EXHIBIT 10.2

CREDIT AGREEMENT

dated as of May 27, 2004

among

INFRASTRUX GROUP, INC.,

PUGET ENERGY, INC.,

VARIOUS FINANCIAL
INSTITUTIONS

UNION BANK OF
CALIFORNIA, N.A., 
as Administrative Agent, Co-Lead Arranger, LC Issuer and Sole Book Runner,

CITIGROUP GLOBAL
MARKETS INC., 
as Co-Lead Arranger and Syndication Agent,

and

JP MORGAN CHASE BANK,
KEYBANK NATIONAL ASSOCIATION 
and WACHOVIA BANK, NATIONAL ASSOCIATION, 
as Co-Documentation Agents

Table of Contents

|ARTICLE 1 DEFINITIONS                                                   |   
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|ARTICLE 2 THE CREDITS                                                   |   
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|ARTICLE 3 YIELD PROTECTION; TAXES                                       |   
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|ARTICLE 4 CONDITIONS PRECEDENT                                          |   
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|ARTICLE 5 REPRESENTATIONS AND WARRANTIES                                |   
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|ARTICLE 6 COVENANTS                                                     |   
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|ARTICLE 7 DEFAULTS                                                      |   
|ARTICLE 8 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES                |   
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|ARTICLE 9 GENERAL PROVISIONS                                            |   
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|ARTICLE 10 THE ADMINISTRATIVE AGENT                                     |   
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|ARTICLE 11 SETOFF; PAYMENTS                                             |   
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|ARTICLE 12 BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS            |   
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|ARTICLE 13 NOTICES                                                      |   
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|ARTICLE 14 CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL |   
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| |                |                                      
| | -------------- | -------------------------------------
| | Schedule 1:    | Pricing Schedule                     
| | Schedule 2:    | Commitments                          
| | Schedule 5.2:  | Litigation and Contingent Obligations
| | Schedule 5.11: | Financial Statements                 
| | Schedule 5.14: | Subsidiaries                         
| | Schedule 6.10: | Existing Liens                       
| |                |                                      
| |                |                                      
| | Exhibit A:     | Promissory Note                      
| | Exhibit B:     | Borrowing Notice                     
| | Exhibit C:     | Conversion/Continuation Notice       
| | Exhibit D:     | Compliance Certificate               
| | Exhibit E:     | Assignment and Assumption            

# CREDIT AGREEMENT

This
Credit Agreement dated as of May 27, 2004 is among InfrastruX Group, Inc., a Washington
corporation, Puget Energy, Inc., a Washington corporation, the Lenders, and Union Bank of
California, N.A., a national banking association having its principal office in San
Francisco, California, as LC Issuer and as Administrative Agent. The parties hereto agree
as follows:

# ARTICLE 1 DEFINITIONS

1.1
   Defined Terms.   As used in this Agreement:

Administrative
Agent means UBOC in its capacity as contractual representative of the
Lenders pursuant to Article 10, and not in its individual capacity as a Lender, and
any successor Administrative Agent appointed pursuant to Article 10.

Advance
means a borrowing hereunder (i) made by all of the Lenders on the same Borrowing
Date, or (ii) converted or continued by all of the Lenders on the same date of
conversion or continuation, consisting, in either case, of the aggregate amount of the
several Loans of the same Type and, in the case of Eurodollar Loans, for the same Interest
Period.

Affiliate
of any Person means any other Person directly or indirectly controlling, controlled by or
under common control with such Person. A Person shall be deemed to control another Person
if the controlling Person owns 10% or more of any class of voting securities (or other
ownership interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the controlled
Person, whether through ownership of stock, by contract or otherwise.

Aggregate
Commitment means the aggregate of the Commitments of all the Lenders,
as reduced from time to time pursuant to the terms hereof.

Aggregate
Outstanding Credit Exposure means, at any time, the aggregate of the
Outstanding Credit Exposures of all the Lenders.

Agreement
means this Credit Agreement.

Agreement
Accounting Principles means generally accepted accounting principles
in the United States as in effect from time to time.

Alternate
Base Rate means, for any day, a rate of interest per annum
equal to the higher of (i) the Reference Rate for such day and (ii) the sum of
the Federal Funds Effective Rate for such day plus 0.5% per annum.

Applicable
Commitment Fee Rate means the applicable percentage rate per
annum determined from time to time in accordance with the Pricing Schedule.

Applicable
Eurodollar Margin means, with respect to Eurodollar Advances, the
applicable percentage rate per annum determined from time to time in accordance
with the Pricing Schedule.

Applicable
LC Fee Rate means, the applicable percentage rate per annum
determined from time to time in accordance with the Pricing Schedule.

Arrangers
means, collectively, (i) UBOC, in its capacity as Co-Lead Arranger and Sole Book
Runner, and (ii) Citigroup Global Markets Inc., a New York corporation, in its
capacity as Co-Lead Arranger.

Article
means an article of this Agreement unless another document is specifically
referenced.

Authorized
Officer means any of the President, the Chief Executive Officer, the
Chief Operating Officer or the Chief Financial Officer of the Borrower, acting singly, or
any of the President, the Chief Executive Officer, the Chief Financial Officer, any Vice
President or the Assistant Treasurer of Puget Energy, acting singly. Unless the context
otherwise requires, the term Authorized Officer shall refer to an Authorized
Officer of the Borrower.

Benefit
Plan means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the Code
as to which Puget Energy or any member of the Controlled Group may have any liability.

Borrower
means InfrastruX Group, Inc., a Washington corporation.

Borrowing
Date means a date on which an Advance is made hereunder.

Borrowing Notice
is defined in Section 2.2.3.

Business
Day means (i) with respect to any borrowing or payment of, or
rate selection for, Eurodollar Advances, a day (other than a Saturday or Sunday) on which
banks generally are open in Los Angeles and New York for the conduct of substantially all
of their commercial lending activities, interbank wire transfers can be made on the
Fedwire system and dealings in U.S. dollars are carried on in the London interbank market
and (ii) for all other purposes, a day (other than a Saturday or Sunday) on which
banks generally are open in Los Angeles for the conduct of substantially all of their
commercial lending activities and interbank wire transfers can be made on the Fedwire
system.

Capitalized
Lease of a Person means any lease of Property by such Person as
lessee which would be capitalized on a balance sheet of such Person prepared in accordance
with Agreement Accounting Principles.

Capitalized
Lease Obligations of a Person means the amount of the obligations of
such Person under Capitalized Leases which would be shown as a liability on a balance
sheet of such Person prepared in accordance with Agreement Accounting Principles.

Change
is defined in Section 3.2.

Change
in Control means: (i) the acquisition, directly or indirectly, by any
Person, or two or more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the SEC under the Securities Exchange Act of 1934) of 20% or more
(by number of votes) of the outstanding shares of voting stock of Puget Energy; (ii) the
cessation of Puget Energy to own, directly or indirectly, free and clear of all Liens and
other encumbrances, 100% of the outstanding shares of voting stock of PSE on a fully
diluted basis; or (iii) the cessation of Puget Energy to own, directly or indirectly, free
and clear of all Liens and other encumbrances, 75% or more of the outstanding shares of
voting stock of the Borrower on a fully diluted basis.

Closing
Date means the date on which this Agreement becomes effective
pursuant to Section 4.1.

Code
means the Internal Revenue Code of 1986.

Commitment
means, for each Lender, the obligation of such Lender to make Loans to, and to participate
in Facility LCs issued upon the application of, the Borrower in an aggregate amount not
exceeding the amount set forth opposite such Lenders name on Schedule 2 or as set
forth in any Lender Assignment relating to any assignment that has become effective
pursuant to Section 12.3.3, as such amount may be modified from time to time pursuant
to the terms hereof.

Commitment
Fee is defined in Section 2.4.1.

Consolidated
Indebtedness means at any time all Indebtedness of Puget Energy and
its Subsidiaries calculated on a consolidated basis as of such time.

Contingent
Obligation of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently agrees to
purchase or provide funds for the payment of, or otherwise becomes or is contingently
liable upon, the obligation or liability of any other Person, or agrees to maintain the
net worth or working capital or other financial condition of any other Person, or
otherwise assures any creditor of such other Person against loss, including any comfort
letter, operating agreement, application for a Letter of Credit or the obligations of any
such Person as general partner of a partnership with respect to the liabilities of the
partnership.

Controlled
Group means all members of a controlled group of corporations or
other business entities and all trades or businesses (whether or not incorporated) under
common control which, together with Puget Energy or any of its Subsidiaries, are treated
as a single employer under Section 414 of the Code.

Conversion/Continuation
Notice is defined in Section 2.2.4.

Credit
Extension means the making of an Advance or the issuance of a
Facility LC hereunder.

Credit
Extension Date means the Borrowing Date for an Advance or the
issuance date for a Facility LC.

Credit
Parties means the Borrower and the Guarantors.

Default
means an event described in Article 7.

EBITDA
means, for Puget Energy and its Subsidiaries on a consolidated basis for any period, the
total of: (i) Income before Interest Charges as reported in Puget
Energys financial statements, plus (ii) federal income taxes for such period to
the extent included in the determination of such Income before Interest Charges, plus
(iii) depreciation, depletion and amortization expense, plus (iv) non-cash
losses included in the determination of such Income before Interest Charges, minus
(v) non-cash gains included in the determination of such Income before Interest
Charges.

Environmental
Laws means any and all federal, state, local and foreign laws,
judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans,
injunctions, permits, concessions, grants, franchises, licenses, agreements and other
governmental restrictions relating to (i) the protection of the environment,
(ii) the effect of the environment on human health, (iii) emissions, discharges
or releases of pollutants, contaminants, hazardous substances or wastes into or onto
surface water, ground water or land, or (iv) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of pollutants,
contaminants, hazardous substances or wastes or the clean-up or other remediation thereof.

ERISA
means the Employee Retirement Income Security Act of 1974 and any rule or regulation
issued thereunder.

ERISA
Affiliate means, with respect to any Person, any other Person,
including a Subsidiary or other Affiliate of such first Person, that is a member of any
group of organizations within the meaning of Section 414(b), (c), (m) or (o) of the
Code of which such first Person is a member.

Eurodollar
Advance means an Advance which, except as otherwise provided in
Section 2.8, bears interest by reference to the Eurodollar Rate.

Eurodollar
Base Rate means, with respect to a Eurodollar Loan for the relevant
Interest Period, the applicable British Bankers Association Libor Rate for deposits in
U.S. dollars appearing on page 3750 of the Moneyline Telerate screen as of 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period, and having
a maturity equal to such Interest Period; provided that (i) if page 3750 of
the Moneyline Telerate screen is not available to the Administrative Agent for any reason,
the applicable Eurodollar Base Rate for the relevant Interest Period shall instead be the
applicable British Bankers Association Libor Rate for deposits in U.S. dollars as reported
by any other generally recognized financial information service as of 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period, and having a
maturity equal to such Interest Period, and (ii) if no such British Bankers
Association Libor Rate is available to the Administrative Agent, the applicable Eurodollar
Base Rate for the relevant Interest Period shall instead be the rate determined by the
Administrative Agent to be the rate at which UBOC or one of its Affiliate banks offers to
place deposits in U.S. dollars with first-class banks in the London interbank market at
approximately 11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, in the approximate amount of UBOCs relevant Eurodollar Loan and
having a maturity equal to such Interest Period.

Eurodollar
Loan means a Loan which, except as otherwise provided in
Section 2.8, bears interest by reference to the Eurodollar Rate.

Eurodollar
Rate means, with respect to a Eurodollar Advance for the relevant
Interest Period, the quotient of (i) the Eurodollar Base Rate applicable to such
Interest Period, divided by (i) one minus the Reserve Requirement (expressed as a
decimal) applicable to such Interest Period.

Excluded
Taxes means, in the case of each Lender or applicable Lending
Installation and the Administrative Agent, taxes imposed on its overall pre-tax net or
gross income, and franchise taxes imposed on it by (i) the jurisdiction under the
laws of which such Lender or the Administrative Agent is incorporated or organized or
(ii) the jurisdiction in which the Administrative Agents or such Lenders
principal executive office or such Lenders applicable Lending Installation is
located; provided that any withholding taxes imposed by the United States of
America on amounts payable by the Borrower under this Agreement or any other Loan Document
shall not in any case be considered Excluded Taxes.

Exhibit
refers to an exhibit to this Agreement, unless another document is specifically
referenced.

Extension
Request is defined in Section 2.17.

Facility
LC is defined in Section 2.16.1.

Facility LC
Application is defined in Section 2.16.3.

Facility
Termination Date means June 15, 2007, any later date as may be
specified as the Facility Termination Date in accordance with Section 2.17 or any
earlier date on which the Aggregate Commitment is reduced to zero or otherwise terminated
pursuant to the terms hereof.

Federal
Funds Effective Rate means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal funds brokers
on such day, as published for such day (or, if such day is not a Business Day, for the
immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations at approximately 10:00 a.m. (Los Angeles time) on such day on such transactions
received by the Administrative Agent from three Federal funds brokers of recognized
standing selected by the Administrative Agent in its sole discretion.

Fee
Letter means the letter agreement dated May 27, 2004 between the
Borrower and the Administrative Agent concerning up-front fees payable to the Lenders.

Floating
Rate Advance means an Advance which, except as otherwise provided in
Section 2.8, bears interest by reference to the Alternate Base Rate.

Floating
Rate Loan means a Loan which, except as otherwise provided in
Section 2.8, bears interest by reference to the Alternate Base Rate.

FRB
means the Board of Governors of the Federal Reserve System.

Governmental
Approval means any authorization, consent, approval, license or
exception of, registration or filing with, or report or notice to, any governmental unit.

Guarantors
means Puget Energy and each Subsidiary of the Borrower.

Guaranty
means the Guaranty executed by the Guarantors in favor of the Lenders and the
Administrative Agent and delivered thereto pursuant to this Agreement.

Indebtedness
of a Person means such Persons (i) obligations for borrowed money,
(ii) obligations representing the deferred purchase price of Property or services
(other than accounts payable arising in the ordinary course of such Persons business
payable on terms customary in the trade), (iii) obligations, whether or not assumed,
secured by Liens or payable out of the proceeds or production from Property now or
hereafter owned or acquired by such Person, (iv) obligations which are evidenced by
notes, bankers acceptances, or other instruments, (v) obligations to purchase
accounts, securities or other Property arising out of or in connection with the sale of
the same or substantially similar accounts, securities or Property, (vi) Capitalized
Lease Obligations, (vii) other obligations for borrowed money or other financial
accommodation which in accordance with Agreement Accounting Principles would be shown as a
liability on the consolidated balance sheet of such Person, (viii) net liabilities
under interest-rate swap, exchange, cap and other such agreements, (ix) Synthetic
Lease Obligations (excluding any such obligations existing on the date hereof pursuant to
PSEs lease of two combustion turbines for its Fredonia 3 and 4 electric generating
facility), (x) obligations in connection with other transactions (excluding any lease
that is treated as an operating lease under Agreement Accounting Principles) which are the
functional equivalent, or take the place, of borrowing but which do not constitute a
liability on the consolidated balance sheet of such Person and (xi) Contingent
Obligations; provided that, except for purposes of Section 7.5, the following
shall not constitute Indebtedness: (a) obligations with respect to Trust
Preferred Securities that are Subordinated; (b) obligations arising under Qualified
Receivables Transactions; (c) obligations with respect to preferred stock of Puget
Energy or PSE that is outstanding on the date hereof; and (d) obligations with
respect to preferred stock of Puget Energy or PSE issued after the date hereof that is
Subordinated.

Interest
Period means, with respect to a Eurodollar Advance, a period of one,
two, three or six months commencing on a Business Day selected by the Borrower pursuant to
this Agreement. Each Interest Period shall end on the day which corresponds numerically to
such date one, two, three or six months thereafter; provided that, if there is no
such numerically corresponding day in such next, second, third or sixth succeeding month,
such Interest Period shall end on the last Business Day of such next, second, third or
sixth succeeding month. If an Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next succeeding Business Day;
provided, further that, if said next succeeding Business Day falls in a new calendar
month, such Interest Period shall end on the immediately preceding Business Day.

LC
Fee is defined in Section 2.16.4.

LC Fronting
Fee is defined in Section 2.16.4.

LC
Issuer means either UBOC or another Lender selected by the Borrower
to be a second issuer of Facility LCs (or any Affiliate of either such Person designated
thereby), in each case in its capacity as issuer of one or more Facility LCs hereunder, as
selected by the Borrower in its sole discretion with respect to each Facility LC requested
by the Borrower.

