect to the Company SEC Reports
      and
      the statements contained in such certifications are true and accurate in all
      material respects as of the date hereof.  Except as set forth in
      Section 4.7 of the Company Disclosure Letter, there are no "significant
      deficiencies" or "material weaknesses" (as defined by SOX) in the design or
      operation of the Company's internal controls and procedures which could
      adversely affect the Company's ability to record, process, summarize and report
      financial data.

     

    Section
      4.8.                                Litigation;
      Undisclosed Liabilities; Restrictions on Dividends; No General
      Liens.  (a) There are no pending or, to the knowledge of the
      Company, threatened claims, suits, actions or proceedings before any court,
      governmental department, commission, agency, instrumentality or authority or
      any
      arbitrator, nor are there, to the knowledge of the Company, any investigations
      or reviews by any court, governmental department, commission, agency,
      instrumentality or authority or any arbitrator pending or threatened against,
      relating to or affecting the Company or any of the Company Subsidiaries which,
      individually or in the aggregate, have resulted in since December 31, 2006
      or
      would reasonably be expected to result in a Company Material Adverse Effect
      or
      prevent, materially delay or materially impair the consummation of the
      transactions contemplated by this Agreement, (b) there have not been any
      significant developments since December 31, 2006 with respect to claims, suits,
      actions, proceedings, investigations or reviews that, individually or in the
      aggregate, have resulted in since December 31, 2006 or would reasonably be
      expected to result in a Company Material Adverse Effect or prevent, materially
      delay or materially impair the consummation of the transactions contemplated
      by
      this Agreement and (c) there are no judgments, decrees, injunctions, rules
      or
      orders of any court, governmental department, commission, agency,
      instrumentality or authority or any arbitrator applicable to the Company or
      any
      of the Company Subsidiaries except for such that, individually or in the
      aggregate, have not resulted in since December 31, 2006 or would not reasonably
      be expected to result in a Company Material Adverse Effect.  Except
      for matters reflected as liabilities or reserved against in the balance sheet
      (or notes thereto) as of December 31, 2006, included in the Company Financial
      Statements, as of the date of this Agreement, neither the Company nor any
      Company Subsidiary has any liabilities or obligations (whether absolute,
      accrued, contingent, fixed or otherwise, or whether due or to become due) of
      any
      nature and whether or not required by GAAP to be reflected on a consolidated
      balance sheet of the Company and its consolidated Subsidiaries (including the
      notes thereto), except liabilities or obligations (i) that were incurred since
      December 31, 2006 in the ordinary course of business consistent in kind and
      amount with past practice, or (ii) that, individually or in the aggregate,
      have
      not had and would not reasonably be expected to have a Company Material Adverse
      Effect.  Except as may be set forth in any Company Required Statutory
      Approval or Parent Required Statutory Approval, there are no restrictions
      (contractual or regulatory) limiting the ability of Puget Sound Energy from
      making distributions, dividends or other return of capital to the
      Company.  Neither the Company nor Puget Sound Energy has granted a
      consensual security interest in the portion of its assets defined as Collateral
      in the Loan and Servicing Agreement dated December 20, 2005 by and between
      Puget
      Sound Energy and PSE Funding, Inc. other than in connection with the
      transactions contemplated by such agreement, including the grant set forth
      in
      Section 1.7 of the Receivable Sales Agreement dated December 20, 2005 by and
      between Puget Sound Energy and PSE Funding, Inc.; it being understood that
      this
      representation is not intended to address statutory or contractual rights of
      set
      off or Liens or security interests arising or existing by operation of
      law.

     

    Section
      4.9.                                Tax
      Matters.  Except as to matters that would not reasonably be
      expected, considered individually or in the aggregate with other matters, to
      result in a Company Material Adverse Effect: (i) the Company and each of the
      Company Subsidiaries have timely filed (or there have been filed on their
      behalf) with appropriate taxing authorities all Tax Returns (as defined below)
      required to be filed by them on or prior to the date hereof, such Tax Returns
      are correct, complete and accurate in all respects, and all Taxes (as defined
      below) due and payable have been paid; (ii) there are no audits, claims,
      assessments, levies, administrative or judicial proceedings pending against
      the
      Company or any Company Subsidiary by any taxing authority; (iii) there are
      no
      Liens for Taxes upon any property or assets of the Company or any of the Company
      Subsidiaries, except for Liens for Taxes (A) not yet due and payable, or if
      due
      and payable, are not delinquent and may thereafter be paid without penalty
      or
      (B) that are being contested in good faith through appropriate proceedings,
      are
      listed in Section 4.9 of the Company Disclosure Letter and have been accrued
      for
      or otherwise taken into account in accordance with GAAP on the Company Financial
      Statements; (iv) there are no outstanding written requests, agreements, consents
      or waivers to extend the statutory period of limitations applicable to the
      assessment or collection of any Taxes or deficiencies against the Company or
      any
      of the Company Subsidiaries; (v) all Taxes that the Company or any Company
      Subsidiary is obligated to withhold from amounts owing to any employee, creditor
      or third party have been paid over to the appropriate taxing authorities in
      a
      timely manner, to the extent due and payable; (vi) neither the Company nor
      any
      Company Subsidiary has been a party to any distribution occurring during the
      two-year period prior to the date of this Agreement in which the parties to
      such
      distribution treated the distribution as one to which Section 355 of the
      Internal Revenue Code of 1986, as amended (the "Code"), applied, (vii) neither
      the Company nor any Company Subsidiary has participated in any "listed
      transactions" or, to the knowledge of the Company, any "reportable transactions"
      within the meaning of Treasury Regulations Section 1.6011-4, and neither the
      Company nor any Company Subsidiary has been a "material advisor" to any such
      transactions within the meaning of Section 6111 of the Code; (viii) neither
      the
      Company nor any Company Subsidiary (A) has any liability for the Taxes of any
      Person (other than the Company or the Company Subsidiaries) under Treasury
      Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
      law), as a transferee or successor, or pursuant to any contractual obligation
      (other than pursuant to any commercial agreement or contract not primarily
      related to Tax) or (B) is a party to or bound by any Tax sharing agreement,
      Tax
      allocation agreement or Tax indemnity agreement (other than the Material
      Contracts or any commercial agreements or contracts not primarily related to
      Tax); and (ix) the Company has made available to the Parent correct and complete
      copies of all income and all other material Tax Returns, material examination
      reports and material statements of deficiencies assessed against or agreed
      to by
      the Company or any Company Subsidiary for taxable periods beginning after
      December 31, 2003.  As used in this Agreement: (i) the term "Tax"
      includes all federal, state, local and foreign income, profits, franchise,
      gross
      receipts, environmental, customs duty, capital stock, severance, stamp, payroll,
      sales, employment, unemployment, disability, use, property, withholding, excise,
      production, value added, occupancy and other taxes, duties or assessments of
      any
      nature whatsoever, together with all interest, penalties and additions imposed
      with respect thereto; (ii) the term "Tax Return" includes all returns and
      reports (including elections, declarations, disclosures, schedules, estimates
      and information returns) required to be supplied to a Tax authority relating
      to
      Taxes, including any amendments to such returns and reports; and (iii) the
      term
      "Treasury Regulations" means the regulations promulgated by the U.S. Department
      of the Treasury pursuant to the Code.  