LC
Obligations means, at any time, the sum, without duplication, of
(i) the maximum aggregate undrawn amount of all Facility LCs outstanding at such
time, plus (ii) the aggregate unpaid amount of all Reimbursement Obligations at such
time.

LC
Payment Date is defined in Section 2.16.5.

Lender
Assignment is defined in Section 12.3.1.

Lenders
means the lending institutions listed on the signature pages of this Agreement, including
UBOC and a second Person, if any, in their capacities as LC Issuers.

Lending
Installation means, with respect to a Lender, an LC Issuer or the
Administrative Agent, the office, branch or Affiliate of such Lender or LC Issuer or the
Administrative Agent listed on the signature pages hereof or on a Schedule or otherwise
selected by such Lender or LC Issuer or the Administrative Agent pursuant to
Section 2.14.

Letter
of Credit of a Person means a letter of credit or similar instrument
which is issued upon the application of such Person or upon which such Person is an
account party or for which such Person is in any way liable.

Lien
means any lien (statutory or other), mortgage, security interest, pledge, hypothecation,
assignment for security, deposit arrangement, encumbrance, preference, priority or other
preferential arrangement of any kind or nature whatsoever (including the interest of a
vendor or lessor under any conditional sale, Capitalized Lease or other title-retention
agreement).

Loan
means, with respect to a Lender, any loan made by such Lender pursuant to Section 2.2
(or in the case of a loan made pursuant to Section 2.2.4, any conversion or
continuation thereof).

Loan
Documents means this Agreement, each Note issued pursuant to
Section 2.10, each Facility LC Application, the Guaranty and the Fee Letter.

Material
Adverse Effect means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), operations or prospects of Puget
Energy and its Subsidiaries taken as a whole or of the Borrower and its Subsidiaries taken
as a whole, (ii) the ability of the Borrower or Puget Energy to perform its
obligations under the Loan Documents to which it is a party or (iii) the validity or
enforceability of any of the Loan Documents with respect to and against any Credit Party.

Material
Indebtedness is defined in Section 7.5.

Modify
and Modification are defined in Section 2.16.1.

Multiemployer
Benefit Plan means a Benefit Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which Puget Energy or any member of the
Controlled Group is a party to which more than one employer is obligated to make
contributions.

Net
Worth means Puget Energys consolidated shareholders
equity.

Non-U.S. Lender is
defined in Section 3.5(iv).

Note
means a promissory note, substantially in the form of Exhibit A, issued at the request of
a Lender pursuant to Section 2.10 to evidence its Loans.

Obligations
means all unpaid principal of and accrued and unpaid interest on the Loans, all
Reimbursement Obligations, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Borrower to the Lenders or to any Lender, the
Administrative Agent, either LC Issuer or any indemnified party arising under the Loan
Documents.

Other
Taxes is defined in Section 3.5(ii).

Outstanding
Credit Exposure means, as to any Lender at any time, the sum of
(i) the aggregate principal amount of its Loans outstanding at such time plus
(ii) an amount equal to its Pro Rata Share of the LC Obligations at such time.

Participants
is defined in Section 12.2.1.

Payment
Date means the last day of each calendar quarter.

PBGC
means the Pension Benefit Guaranty Corporation.

Person
means any natural person, corporation, firm, joint venture, partnership, limited liability
company, association, enterprise, trust or other entity or organization, or any government
or political subdivision or any agency, department or instrumentality thereof.

Plan
means an employee pension benefit plan which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Code as to which Puget Energy
or any member of the Controlled Group may have any liability.

Pricing
Schedule means Schedule 1.

Property
of a Person means any and all property, whether real, personal, tangible, intangible or
mixed, of such Person (including equity interests in other Persons), and any and all other
assets owned, leased or operated by such Person, including any interest in any of the
foregoing.

Pro
Rata Share means, with respect to a Lender, a percentage equal to
such Lenders Commitment divided by the Aggregate Commitment.

PSE
means Puget Sound Energy, Inc., a Washington corporation.

Puget
Energy means Puget Energy, Inc., a Washington corporation.

PUHCA
means the Public Utility Holding Company Act of 1935 and any rule or regulation issued
thereunder.

Purchasers
is defined in Section 12.3.1.

Qualified
Receivables Transaction means any transaction or series of
transactions that may be entered into by Puget Energy or any Subsidiary pursuant to which
Puget Energy or any Subsidiary may sell, convey, pledge or otherwise transfer to a
newly-formed Subsidiary or another special purpose entity, or any other Person, any
accounts receivable (including chattel paper, instruments and general intangibles) or
notes receivable and the rights and certain other property related thereto;
provided that the Receivables Transaction Attributed Indebtedness incurred in all such
transactions or series of transactions does not exceed $200,000,000 at any time
outstanding. For the avoidance of doubt, the transactions contemplated by the Receivables
Purchase Agreement dated as of December 23, 2002 by and among Rainier Receivables,
Inc., PSE, as servicer, the purchasers party thereto from time to time and Bank One, NA,
as agent, shall constitute a Qualified Receivables Transaction.

Receivables
Transaction Attributed Indebtedness means, with respect to any
Qualified Receivables Transaction on any date of determination, the unrecovered purchase
price on such date of all assets sold, conveyed, pledged or otherwise transferred by Puget
Energy or any Subsidiary to the third-party conduit entity or other receivables credit
provider under such Qualified Receivables Transaction.

Reference
Rate means the variable rate of interest per annum established
by UBOC from time to time as its reference rate. Such reference
rate is set by UBOC as a general reference rate of interest, taking into account
such factors as UBOC may deem appropriate, it being understood that many of UBOCs
commercial or other loans are priced in relation to such rate, that it is not necessarily
the lowest or best rate actually charged to any customer and that UBOC may make various
commercial or other loans at rates of interest having no relationship to such rate. For
purposes of this Agreement, each change in the Reference Rate shall be effective as of the
opening of business on the date announced as the effective date of any change in such
reference rate.

Regulation D
means Regulation D of the FRB as from time to time in effect and any other regulation
or official interpretation of the FRB relating to reserve requirements applicable to
member banks of the Federal Reserve System.

Regulation U
means Regulation U of the FRB as from time to time in effect and any other regulation
or official interpretation of the FRB relating to the extension of credit by banks for the
purpose of purchasing or carrying margin stocks applicable to member banks of the Federal
Reserve System.

Reimbursement
Obligations means, at any time, the aggregate of all obligations of
the Borrower then outstanding under Section 2.16 to reimburse the LC Issuers for
amounts paid by the LC Issuers in respect of any one or more drawings under Facility LCs.

Reportable
Event means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan excluding such
events as to which the PBGC has by regulation waived the requirement of
Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such
event; providedthat a failure to meet the minimum funding standard of
Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event
regardless of the issuance of any such waiver of the notice requirement in accordance with
either Section 4043(a) of ERISA or Section 412(d) of the Code.

Required
Lenders means Lenders in the aggregate having more than 50% of the
Aggregate Commitment or, if the Aggregate Commitment has been terminated, Lenders in the
aggregate holding more than 50% of the Aggregate Outstanding Credit Exposure.

Reserve
Requirement means the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves), expressed as a
decimal, established by the FRB to which the Administrative Agent is subject for
eurocurrency funding (currently referred to as Eurocurrency liabilities in
Regulation D). Such reserve percentages shall include those imposed pursuant to Regulation
D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject
to such reserve requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under Regulation D. The
Reserve Requirement shall be adjusted automatically on and as of the effective date of any
change in any such reserve percentage.

Response
Date is defined in Section 2.17.

Risk-Based
Capital Guidelines is defined in Section 3.2.

Schedule
refers to a schedule to this Agreement, unless another document is specifically
referenced.

SEC
means the Securities and Exchange Commission.

Section
means a numbered section of this Agreement, unless another document is specifically
referenced.

Significant
Subsidiary means a significant subsidiary (as defined in
Regulation S-X of the SEC) of Puget Energy.

Subordinated
means, with respect to any debt or equity securities or other instruments of any sort,
that the principal or equivalent thereof is not required to be paid in whole or in part,
and after the occurrence of any event of any type described in Section 7.6 or 7.7 cannot
be paid in whole or in part, unless and until the Obligations (including the obligation to
provide cash collateral pursuant to the last sentence of Section 2.16.1) have been paid in
full and the Commitments have terminated.

Subsidiary
of a Person means (i) any corporation more than 50% of the outstanding securities of
which having ordinary voting power shall at the time be owned or controlled, directly or
indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one
or more of its Subsidiaries, or (ii) any partnership, limited liability company,
association, joint venture or similar business organization more than 50% of the ownership
interests of which having ordinary voting power shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
Subsidiary shall mean a Subsidiary of Puget Energy.

Substantial
Portion means, with respect to a Person and its Subsidiaries,
Property which (i) represents more than 10% of the consolidated assets of such Person
and its Subsidiaries as would be shown in the consolidated financial statements of such
Person and its Subsidiaries as at the beginning of the twelve-month period ending with the
month in which such determination is made, or (ii) is responsible for more than 10%
of the consolidated net sales or of the consolidated net income of such Person and its
Subsidiaries as reflected in the financial statements referred to in clause
(i) above.

Synthetic
Lease Obligation means the monetary obligation of a Person under
(i) a so-called synthetic, off-balance-sheet or tax-retention lease or (ii) any
other agreement (excluding any lease that is treated as an operating lease under Agreement
Accounting Principles) for the use or possession of property creating obligations that do
not appear on the balance sheet of such Person but that, upon the insolvency or bankruptcy
of such Person, would be characterized as the indebtedness of such Person (without regard
to accounting treatment).

Taxes
means any and all present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and any and all liabilities with respect to the foregoing, but excluding
Excluded Taxes.

Total
Capitalization means, at any time, the sum of the following for Puget
Energy and its Subsidiaries, determined on a consolidated basis in accordance with
Agreement Accounting Principles (without duplication and excluding minority interests in
Subsidiaries):

(i)    
          Net Worth; plus

(ii)    
          the aggregate obligations of PSE with respect to the Trust Preferred Securities;
          plus

(iii)    
          the aggregate obligations of Puget Energy and PSE with respect to any preferred
          stock thereof, including any preferred stock subject to mandatory redemption;
          plus

(iv)    
          the aggregate outstanding principal amount of all Consolidated Indebtedness.

Trust
Preferred Securities means (a) the outstanding principal amount
of 8.4% Trust Preferred Securities due June 30, 2041 issued by PSE on May 24,
2001, (b) the outstanding principal amount of 8.231% Trust Preferred Securities due
June 1, 2027 issued by PSE on June 6, 1997, and (c) the outstanding
principal amount of other trust preferred securities of PSE that are similar in structure
to those described in clauses (a) and (b).

Type
means with respect to any Advance, its nature as a Floating Rate Advance or a Eurodollar
Advance.

UBOC
means Union Bank of California, N.A., a national banking association.

Unmatured
Default means an event which but for the lapse of time or the giving
of notice, or both, would constitute a Default.

Wholly
Owned Subsidiary means, with respect to Puget Energy, (i) any
Subsidiary all of the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, by Puget Energy or one or more Wholly Owned
Subsidiaries, or (ii) any partnership, limited liability company, association, joint
venture or similar business organization 100% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled.

1.2   
Terms Generally.    The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context requires, any
pronoun shall include the corresponding masculine, feminine and neuter forms. The words
include, includesand including shall be deemed to be
followed by the phrase without limitation. The word will shall be
construed to have the same meaning and effect as the word shall. Unless the
context requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, restated, supplemented or
otherwise modified (subject to any restriction on such amendments, restatements,
supplements or modifications set forth in any Loan Document), (ii) any reference
herein to any Person shall be construed to include such Persons successors and
assigns (subject to any restrictions on assignment set forth in any Loan Document), (iii) the
words herein,hereof and hereunder, and words of
similar import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (iv) any reference herein to any law or regulation
shall, unless otherwise specified, refer to such law or regulation as amended, restated,
replaced or otherwise modified from time to time, and (v) the words asset and
property shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.

1.3   
Accounting Terms.    Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with Agreement Accounting
Principles; providedthat, if the Borrower notifies the Administrative Agent that
the Borrower requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in Agreement Accounting Principles or in the
application thereof on the operation of such provision (or if the Administrative Agent
notifies the Borrower that the Required Lenders request an amendment to any provision
hereof for such purpose), regardless of whether any such notice is given before or after
such change in Agreement Accounting Principles or the application thereof, then such
provision shall be interpreted on the basis of Agreement Accounting Principles as in
effect and applied immediately before the effective date of such change, until such
notice is withdrawn or such provision is amended in accordance herewith.

## ARTICLE 2 THE CREDITS

2.1   
Facility.    From and including the Closing Date to but excluding the Facility
Termination Date, (a) each Lender severally agrees, on the terms and conditions set
forth in this Agreement, to (i) make Loans to the Borrower and (ii) participate
in Facility LCs issued upon the request of the Borrower; and (b) each LC Issuer
severally agrees to issue Facility LCs on the terms and conditions set forth in this
Agreement.

| | 2.1.1   
  Amount of Facility.     In no event may the Aggregate Outstanding Credit Exposure exceed
the Aggregate Commitment.
| | -----------------------------------------------------------------------------------------------------------------------------

| | 2.1.2   
Availability of Facility.    Subject to the terms of this Agreement, the Borrower may
borrow, repay and reborrow hereunder at any time prior to the Facility Termination Date.
The Commitments to lend hereunder shall expire on the Facility Termination Date.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.1.3   
Repayment of Facility.    The Aggregate Outstanding Credit Exposure and all other
unpaid Obligations shall be paid in full by the Borrower on the Facility Termination
Date, except that the Borrowers contingent reimbursement obligations in respect of
any Facility LCs outstanding on the Facility Termination Date shall be secured in
accordance with the last sentence of Section 2.16.1.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2.2   
    Advances.

| | 2.2.1   
Advances. Each Advance hereunder shall consist of Loans made by the Lenders
ratably in proportion to the ratio that their respective Commitments bear to the
Aggregate Commitment.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.2.2   
Types of Advances. Advances may be Floating Rate Advances or Eurodollar Advances,
or a combination thereof, as selected by the Borrower in accordance with Section 2.2.3.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.2.3   
Method of Selecting Types and Interest Periods for Advances. The Borrower shall
select the Type of Advance and, in the case of each Eurodollar Advance, the Interest
Period applicable thereto, from time to time. The Borrower shall give the Administrative
Agent irrevocable notice in the form of Exhibit B (a Borrowing Notice)
not later than 10:00 a.m. (Los Angeles time) (a) on the Borrowing Date of each
Floating Rate Advance and (b) at least three Business Days before the Borrowing Date
of each Eurodollar Advance. A Borrowing Notice shall specify:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(i)              the
Borrowing Date, which shall be a Business Day, of such Advance;

(ii)              the
aggregate amount of such Advance;

(iii)              the
Type of Advance selected; and

(iv)              in
the case of each Eurodollar Advance, the Interest Period applicable thereto
          (which may not end after the scheduled Facility Termination Date).

| | 2.2.4   
Conversion and Continuation of Outstanding Advances. Floating Rate Advances shall
continue as Floating Rate Advances unless and until such Floating Rate Advances are
either converted into Eurodollar Advances in accordance with this Section 2.2.4 or
are repaid in accordance with Section 2.6. Each Eurodollar Advance shall continue as
a Eurodollar Advance until the end of the then applicable Interest Period therefor, at
which time such Eurodollar Advance shall be automatically converted into a Floating Rate
Advance unless (x) such Eurodollar Advance is or was repaid in accordance with
Section 2.6 or (y) the Borrower shall have given the Administrative Agent a
Conversion/Continuation Notice requesting that, at the end of such Interest Period, such
Eurodollar Advance continue as a Eurodollar Advance for the same or another Interest
Period. Subject to Section 2.5, the Borrower may elect from time to time to convert
all or any part of a Floating Rate Advance into a Eurodollar Advance. The Borrower shall
give the Administrative Agent irrevocable notice in the form of Exhibit C (a Conversion/Continuation
Notice) with respect to each conversion of a Floating Rate Advance
into a Eurodollar Advance, or continuation of a Eurodollar Advance, not later than 10:00
a.m. (Los Angeles time) at least three Business Days prior to the date of the requested
conversion or continuation, specifying:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(i)              the
requested date, which shall be a Business Day, of such conversion or
          continuation;

(ii)              the
aggregate amount and Type of the Advance which is to be converted or           continued;
and

(iii)              the
amount of the Advance which is to be converted into or continued as a
          Eurodollar Advance and the duration of the Interest Period applicable thereto.

2.3   
Method of Borrowing. Not later than 11:00 a.m. (Los Angeles time) on each
Borrowing Date, each Lender shall make available its Loan or Loans in funds immediately
available in Los Angeles to the Administrative Agent at its address specified pursuant to
Article 13. The Administrative Agent will make the funds so received from the
Lenders available to the Borrower at the Administrative Agents aforesaid address.

2.4
   Fees; Reductions in Aggregate Commitment.

| | 2.4.1   
The Borrower agrees to pay to the Administrative Agent for the account of each Lender
according to its Pro Rata Share a commitment fee at a per annum rate equal to the
Applicable Commitment Fee Rate on the daily unused portion of the Aggregate Commitment
(the Commitment Fee) from and including the date hereof
to but excluding the Facility Termination Date, payable in arrears on each Payment Date
and on the Facility Termination Date.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.4.2    
The Borrower agrees to pay to the Administrative Agent on the Closing Date, for the
account of each Lender, an upfront fee as provided for in the Fee Letter.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.4.3
   The Borrower may permanently reduce the Aggregate Commitment in whole,
or in part ratably among the Lenders in a minimum amount of $10,000,000 and higher
integral multiples of $1,000,000, upon at least three Business Days prior written
notice to the Administrative Agent, which notice shall specify the amount of any such
reduction; provided that the amount of the Aggregate Commitment may not be reduced
below the Aggregate Outstanding Credit Exposure. All accrued Commitment Fees shall be
payable on the effective date of any termination of the Commitments in full.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2.5
   Minimum Amount of Each Advance; Limitation on Eurodollar Advances.
Each Advance shall at all times (including after giving effect to any prepayment,
conversion or continuation of all or part of an Advance) be in the amount of $1,000,000
or a higher integral multiple of $500,000. The Borrower shall not request a Eurodollar
Advance if, after giving effect to the requested Eurodollar Advance, more than seven
separate Eurodollar Advances would be outstanding.

2.6   
Optional Principal Payments. The Borrower may from time to time pay, without
penalty or premium, all outstanding Floating Rate Advances or, in an aggregate amount of
$1,000,000 or a higher integral multiple of $500,000, any portion of the outstanding
Floating Rate Advances upon one Business Days prior notice to the Administrative
Agent. The Borrower may from time to time pay, subject to the payment of any funding
indemnification amounts required by Section 3.4 but without penalty or premium, all
outstanding Eurodollar Advances or, in an aggregate amount of $1,000,000 or a higher
integral multiple of $500,000, any portion of the outstanding Eurodollar Advances upon
three Business Days prior notice to the Administrative Agent.

2.7   
Changes in Interest Rate, etc. Each Floating Rate Advance shall bear interest on
the outstanding principal amount thereof, for each day from and including the date such
Floating Rate Advance is made or is converted from a Eurodollar Advance pursuant to
Section 2.2.4 to but excluding the date it becomes due or is converted into a
Eurodollar Advance pursuant to Section 2.2.4, at the Alternate Base Rate for such
day. Changes in the rate of interest applicable to each Floating Rate Advance will take
effect simultaneously with each change in the Alternate Base Rate. Each Eurodollar
Advance shall bear interest on the outstanding principal amount thereof, from and
including the first day of each Interest Period applicable thereto to but excluding the
last day of such Interest Period, at a rate per annum equal to the sum of the
Eurodollar Rate for each day during such Interest Period plus the Applicable Eurodollar
Margin.

2.8   
Rates Applicable After Default. Notwithstanding anything to the contrary contained
in Section 2.2.3 or Section 2.2.4, during the continuance of a Default or
Unmatured Default the Required Lenders may, at their option, by notice to the Borrower
(which notice may be revoked at the option of the Required Lenders notwithstanding any
provision of Section 8.2 requiring unanimous consent of the Lenders to changes in
interest rates), declare that no Advance may be made as, converted into or continued as a
Eurodollar Advance. During the continuance of a Default the Required Lenders may, at
their option, by notice to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous
consent of the Lenders to changes in interest rates), declare that (i) each
Eurodollar Advance shall bear interest for the remainder of the applicable Interest
Period at the Alternate Base Rate in effect from time to time plus 2% per annum,
(ii) each Floating Rate Advance shall bear interest at a rate per annum equal
to the Alternate Base Rate in effect from time to time plus 2% per annum and (iii) the
LC Fee shall be increased by 2% per annum; provided that, during the continuance
of a Default under Section 7.6 or 7.7, the interest rates set forth in clauses (i) and
(ii) above and the increase in the LC Fee set forth in clause (iii) above shall
be applicable to all Credit Extensions without any election or action on the part of the
Administrative Agent or any Lender.

2.9   
Method of Payment. All payments of the Obligations hereunder shall be made,
without setoff, deduction or counterclaim, in immediately available funds to the
Administrative Agent at the Administrative Agents address specified pursuant to
Article 13, or at any other Lending Installation of the Administrative Agent
specified in writing by the Administrative Agent to the Borrower, by 10:00 a.m. (Los
Angeles time) on the date when due and shall (except in the case of Reimbursement
Obligations for which either LC Issuer has not been fully indemnified by the Lenders, or
as specifically required hereunder) be applied ratably by the Administrative Agent among
the Lenders. Each payment delivered to the Administrative Agent for the account of any
Lender shall be delivered promptly by the Administrative Agent to such Lender in the same
type of funds as the Administrative Agent received at such Lenders address
specified pursuant to Article 13 or at any Lending Installation specified in a
notice received by the Administrative Agent from such Lender. Each reference to the
Administrative Agent in this Section 2.9 shall also be deemed to refer, and shall
apply equally, to each LC Issuer, in the case of payments required to be made by the
Borrower to such LC Issuer pursuant to 2.16.6.

2.10   
Noteless Agreement; Evidence of Indebtedness. (i) (i) Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing the indebtedness
of the Borrower to such Lender resulting from each Loan made by such Lender from time to
time, including the amounts of principal and interest payable and paid to such Lender
from time to time hereunder.

(ii)              The
Administrative Agent shall also maintain accounts in which it will record           (a) the
amount of each Loan made hereunder, the Type thereof and the           Interest Period,
if any, with respect thereto, (b) the amount of any           principal or interest
due and payable or to become due and payable from the           Borrower to each Lender
hereunder, (c) the original stated amount of each           Facility LC and the
amount of LC Obligations outstanding at any time, and           (d) the amount of
any sum received by the Administrative Agent hereunder           from the Borrower and
each Lenders share thereof.

(iii)              The
entries made in the accounts maintained pursuant to paragraphs (i) and           (ii) above
shall be prima facieevidence of the existence and           amounts of the
Obligations recorded therein; provided that the failure of           the
Administrative Agent or any Lender to maintain such accounts or any error
          therein shall not in any manner affect the obligation of the Borrower to repay
          the Obligations in accordance with the terms hereof.

(iv)              Any
Lender may request that its Loans be evidenced by a Note. In such event, the
          Borrower shall prepare, execute and deliver to such Lender a Note payable to
the           order of such Lender. Thereafter, the Loans evidenced by such Note and
interest           thereon shall at all times (including after any assignment pursuant to
          Section 12.3) be represented by a Note payable to the order of the payee
          named therein or any assignee pursuant to Section 12.3, except to the
          extent that any such Lender or assignee subsequently returns any such Note for
          cancellation and requests that such Loans once again be evidenced as described
          in paragraphs (i) and (ii) above.

2.11   
Telephonic Notices. The Borrower hereby authorizes the Lenders and the
Administrative Agent to extend, convert or continue Advances, to effect selections of
Types of Advances and to transfer funds based on telephonic notices made pursuant to the
terms of this Agreement by any person or persons the Administrative Agent or any Lender
in good faith believes to be acting on behalf of the Borrower, it being understood that
the foregoing authorization is specifically intended to allow Borrowing Notices and
Conversion/Continuation Notices to be given telephonically to the Administrative Agent.
The Borrower agrees to deliver promptly to the Administrative Agent a written
confirmation of each telephonic notice, if such confirmation is requested by the
Administrative Agent or any Lender, signed by an Authorized Officer. If the written
confirmation differs in any material respect from the action taken by the Administrative
Agent and the Lenders, the records of the Administrative Agent and the Lenders shall
govern absent manifest error.

2.12   
Interest Payment Dates; Interest and Fee Basis. Interest accrued on each Floating
Rate Advance shall be payable on each Payment Date, on any date on which such Floating
Rate Advance is paid, whether due to acceleration or otherwise, and at maturity. Interest
accrued on that portion of the outstanding principal amount of any Floating Rate Advance
converted into a Eurodollar Advance on a day other than a Payment Date shall be payable
on the date of conversion. Interest accrued on each Eurodollar Advance shall be payable
on the last day of its applicable Interest Period, on any date on which such Eurodollar
Advance is paid, whether by acceleration or otherwise, and at maturity. Interest accrued
on each Eurodollar Advance having an Interest Period longer than three months shall also
be payable on the last day of each three-month interval during such Interest Period.
Interest, Commitment Fees, LC Fees and LC Fronting Fees shall be calculated for actual
days elapsed on the basis of a 360-day year, except that interest on Floating Rate
Advances accruing at a rate based on the Reference Rate shall be computed on the basis of
a 365- or 366-day year, as applicable. Interest shall be payable for the day an Advance
is made but not for the day of any payment on the amount paid if payment is received
prior to 10:00 a.m. (Los Angeles time). If any payment of principal of or interest on an
Advance or any payment of fees in connection herewith shall become due on a day which is
not a Business Day, such payment shall be made on the next succeeding Business Day, and
such extension of time shall be reflected in computing interest or fees, as the case may
be.

2.13   
Notification of Advances, Interest Rates, Prepayments and Commitment Reductions.
Promptly after receipt thereof, the Administrative Agent will notify each Lender of the
contents of each Aggregate Commitment reduction notice, Borrowing Notice,
Conversion/Continuation Notice and repayment notice received by the Administrative Agent
hereunder. Promptly after receipt of notice thereof from either LC Issuer, the
Administrative Agent will notify each Lender of the contents of each request for issuance
of a Facility LC hereunder. The Administrative Agent will notify each Lender and the
Borrower of the interest rate applicable to each Eurodollar Advance promptly upon
determination of such interest rate and will give each Lender and the Borrower prompt
notice of each change in the Alternate Base Rate.

2.14   
Lending Installations. Each Lender may book its Loans and its participations in
any LC Obligations, and each LC Issuer may book the Facility LCs issued thereby, at any
Lending Installation selected by such Lender or LC Issuer, as the case may be, and may
change its Lending Installation from time to time. All terms of this Agreement shall
apply to any such Lending Installation, and the Loans, Facility LCs, participations in LC
Obligations and any Notes issued hereunder shall be deemed held by each Lender or LC
Issuer, as the case may be, for the benefit of any such Lending Installation. Each Lender
and LC Issuer may, by written notice to the Administrative Agent and the Borrower in
accordance with Article 13, designate replacement or additional Lending
Installations through which Loans will be made by it or Facility LCs will be issued by it
and for whose account payments under this Agreement are to be made.

2.15   
Non-Receipt of Funds by Administrative Agent. Unless the Borrower or a Lender, as
the case may be, notifies the Administrative Agent prior to the date on which it is
scheduled to make payment to the Administrative Agent of (i) in the case of a
Lender, the proceeds of a Loan or (ii) in the case of the Borrower, a payment of
principal, Reimbursement Obligations, interest or fees to the Administrative Agent for
the account of the Lenders, that it does not intend to make such payment, the
Administrative Agent may assume that such payment has been made. The Administrative Agent
may, but shall not be obligated to, make the amount of such payment available to the
intended recipient in reliance upon such assumption. If such Lender or the Borrower, as
the case may be, has not in fact made such payment to the Administrative Agent, the
recipient of such payment from the Administrative Agent shall, on demand by the
Administrative Agent, repay to the Administrative Agent the amount so made available,
together with interest thereon in respect of each day during the period commencing on the
date such amount was so made available by the Administrative Agent until the date the
Administrative Agent recovers such amount at a rate per annum equal to (x) in
the case of repayment by a Lender, the Federal Funds Effective Rate for such day for the
first three days and, thereafter, the interest rate applicable to the relevant Loan or (y) in
the case of repayment by the Borrower, the interest rate applicable to the relevant Loan.