     

    Section
      4.10.                                Employee
      Benefits; ERISA.  

     

    (a)  Company
      Plans.  Section 4.10(a) of the Company Disclosure Letter contains
      a true and complete list of each deferred compensation and each bonus or other
      incentive compensation, stock purchase, stock option and other equity
      compensation plan, program, policy, agreement or arrangement; each severance
      or
      termination pay, medical, surgical, hospitalization, life insurance and other
      "welfare plan," fund or program (within the meaning of Section 3(1) of the
      Employee Retirement Income Security Act of 1974, as amended ("ERISA")); each
      profit-sharing, stock bonus or other "pension plan," fund or program (within
      the
      meaning of Section 3(2) of ERISA); each employment, termination or severance
      contract, arrangement, policy or agreement; and each other employee benefit
      plan, fund, program, policy, agreement or arrangement; in each case, that (i)
      is
      sponsored, maintained or contributed to or required to be contributed to by
      the
      Company, any Company Subsidiary or any trade or business, whether or not
      incorporated, that together with the Company or any Company Subsidiary is deemed
      a "single employer" under Section 4001(b) of ERISA (an "ERISA Affiliate"),
      or to
      which the Company or an ERISA Affiliate is a party, for the benefit of any
      employee or former employee of the Company or any Company Subsidiary or with
      respect to which the Company or any Company Subsidiary to its knowledge has
      any
      liability, and (ii) is material to the Company and the Company Subsidiaries
      taken as a whole (the "Company Plans").

     

    (b)  Deliveries.  With
      respect to each Company Plan, the Company has heretofore delivered or made
      available to the Parent true and complete copies of (i) each of the Company
      Plans as currently in effect; (ii) if the Company Plan is funded through a
      trust
      or any third party funding vehicle, a copy of the trust or other funding
      agreement; (iii) the most recent determination or opinion letter received from
      the Internal Revenue Service with respect to each Company Plan intended to
      qualify under Section 401 of the Code; (iv) if applicable, the most recent
      annual report (Form 5500 series) filed with the Internal Revenue Service; (v)
      if
      applicable, the most recent actuarial report prepared for such Company Plan;
      and
      (vi) for the last three years, all material correspondence with the
      Internal Revenue Service, the United States Department of Labor, the Pension
      Benefit Guaranty Corporation (the "PBGC"), the SEC and any other Governmental
      Authority regarding the operation or the administration of any Company
      Plan.

     

    (c)  Absence
      of Liability.  No material liability under Title IV of ERISA has
      been incurred by the Company, any Company Subsidiary or any ERISA Affiliate
      that
      has not been satisfied in full and, to the knowledge of the Company, no
      condition exists that presents a material risk to the Company, any Company
      Subsidiary or any ERISA Affiliate of incurring any such liability, other than
      liability for premiums due to the PBGC (which premiums have been paid when
      due).  No notice of a "reportable event," within the meaning of
      Section 4043 of ERISA for which the reporting requirement has not been waived
      or
      extended, other than pursuant to PBGC Reg. Section 4043.33 or 4043.66, has
      been
      required to be filed for any Company Plan within the 12-month period ending
      on
      the date hereof or will be required to be filed in connection with the
      transactions contemplated by this Agreement.  No notices have been
      required to be sent to participants and beneficiaries or the PBGC under Section
      302 or 4011 of ERISA or Section 412 of the Code with respect to the most recent
      three fiscal years of the applicable Company Plan ended prior to the Closing
      Date.

     

    (d)  Present
      Value of Accrued Benefits.  With respect to each Company Plan
      subject to Title IV of ERISA (a "Title IV Company Plan"), the present value
      of
      accrued benefits under such plan, based upon the actuarial assumptions used
      for
      funding purposes in the most recent actuarial report prepared by such plan's
      actuary with respect to such plan, did not exceed, as of the end of the most
      recent fiscal year of such plan ended prior to the Closing Date, the then
      current value of the assets of such plan allocable to such accrued benefits
      by
      an amount that is material to the Company and the Company subsidiaries taken
      as
      a whole.

     

    (e)  Funding.  No
      Title IV Company Plan has incurred any "accumulated funding deficiency" (as
      defined in Section 302 of ERISA and Section 412 of the Code), whether or not
      waived, as of the last day of the most recent fiscal year of such Title IV
      Company Plan ended prior to the Closing Date.  Except as would not,
      individually or in the aggregate, reasonably be expected to have a Company
      Material Adverse Effect, all material contributions required to be made with
      respect to any Company Plan on or before the date hereof have been made and
      all
      obligations in respect of each Company Plan as of the date hereof have been
      accrued and reflected in the Company Financial Statements to the extent required
      by GAAP.

     

    (f)  Multiemployer
      Plans.  No Title IV Company Plan is a "multiemployer plan," as
      defined in Section 4001(a)(3) of ERISA, nor is any Title IV Company Plan a
      plan
      described in Section 4063(a) of ERISA.

     

    (g)  No
      Violations.  Each Company Plan has been operated and administered
      in all material respects in accordance with its terms and applicable law,
      including but not limited to ERISA and the Code.  As of the date
      hereof, there is no material pending or, to the knowledge of the Company
      threatened, litigation relating to the Company Plans.  Neither the
      Company nor any Company Subsidiary has engaged in a transaction with respect
      to
      any Company Plan that, assuming the taxable period of such transaction expired
      as of the date hereof, would subject the Company or any Company Subsidiary
      to a
      tax or penalty imposed by either Section 4975 of the Code or Section 502(i)
      of
      ERISA in an amount which would be material to the Company and the Company
      Subsidiaries taken as a whole.  Neither the Company nor any Company
      Subsidiary has incurred or reasonably expects to incur a tax or penalty imposed
      by Section 4980 of the Code or Section 502 of ERISA or any liability under
      Section 4071 of ERISA, in any such case, in an amount which would be material
      to
      the Company and the Company Subsidiaries taken as a whole.  To the
      knowledge of the Company, neither the Company nor any Company Subsidiary has
      any
      material liability with respect to any misclassification of any Person as an
      independent contractor rather than as an employee.  Since January 1,
      2005, each Company Plan that is subject to Section 409A of the Code has been
      administered in all material respects in good faith compliance with Section
      409A
      of the Code.

     

    (h)  Section
      401(a) Qualification.  Each Company Plan intended to be
      "qualified" within the meaning of Section 401(a) of the Code has received a
      determination letter from the Internal Revenue Service covering all tax law
      changes prior to the Economic Growth and Tax Relief Reconciliation Act of 2001
      or has remaining a period of time under the Code or applicable Treasury
      Regulations or Internal Revenue Service pronouncements in which to request,
      and
      make any amendments necessary to obtain, such a letter from the Internal Revenue
      Service; and the Company is not aware of any circumstances likely to result
      in
      the loss of the qualification of such Company Plan under Section 401(a) of
      the
      Code.

     

    (i)  Post-Employment
      Benefits.  No Company Plan provides medical, surgical, vision,
      hospitalization, death or similar benefits (whether or not insured) for
      employees or former employees of the Company or any Company Subsidiary for
      periods extending beyond their respective dates of retirement or other
      termination of service, other than (i) coverage mandated by applicable law,
      (ii)
      death benefits under any "pension plan," (iii) benefits the full cost of which
      is borne by the current or former employee (or his beneficiary), (iv) retiree
      medical subsidies as set forth in the IBEW Collective Bargaining Agreement,
      or
      (v) other retiree medical subsidies as described in Section 4.10(i) of the
      Company Disclosure Letter.

     

    (j)  Effect
      of Transaction.  Neither the execution of this Agreement nor the
      consummation of the transactions contemplated hereby will (w) result in payments
      (whether in cash or property or the vesting of property) to any employee,
      officer or director of the Company or any Company Subsidiary who is a
      "disqualified individual" (as such term is defined in Treasury Regulation
      Section 1.280G-1) under any employment, severance or termination agreement,
      other compensation arrangement or any of the Company Plans that would not be
      deductible under Section 162(m) or that would be characterized as an "excess
      parachute payment" (as defined in Section 280G(b)(1) of the Code), (x) entitle
      any employees of the Company or any Company Subsidiary to severance pay or
      any
      increase in severance pay upon any termination of employment after the date
      hereof, or (y) accelerate the time of payment or vesting or result in any
      payment or funding (through a grantor trust or otherwise) of compensation or
      benefits under, increase the amount payable or result in any other material
      obligation pursuant to, any of the Company Plans.  There has been no
      amendment to, announcement by the Company or any Company Subsidiary relating
      to,
      or change in employee participation or coverage under, any Company Plan which
      would increase materially the expense of maintaining such plan above the level
      of the expense incurred therefor for the most recently completed fiscal year
      of
      the Company.

     

    (k)  Claims.  There
      are no material pending, or to the knowledge of the Company threatened, material
      claims by or on behalf of any Company Plan, by any employee or beneficiary
      covered under any Company Plan, or otherwise involving any Company Plan (other
      than routine claims for benefits).

     

    (l)  No
      Foreign Company Plans.  No Company Plan is maintained for the
      benefit of employees outside of the United States or is otherwise subject to
      the
      laws of any jurisdiction other than the United States or a political subdivision
      thereof.

     

    (m)  Options.  All
      stock options on Company Common Stock granted under any plan, program, agreement
      or arrangement maintained by the Company to provide for grants of equity-based
      awards (the "Options") have an exercise price per share that was not less than
      the "fair market value" of a share of Company Common Stock on the date of grant,
      as determined in accordance with the terms of the applicable plan, program,
      agreement or arrangement maintained by the Company to provide for grants of
      equity-based awards and, to the extent applicable, Sections 409A and 422 of
      the
      Code.  All Options have been properly accounted for by the Company in
      accordance with GAAP, and no change is expected in respect of any prior Company
      Financial Statement relating to expenses for stock
      compensation.  There is no pending audit, investigation or inquiry by
      any Governmental Authority or by the Company with respect to the Company's
      stock
      option granting practices or other equity compensation practices.

     

    Section
      4.11.                                Labor
      and Employee Relations.

     

    (a)  As
      of the
      date of this Agreement, except for employees represented by the International
      Brotherhood of Electrical Workers Union and the United Association of Plumbers
      and Pipefitters, no employee of the Company or any of its Subsidiaries is
      represented by any union or covered by any collective bargaining agreement.
      As
      of the date of this Agreement, no labor organization or group of employees
      of
      the Company or any of its Subsidiaries has made a pending demand for recognition
      or certification, and there are no representation or certification proceedings
      or petitions seeking a representation proceeding presently pending or, to the
      knowledge of the Company, threatened to be brought or filed, with the National
      Labor Relations Board or any other labor relations tribunal or
      authority;

     

    (b)  there
      are
      no pending or, to the knowledge of the Company, threatened employee strikes,
      work stoppages, slowdowns, picketing or material labor disputes with respect
      to
      any employees of the Company or the Company Subsidiaries which, individually
      or
      in the aggregate, would reasonably be expected to result in a Company Material
      Adverse Effect, and during the past five years, neither the Company nor any
      of
      the Company Subsidiaries has experienced any strike, work stoppage, lock-up,
      slow-down or other material labor dispute;

     

    (c)  neither
      the Company nor any of the Company Subsidiaries has to its knowledge, within
      the
      last two years, engaged in any unfair labor practice and there are no complaints
      against the Company or any of the Company Subsidiaries pending before the
      National Labor Relations Board or any similar state or local labor agency by
      or
      on behalf of any employee of the Company or any of the Company
      Subsidiaries;

     

    (d)  the
      Company and the Company Subsidiaries are (a) in compliance in all material
      respects with all federal and state laws respecting employment and employment
      practices, terms and conditions of employment, collective bargaining,
      immigration, wages, hours and benefits, non-discrimination in employment,
      workers compensation, the collection and payment of withholding and/or payroll
      taxes and similar taxes (except for any non-compliance which, individually
      or in
      the aggregate, would not reasonably be expected to result in a Company Material
      Adverse Effect), including but not limited to the Civil Rights Act of 1964,
      the
      Age Discrimination in Employment Act of 1967, the Equal Employment Opportunity
      Act of 1972, the Employee Retirement Income Security Act of 1974, the Equal
      Pay
      Act, the National Labor Relations Act, the Americans with Disabilities Act
      of
      1990, the Vietnam Era Veterans Reemployment Act, the Uniformed Services
      Employment and Reemployment Rights Act and the Family and Medical Leave Act
      and
      any and all similar applicable state and local laws, and all material applicable
      requirements of the Occupational Safety and Health Act of 1970 within the United
      States and comparable regulations and orders thereunder; and (b) to the
      knowledge of the Company, neither the Company nor any of the Company
      Subsidiaries has committed a material unfair labor practice as defined in the
      National Labor Relations Act;

     

    (e)  each
      of
      the Company and the Company Subsidiaries is, and during the 90-day period prior
      to the date of this Agreement, has been in compliance in all material respects
      with the Worker Adjustment Retraining Notification Act of 1988, as amended
      ("WARN Act"), or any similar state or local law.