2.16   
Facility LCs.

| | 2.16.1   
Issuance. Each LC Issuer hereby agrees, on the terms and conditions set forth in
this Agreement, to issue standby letters of credit (each, a Facility LC)
and to renew, extend, increase, decrease or otherwise modify each Facility LC issued
thereby (Modify, and each such action a Modification),
from time to time from and including the date of this Agreement and prior to the Facility
Termination Date upon the request of the Borrower; providedthat, immediately
after each such Facility LC is issued or Modified, (i) the aggregate amount of the
outstanding LC Obligations shall not exceed $50,000,000 and (ii) the Aggregate
Outstanding Credit Exposure shall not exceed the Aggregate Commitment. No Facility LC
shall have an expiry date later than one year after the Facility Termination Date. If one
or more Facility LCs are outstanding on the Facility Termination Date, the Borrower shall
cause to be deposited with the Administrative Agent on or before such date cash
collateral in the amount equal to the maximum aggregate amount then available to be drawn
under such Facility LCs (or cash equivalents of such types and in such amounts as are
reasonably satisfactory to the Administrative Agent), pursuant to documentation in form
and substance reasonably satisfactory to the Administrative Agent, to secure the Borrowers
contingent reimbursement obligations in respect of such Facility LCs.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.16.2   Participations.
Upon the issuance or Modification by either LC Issuer of a Facility LC in accordance with
this Section 2.16, such LC Issuer shall be deemed, without further action by any
party hereto, to have unconditionally and irrevocably sold to each Lender, and each
Lender shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably purchased from such LC Issuer, a participation in such
Facility LC (and each Modification thereof) and the related LC Obligations in proportion
to such Lenders Pro Rata Share.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.16.3
   Notice. Subject to Section 2.16.1, the Borrower shall give
each LC Issuer notice prior to 12:00 noon (local time of such LC Issuer) at least three
Business Days prior to the proposed date of issuance or Modification of each Facility LC
by such LC Issuer, specifying the beneficiary, the proposed date of issuance or
Modification and the expiry date of such Facility LC, and describing the proposed terms
of such Facility LC and the nature of the transactions proposed to be supported thereby.
Upon receipt of such notice, the applicable LC Issuer shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly notify each Lender, of
the contents thereof and of the amount of such Lenders participation in such
proposed Facility LC. The issuance or Modification by an LC Issuer of any Facility LC
shall, in addition to the conditions precedent set forth in Article 4 (the
satisfaction of which such LC Issuer shall have no duty to ascertain), be subject to the
conditions precedent that such Facility LC shall be satisfactory to such LC Issuer and
that the Borrower shall have executed and delivered such application agreement and/or
other instruments and agreements relating to such Facility LC as such LC Issuer shall
have reasonably requested (each, a Facility LC Application).
In the event of any conflict between the terms of this Agreement and the terms of any
Facility LC Application, the terms of this Agreement shall control.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.16.4
   LC Fees and LC Fronting Fees. The Borrower shall pay to the
Administrative Agent, for the account of the Lenders ratably in accordance with their
respective Pro Rata Shares, with respect to each Facility LC, a letter of credit fee at a
per annum rate equal to the Applicable LC Fee Rate in effect from time to time on
the maximum undrawn amount available under such Facility LC from time to time, such fee
to be payable in arrears on each Payment Date (each such fee, an LC Fee).
In addition to the LC Fee, with respect to each Facility LC issued by a particular LC
Issuer, the Borrower shall pay to such LC Issuer for its own account (x) a fronting
fee at the rate of 0.125% per annum on the maximum undrawn amount available under
each such Facility LC from time to time, such fee to be payable in arrears on each
Payment Date (each such fee, an LC Fronting Fee), and (y) documentary
and processing charges in connection with the issuance or Modification of, and draws
under, each such Facility LC in accordance with such LC Issuers standard schedule
for such charges as in effect from time to time.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.16.5
   Administration; Reimbursement by Lenders. Upon receipt from the
beneficiary of any Facility LC of any demand for payment under such Facility LC, the LC
Issuer of such Facility LC shall notify the Administrative Agent, and the Administrative
Agent shall promptly notify the Borrower and each Lender, as to the amount to be paid by
such LC Issuer as a result of such demand and the proposed payment date (the LC
Payment Date). The responsibility of each LC Issuer to the Borrower
and each Lender shall be only to determine that the documents (including each demand for
payment) delivered under each Facility LC issued by such LC Issuer in connection with
each presentment thereunder shall be in conformity in all material respects with such
Facility LC. Each LC Issuer shall endeavor to exercise the same care in the issuance and
administration of Facility LCs thereby as it does with respect to letters of credit in
which no participations are granted, it being understood that, in the absence of any
gross negligence or willful misconduct by such LC Issuer, each Lender shall be
unconditionally and irrevocably liable, without regard to the occurrence of any Default
or Unmatured Default or any condition precedent whatsoever, to reimburse such LC Issuer
on demand for (i) such Lenders Pro Rata Share of the amount of each payment
made by such LC Issuer under each Facility LC issued thereby to the extent such amount is
not reimbursed by the Borrower pursuant to Section 2.16.6, plus (ii) interest
on the foregoing amount to be reimbursed by such Lender, for each day from the date of
such LC Issuers demand for such reimbursement (or, if such demand is made after
12:00 noon (local time of such LC Issuer) on such date, from the next succeeding Business
Day) to the date on which such Lender pays the amount to be reimbursed by it, at a rate
of interest per annumequal to the Federal Funds Effective Rate for the first three
days and, thereafter, to the rate applicable to Floating Rate Advances.
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| | 2.16.6   Reimbursement
by Borrower. The Borrower shall be irrevocably and unconditionally obligated to
reimburse each LC Issuer on or before the applicable LC Payment Date for any amounts paid
or to be paid by such LC Issuer upon any drawing under any Facility LC issued thereby,
without presentment, demand, protest or other formalities of any kind; provided that
neither the Borrower nor any Lender shall hereby be precluded from asserting any claim
for direct (but not consequential) damages suffered by the Borrower or such Lender to the
extent, but only to the extent, caused by (i) the willful misconduct or gross
negligence of such LC Issuer in determining whether a request presented under any
Facility LC issued by it complied with the terms of such Facility LC or (ii) such LC
Issuers failure to pay under any Facility LC issued by it after the presentation to
it of a request for payment strictly complying with the terms and conditions of such
Facility LC. All such amounts paid by either LC Issuer and remaining unpaid by the
Borrower shall bear interest, payable on demand, for each day until paid at a rate per
annumequal to (x) the rate applicable to Floating Rate Advances for such day if
such day falls on or before the applicable LC Payment Date and (y) the sum of 2%
plus the rate applicable to Floating Rate Advances for such day if such day falls after
such LC Payment Date. Each LC Issuer will pay to each Lender ratably in accordance with
its Pro Rata Share all amounts received by such LC Issuer from the Borrower for
application in payment, in whole or in part, of any Reimbursement Obligation in respect
of any Facility LC issued by such LC Issuer, but only to the extent such Lender has made
payment to such LC Issuer in respect of such Facility LC pursuant to Section 2.16.5.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.16.7
   Obligations Absolute. The Borrowers obligations under this
Section 2.16 shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which the Borrower may
have or have had against either LC Issuer, any Lender or any beneficiary of a Facility
LC. The Borrower further agrees with the LC Issuers and the Lenders that none of the LC
Issuers or Lenders shall be responsible for, and no Reimbursement Obligation in respect
of any Facility LC shall be affected by, among other things, (i) the validity or
genuineness of documents or of any endorsements thereon, even if such documents should in
fact prove to be in any or all respects invalid, fraudulent or forged, (ii) any
dispute between or among the Borrower, any of its Affiliates, the beneficiary of any
Facility LC or any financing institution or other party to which any Facility LC may be
transferred or (iii) any claims or defenses whatsoever of the Borrower or any of its
Affiliates against the beneficiary of any Facility LC or any such transferee. Neither LC
Issuer shall be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in connection with
any Facility LC. The Borrower agrees that any action taken or omitted by any LC Issuer or
Lender under or in connection with any Facility LC and the related drafts and documents,
if done without gross negligence or willful misconduct, shall be binding upon the
Borrower and shall not put any LC Issuer or Lender under any liability to the Borrower.
Nothing in this Section 2.16.7 is intended to limit the right of the Borrower to
make a claim against either LC Issuer for damages as contemplated by the proviso to the
first sentence of Section 2.16.6.
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| | 2.16.8   Actions
of LC Issuer. Each LC Issuer shall be entitled to rely, and shall be fully protected
in relying, upon any Facility LC, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex, teletype or
electronic message, statement, order or other document reasonably believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person or
Persons, and upon advice and statements of legal counsel, independent accountants and
other experts selected by such LC Issuer. Each LC Issuer shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall first have
received such advice or concurrence of the Required Lenders as it reasonably deems
appropriate or it shall first be indemnified to its reasonable satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. Notwithstanding any other provision of
this Section 2.16, each LC Issuer shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement in accordance with a request of the
Required Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon the Lenders and any future holders of a participation in
any Facility LC.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.16.9   Indemnification.
The Borrower hereby agrees to indemnify and hold harmless each Lender, each LC Issuer and
the Administrative Agent, and their respective directors, officers, agents and employees
from and against any and all claims, damages, losses, liabilities, costs and expenses
which such Lender or LC Issuer or the Administrative Agent may incur (or which may be
claimed against such Lender or LC Issuer or the Administrative Agent by any Person
whatsoever) by reason of or in connection with the issuance, execution and delivery or
transfer of, or payment or failure to pay under, any Facility LC or any actual or
proposed use of any Facility LC, including any claims, damages, losses, liabilities,
costs and expenses which either LC Issuer may incur by reason of or in connection with
the failure of any other Lender to fulfill or comply with its obligations to such LC
Issuer hereunder (but nothing herein contained shall affect any rights the Borrower may
have against any defaulting Lender); provided that the Borrower shall not be
required to indemnify any Lender or LC Issuer or the Administrative Agent for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the extent,
caused by (x) the willful misconduct or gross negligence of such LC Issuer in
determining whether a request for payment presented under any Facility LC issued thereby
complied with the terms of such Facility LC, (y) such LC Issuers failure to
pay under any such Facility LC after the presentation to it of such a request strictly
complying with the terms and conditions of such Facility LC or (z) disputes, not
involving the Borrower or any beneficiary of any Facility LC, solely among the Lenders,
either LC Issuer and/or the Administrative Agent relating to a Facility LC. Nothing in
this Section 2.16.9 is intended to limit the obligations of the Borrower under any
other provision of this Agreement.
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| | 2.16.10   LendersIndemnification.
Each Lender shall, ratably in accordance with its Pro Rata Share, indemnify each LC
Issuer, its Affiliates and their respective directors, officers, agents and employees (to
the extent not reimbursed by the Borrower) against any costs, expenses (including
reasonable counsel fees and disbursements), claims, demands, actions, losses and
liabilities (except such as result from such indemnitees gross negligence or
willful misconduct or such LC Issuers failure to pay under any Facility LC issued
thereby after the presentation to it of a request for payment strictly complying with the
terms and conditions of such Facility LC) that such indemnitees may suffer or incur in
connection with this Section 2.16 or any action taken or omitted by such indemnitees
hereunder.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.16.11
   Rights as Lender. In its capacity as a Lender, each LC Issuer
shall have the same rights and obligations as any other Lender.
| | ----------------------------------------------------------------------------------------------------------------------------------------

2.17
   Extension of Facility Termination Date. The Borrower may request
an extension of the Facility Termination Date by submitting a request for an extension to
the Administrative Agent (an Extension Request) at least
30 days but no more than 60 days prior to each anniversary of the date of this Agreement.
The Extension Request must specify the new Facility Termination Date requested by the
Borrower and the date (which must be at least 10  days after the Extension Request
is delivered to the Administrative Agent) as of which the Lenders must respond to the
Extension Request (the Response Date). Promptly upon
receipt of an Extension Request, the Administrative Agent shall notify each Lender of the
contents thereof and shall request each Lender to respond to the Extension Request. Each
Lender approving the Extension Request shall deliver its written consent no later than
the Response Date. The response by each Lender to the Extension Request shall be in such
Lenders sole and absolute discretion. The failure of any Lender to respond to an
Extension Request on or before the Response Date shall be deemed to be a refusal by such
Lender to consent to the Extension Request. If the consent of each of the Lenders is
received by the Administrative Agent (or, in the case of a non-consenting Lender or
Lenders, such Lender or Lenders are replaced by the Borrower pursuant to Section 3.7
not later than five days prior to the existing Facility Termination Date and, at the time
of such replacement, each replacement Lender consents to the Extension Request), the
Facility Termination Date specified in the Extension Request shall become effective on
the existing Facility Termination Date, and the Administrative Agent shall promptly
notify the Borrower and each Lender of the new Facility Termination Date.

# ARTICLE 3 YIELD PROTECTION; TAXES

3.1   Yield
Protection. If, on or after the date of this Agreement, the adoption of any law or
any governmental or quasi-governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law), or any change in the interpretation or
administration thereof by any governmental or quasi-governmental authority, central bank
or comparable agency charged with the interpretation or administration thereof, or
compliance by any Lender, LC Issuer or applicable Lending Installation with any request
or directive (whether or not having the force of law) of any such authority, central bank
or comparable agency:

(i)              subjects
any Lender, LC Issuer or applicable Lending Installation to any Taxes,           or
changes the basis of taxation of payments (other than with respect to           Excluded
Taxes) to any Lender, LC Issuer or applicable Lending Installation in           respect
of its Eurodollar Loans, Facility LCs or participations therein, or

(ii)              imposes,
increases or deems applicable any reserve, assessment, insurance           charge,
special deposit or similar requirement against assets of, deposits with           or for
the account of, or credit extended by, any Lender, LC Issuer or           applicable
Lending Installation (other than reserves and assessments taken into           account in
determining the interest rate applicable to Eurodollar Advances), or

(iii)              imposes
any other condition the result of which is to increase the cost to any           Lender,
LC Issuer or applicable Lending Installation of making, funding or           maintaining
its Eurodollar Loans or of issuing or participating in Facility LCs,           or reduces
any amount receivable by any Lender, LC Issuer or applicable Lending
          Installation in connection with its Eurodollar Loans, Facility LCs or
          participations therein, or requires any Lender, LC Issuer or applicable Lending
          Installation to make any payment calculated by reference to the amount of
          Eurodollar Loans, Facility LCs or participations therein held or interest
          received by it, by an amount deemed material by such Lender or LC Issuer, as
the           case may be,

and the result of any of the
foregoing is to increase the cost to such Lender, LC Issuer or applicable Lending
Installation, as the case may be, of making or maintaining its Eurodollar Loans or
Commitment or of issuing or participating in Facility LCs or to reduce the return received
by such Lender, LC Issuer or applicable Lending Installation in connection with such
Eurodollar Loans, Commitment, Facility LCs or participations therein then, within 15 days
of demand by such Lender or LC Issuer, as the case may be, the Borrower shall pay such
Lender or LC Issuer such additional amount or amounts as will compensate such Lender, LC
Issuer or Lending Installation, as the case may be, for such increased cost or reduction
in amount received.

3.2
   Changes in Capital Adequacy Regulations. If a Lender or LC
Issuer determines that the amount of capital required or expected to be maintained by
such Lender or LC Issuer, the Lending Installation of such Lender or LC Issuer or any
corporation controlling such Lender or LC Issuer is increased as a result of a Change,
then, within 15 days of demand by such Lender or LC Issuer, the Borrower shall pay such
Lender or LC Issuer the amount necessary to compensate for any shortfall in the rate of
return on the portion of such increased capital which such Lender or LC Issuer reasonably
determines is attributable to this Agreement, its Outstanding Credit Exposure or its
Commitment to make Loans and issue or participate in Facility LCs, as the case may be,
hereunder (after taking into account such Lenders or LC Issuers policies as
to capital adequacy). The Administrative Agent agrees to notify the Borrower of any
Change within 60 days after the Administrative Agent becomes aware of such Change. Change means
(i) any change after the date of this Agreement in the Risk-Based Capital Guidelines
or (ii) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation or directive
(whether or not having the force of law) after the date of this Agreement which affects
the amount of capital required or expected to be maintained by any Lender, LC Issuer or
Lending Installation or any corporation controlling any Lender or LC Issuer. Risk-Based
Capital Guidelinesmeans (i) the risk-based capital guidelines
in effect in the United States on the date of this Agreement, including transition rules,
and (ii) the corresponding capital regulations promulgated by regulatory authorities
outside the United States implementing the July 1988 report of the Basle Committee on
Banking Regulation and Supervisory Practices Entitled International Convergence of
Capital Measurements and Capital Standards, including transition rules.

3.3
   Availability of Types of Advances. If (x) any Lender
determines that maintenance of its Eurodollar Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation, or directive, whether or not having
the force of law, or (y) prior to the first day of any applicable Interest Period,
the Required Lenders determine that (i) deposits of a type and maturity appropriate
to match-fund Eurodollar Loans are not available or (ii) the interest rate
applicable to any Eurodollar Loans does not accurately reflect the cost of making or
maintaining such Eurodollar Loans, then (a) in the case of clause (x) above,
such Lender shall promptly notify the Borrower and the Administrative Agent and, so long
as such circumstances shall continue, (i) such Lender shall have no obligation to
make Eurodollar Loans or convert Floating Rate Loans into Eurodollar Loans (but shall
make Floating Rate Loans concurrently with the making of or conversion into Eurodollar
Loans by the Lenders which are not so affected, in each case in an amount equal to such
Lenders share of all Eurodollar Loans which would be made or converted into at such
time in the absence of such circumstances) and (ii) on the last day of the current
Interest Period for each Eurodollar Loan of such Lender (or, in any event, on such
earlier date as may be required by the relevant law, regulation or interpretation), such
Eurodollar Loan shall, unless then paid in full, automatically convert to a Floating Rate
Loan, and (b) in the case of clause (y) above, the Administrative Agent shall
suspend the availability of future Eurodollar Advances and any requested borrowing of,
conversion into or continuation of a Eurodollar Advance shall instead be made as, remain
or be converted into a Floating Rate Advance. Each Floating Rate Loan made pursuant to
clause (a) above shall remain outstanding for the same period as the Eurodollar
Advance of which such Floating Rate Loan would be a part absent the circumstances
described in such clause (a).

3.4
   Funding Indemnification. If any payment of a Eurodollar Advance
occurs on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or if a Eurodollar Advance is not made
on the date specified by the Borrower (including in the case of any continuation of or
conversion into a Eurodollar Advance) for any reason other than default by the Lenders,
the Borrower will indemnify each Lender for any loss or cost incurred by it resulting
therefrom, including any loss or cost in liquidating or employing deposits acquired to
fund or maintain such Eurodollar Advance.

3.5   
Taxes. (i) (i) All payments by the Borrower to or for the account of any Lender or
LC Issuer or the Administrative Agent hereunder or under any Note or Facility LC
Application shall be made free and clear of and without deduction for any and all Taxes.
If the Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to any Lender or LC Issuer or the Administrative Agent, (a) the
sum payable shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section 3.5)
such Lender or LC Issuer or the Administrative Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made, (b) the
Borrower shall make such deductions, (c) the Borrower shall pay the full amount
deducted to the relevant authority in accordance with applicable law and (d) the
Borrower shall furnish to the Administrative Agent the original copy of a receipt
evidencing payment thereof within 30 days after such payment is made.

(ii)              In
addition, the Borrower hereby agrees to pay any present or future stamp or
          documentary taxes and any other excise or property taxes, charges or similar
          levies which arise from any payment made hereunder or under any Note or
Facility           LC Application or from the execution or delivery of, or otherwise with
respect           to, this Agreement or any Note or Facility LC Application (Other
          Taxes).

(iii)              The
Borrower hereby agrees to indemnify the Administrative Agent and each LC           Issuer
and Lender for the full amount of Taxes or Other Taxes (including any           Taxes or
Other Taxes imposed on amounts payable under this Section 3.5)           paid by the
Administrative Agent or such LC Issuer or Lender and any liability           (including
penalties, interest and expenses) arising therefrom or with respect           thereto
relating to this Agreement. Payments due under this indemnification           shall be
made within 30 days of the date the Administrative Agent or such LC           Issuer or
Lender makes demand therefor pursuant to Section 3.6.