     

    Section
      4.12.                                Rights
      Agreement.  The Company has made available to the Parent a true
      and complete copy of the Rights Agreement dated as of December 21, 2000 between
      the Company and Wells Fargo Shareowner Services (replacing Mellon Investor
      Services LLC), as Rights Agent, (the "Rights Agreement") as in effect on the
      date of this Agreement.  The Company has (i) taken all action
      necessary so that the entering into of this Agreement and the Merger Agreement
      and the consummation of the transactions contemplated hereby and thereby
      (including the Merger) do not and will not result in the ability of any Person
      to exercise any rights under the Rights Agreement or enable or require the
      Company rights to separate from the shares of Company Common Stock to which
      they
      are attached or to be triggered or become exercisable; and (ii) amended the
      Rights Agreement in the form of Amendment No. 1 to the Rights Agreement, as
      set
      forth in Section 4.12 of the Company Disclosure Letter.

     

    Section
      4.13.                                Environmental
      Protection.

     

    (a)  Compliance.  The
      Company and each of the Company Subsidiaries are in compliance with all
      applicable Environmental Laws (as defined in Section 4.13(g)(ii)) except where
      the failure to so comply is not, individually or in the aggregate, reasonably
      likely to have a Company Material Adverse Effect, and neither the Company nor
      any of the Company Subsidiaries has received any written communication that
      has
      not been resolved from any Governmental Authority that alleges that the Company
      or any of the Company Subsidiaries is not in such compliance with applicable
      Environmental Laws.

     

    (b)  Environmental
      Permits.  The Company and each of the Company Subsidiaries have
      obtained or have applied for or otherwise in the ordinary course of business
      expect to apply for all environmental, health and safety permits and
      governmental authorizations (collectively, the "Environmental Permits")
      necessary for the construction of their facilities or the conduct of their
      operations under applicable Environmental Laws except where such failures to
      so
      obtain are not, individually or in the aggregate, reasonably likely to have
      a
      Company Material Adverse Effect, and all such Environmental Permits are in
      good
      standing or, where applicable, a renewal application has been timely filed
      and
      is pending agency approval, except where such deficiencies or failures to timely
      renew are not, individually or in the aggregate, reasonably likely to have
      a
      Company Material Adverse Effect, and the Company and the Company Subsidiaries
      are in material compliance with all terms and conditions of the Environmental
      Permits, except where failures to so comply are not, individually or in the
      aggregate, reasonably likely to have a Company Material Adverse
      Effect.

     

    (c)  Environmental
      Claims.  There is no Environmental Claim (as defined in Section
      4.13(g)(i)) outstanding which, individually or in the aggregate, is reasonably
      likely to have a Company Material Adverse Effect pending (A) against the Company
      or any of the Company Subsidiaries, or (B) against any real or personal property
      or operations which the Company or any of the Company Subsidiaries owns, leases
      or manages, in whole or in part.

     

    (d)  Releases.  The
      Company has no knowledge of any Releases (as defined in Section 4.13(g)(iv))
      of
      any Hazardous Material (as defined in Section 4.13(g)(iii)) that would be
      reasonably likely to be the subject of any Environmental Claim against the
      Company or any of the Company Subsidiaries, except for any Environmental Claims
      which, individually or in the aggregate, are not reasonably likely to have
      a
      Company Material Adverse Effect.

     

    (e)  Environmental
      Orders.  Neither the Company nor any of the Company Subsidiaries
      is subject to any environmental consent orders, decrees or settlements which,
      individually or in the aggregate, are reasonably likely to have a Company
      Material Adverse Effect.

     

    (f)  Exclusive
      Representations and Warranties.  This Section 4.13(a) contains the
      sole and exclusive representations and warranties of the Company with respect
      to
      environmental matters.

     

    (g)  Definitions.  As
      used in this Agreement:

     

    (i)  "Environmental
      Claim" means any and all written administrative or judicial actions, suits,
      demands, demand letters, directives, claims, Liens, investigations, proceedings
      or notices of noncompliance or violation by any Person (including any
      Governmental Authority), alleging potential liability (including, without
      limitation, potential responsibility for or liability for enforcement,
      investigatory costs, cleanup costs, governmental response costs, removal costs,
      remedial costs, natural resources damages, property damages, personal injuries
      or penalties) arising out of, based on or resulting from (A) the presence,
      Release or threatened Release into the environment of any Hazardous Materials
      at
      any location, whether or not owned, operated, leased or managed by the Company
      or any of the Company Subsidiaries; (B) circumstances forming the basis of
      any
      violation or alleged violation of any applicable Environmental Law; or (C)
      any
      and all claims by any third party seeking damages, contribution,
      indemnification, cost recovery, compensation or injunctive relief resulting
      from
      the presence or Release of any Hazardous Materials.

     

    (ii)  "Environmental
      Laws" means all federal, state and local laws (including common law), rules
      and regulations relating to pollution, the environment (including, without
      limitation, ambient air, surface water, groundwater, land surface or subsurface
      strata) or protection of human health as it relates to Releases or threatened
      Releases of Hazardous Materials, or otherwise relating to the manufacture,
      processing, distribution, use, treatment, storage, disposal, transport or
      handling of Hazardous Materials.

     

    (iii)  "Hazardous
      Materials" means (A) any petroleum or petroleum products, radioactive
      materials, asbestos in any form that is or could become friable, urea
      formaldehyde foam insulation and transformers or other equipment that contain
      dielectric fluid containing polychlorinated biphenyls; (B) any chemicals,
      materials or substances which are now defined as or included in the definition
      of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely
      hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
      pollutants," or words of similar import under any applicable Environmental
      Law
      and (C) any other chemical, material, substance or waste, exposure to which
      is
      now prohibited, limited or regulated under any applicable Environmental Law
      in a
      jurisdiction in which the Company or any of the Company Subsidiaries is subject
      (for purposes of this Section 4.13).