(iv)              Each
Lender that is not incorporated under the laws of the United States of           America
or a state thereof (each a Non-U.S.           Lender)
agrees that it will, within 10 Business Days after           the date of this Agreement,
deliver to each of the Borrower and the           Administrative Agent two duly completed
copies of whichever of the following is           applicable: (a) Internal Revenue
Service Form W-8BEN claiming eligibility for           benefits of an income-tax treaty
to which the United States of America is a           party; (b) Internal Revenue Service
Form W-8ECI; (c) in the case of a Non-U.S.           Lender claiming the benefits of the
exemption for portfolio interest under           section 881(c) of the Code, (x) a
certificate to the effect that such Non-U.S.           Lender is not a bank within
the meaning of section 881(c)(3)(A) of           the Code, a 10 percent shareholder of
the Borrower within the           meaning of section 881(c)(3)(B) of the Code or a controlled
foreign           corporation as described in section 881(c)(3)(C) of the Code and
(y)           Internal Revenue Service Form W-8BEN; or (d) any other form prescribed by
          applicable law as a basis for claiming exemption from or a reduction in United
          States federal withholding tax, together with such supplementary documentation
          as may be prescribed by applicable law to permit the Borrower to determine the
          withholding or deduction required to be made. Each Non-U.S. Lender further
          undertakes to deliver to each of the Borrower and the Administrative Agent
          (x) renewals or additional copies of such form (or any successor form) on
          or before the date that such form expires or becomes obsolete, and           (y) after
the occurrence of any event requiring a change in the most recent           forms so
delivered by it, such additional forms or amendments thereto as may be
          reasonably requested by the Borrower or the Administrative Agent. All forms or
          amendments described in the preceding sentence shall certify that such Lender
is           entitled to receive payments under this Agreement without deduction or
          withholding of any United States federal income taxes, unless an event
          (including any change in a treaty, law or regulation) has occurred prior to the
          date on which any such delivery would otherwise be required which renders all
          such forms inapplicable or which would prevent such Lender from duly completing
          and delivering any such form or amendment with respect to it and such Lender
          advises the Borrower and the Administrative Agent that it is not capable of
          receiving payments without any deduction or withholding of United States
federal           income tax.

(v)              For
any period during which a Non-U.S. Lender has failed to provide the Borrower
          with an appropriate form pursuant to clause (iv) above (unless such
failure           is due to a change in a treaty, law or regulation, or any change in the
          interpretation or administration thereof by any governmental authority,
          occurring subsequent to the date on which a form originally was required to be
          provided), such Non-U.S. Lender shall not be entitled to indemnification under
          this Section 3.5 with respect to Taxes imposed by the United States;
          provided that, should a Non-U.S. Lender which is otherwise exempt from or
          subject to a reduced rate of withholding tax become subject to Taxes because of
          its failure to deliver a form required under clause (iv), above, the Borrower
          shall take such steps as such Non-U.S. Lender shall reasonably request to
assist           such Non-U.S. Lender to recover such Taxes.

(vi)              Any
Lender that is entitled to an exemption from or reduction of withholding tax
          with respect to payments under this Agreement or any Note pursuant to the law
of           any relevant jurisdiction or any treaty shall deliver to the Borrower (with
a           copy to the Administrative Agent), at the time or times prescribed by
applicable           law, such properly completed and executed documentation prescribed
by applicable           law as will permit such payments to be made without withholding
or at a reduced           rate.

(vii)              If
the U.S. Internal Revenue Service or any other governmental authority of the
          United States or any other country or any political subdivision thereof asserts
          a claim that the Administrative Agent did not properly withhold tax from
amounts           paid to or for the account of any Lender (because the appropriate form
was not           delivered or properly completed, because such Lender failed to notify
the           Administrative Agent of a change in circumstances which rendered its
exemption           from withholding ineffective or for any other reason), such Lender
shall           indemnify the Administrative Agent fully for all amounts paid, directly
or           indirectly, by the Administrative Agent as tax, withholding therefor or
          otherwise, including penalties and interest, and including taxes imposed by any
          jurisdiction on amounts payable to the Administrative Agent under this
          subsection, together with all costs and expenses related thereto (including
          attorneys fees and time charges of attorneys for the Administrative
Agent,           which attorneys may be employees of the Administrative Agent). The
obligations           of the Lenders under this Section 3.5(vii) shall survive the
payment of the           Obligations and termination of this Agreement.

3.6
   Statements; Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with respect to
its Eurodollar Loans to reduce any liability of the Borrower to such Lender under
Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of Eurodollar Advances under
Section 3.3, so long as such designation is not, in the judgment of such Lender,
disadvantageous to such Lender. Each Lender or LC Issuer, as applicable, shall deliver a
written statement thereof to the Borrower (with a copy to the Administrative Agent) as to
the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such written statement
shall set forth in reasonable detail the calculations upon which such Lender or LC Issuer
determined such amount and shall be final, conclusive and binding on the Borrower in the
absence of manifest error. Determination of amounts payable under such Sections in
connection with a Eurodollar Loan shall be calculated as though each Lender funded its
Eurodollar Loan through the purchase of a deposit of the type and maturity corresponding
to the deposits described in clause (ii) of the proviso contained in the definition
of Eurodollar Base Rate in Section 1.1, whether in fact that is the case
or not. Unless otherwise provided herein, the amount specified in the written statement
of any Lender or LC Issuer shall be payable on demand after receipt by the Borrower of
such written statement. The obligations of the Borrower under Sections 3.1, 3.2, 3.4 and
3.5 shall survive payment of the Obligations and termination of this Agreement.

3.7
   Replacement of Affected Lender. At any time any Lender (i) is
affected by the circumstances described in Section 3.1, 3.2, 3.3 or 3.5 or (ii) does
not consent to an Extension Request made pursuant to Section 2.17, the Borrower may
replace such Lender as a party to this Agreement with one or more bank(s) or other
financial institution(s) reasonably satisfactory to the Administrative Agent, such
bank(s) or financial institution(s) to have a Commitment or Commitments, as the case may
be, in such amounts as shall be reasonably satisfactory to the Administrative Agent (and
upon notice from the Borrower such Lender shall assign, without recourse or warranty, its
Commitment, its Loans, its Note and all of its other rights and obligations hereunder to
such replacement bank(s) or other financial institution(s) for a purchase price equal to
the sum of the principal amount of the Loans so assigned and, as applicable, all accrued
and unpaid interest thereon, its share of all accrued and unpaid fees, any amounts
payable under Section 3.4 as a result of such Lender receiving payment of any
Eurodollar Loan prior to the end of an Interest Period therefor and all other obligations
owed to such Lender hereunder).

# ARTICLE 4 CONDITIONS PRECEDENT

4.1
   Effectiveness. This Agreement shall not become effective until
the Borrower has paid, or made arrangements satisfactory to the Administrative Agent for
payment of, all fees and other amounts payable by the Borrower to the Administrative
Agent, the Arrangers and the Lenders on or before the Closing Date in connection with
this Agreement (including, to the extent invoiced, out-of-pocket expenses of the
Administrative Agent and the Arrangers) and furnished the Administrative Agent (with
sufficient copies for the Lenders) each of the following, in form and substance
satisfactory to the Administrative Agent:

(i)              the
bylaws, operating agreement or partnership agreement, or equivalent           document,
of each Credit Party, certified by a Person satisfactory to the           Administrative
Agent to be correct and complete and in full force and effect;           the charter
documents, articles of organization or statement of limited           partnership, or
equivalent document, of each Credit Party, certified by the           appropriate
government officer of such Credit Partys jurisdiction of           organization (provided that
the charter documents of Puget Energy may be           certified by the Secretary or an
Assistant Secretary thereof); and a certificate           of good standing for each
Credit Party, to the extent available, from the           appropriate government officer
of such Credit Partys jurisdiction of           organization;

(ii)              Board
of Directors resolutions or other authorizing action satisfactory to the
          Administrative Agent for each Credit Party, in each case certified by a
          Secretary, Assistant Secretary or other Person satisfactory to the
          Administrative Agent, authorizing the execution, delivery and performance of
the           Loan Documents to which such Credit Party is to be a party;

(iii)              an
incumbency certificate for each Credit Party that is a corporation and for           each
corporation executing any Loan Document on behalf of a Credit Party,           executed
by the Secretary or Assistant Secretary of such Credit Party or           corporation,
which shall identify by name and title and bear the signatures of           the officers
of such Credit Party or corporation authorized to execute Loan           Documents on
behalf of such Credit Party or corporation (such officers being, in           the case of
the Borrower and Puget Energy, the Authorized Officers thereof),           upon which
certificate the Administrative Agent and the Lenders shall be           entitled to rely
until informed of any change in writing by the Borrower;

(iv)              certificates,
signed by the Chief Financial Officer of the Borrower and the           Chief Financial
Officer of Puget Energy, stating that on the date of the           effectiveness hereof
no Default or Unmatured Default has occurred and is           continuing and that the
representations and warranties contained in           Article 5 and, in the case of
Puget Energy, in Section 5 of the Guaranty           are true and correct on such date
except to the extent any such representation           or warranty is stated to relate
solely to an earlier date, in which case as of           such earlier date;

(v)              the
Guaranty, duly executed by the Guarantors;

(vi)              one
or more written opinions of Perkins Coie LLP or other counsel for the Credit
          Parties, as to such matters as the Administrative Agent may reasonably request;

(vii)              the
Fee Letter and any Notes requested by Lenders pursuant to Section 2.10,
          payable to the order of such requesting Lenders, in each case duly executed by
          the Borrower;

(viii)              such
funds-transfer agreements, authorizations, instructions and related           documents
as the Administrative Agent may have reasonably requested, duly           executed by the
Borrower and/or other appropriate Persons;

(ix)              evidence
that the Credit Agreement dated as of June 29, 2001 among the Borrower,           Puget
Energy, various financial institutions, Bank One, NA, as administrative           agent
and letter of credit issuer, The Industrial Bank of Japan, Limited, as
          syndication agent, and KeyBank National Association, as documentation agent,
has           been, or concurrently with the Closing Date is being, terminated; and

(x)              such
other documents as the Administrative Agent or its counsel may have           reasonably
requested.

4.2
   Each Credit Extension. The Lenders and the LC Issuers shall not
be required to make any Credit Extension unless on the applicable Credit Extension Date:

(i)              no
Default or Unmatured Default exists or will result from such Credit           Extension;

(ii)              the
representations and warranties contained in Article 5 hereof and in
          Section 5 of the Guaranty are true and correct as of such Credit Extension Date
          except to the extent any such representation or warranty is stated to relate
          solely to an earlier date, in which case such representation or warranty shall
          have been true and correct on and as of such earlier date; and

(iii)              all
legal matters incident to the making of such Credit Extension are reasonably
          satisfactory to the Administrative Agent, the Lenders and their counsel.

Each Borrowing Notice with respect to
an Advance and each request for issuance of a Facility LC shall constitute a
representation and warranty by the Borrower that the conditions contained in Sections
4.2(i) and (ii) have been satisfied. The Administrative Agent, at the request of any
Lender, may require a duly completed compliance certificate in substantially the form of
Exhibit D as a condition to making a Credit Extension.

# ARTICLE 5 REPRESENTATIONS AND
WARRANTIES

Each
of the Borrower and Puget Energy represents and warrants to the Lenders that:

5.1
   Corporate Existence, etc. The Borrower: (a) is a
corporation duly organized, validly existing and in good standing under the laws of the
State of Washington; (b) has all requisite corporate power, and has all material
governmental licenses, authorizations, consents and approvals, necessary to own its
Property and carry on its business as now being conducted; and (c) is qualified to
do business in all jurisdictions in which the nature of the business conducted by it
makes such qualification necessary and where failure so to qualify could reasonably be
expected have a Material Adverse Effect.

5.2
   Litigation and Contingent Obligations. There are not, in any
court or before any referee or arbitrator of any kind or before or by any governmental
body, any actions, suits or proceedings pending or, to Puget Energys knowledge,
threatened (i) against or affecting Puget Energy or any Subsidiary or any of their
respective businesses or properties except for actions, suits or proceedings (a) that
exist as of the date of this Agreement and are disclosed in Puget Energys Annual
Report on Form 10-K for the year ended December 31, 2003, in Puget Energys
Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 or on Schedule 5.2 or
(b) that, singly or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect, (ii) which seek to prevent, enjoin or delay the making of any Credit
Extension or (iii) affecting in an adverse manner the binding nature, validity or
enforceability of any Loan Document. Other than any liability incident to any action,
suit or proceeding described in subclause (i)(a) or (i)(b) of the foregoing sentence,
neither Puget Energy nor any Subsidiary has any contingent obligations (including
Contingent Obligations) that, singly or in the aggregate, could reasonably be expected to
have a Material Adverse Effect, except as disclosed in the reports or Schedule referred
to in subclause (i)(a) of the preceding sentence. Since the date of this Agreement, there
has been no change in the status of any action, suit, proceeding or contingent obligation
disclosed in the reports or Schedule referred to in subclause (i)(a) of the first
sentence of this Section that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect.

5.3
   No Breach. None of the execution and delivery of the Loan
Documents to which the Borrower is a party, the consummation of the transactions therein
contemplated or compliance with the terms and provisions thereof will (i) conflict
with or result in a breach of, or require any consent under, the Articles of
Incorporation or Bylaws of the Borrower, or any applicable law, rule or regulation, or
any order, writ, injunction or decree of any court or governmental authority or agency,
or any agreement or instrument to which the Borrower or any of its Subsidiaries is a
party or by which it is bound or to which it is subject, (ii) constitute a default
under any such agreement or instrument or (iii) result in or require the creation or
imposition of any Lien upon any of the revenues or assets of the Borrower or any of its
Subsidiaries pursuant to the terms of any such agreement or instrument.

5.4   
Corporate Action. The Borrower has all necessary corporate power and authority to
execute, deliver and perform its obligations under this Agreement and the other Loan
Documents to which the Borrower is a party; the execution, delivery and performance by
the Borrower of its obligations under this Agreement and such other Loan Documents have
been duly authorized by all necessary corporate action on its part; this Agreement has
been, and each such other Loan Document when delivered hereunder will have been, duly and
validly executed and delivered by the Borrower; and this Agreement constitutes, and each
other such Loan Document when so delivered will constitute, a legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in accordance with its
terms, except as limited by applicable bankruptcy laws or similar laws of general
applicability affecting creditors rights.

5.5
   Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any governmental or regulatory authority or agency are
necessary for the execution, delivery or performance by the Borrower of this Agreement or
any other Loan Document to which it is a party or for the validity or enforceability
hereof or thereof.

5.6
   Use of Proceeds. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose, whether immediate, incidental or ultimate,
of buying or carrying margin stock, as defined in Regulation U, and no part of the
proceeds of any Loan will be used to buy or carry any margin stock. No part of the
proceeds of any Loan will be used to acquire stock of any corporation the board of
directors of which has publicly stated its opposition to such acquisition or fails to
endorse such acquisition.

5.7   ERISA.
Puget Energy and its ERISA Affiliates have fulfilled their respective obligations under
the minimum funding standards of ERISA and the Code with respect to each Benefit Plan,
are in compliance in all material respects with the presently applicable provisions of
ERISA and the Code, and have not incurred any liability pursuant to Title IV of ERISA to
the PBGC or any liability in excess of $10,000,000, individually or in the aggregate, to
any Benefit Plan.

5.8
   Taxes. United States Federal income tax returns of Puget Energy,
the Borrower and the Significant Subsidiaries have been examined and closed through the
period ended December 31, 2000. Puget Energy, the Borrower and the Significant
Subsidiaries have filed all United States Federal and state income tax returns which are
required to be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by Puget Energy, the Borrower or any Significant
Subsidiary, except such taxes, if any, as are being contested in good faith and by proper
proceedings. The charges, accruals and reserves on the books of Puget Energy, the
Borrower and the Significant Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of Puget Energy and the Borrower, adequate.

5.9
   Public Utility Holding Company Act. The Borrower is a Subsidiary
of Puget Energy, which is exempt, pursuant to Section 3(a)(1) of PUHCA and the rules
of the SEC thereunder, from regulation under PUHCA, except Section 9(a)(2) of PUHCA.