     

    (iv)  "Release"
      means any release, spill, emission, leaking, injection, deposit, disposal,
      discharge, dispersal, leaching or migration into the atmosphere, soil, surface
      water, groundwater or property.

     

    Section
      4.14                                Material
      Contracts. 

     

    (a)  All
      Material Contracts or material note, bond, mortgage, indenture, deed of trust,
      license, franchise, permit, concession, contract, lease or other instrument,
      obligation or agreement of any kind (collectively, "Contracts"), including
      amendments thereto, required to be filed as an exhibit to any report of the
      Company filed pursuant to the Exchange Act of the type described in
      Item 601(b)(10) of Regulation S-K promulgated by the SEC have been
      filed, and no such Contract has been amended or modified, except for such
      amendments or modifications which have been filed as an exhibit to a
      subsequently dated and filed Company SEC Report.  All such filed
      Contracts (excluding any redacted portions thereof) shall be deemed to have
      been
      made available to the Parent.

     

    (b)  Other
      than the Contracts set forth in clause (a) above which were filed in an
      unredacted form, Section 4.14(b) of the Company Disclosure Letter sets
      forth a correct and complete list as of the date of this Agreement, and the
      Company has made available to the Parent correct and complete copies (including
      all material amendments, modifications, extensions or renewals with respect
      thereto, but excluding all names, terms and conditions that have been redacted
      in compliance with applicable laws governing the sharing of information), of
      any
      Contract to which the Company or any of its Subsidiaries is a party to or bound
      by which has not expired or been terminated with no further obligation or
      liability of the Company or any of the Company Subsidiaries prior to the date
      hereof in accordance with its terms:

     

    (i)  that
      is
      reasonably likely to require (x) annual payments or other transfers of value
      to
      or from the Company and its Subsidiaries of more than $15 million or (y)
      aggregate payments or other transfers of value to or from the Company and its
      Subsidiaries of more than $25 million (other than Contracts relating to
      purchases of transformers or related infrastructure and Contracts for the
      wholesale purchase and sale of electric power);

     

    (ii)  for
      any
      wholesale purchase and sale of electric power that are reasonably likely to
      require annual payments or other transfers of value to or from the Company
      and
      its Subsidiaries of more than $10 million, other than Hedging
      Contracts;

     

    (iii)  that
      relates to the sale of a business by the Company or any Company Subsidiary
      pursuant to which the Company or any Company Subsidiary has any potential
      indemnity or other payment obligation of more than $25 million;

     

    (iv)  other
      than with respect to any partnership that is wholly-owned by the Company or
      any
      wholly-owned Subsidiary of the Company, that represents any partnership, joint
      venture or other similar agreement or arrangement relating to the formation,
      creation, operation, management or control of any partnership or joint venture
      material to the Company or any of its Subsidiaries or in which the Company
      owns
      more than a 20% voting or economic interest, or any interest valued at more
      than
      $25 million without regard to percentage voting or economic
      interest;

     

    (v)  that
      is
      any non-competition Contract or other Contract that (w) purports to limit in
      any
      material respect either the type of business in which the
      Company,  its Subsidiaries (or, after the Effective Time of the Merger
      under the Merger Agreement, Parent or its Subsidiaries) or any of their
      affiliates may engage or the manner or geographic area in which any of them
      may
      so engage in any business, except for franchise agreements (or agreements
      pursuant to Chapter 54.48 of the Revised Code of Washington) containing
      customary provisions between the Company or one of its Subsidiaries and the
      applicable jurisdictions, (x) would require the disposition of any material
      assets or line of business of the Company, its Subsidiaries (or, after the
      Effective Time of the Merger under the Merger Agreement, Parent or its
      Subsidiaries) or any of their affiliates as a result of the consummation of
      the
      transactions contemplated by this Agreement, (y) is a material Contract that
      grants "most favored nation" status that, following the Merger, would apply
      to
      the Parent and its Subsidiaries, including the Company and its Subsidiaries
      or
      (z) prohibits or limits, in any material respect, the right of the Company
      or
      any of its Subsidiaries to make, sell or distribute any products or services
      or
      use, transfer, license, distribute or enforce any of their respective
      Intellectual Property rights;

     

    (vi)  under
      which the Company or any Company Subsidiary has created, incurred, assumed
      or
      guaranteed (or may create, incur, assume or guarantee) indebtedness for borrowed
      money in excess of $10 million;

     

    (vii)  that
      is a
      swap, cap, floor, collar, futures contract, forward contract, option and any
      other derivative financial instrument, contract or arrangement, based on any
      commodity, security, instrument, asset, rate or index of any kind or nature
      whatsoever, whether tangible or intangible, including electricity, natural
      gas,
      crude oil and other commodities, currencies, interest rates and indices, and
      forward contracts for physical delivery, physical output of assets and physical
      load obligations (a "Hedging Contract"), with a term of ninety days or longer
      and a notional value in excess of $5 million; and

     

    (viii)  with
      provisions that, in the event of a Company ratings downgrade below "investment
      grade," would require a cash payment or posting of collateral, in each case
      with
      a value in excess of $10 million, or the termination of such contract, other
      than Hedging Contracts.

     

    The
      Contracts described in clauses (a) and (b) together with all exhibits and
      schedules to such Contracts, as amended through the date hereof, are referred
      to
      herein as "Material Contracts".

     

    (c)  A
      true
      and correct copy of each Material Contract has previously been made available
      to
      the Parent and each such Contract is a valid and binding agreement of the
      Company or one of its Subsidiaries, as the case may be, and is in full force
      and
      effect, and neither the Company nor any of its Subsidiaries nor, to the
      knowledge of the officers of the Company, any other party thereto is in default
      or breach in any respect under the terms of any such agreement, contract, plan,
      lease, arrangement or commitment, except for such default or breach as would
      not, individually or in the aggregate, reasonably be expected to have a Company
      Material Adverse Effect.

     

    Section
      4.15                                Intellectual
      Property.  