5.10   Material
Adverse Change. Since March 31, 2004, there has been no change in the business,
Property, condition (financial or otherwise), operations or prospects of either Puget
Energy and its Subsidiaries taken as a whole or the Borrower and its Subsidiaries taken
as whole, as reflected in the financial statements referred to in Schedule 5.11, that
could reasonably be expected to have a Material Adverse Effect.

5.11
   Financial Statements. Schedule 5.11 sets forth a complete list
of the financial statements submitted prior to the date hereof by Puget Energy and the
Borrower to the Lenders in connection with this Agreement. All financial statements
listed in Schedule 5.11 or delivered pursuant to Section 6.9(i), (ii), (iii) or (iv) are
complete and correct and present fairly, in accordance with Agreement Accounting
Principles, the consolidated financial position of Puget Energy and its Subsidiaries or
the Borrower and its Subsidiaries, as applicable, as at their respective dates and the
consolidated results of operations, retained earnings and, as applicable, changes in
financial position or cash flows of Puget Energy and its Subsidiaries or the Borrower and
its Subsidiaries, as applicable, for the respective periods to which such statements
relate.

5.12
   Environmental Matters. In the ordinary course of its business,
the officers of Puget Energy consider the effect of Environmental Laws on the business of
Puget Energy and its Subsidiaries, in the course of which they identify and evaluate
potential risks and liabilities accruing to Puget Energy and its Subsidiaries due to
Environmental Laws. On the basis of this consideration, Puget Energy has concluded that
the application of Environmental Laws to it and its Subsidiaries could not reasonably be
expected to have a Material Adverse Effect. Neither Puget Energy nor any Subsidiary has
received any notice to the effect that its operations are not in material compliance with
any of the requirements of applicable Environmental Laws or are the subject of any
federal or state investigation evaluating whether any remedial action is needed to
respond to a release of any toxic or hazardous waste or substance into the environment,
which noncompliance or remedial action could reasonably be expected to have a Material
Adverse Effect.

5.13
   Investment Company Act. None of Puget Energy, the Borrower and
the Significant Subsidiaries is an investment company or a company controlled by
an investment company,within the meaning of the Investment Company Act of
1940.

5.14
   Subsidiaries. Schedule 5.14 contains an accurate list of all
Subsidiaries as of the date of this Agreement, setting forth their respective
jurisdictions of organization and the percentage of their respective capital stock or
other ownership interests owned by Puget Energy or other Subsidiaries. All of the issued
and outstanding shares of capital stock or other ownership interests of the Subsidiaries
have been (to the extent such concepts are relevant with respect to such ownership
interests) duly authorized and issued and are fully paid and nonassessable.

5.15
   Accuracy of Information. No information, exhibit or report
furnished by Puget Energy or any Subsidiary to the Administrative Agent or any Arranger
or Lender in connection with the negotiation of, or compliance with, the Loan Documents
contained any material misstatement of fact, or omitted to state a material fact or any
fact necessary to make the statements contained therein not misleading, at the time so
furnished.

5.16   Compliance
with Laws, Etc. Puget Energy and its Subsidiaries are in compliance in all material
respects with (i) all applicable statutes, rules, regulations, orders and restrictions of
any domestic or foreign government or any instrumentality or agency thereof having
jurisdiction over the conduct of their respective businesses or the ownership of their
respective Property and (ii) all indentures, agreements and other instruments binding
upon them or upon their respective Property, except for any failure to comply with any of
the foregoing which could not reasonably be expected to have a Material Adverse Effect.

5.17
   Insurance. Puget Energy and its Subsidiaries (i) maintain
insurance with financially sound and reputable insurance companies (or through a
self-insurance program) on all their Property of a character usually insured by entities
in the same or similar businesses similarly situated, against loss or damage of the kinds
and in the amounts as customarily insured against by such entities, and (ii) maintain
such other insurance as is usually carried by such entities.

5.18
   Properties. Each of Puget Energy and its Subsidiaries has good
title to, or valid leasehold interests in, all of its real and personal properties
material to its business, except for minor defects in title that do not interfere with
its ability to conduct its business as currently conducted or to utilize such properties
for their intended purposes.

# ARTICLE 6 COVENANTS

So
long as any Lender has any Commitment hereunder, any Facility LC is outstanding or any
Obligation is unpaid, Puget Energy and/or the Borrower, as specified below, will observe
the covenants specified below unless the Required Lenders otherwise consent in writing.

6.1
   Preservation of Existence and Business. Puget Energy will
preserve and maintain, and will cause each Subsidiary to preserve and maintain, its
corporate existence and all of its material rights, privileges, licenses and franchises,
except as permitted by Sections 6.13 and 6.14, and carry on and conduct its business
in substantially the same manner and in substantially the same fields of enterprise as it
is presently conducted.

6.2
   Preservation of Property. Puget Energy will maintain, and will
cause the Borrower and each Significant Subsidiary to maintain, all of its Property
necessary to operate its business in good working order and condition, ordinary wear and
tear excepted (it being understood that this covenant relates only to the good working
order and condition of such Property and shall not be construed as a covenant of Puget
Energy, the Borrower or any Significant Subsidiary not to dispose of any such Property by
sale, lease, transfer or otherwise or to discontinue operation thereof if Puget Energy,
the Borrower or such Significant Subsidiary, as applicable, reasonably determines that
such discontinuation is necessary).

6.3
   Payment of Obligations. Puget Energy will pay and discharge, and
will cause the Borrower and each Significant Subsidiary to pay and discharge, before the
same shall become delinquent, (i) all taxes, assessments and governmental charges or
levies imposed upon it or upon its property, and (ii) all lawful claims which, if
unpaid, might by law become a Lien upon its property; provided that none of Puget
Energy, the Borrower and the Significant Subsidiaries shall be required to pay or
discharge any such tax, assessment, charge or claim (a) which is being contested by
it in good faith and by proper procedures and with respect to which appropriate reserves
are being maintained in accordance with Agreement Accounting Principles or (b) the
non-payment of which could not reasonably be expected to have a Material Adverse Effect.

6.4   Compliance
with Applicable Laws and Contracts. Puget Energy will comply, and will cause each
Subsidiary to comply, with the requirements of all applicable laws, rules, regulations
and Governmental Approvals, and all orders, writs, injunctions or decrees of any court or
governmental authority or agency, including Environmental Laws, if failure to comply with
such requirements could reasonably be expected to have a Material Adverse Effect.

6.5
   Preservation of Loan Document Enforceability. Puget Energy will
take all reasonable actions (including obtaining and maintaining in full force and effect
consents and Governmental Approvals), and will cause each Subsidiary to take all
reasonable actions, that are required so that its obligations under the Loan Documents
will at all times be legal, valid, binding and enforceable in accordance with their
respective terms.

6.6
   Insurance. Puget Energy will maintain, and will cause each
Subsidiary to maintain, with responsible insurance companies or through a program of
self-insurance, insurance against at least such risks and in at least such amounts as is
customarily maintained by similar businesses, or as may be required by any applicable
law, rule or regulation, any Governmental Approval, or any order, writ, injunction or
decree of any court or governmental authority or agency.

6.7
   Use of Proceeds. The Borrower will use, and will cause its
Subsidiaries to use, directly or indirectly, the Facility LCs and the proceeds of the
Loans for general corporate purposes of the Borrower and its Subsidiaries (in compliance
with all applicable legal and regulatory requirements).

6.8
   Visits, Inspections and Discussions. Puget Energy will keep, and
will cause each Subsidiary to keep, proper books of record and account in which full,
true and correct entries are made of all dealings and transactions in relation to it
business and activities, and will permit, and will cause each Subsidiary to permit,
representatives of any Lender or the Administrative Agent, during normal business hours
and upon reasonable notice to Puget Energy or such Subsidiary, as applicable, to examine,
copy and make extracts from its books and records, to inspect its Property, and to
discuss its business and affairs with its officers and independent certified accountants,
all to the extent reasonably requested by such Lender or the Administrative Agent;
provided that each of Puget Energy and its Subsidiaries reserves the right to
restrict access to any of its generating facilities in accordance with reasonably adopted
procedures relating to safety and security, and to the extent reasonably requested to
maintain normal operations thereof; provided, further, that, Sections 9.6
and 10.8 notwithstanding, the costs and expenses incurred by any Lender or the
Administrative Agent or their agents or representatives in connection with any such
examinations, visits or discussions occurring or made prior to the occurrence of any
Default shall be for the account of such Lender or the Administrative Agent, as
applicable.

6.9   Information
to Be Furnished. Puget Energy will furnish to the Administrative Agent, with copies
sufficient for each Lender:

(i)              as
soon as available and in any event within 60 days after the close of each of
          the first three quarterly accounting periods in each fiscal year of Puget
          Energy, a copy of the Quarterly Report on Form 10-Q (or any successor form) for
          Puget Energy for such quarter;

(ii)              as
soon as available and in any event within 120 days after the end of each           fiscal
year of Puget Energy, a copy of the Annual Report on Form 10-K (or any
          successor form) for Puget Energy for such year, together with a copy of the
          accompanying report of Puget Energys independent certified public
          accounting firm;

(iii)              within
120 days after the close of each of the Borrowers fiscal years, an           audit
report (unqualified as to scope or as to going concern status)           for
the Borrower and its Subsidiaries, certified by independent certified public
          accountants reasonably acceptable to the Administrative Agent and prepared in
          accordance with Agreement Accounting Principles on a consolidated and
          consolidating basis (provided that consolidating statements need not be
          certified or audited by such accountants), including a balance sheet as of the
          end of each such year, statements of profit and loss and reconciliation of
          surplus, and a statement of cash flows, accompanied by any management letter
          prepared by said accountants;

(iv)              within
60 days after the close of the first three quarterly periods of each of           the
Borrowers fiscal years, unaudited consolidated and consolidating           balance
sheets for the Borrower and its Subsidiaries as at the close of such           period and
related statements of consolidated and consolidating profit and loss           and
reconciliation of surplus, and of cash flows, for the period from the           beginning
of such fiscal year to the end of such quarterly period, all certified           by an
Authorized Officer;

(v)              at
the time that financial statements are furnished pursuant to           Section 6.9(i)
or (ii), a certificate of the Chief Financial Officer, the           Treasurer, an
Assistant Treasurer or any other financial officer of Puget Energy
          substantially in the form of Exhibit D;

(vi)              promptly
upon the filing thereof, copies of all registration statements, monthly           or
other regular reports, including reports on Form 8-K (or any successor form),
          filed by Puget Energy or any Subsidiary with the SEC;

(vii)              promptly
upon request from time to time, such other information regarding the           business,
affairs, insurance or financial condition of Puget Energy or any of           its
Subsidiaries (including any Benefit Plan and any reports of other           information
required to be filed under ERISA) as any Lender or the           Administrative Agent may
reasonably request; and

(viii)              within
5 days after the occurrence thereof, notice of (a) any Default or
          Unmatured Default and (b) any circumstance that could reasonably be
          expected to have a Material Adverse Effect or an adverse effect on the binding
          nature, validity or enforceability of any Loan Document as an obligation of
          Puget Energy or any Subsidiary.

6.10
   Liens. Puget Energy will not permit to exist, and will not
permit any Subsidiary (other than PSE) to permit to exist, any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, except for:

(i)              Liens
for taxes, assessments or charges imposed on Puget Energy or any such
          Subsidiary or any of their property by any governmental authority which are not
          yet due or are being contested in good faith by appropriate proceedings if
          adequate reserves with respect thereto are maintained on the books of Puget
          Energy or such Subsidiary, as the case may be, in accordance with Agreement
          Accounting Principles;

(ii)              Liens
imposed by law, such as carriers, warehousemens,           mechanics,
materialmens, repairmens or other like Liens,           incurred in the
ordinary course of business and securing obligations that are           not yet due or
that are being contested in good faith by appropriate           proceedings, and Liens
arising out of judgments or awards which secure payment           of legal obligations
that would not constitute a Default;

(iii)              pledges
or deposits in connection with workers compensation, unemployment
          insurance and other social security laws, or to secure the performance of bids,
          tenders, contracts (other than for borrowed money), leases, statutory
          obligations, surety or appeal bonds, or indemnity, performance or other similar
          bonds, in the ordinary course of business;

(iv)              easements,
rights-of-way, restrictions and other similar encumbrances incurred           in the
ordinary course of business and encumbrances consisting of zoning           restrictions,
easements, licenses, restrictions on the use of property or minor           imperfections
in title thereto which, in the aggregate, are not material in           amount, and which
do not in any case materially detract from the value of any           material property
subject thereto or interfere with the ordinary conduct of the           business of Puget
Energy or any such Subsidiary;

(v)              Liens
existing on the date hereof and described in Schedule 6.10;

(vi)              Liens
on property or assets of any Subsidiary in favor of Puget Energy or any
          Subsidiary;

(vii)              Liens
with respect to which cash in the amount secured by such Liens has been
          deposited with the Administrative Agent; and

(viii)              other
Liens securing Indebtedness in an aggregate amount not exceeding           $75,000,000.

6.11
   Debt to Capitalization Ratio. Puget Energy will not permit the
principal amount of Consolidated Indebtedness to exceed 65% of Total Capitalization as of
the last day of any fiscal quarter of Puget Energy.

6.12
   Minimum Interest Coverage Ratio. Puget Energy will not permit
the ratio of (i) EBITDA for any period of four consecutive fiscal quarters of Puget
Energy ending on the last day of a fiscal quarter to (ii) consolidated interest
expense of Puget Energy for such period to be less than 2.0 to 1.0. For purposes of the
foregoing, dividends on any preferred stock of PSE subject to mandatory redemption shall,
to the extent included in computing interest expense under clause (ii), be deducted from
interest expense.

6.13
   Merger. The Borrower will not, and will not permit any
Subsidiary thereof to, merge or consolidate with or into any other Person, except that
(i) a Subsidiary of the Borrower may merge or consolidate with or into the Borrower or
another Subsidiary of the Borrower so long as, if the Borrower is a party to such merger
or consolidation, it is the surviving Person and (ii) a Subsidiary of the Borrower may
merge or consolidate with or into any other Person so long as (a) if such Subsidiary is
the surviving Person, such surviving Person has a net worth (as determined in accordance
with Agreement Accounting Principles) at least equal to the net worth of such Subsidiary
at the end of the fiscal quarter immediately preceding the effective date of such merger
or consolidation or (b) if such Subsidiary is not the surviving Person, the net income of
such Subsidiary for the twelve-month period ending with the calendar month immediately
preceding the month in which such merger or consolidation occurs, when combined with the
net income (for the same period) of any other Subsidiaries of the Borrower merged or
consolidated as permitted by this subclause (b) and the net income (for the same period)
of any Subsidiaries of the Borrower whose assets or the equity interests in which are
disposed of as permitted by Section 6.14(iv) during the twelve-month period ending with
the month in which such merger or consolidation occurs, does not exceed the amount equal
to 10% of Puget Energys consolidated net income as would be shown in its
consolidated financial statements for the twelve-month period ending with the calendar
month immediately preceding the month in which such merger or consolidation occurs.

6.14   Sales
of Property. The Borrower will not, and will not permit any Subsidiary thereof to,
sell, lease, assign, transfer or otherwise dispose of any of its Property, except for (i)
sales of inventory and other dispositions of assets in the ordinary course of business,
(ii) dispositions of obsolete or retired assets not used or useful in such Persons
business, (iii) dispositions of Property by the Borrower to a Subsidiary thereof or by a
Subsidiary of the Borrower to the Borrower or another Subsidiary thereof and (iv)
dispositions of all or substantially all of the assets of or equity interests in a
Subsidiary of the Borrower, so long as the net income of such Subsidiary for the
twelve-month period ending with the calendar month immediately preceding the month in
which such disposition occurs, when combined with the net income (for the same period) of
any Subsidiaries of the Borrower merged or consolidated as permitted by Section
6.13(ii)(b) and the net income (for the same period) of any other Subsidiaries of the
Borrower whose assets or the equity interests in which are disposed of as permitted by
this clause (iv) during the twelve-month period ending with the month in which such
disposition occurs, does not exceed the amount equal to 10% of Puget Energys
consolidated net income as would be shown in its consolidated financial statements for
the twelve-month period ending with the calendar month immediately preceding the month in
which such disposition occurs.