     

    (a)  Except
      as
      to matters that, individually or in the aggregate, would not reasonably be
      expected to result in a Company Material Adverse Effect: (i) the Company and
      its
      Subsidiaries have sufficient rights to use all Intellectual Property used in
      its
      business as presently conducted; (ii) to the knowledge of the Company, the
      conduct of the Company and Puget Sound Energy does not and has not in the past
      three (3) years infringed or otherwise violated the Intellectual Property rights
      of any third party; (iii) there is no litigation, opposition, cancellation,
      proceeding, objection or claim pending, asserted in writing or, to the Company's
      knowledge, threatened against the Company or Puget Sound Energy concerning
      the
      ownership, validity, registrability, enforceability, infringement or use of,
      or
      licensed right to use, any Intellectual Property used by the Company or Puget
      Sound Energy; (iv) to the Company's knowledge, no Person is violating any
      Intellectual Property right that the Company or Puget Sound Energy holds
      exclusively; and (v) the Company and Puget Sound Energy have taken commercially
      reasonable measures to protect the confidentiality of all Trade Secrets that
      are
      owned, used or held by the Company or Puget Sound Energy.  For
      purposes of this Agreement, "Intellectual Property" means all (i) trademarks,
      service marks, brand names, collective marks, Internet domain names, logos,
      symbols, trade dress, trade names, and other indicia of origin, all applications
      and registrations for the foregoing, and all goodwill associated therewith
      and
      symbolized thereby, including all renewals of same; (ii) inventions, to the
      extent patentable, and all patents, registrations, invention disclosures and
      applications therefor, including divisions, continuations, continuations-in-part
      and renewal applications, and including renewals, extensions and reissues;
      (iii)
      confidential business information, trade secrets and know-how, including
      processes, schematics, business methods, formulae, drawings, prototypes, models,
      designs, unpatentable discoveries and inventions (collectively, "Trade
      Secrets"); and (iv) published and unpublished works of authorship, whether
      copyrightable or not (including without limitation databases and other
      compilations of information), copyrights therein and thereto, and registrations
      and applications therefor, and all renewals, extensions, restorations and
      reversions thereof.

     

    (b)  The
      Company and Puget Sound Energy have implemented reasonable backup, security
      and
      disaster recovery technology that, to the Company's knowledge, is consistent
      with industry practices. The Company and Puget Sound Energy take such measures
      as are required by applicable law to ensure the confidentiality of customer
      financial and other confidential information and to comply with the Company's
      privacy policy.  The Company’s and the Company Subsidiaries’
computers, computer software, firmware, middleware, servers, workstations,
      routers, hubs, switches, data communications lines, and all other information
      technology equipment operate and perform in all material respects in accordance
      with their documentation and functional specifications and otherwise as required
      by the Company or Puget Sound Energy in connection with its business as
      presently conducted, and have not materially malfunctioned or failed within
      the
      past three (3) years.

     

    Section
      4.16                                Absence
      of Certain Changes or Event.  Except as expressly contemplated or
      permitted by this Agreement, since December 31, 2006, the Company and each
      of
      the Company Subsidiaries have conducted their respective businesses only in
      the
      ordinary course of business consistent with past practice and there has not
      been
      any change or development or combination of developments affecting the Company
      or any Company Subsidiary, of which the Company has knowledge, that would,
      individually or in the aggregate, reasonably be expected to result in a Company
      Material Adverse Effect.

     

    Section
      4.17                                [Intentionally
      Omitted]

     

    Section
      4.18                                [Intentionally
      Omitted]

     

    Section
      4.19                                Insurance.  Except
      for failures to maintain insurance or self-insurance that, individually or
      in
      the aggregate, have not had and would not reasonably be expected to have a
      Company Material Adverse Effect, since January 1, 2004 each of the Company
      and
      its Subsidiaries and their respective properties and assets has been
      continuously insured with financially responsible insurers or has self-insured,
      in each case in such amounts and with respect to such risks and losses as (i)
      are required by applicable law or by the Company's Material Contracts and (ii)
      are customary for companies in the United States of America conducting the
      business conducted by the Company and its Subsidiaries and, to the knowledge
      of
      the Company, there is no condition specific to the Company or its Subsidiaries
      which would prevent the Company or the Company Subsidiaries from obtaining
      insurance policies for such risks and losses.  All material insurance
      policies of the Company and each Company Subsidiary are in full force and
      effect.  All premiums due and payable through the date hereof under
      all such policies and Contracts have been paid and the Company and its
      Subsidiaries are otherwise in compliance in all respects with the terms of
      such
      policies and Contracts, except for such failures to be in compliance which
      would
      not, individually or in the aggregate, reasonably be expected to have a Company
      Material Adverse Effect.  Neither the Company nor any of its
      Subsidiaries has received any notice of cancellation or termination with respect
      to any such policy or Contract, except with respect to any cancellation or
      termination that, individually or in the aggregate, has not had and would not
      reasonably be expected to have a Company Material Adverse Effect.

     

    Section
      4.20                                Hedging
      Activities.

     

    (a)  The
      Company has established risk parameters, limits and guidelines in compliance
      with the risk management policy approved by the Company Board of Directors
      (or
      committee thereof) (the "Company Hedging Guidelines") to (i) restrict the level
      of risk that the Company and its Subsidiaries are authorized to take with
      respect to, among other things, the net position resulting from all physical
      and
      financial electricity contacts, natural gas hedge contracts, gas adjustment
      clauses, exchange-traded futures and options transactions, over-the-counter
      transactions and derivatives thereof, interest rate swap agreements, and similar
      transactions (the "Company Net Position") and (ii) monitor compliance with
      the
      Company Hedging Guidelines by the Company and its Subsidiaries with such risk
      parameters.  The Company has provided the Company Hedging Guidelines
      to the Parent prior to the date hereof.

     

    (b)  (i)
      The
      Company Net Position is within the risk parameters that are set forth in the
      Company Hedging Guidelines and (ii) the exposure of the Company and its
      Subsidiaries with respect to the Company Net Position resulting from all
      transactions described in Section 4.20(a) would not reasonably be expected
      to
      result in a material loss to the Company and its Subsidiaries, taken as a whole,
      based on market prices in existence as of the date hereof.  Since
      December 31, 2006, neither the Company nor any of its Subsidiaries has, in
      accordance with its mark-to-market accounting policies, experienced an aggregate
      net loss in its hedging and related operations that would be material to the
      Company and its Subsidiaries taken as a whole taking into account the
      recognition of any underlying commodity sales and the regulatory treatment
      and
      allowances for hedge transactions.

     

    Section
      4.21                                
[Intentionally Omitted]

     

    Section
      4.22                                Regulatory
      Proceedings.  As of the date hereof, neither the Company nor any
      of its Subsidiaries, all or part of whose rates or services are regulated by
      a
      Governmental Authority, (i) has rates which have been or are being collected
      subject to refund, pending final resolution of any proceeding pending before
      a
      Governmental Authority or on appeal to the courts, or (ii) except as identified
      in Section 4.8 of the Company Disclosure Letter, is a party to any proceeding
      before a Governmental Authority or on appeal from orders of a Governmental
      Authority, in each case which individually or in the aggregate, have resulted
      in
      or would reasonably be expected to result in a Company Material Adverse
      Effect.