6.15
   Transactions with Affiliates. Puget Energy will not, and will
not permit any Subsidiary to, enter into any transaction (including the purchase or sale
of any Property or service) with, or make any payment or transfer to, any Affiliate
except (i) in the ordinary course of business and pursuant to the reasonable
requirements of Puget Energys or such Subsidiarys business and upon fair and
reasonable terms no less favorable to Puget Energy or such Subsidiary than Puget Energy
or such Subsidiary would obtain in a comparable arms-length transaction, (ii) with
or to a Subsidiary or (iii) in connection with a Qualified Receivables Transaction
permitted under this Agreement.

6.16
   PSE Dividends. Puget Energy will not, and will not permit PSE
to, enter into any agreement, instrument or contract that would limit the right of PSE to
pay dividends or make other distributions to Puget Energy, except as set forth in (i) the
First and Refunding Mortgage dated as of June 2, 1924 issued by PSE (as successor to
Puget Sound Power & Light Company) in favor of U.S. Bank National Association (as
successor to State Street Bank and Trust Company, as successor to Old Colony Trust
Company), as trustee, as such Mortgage has been amended, supplemented or otherwise
modified through the date of this Agreement, (ii) the Indenture of First Mortgage dated
as of April 1, 1957 issued by PSE (as successor to Puget Sound Power & Light Company)
in favor of BNY Midwest Trust Company (as successor to Harris Trust and Savings Bank), as
trustee, as such Indenture has been amended, supplemented or otherwise modified through
the date of this Agreement, or (iii) any agreement, instrument or contract entered into
after the date hereof that is not more restrictive than those described in clauses (i)
and (ii) above.

6.17
   Additional Subsidiary Guarantors. Within thirty days after
creating or acquiring any new U.S. domestic Subsidiary thereof, the Borrower will notify
the Administrative Agent of the same and will cause such Subsidiary to become a party to
the Guaranty and to deliver such certified resolutions, incumbency certificates, opinions
and other such documents as the Administrative Agent may reasonably request.

# ARTICLE 7 DEFAULTS

The
occurrence of any one or more of the following events shall constitute a Default:

7.1
   Any representation or warranty made or deemed made by Puget Energy or
any Subsidiary to the Lenders or the Administrative Agent under or in connection with
this Agreement, any other Loan Document, or any certificate or information delivered in
connection with this Agreement or any other Loan Document shall be materially false on
the date as of which made.

7.2
   Nonpayment of principal of any Loan when due, nonpayment of any
Reimbursement Obligation within two Business Days after the same becomes due (provided that
the Borrower receives notice of the existence of such Reimbursement Obligation), or
nonpayment of any interest, fee or other obligation under any of the Loan Documents
within five days after the same becomes due.

7.3
   The breach by the Borrower or Puget Energy of any of the terms or
provisions of Section 6.1, 6.6, 6.7, 6.11, 6.12, 6.13, 6.14, 6.16 or 6.17.

7.4
   The breach by the Borrower or Puget Energy (other than a breach which
constitutes a Default under another Section of this Article 7) of any of the
terms or provisions of this Agreement or any other Loan Document which is not remedied
within thirty days after written notice from the Administrative Agent or any Lender.

7.5
   Failure of Puget Energy and/or any of its Subsidiaries to pay when due
any Indebtedness aggregating in excess of $25,000,000, or the equivalent thereof in any
currencies (Material Indebtedness); or the default by
Puget Energy and/or any of its Subsidiaries in the performance (beyond the applicable
grace period with respect thereto, if any) of any term, provision or condition contained
in any agreement under which any Material Indebtedness was created or is governed, or any
other event shall occur or condition exist, if the effect of such default, event or
condition is to cause, or to permit the holder or holders of such Material Indebtedness
to cause, such Material Indebtedness to become due prior to its stated maturity; or any
Material Indebtedness of Puget Energy and/or any of its Subsidiaries shall be declared to
be due and payable or required to be prepaid or repurchased (other than by a regularly
scheduled payment) prior to the stated maturity thereof; or Puget Energy or any of its
Subsidiaries shall not pay, or shall admit in writing its inability to pay, its debts
generally as they become due.

7.6
   The Borrower, Puget Energy or any Significant Subsidiary shall (i) have
an order for relief entered with respect to it under the Federal bankruptcy laws as now
or hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii) apply
for, seek, consent to or acquiesce in the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any of its Property that, when
combined with the Property of any of its Subsidiaries that is also the subject of any
such action or acquiescence, constitutes a Substantial Portion of the Property of it and
its Subsidiaries, (iv) institute any proceeding seeking an order for relief under
the Federal bankruptcy laws as now or hereafter in effect or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or fail to file an answer
or other pleading denying the material allegations of any such proceeding filed against
it, (v) take any corporate, partnership or similar action to authorize or effect any
of the foregoing actions set forth in this Section 7.6 or (vi) fail to contest
in good faith any appointment or proceeding described in Section 7.7.

7.7
   Without the application, approval or consent of the Borrower, Puget
Energy or any Significant Subsidiary, a receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Borrower, Puget Energy or such Significant
Subsidiary or any of its Property that, when combined with the Property of any of such
Persons Subsidiaries that is also the subject of any such appointment, constitutes
a Substantial Portion of the Property of such Person and its Subsidiaries, or a
proceeding described in Section 7.6(iv) shall be instituted against the Borrower,
Puget Energy or any Significant Subsidiary, and such appointment continues undischarged,
or such proceeding continues undismissed or unstayed, for a period of 60 consecutive
days.

7.8
   Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of, all or any portion of the Property
of the Borrower, Puget Energy or any Significant Subsidiary which, when taken together
with all other Property of such Person and its Subsidiaries so condemned, seized,
appropriated, or taken custody or control of during the twelve-month period ending with
the month in which any such action occurs, constitutes a Substantial Portion of the
Property of such Person and its Subsidiaries.

7.9
   Puget Energy and/or any of its Subsidiaries, as applicable, shall fail
within 60 days to pay, bond or otherwise discharge one or more (i) judgments or
orders for the payment of money in excess of $25,000,000 (or the equivalent thereof in
any currencies) in the aggregate, or (iii) nonmonetary judgments or orders which,
individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect, which judgments or orders, in any such case, are not stayed on appeal or
otherwise being appropriately contested in good faith.

7.10
   Puget Energy and/or any of its Subsidiaries shall (i) be the
subject of any proceeding or investigation pertaining to the release by Puget Energy, any
Subsidiary or any other Person of any toxic or hazardous waste or substance into the
environment, or (ii) violate any Environmental Law, which, in the case of an event
described in clause (i) or clause (ii), could reasonably be expected to have a
Material Adverse Effect.

7.11
   Any Change in Control shall occur.

7.12
   Puget Energy and/or any ERISA Affiliates thereof incur any liability to
the PBGC pursuant to Title IV of ERISA (other than liability for premium payments which
are paid when due) or to a Benefit Plan in excess of $10,000,000 in the aggregate
pursuant to Title IV of ERISA, or Puget Energy and/or any ERISA Affiliates thereof incur,
or receive notice of, any withdrawal liability pursuant to Title IV of ERISA to or from a
Benefit Plan or Multiemployer Benefit Plan (determined as of the date of notice of such
withdrawal liability) in excess of $10,000,000 in the aggregate.

7.13
   Any of the following events occurs with respect to any Benefit Plan of
Puget Energy or any ERISA Affiliate thereof: (a) a Reportable Event, (b) the
failure to make a required installment or other payment (within the meaning of section 302(f)
of ERISA), (c) the appointment of a trustee to administer any such Benefit Plan, (d) the
institution by the PBGC of proceedings to terminate any such Benefit Plan, (e) the
implementation by Puget Energy or any ERISA Affiliate thereof of any steps to terminate
any such Benefit Plan, or (f) the receipt of notice by Puget Energy or any ERISA
Affiliate thereof that any Multiemployer Benefit Plan is in reorganization or is
insolvent and, in the case of any event described in clauses (a) through (f) above,
such occurrence, individually or together with all other such occurrences, subjects Puget
Energy and/ or any ERISA Affiliates thereof to liability in excess of $25,000,000 in the
aggregate.

7.14
   The Guaranty shall fail to remain in full force and effect, or any
action shall be taken to discontinue the Guaranty or to assert the invalidity or
unenforceability thereof, or any Guarantor shall fail to comply with any of the terms or
provisions thereof, or any Guarantor shall deny that it has any further liability
thereunder or shall give notice to such effect.

# ARTICLE 8 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

8.1    Acceleration.

(i)              If
any Default described in Section 7.6 or 7.7 occurs with respect to the
          Borrower, the obligations of the Lenders to make Loans hereunder and the
          obligation and power of the LC Issuers to issue Facility LCs shall
automatically           terminate, and the Obligations (including the obligation to
provide cash           collateral pursuant to the last sentence of Section 2.16.1)
shall           immediately become due and payable without any election or action on the
part of           the Administrative Agent, either LC Issuer or any Lender. If any other
Default           occurs and is continuing, the Required Lenders (or the Administrative
Agent with           the consent of the Required Lenders) may terminate or suspend the
obligations of           the Lenders to make Loans hereunder and the obligation and power
of the LC           Issuers to issue Facility LCs, or declare the Obligations to be due
and payable,           or both, whereupon such obligations of the Lenders and such
obligation and power           of the LC Issuers shall be terminated or suspended and/or
the Obligations shall           become immediately due and payable, without presentment,
demand, protest or           notice of any kind, all of which the Borrower hereby
expressly waives.

(ii)              If,
within 30 days after acceleration of the maturity of the Obligations or
          termination of the obligations of the Lenders to make Loans hereunder and the
          obligation and power of the LC Issuers to issue Facility LCs as a result of any
          Default (other than any Default described in Section 7.6 or 7.7 with
          respect to the Borrower) and before any judgment or decree for the payment of
          the Obligations due shall have been obtained or entered, the Required Lenders
          (in their sole discretion) shall so direct, the Administrative Agent shall, by
          notice to the Borrower, rescind and annul such acceleration and/or termination.

8.2
   Amendments. Neither this Agreement nor any provision hereof may
be waived, amended or otherwise modified except pursuant to an agreement or agreements in
writing entered into by the Borrower, Puget Energy and the Required Lenders or by the
Borrower, Puget Energy and the Administrative Agent with the consent of the Required
Lenders; provided that no such agreement shall (i) increase the Commitment of
any Lender without the written consent of such Lender, (ii) reduce the principal
amount of any Loan or Reimbursement Obligation or the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the scheduled date of payment of the principal amount of any Loan or
Reimbursement Obligation, any interest thereon or any fees payable hereunder, reduce the
amount of, waive or excuse any such payment, or postpone the scheduled date of expiration
of any Commitment, without the written consent of each Lender affected thereby, (iv) change
Section 11.2 in a manner that would alter the pro rata sharing of payments
required thereby, without the written consent of each Lender, or (v) change any of
the provisions of this Section, the definition of Required Lenders or any
other provision hereof specifying the number or percentage of Lenders required to waive,
amend or modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; further provided that no
such agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent or any LC Issuer or Arranger hereunder without the prior written
consent of the Administrative Agent or such Issuing Bank or Arranger, as the case may be.

8.3
   Preservation of Rights. No delay or omission of any Lender,
either LC Issuer or the Administrative Agent to exercise any right under this Agreement
or any Note shall impair such right or be construed to be a waiver of any Default or
Unmatured Default or an acquiescence therein, and the making of a Credit Extension
notwithstanding the existence of a Default or Unmatured Default or the inability of the
Borrower to satisfy any other condition precedent to such Credit Extension shall not
constitute any waiver or acquiescence. Any single or partial exercise of any such right
shall not preclude other or further exercise thereof or the exercise of any other right,
and no waiver, amendment or other variation whatsoever of the terms, conditions or
provisions of this Agreement or any Note shall be valid unless in a writing signed by the
Lenders required pursuant to Section 8.2, and then only to the extent in such
writing specifically set forth. All remedies contained in the Loan Documents or afforded
by law shall be cumulative and shall be available to the Administrative Agent, the LC
Issuers and the Lenders until the Obligations have been paid in full and the Commitments
have terminated.

# ARTICLE 9 GENERAL PROVISIONS

9.1
   Survival of Representations. All representations and warranties
of the Credit Parties contained in this Agreement and the Guaranty shall survive the
making of the Credit Extensions herein contemplated.

9.2
   Governmental Regulation. Anything contained in this Agreement to
the contrary notwithstanding, no LC Issuer or Lender shall be obligated to extend credit
to the Borrower in violation of any applicable statute or regulation.

9.3
   Headings. Section headings in this Agreement are for
convenience of reference only and shall not govern the interpretation of any of the
provisions hereof.

9.4
   Entire Agreement. This Agreement embodies the entire agreement
and understanding among the Borrower, Puget Energy, the Administrative Agent, the LC
Issuers and the Lenders with respect to the subject matter hereof and supersedes all
prior agreements and understandings among the Borrower, Puget Energy, the Administrative
Agent, the LC Issuers and the Lenders relating to the subject matter hereof, except as
specifically contemplated hereby. The Borrower and Puget Energy acknowledge that no oral
agreement or oral commitment to lend money, extend credit or forbear from enforcing
repayment of a debt is enforceable under the law of the State of Washington.

9.5
   Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint, and no Lender shall be
the partner or agent of any other (except to the extent to which the Administrative Agent
is authorized to act as such). The failure of any Lender to perform any of its
obligations hereunder shall not relieve any other Lender from any of its obligations
hereunder. This Agreement shall not be construed so as to confer any right or benefit
upon any Person other than the parties to this Agreement and their respective successors
and assigns; provided that the parties hereto expressly agree that the Arrangers
shall enjoy the provisions of Sections 9.6, 9.9 and 10.11 to the extent specifically set
forth therein and shall have the right to enforce such provisions on their own behalf and
in their own names to the same extent as if they were parties to this Agreement.

9.6    Expenses;
Indemnification.

(i)              The
Borrower shall reimburse the Administrative Agent and each Arranger for           their
reasonable costs, internal charges and reasonable out-of-pocket expenses
          (including, in the case of the Administrative Agent, reasonable fees, time
          charges and expenses of attorneys for the Administrative Agent, including
          attorneys that are employees of the Administrative Agent) paid or incurred by
          the Administrative Agent or either Arranger in connection with the preparation,
          negotiation, execution, delivery, syndication, distribution (including via the
          Internet), amendment and modification of the Loan Documents and the review and
          administration of the Loan Documents in connection with any request made by the
          Borrower or Puget Energy; provided that the Borrower shall only be
          required to reimburse the Administrative Agent for the fees and expenses of one
          law firm, subject to the limitations agreed to by the Borrower and the
          Administrative Agent. The Borrower also agrees to reimburse the Administrative
          Agent, the LC Issuers, the Arrangers and the Lenders for their reasonable
costs,           internal charges and reasonable out-of-pocket expenses (including
reasonable           fees, time charges and expenses of attorneys for the Administrative
Agent, the           LC Issuers, the Arrangers and the Lenders, including attorneys that
are           employees of the Administrative Agent, the LC Issuers, the Arrangers or the
          Lenders) paid or incurred by the Administrative Agent, either LC Issuer, either
          Arranger or any Lender in connection with the collection and enforcement of the
          Loan Documents during the existence of any Default, including in connection
with           any proceeding described in Section 7.6 or 7.7.

(ii)              The
Borrower hereby further agrees to indemnify the Administrative Agent, each           LC
Issuer, each Arranger, each Lender, their respective Affiliates, and each of
          their directors, officers, agents and employees against all losses, claims,
          damages, penalties, judgments, liabilities and expenses (including all expenses
          of litigation or preparation therefor, whether or not the Administrative Agent,
          either LC Issuer, either Arranger, any Lender or any such Affiliate is a party
          thereto) which any of them may pay or incur arising out of or relating to this
          Agreement, the other Loan Documents, the transactions contemplated hereby or
          thereby or the direct or indirect application or proposed application of the
          proceeds of any Credit Extension hereunder, except to the extent that any such
          losses, claims, damages, penalties, judgments, liabilities or expenses are
          determined in a final, non-appealable judgment by a court of competent
          jurisdiction to have resulted from the gross negligence or willful misconduct
of           the party seeking indemnification. The obligations of the Borrower under
this           Section 9.6 shall survive the termination of this Agreement.

9.7
   Numbers of Documents. All statements, notices, closing
documents, and requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to each of the
Lenders.

9.8
   Severability of Provisions. Any provision of this Agreement or
any Note that is held to be inoperative, unenforceable or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable or invalid without
affecting the remaining provisions in that jurisdiction or the operation, enforceability
or validity of that provision in any other jurisdiction, and to this end the provisions
of all Loan Documents are declared to be severable.