     

    Section
      4.23                                Regulation
      as a Utility.  (a)  The Company together with its
      subsidiary companies is a "single state holding company system" under the Public
      Utility Holding Company Act of 2005 ("PUHCA 2005").  Puget Sound
      Energy and its indirect wholly-owned exempt wholesale generator subsidiary
      Black
      Creek Hydro, Inc. ("BCH") are each a "public utility"
      within the meaning of Section 201(e) of the FPA.  Puget Sound Energy
      is not regulated as a "natural gas company" under the Natural Gas Act, except
      in
      two limited aspects of its business which subject it only to limited
      jurisdiction of the Federal Energy Regulatory Commission (“FERC"): (i) to the
      extent that Puget Sound Energy makes natural gas sales for resale in interstate
      commerce, it has a limited jurisdiction blanket marketing certificate as
      contained in the regulations of the FERC; and (ii) in its capacity as Project
      Operator of the Jackson Prairie Storage Project (which otherwise does not
      subject it to regulation as a "natural gas company"). Puget Sound Energy
      is also regulated as a "public service company," "gas
      company" and "electrical company" under Washington state law.  Except
      for regulation of BCH, Hydro Energy Development Corp. ("HEDC") and Puget Sound
      Energy by the FERC under the FPA, PUHCA
      2005 and regulation of Puget Sound Energy by the
      Washington Utilities and Transportation Commission, neither the Company nor
      any
      Company Subsidiary is subject to regulation as a public utility or public
      service company (or similar designation) by the FERC, any state in the United
      States or in any foreign nation.  Puget Sound Energy has been
      authorized by FERC to make wholesale sales of energy and capacity at
      market-based rates pursuant to Section 205 of the FPA, which blanket authority
      has not been limited in any material respect through a Puget Sound
      Energy-specific rate cap or mitigation measure.  All sales of energy
      and/or capacity by BCH are made pursuant to power sale agreements or tariffs
      filed with and accepted by FERC pursuant to Section 205 of the FPA.

     

    Neither
      the Company nor any Company Subsidiary owns, holds or controls nuclear materials
      or nuclear related facilities that are subject to the regulation of the Nuclear
      Regulatory Commission under the Atomic Energy Act.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      C

     

    FORM
      OF OPINION OF COMPANY COUNSEL

     

    (i)           The
      Company and Puget Sound Energy have been duly incorporated and are validly
      existing under the laws of the State of Washington, except any failure to be
      so
      qualified or have such power or authority as would not, individually or in
      the
      aggregate, have a Company Material Adverse Effect.

     

    (ii)           The
      Company has the corporate power and authority to execute and deliver the
      Agreement and to consummate the transactions contemplated thereby.

     

    (iii)           The
      Shares have been duly authorized and when delivered and paid for in accordance
      with the terms of the Stock Purchase Agreement will be validly issued, fully
      paid and non-assessable; and the issuance of the Shares will not be subject
      to
      any preemptive or similar rights under the Company’s charter or bylaws or under
      Washington law.

     

    (iv)           The
      Agreement has been duly and validly authorized, executed and delivered by the
      Company and constitutes a valid and binding agreement of the Company enforceable
      against the Company in accordance with its terms, except to the extent
      enforcement thereof may be limited by applicable bankruptcy, insolvency,
      fraudulent transfer, reorganization, moratorium and similar laws of general
      applicability relating to or affecting creditors’ rights and to general
      principles of equity (regardless whether such enforcement is sought in equity
      or
      at law).

     

    (v)           The
      execution, delivery and performance by the Company of the Agreement will not
      (i)
      constitute a violation of, or breach or default under, or result in the creation
      or imposition of any lien upon any property or assets of the Company or Puget
      Sound Energy under, the terms of any indenture, mortgage, deed of trust, loan
      agreement or other agreement or instrument to which the Company or any of its
      subsidiaries is a party or by which the Company or any of its subsidiaries
      is
      bound or to which any of the property or assets of the Company or any of its
      subsidiaries is subject and, in each case, that is filed as an exhibit to the
      Company's Annual Report on Form 10-K for the year ended December 31, 2006,
      (ii)
      result in any violation of the provisions of the charter or by-laws or similar
      organizational documents of the Company or Puget Sound Energy or (iii) result
      in
      the violation of any Washington State or Federal law, statute, rule or
      regulation or any judgment or order of any court or governmental or regulatory
      authority having jurisdiction over the Company that, in each case, in the
      experience of such counsel, is normally applicable to transactions of the type
      contemplated by the Agreement and that, in the case of orders and judgments,
      are
      known to such counsel, except, in the case of clauses (i) and (iii) above,
      for
      any such conflict, breach, violation or default that would not, individually
      or
      in the aggregate, have a Company Material Adverse Effect.  We do not
      express any opinion, however, on whether the execution, delivery or performance
      by the Company of the Agreement will constitute a violation of, or constitute
      a
      default under, any covenant, restriction or provision with respect to financial
      ratios or tests or any aspect of the financial condition or results of
      operations of the Company or any of its subsidiaries.

     

    (vi)           No
      consent, approval, authorization, filings, order, registration or qualification
      of or with any Washington State or Federal court or governmental or regulatory
      authority is required for the execution, delivery and performance by the Company
      of the Agreement and the consummation of the transactions contemplated thereby,
      except for such consents, approvals, authorizations, orders and registrations
      or
      qualifications as have been obtained.

     

    The
      foregoing opinion may be subject to customary assumptions, qualifications and
      exclusions and shall be rendered by outside counsel for the Company reasonably
      acceptable to the Purchasers.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      D

     

    FORM
      OF COMPANY COMPLIANCE CERTIFICATE

     

    I,
      ______________, [Chief Executive Officer][President] of Puget Energy, Inc.,
      a
      Washington corporation (the “Company”), pursuant to Section 6.8 of the
      Stock Purchase Agreement, dated October 25, 2007 (the “Stock Purchase
      Agreement”), among the Company and the purchasers named therein, hereby
      certify that:

     

    1.           The
      representations and warranties made by the Company in Article III of the Stock
      Purchase Agreement and Exhibit B thereof were true and correct as of the date
      of
      the Stock Purchase Agreement and as of the Closing Date as though made on and
      as
      of the Closing Date (except to the extent any such representation or warranty
      expressly speaks as of an earlier date), except for such failures of
      representations or warranties to be true and correct (without giving effect
      to
      any materiality qualification or standard contained in any such representations
      and warranties) which, individually or in the aggregate, have not resulted
      in
      and would not reasonably be expected to result in a Company Material Adverse
      Effect.

     

    2.           All
      covenants, agreements and conditions contained in this Agreement to be performed
      or complied with by the Company on or prior to the date hereof have been
      performed or complied with in all material respects.

     

    3.           All
      notices, reports and other filings required to be made prior to the date hereof
      by the Company or any of the Company Subsidiaries with, and all consents,
      registrations, approvals, permits and authorizations required to be obtained
      prior to the date hereof by the Company or any of the Company Subsidiaries
      from,
      any Governmental Authority in connection with the execution and delivery of
      the
      Stock Purchase Agreement and the consummation of the transactions contemplated
      thereby by the Company have been made or obtained and are effective on and
      as of
      the date hereof.

     

    4.           No
      Company Material Adverse Effect shall have occurred that is
      continuing.

     

    5.           The
      number of shares of Company Common Stock outstanding as of the day immediately
      preceding the Closing Date is [ ].

     

    Capitalized
      terms used but not defined herein shall have the meanings set forth in the
      Stock
      Purchase Agreement.

     

    [Remainder
      of page intentionally left blank]

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, I have hereunto signed my name on behalf of the
      Company.

     

    Dated: _________________________                                                               

     

    By:____________________________                                                               

    Name:__________________________                                                                

    Title:___________________________                                                                

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      E

     

    FORM
      OF PURCHASER COMPLIANCE CERTIFICATE

     

    I,
      ______________, [INSERT TITLE] of [INSERT NAME OF PURCHASER], a [INSERT
      JURISDICTION] [corporation] (the “Purchaser”), pursuant to Section 7.5 of
      the Stock Purchase Agreement, dated October 25, 2007 (the “Stock Purchase
      Agreement”), among Puget Energy, Inc. (the “Company”) and the
      purchasers named therein, hereby certify that:

     

    1.           The
      representations and warranties made by the Purchasers in Article IV of the
      Stock
      Purchase Agreement were true and correct as of the date of the Stock Purchase
      Agreement and as of the Closing Date as though made on and as of the Closing
      Date (except to the extent any such representation or warranty expressly speaks
      as of an earlier date) except for such failures of representations or warranties
      to be true and correct (without giving effect to any materiality qualification
      or standard contained in any such representations and warranties) which,
      individually or in the aggregate, have not resulted in and would not reasonably
      be expected to result in a any material adverse effect on the ability of the
      Purchaser to consummate the transaction contemplated by this
      Agreement.

     

    2.           All
      covenants, agreements and conditions contained in the Stock Purchase Agreement
      to be performed or complied with by the Purchaser on or prior to the date hereof
      have been performed or complied with in all material respects.

     

    3.           All
      notices, reports and other filings required to be made prior to the date hereof
      by the Purchaser or any of its subsidiaries with, and all consents,
      registrations, approvals, permits and authorizations required to be obtained
      prior to the date hereof by the Purchaser or any of its subsidiaries from,
      any
      Governmental Authority in connection with the execution and delivery of the
      Stock Purchase Agreement and the consummation of the transactions contemplated
      thereby by the Purchaser have been made or obtained and are effective on and
      as
      of the date hereof.

     

    Capitalized
      terms used but not defined herein shall have the meanings set forth in the
      Stock
      Purchase Agreement.

     

    [Remainder
      of page intentionally left blank]

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, I have hereunto signed my name on behalf of the
      Purchaser.

     

    Dated:______________________________                                                                

    By: ________________________________                                                               

    Name: ______________________________                                                               

    Title: _______________________________                                                               

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBIT
      F

     

    LIABILITY
      OF TRUSTEES AND RESPONSIBLE ENTITIES

     

    If
      (i) a
      Person (a “Trustee”) enters into the Stock Purchase Agreement as trustee
      or responsible entity of a trust (“its Trust”) and (ii) the Trustee
      notifies the Company or another party that it is acting as trustee or
      responsible entity of its Trust, the following provisions shall apply in respect
      of the Trustee and its Trust:

     

    1.           the
      Trustee enters into this Agreement and holds Shares only in its capacity as
      responsible entity or trustee (as applicable) of its Trust and in no other
      capacity.  A liability arising under or in connection with this
      Agreement is limited to, and can be enforced against the Trustee only to, the
      extent to which it can be satisfied out of the assets of its Trust out of which
      the Trustee is actually indemnified for such liability.  This
      limitation of the Trustee’s liability applies despite any other provision of
      this Agreement and extends to all liabilities and obligations of the relevant
      party in any way connected with any representation, warranty, conduct, omission,
      agreement or transaction related to this Agreement;

     

    2.           no
      party may sue the Trustee in any capacity other than as responsible entity
      or
      Trustee (as applicable) of its Trust, including to seek the appointment of
      a
      receiver (except in relation to property of its Trust), a liquidator, an
      administrator, or any similar person to the Trustee or prove in any bankruptcy,
      insolvency, liquidation, administration or arrangement of or affecting the
      Trustee (except in relation to property of its Trust);

     

    3.           the
      provisions of this Exhibit E do not apply to any obligation or liability of
      the
      Trustee to the extent that it is not satisfied because under the agreement
      governing its Trust or by operation of law there is a reduction in the extent
      of
      the Trustee’s indemnification out of the assets of its Trust, as a result of the
      Trustee’s fraud, negligence or breach of trust;

     

    4.           no
      attorney, agent, receiver or receiver and manager appointed in accordance with
      this Agreement has authority to act on behalf of the Trustee in a way which
      exposes the Trustee to any personal liability, and no act or omission of any
      such person will be considered fraud, negligence or breach of trust of the
      relevant party for the purpose of Section 3 of this Exhibit F;

     

    5.           the
      Trustee warrants to each party to this Agreement that it has the rights of
      indemnification referred to in Section 1 of this Exhibit F (the “Trustee
      Indemnity”); and

     

    6.           the
      Trustee warrants to each party to the Stock Purchase Agreement that it has
      not
      done and has omitted to do, and undertakes that it will not, during the term
      of
      this Agreement, do or omit to do, anything which has or would limit, affect,
      amend or in any manner whatsoever restrict the Trustee Indemnity.

     

    For
      the
      avoidance of doubt, this Exhibit F applies to each representation and warranty
      given by the Purchaser in Article IV of the Stock Purchase Agreement, including
      those given in respect of a Purchaser’s Trust in Section
      4.8.