9.9
   Nonliability of Lenders. The relationship between the Borrower
and Puget Energy on the one hand and the Lenders, the LC Issuers, the Arrangers and the
Administrative Agent on the other hand shall be solely that of borrower (or, in the case
of Puget Energy, guarantor) and lender. Neither the Administrative Agent nor any LC
Issuer, Lender or Arranger shall have any fiduciary responsibilities to the Borrower or
Puget Energy. Neither the Administrative Agent nor any LC Issuer, Lender or Arranger
undertakes any responsibility to the Borrower or Puget Energy to review or inform the
Borrower or Puget Energy of any matter in connection with any phase of the Borrowers
or Puget Energys business or operations. The Borrower and Puget Energy agree that
neither the Administrative Agent nor any LC Issuer, Lender or Arranger shall have any
liability to the Borrower or Puget Energy (whether sounding in tort, contract or
otherwise) for losses suffered by the Borrower or Puget Energy in connection with,
arising out of, or in any way related to, the transactions contemplated and the
relationship established by the Loan Documents, or any act, omission or event occurring
in connection therewith, unless it is determined in a final, non-appealable judgment by a
court of competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither the Administrative
Agent nor any LC Issuer, Lender or Arranger shall have any liability with respect to, and
the Borrower and Puget Energy hereby waive, release and agree not to sue for, any
special, indirect or consequential damages suffered by the Borrower or Puget Energy in
connection with, arising out of, or in any way related to the Loan Documents or the
transactions contemplated thereby.

9.10
   Confidentiality. Each of the Administrative Agent, the Lenders
and the LC Issuers agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (i) to its Affiliates and to its
and its Affiliates respective partners, directors, officers, employees, agents,
advisors and other representatives (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of the Information and
instructed to keep the Information confidential), (ii) to the extent requested by
any regulatory authority purporting to have jurisdiction over it (including any
self-regulatory authority, such as the National Association of Insurance Commissioners),
(iii) to the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (iv) to any other party hereto, (v) in connection with
the exercise of any remedies hereunder or under any other Loan Document, any action or
proceeding relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (vi) subject to an agreement containing provisions
substantially the same as those of this Section, to (a) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its rights or
obligations under this Agreement or (b) any actual or prospective counterparty (or
its advisors) to any swap or derivative transaction relating to the Borrower or Puget
Energy and its obligations, (vii) with the consent of the Borrower or Puget Energy
or (viii) to the extent such Information (a) becomes publicly available other
than as a result of a breach of this Section or (b) becomes available to the
Administrative Agent, any Lender, either LC Issuer or any of their respective Affiliates
on a nonconfidential basis from a source other than the Borrower or Puget Energy

For purposes of this Section,
Information means all information received from Puget
Energy or any Subsidiary relating to Puget Energy or any Subsidiary or any of their
respective businesses, other than any such information that is available to the
Administrative Agent, any Lender or either LC Issuer on a nonconfidential basis before
disclosure by Puget Energy or any Subsidiary; provided that, in the case of
information received from Puget Energy or any Subsidiary after the date hereof, such
information either is financial information or is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied with its
obligation to do so if such Person exercises the same degree of care to maintain the
confidentiality of the Information as a Person acting in the capacity of such Person in
connection with this Agreement (i.e., as administrative agent, a lender, a letter
of credit issuer or as described in clause (i) above) would customarily accord to its own
confidential information.

9.11
   Non-Reliance. Each Lender hereby represents that it is not
relying on or looking to any margin stock (as defined in Regulation U) for the repayment
of the Credit Extensions provided for herein.

9.12
   Disclosure. The Borrower, Puget Energy and each Lender hereby (i) acknowledge
and agree that UBOC and/or its Affiliates from time to time may hold investments in, make
other loans to or have other relationships with the Borrower, Puget Energy and their
Affiliates, and (ii) waive any liability of UBOC and/or its Affiliates to the
Borrower, Puget Energy or any Lender, respectively, arising out of or resulting from such
investments, loans or relationships, other than liabilities arising out of the gross
negligence or willful misconduct of UBOC and/or its Affiliates.

9.13
   Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and any of the
parties hereto may execute this Agreement by signing any such counterpart.

# ARTICLE 10 THE ADMINISTRATIVE AGENT

10.1
   Appointment; Nature of Relationship. UBOC is hereby appointed by
each of the Lenders as its contractual representative (herein referred to as the Administrative
Agent) hereunder and under each other Loan Document, and each of the
Lenders irrevocably authorizes the Administrative Agent to act as the contractual
representative of such Lender with the rights and duties expressly set forth herein and
in the other Loan Documents. The Administrative Agent agrees to act as such contractual
representative upon the express conditions contained in this Article 10.
Notwithstanding the use of the defined term Administrative Agent, it is
expressly understood and agreed that the Administrative Agent shall not have any
fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan
Document and that the Administrative Agent is merely acting as the contractual
representative of the Lenders with only those duties as are expressly set forth in this
Agreement and the other Loan Documents. In its capacity as the Lenders contractual
representative, the Administrative Agent (i) does not hereby assume any fiduciary
duties to any of the Lenders, (ii) is a representative of the Lenders
within the meaning of the term secured party as defined in the California
Uniform Commercial Code and (iii) is acting as an independent contractor, the rights
and duties of which are limited to those expressly set forth in this Agreement and the
other Loan Documents. Each of the Lenders hereby agrees to assert no claim against the
Administrative Agent on any agency theory or any other theory of liability for breach of
fiduciary duty, all of which claims each Lender hereby waives.

10.2   Powers.
The Administrative Agent shall have and may exercise such powers under the Loan Documents
as are specifically delegated to the Administrative Agent by the terms of each thereof,
together with such powers as are reasonably incidental thereto. The Administrative Agent
shall have no implied duties to the Lenders, or any obligation to the Lenders to take any
action thereunder except any action specifically provided by the Loan Documents to be
taken by the Administrative Agent.

10.3
   General Immunity. Neither the Administrative Agent nor any of
its directors, officers, agents or employees shall be liable to the Borrower, any
Guarantor or any Lender for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Document or in connection herewith or therewith except
to the extent such action or inaction is determined in a final non-appealable judgment by
a court of competent jurisdiction to have arisen from the gross negligence or willful
misconduct of such Person.

10.4
   No Responsibility for Loans, Recitals, etc. Neither the
Administrative Agent nor any of its directors, officers, agents or employees shall be
responsible for, or have any duty to ascertain, inquire into or verify, (i) any
statement, warranty or representation made in connection with any Loan Document or any
borrowing hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including any agreement by an obligor
to furnish information directly to each Lender; (iii) the satisfaction of any
condition specified in Article 4, except receipt of items required to be delivered
solely to the Administrative Agent; (iv) the existence or possible existence of any
Default or Unmatured Default; (v) the validity, enforceability, effectiveness,
sufficiency or genuineness of any Loan Document or any other instrument or writing
furnished in connection therewith; or (vi) the financial condition of the Borrower
or any guarantor of any of the Obligations or of any of the Borrowers or any such
guarantors respective Subsidiaries. The Administrative Agent shall have no duty to
disclose to the Lenders information that is not required to be furnished by the Borrower
or Puget Energy to the Administrative Agent at such time, but is voluntarily furnished by
the Borrower or Puget Energy to the Administrative Agent (either in its capacity as
Administrative Agent or in its individual capacity).

10.5
   Action on Instructions of Lenders. The Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting, hereunder
and under any other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act pursuant
thereto shall be binding on all of the Lenders. The Lenders hereby acknowledge that the
Administrative Agent shall be under no duty to take any discretionary action permitted to
be taken by it pursuant to the provisions of this Agreement or any other Loan Document
unless it shall be requested in writing to do so by the Required Lenders. The
Administrative Agent shall be fully justified in failing or refusing to take any action
hereunder and under any other Loan Document unless it shall first be indemnified to its
satisfaction by the Lenders pro rata against any and all liability, cost and
expense that it may incur by reason of taking or continuing to take any such action.

10.6
   Employment of Agents and Counsel. The Administrative Agent may
execute any of its duties as Administrative Agent hereunder and under any other Loan
Document by or through employees, agents, and attorneys-in-fact and shall not be
answerable to the Lenders, except as to money or securities received by it or its
authorized agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Administrative Agent shall be entitled to advice
of counsel concerning the contractual arrangement between the Administrative Agent and
the Lenders and all matters pertaining to the Administrative Agents duties
hereunder and under any other Loan Document.

10.7
   Reliance on Documents; Counsel. The Administrative Agent shall
be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper, electronic message or document believed by it to be genuine
and correct and to have been signed or sent by the proper person or persons, and, in
respect to legal matters, upon the opinion of counsel selected by the Administrative
Agent, which counsel may be employees of the Administrative Agent.

10.8
   Administrative Agents Reimbursement and Indemnification.
The Lenders agree to reimburse and indemnify the Administrative Agent ratably in
proportion to their respective Commitments (or, if the Commitments have been terminated,
in proportion to their Commitments immediately prior to such termination), to the extent
not reimbursed or indemnified by the Borrower, (i) for any amounts for which the
Administrative Agent is entitled to reimbursement by the Borrower under the Loan
Documents, (ii) for any other expenses incurred by the Administrative Agent on
behalf of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Loan Documents (including for any expenses incurred
by the Administrative Agent in connection with any dispute between the Administrative
Agent and any Lender or between two or more of the Lenders) and (iii) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to or
arising out of the Loan Documents or any other document delivered in connection therewith
or the transactions contemplated thereby (including for any such amounts incurred by or
asserted against the Administrative Agent in connection with any dispute between the
Administrative Agent and any Lender or between two or more of the Lenders), or the
enforcement of any of the terms of the Loan Documents or of any such other documents;
provided that (a) no Lender shall be liable for any of the foregoing to the
extent any of the foregoing is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from the gross negligence or willful misconduct
of the Administrative Agent and (b) any indemnification required pursuant to Section 3.5(vii)
shall, notwithstanding the provisions of this Section 10.8, be paid by the relevant
Lender in accordance with the provisions thereof. The obligations of the Lenders under
this Section 10.8 shall survive payment of the Obligations and termination of this
Agreement.

10.9
   Notice of Default. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Unmatured Default
hereunder unless the Administrative Agent has received written notice from a Lender, the
Borrower or Puget Energy referring to this Agreement, describing such Default or
Unmatured Default and stating that such notice is a notice of default. In the
event that the Administrative Agent receives such a notice, the Administrative Agent
shall give prompt notice thereof to the Lenders.

10.10   Rights
as Lender. In the event the Administrative Agent is a Lender, the Administrative
Agent shall have the same rights and powers hereunder and under any other Loan Document
with respect to its Commitment and its Loans as any other Lender and may exercise the
same as though it were not the Administrative Agent, and the term Lender or
Lendersshall, at any time when the Administrative Agent is a Lender, unless
the context otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent and its Affiliates may accept deposits from, lend
money to, and generally engage in any kind of trust, debt, equity or other transaction,
in addition to those contemplated by this Agreement or any other Loan Document, with
Puget Energy or any Subsidiary in which Puget Energy or such Subsidiary is not restricted
hereby from engaging with any other Person. The Administrative Agent, in its individual
capacity, is not obligated to remain a Lender.

10.11
   Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, either Arranger or any
other Lender, and based on the financial statements prepared by the Borrower and Puget
Energy and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without reliance
upon the Administrative Agent, either Arranger or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and the other
Loan Documents.

10.12
   Successor Administrative Agent. The Administrative Agent may
resign at any time by giving written notice thereof to the Lenders and the Borrower, such
resignation to be effective upon the appointment of a successor Administrative Agent or,
if no successor Administrative Agent has been appointed, 45 days after the retiring
Administrative Agent gives notice of its intention to resign. The Administrative Agent
may be removed at any time with or without cause by written notice received by the
Administrative Agent from the Required Lenders, such removal to be effective on the date
specified by the Required Lenders. Upon any such resignation or removal, the Required
Lenders with the consent of the Borrower (so long as no Default or Unmatured Default
exists), which consent shall not be unreasonably withheld or delayed, shall have the
right to appoint, on behalf of the Borrower, Puget Energy and the Lenders, a successor
Administrative Agent. If no successor Administrative Agent shall have been so appointed
by the Required Lenders within thirty days after the resigning Administrative Agents
giving notice of its intention to resign, then the resigning Administrative Agent may
appoint, on behalf of the Borrower, Puget Energy and the Lenders, a successor
Administrative Agent. Notwithstanding the previous sentence, the Administrative Agent may
at any time, without the consent of the Borrower or any Lender, appoint any of its
Affiliates which is a commercial bank as a successor Administrative Agent hereunder. If
the Administrative Agent has resigned or been removed and no successor Administrative
Agent has been appointed, the Lenders may perform all the duties of the Administrative
Agent hereunder, and the Borrower shall make all payments in respect of the Obligations
to the applicable Lender and for all other purposes shall deal directly with the Lenders.
No successor Administrative Agent shall be deemed to be appointed hereunder until such
successor Administrative Agent has accepted the appointment. Any such successor
Administrative Agent shall be a commercial bank having capital and retained earnings of
at least $100,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges and duties
of the resigning or removed Administrative Agent. Upon the effectiveness of the
resignation or removal of the Administrative Agent, the resigning or removed
Administrative Agent shall be discharged from its duties and obligations hereunder and
under the Loan Documents. After the effectiveness of the resignation or removal of an
Administrative Agent, the provisions of this Article 10 shall continue in effect for
the benefit of such Administrative Agent in respect of any actions taken or omitted to be
taken by it while it was acting as the Administrative Agent hereunder and under the other
Loan Documents. In the event that there is a successor to the Administrative Agent by
merger, or the Administrative Agent assigns its duties and obligations to an Affiliate
pursuant to this Section 10.12, then the term Reference Rate as used in
this Agreement shall mean the reference rate, prime rate, corporate base rate or other
analogous rate of the new Administrative Agent.

10.13
   Administrative Agents Fee. The Borrower agrees to pay to
the Administrative Agent, for its own account, (i) an annual administrative agents
fee in the amount of $12,500, payable on the Closing Date and on each anniversary
thereof, and (ii) such other fees as may be agreed to by the Borrower and the
Administrative Agent from time to time.

10.14
   Delegation to Affiliates. The Borrower, Puget Energy and the
Lenders agree that the Administrative Agent may delegate any of its duties under this
Agreement to any of its Affiliates. Any such Affiliate (and such Affiliates
directors, officers, agents and employees) which performs duties in connection with this
Agreement shall be entitled to the same benefits of the indemnification, waiver and other
protective provisions to which the Administrative Agent is entitled under Articles 9 and
10.

10.15   Other
Agents. No Lender or Affiliate thereof identified on the facing page of this
Agreement or otherwise herein, or in any amendment hereof or other document related
hereto, as being the Syndication Agent or a Co-Documentation Agent shall
have any right, power, obligation, liability, responsibility or duty under this Agreement
in such capacity. Each Lender acknowledges that it has not relied, and will not rely, on
any Person so identified in deciding to enter into this Agreement or in taking or
refraining from taking any action hereunder or pursuant hereto.

# ARTICLE 11 SETOFF; PAYMENTS

11.1
   Setoff. In addition to, and without limitation of, any rights of
the Lenders under applicable law, if the Required Lenders determine that the Borrower is
insolvent, however evidenced, or any Default occurs and is continuing, any and all
deposits (including all account balances, whether provisional or final and whether or not
collected or available) and any other indebtedness at any time held or owing by any
Lender or any Affiliate of any Lender to or for the credit or account of the Borrower,
may be offset and applied toward the payment of the Obligations owing to such Lender,
whether or not the Obligations, or any part thereof, shall then be due.

11.2
   Ratable Payments. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Outstanding Credit Exposure (other than payments received
pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than that received
by any other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Aggregate Outstanding Credit Exposure held by the other Lenders so that after such
purchase each Lender will hold its Pro Rata Share of the Aggregate Outstanding Credit
Exposure. If any Lender, whether in connection with setoff or amounts which might be
subject to setoff or otherwise, receives collateral or other protection for the
Obligations owed thereto or such amounts which may be subject to setoff, such Lender
agrees, promptly upon demand, to take such action necessary such that all Lenders share
in the benefits of such collateral ratably in proportion to their respective Pro Rata
Share of the Aggregate Outstanding Credit Exposure. In case any such payment is disturbed
by legal process, or otherwise, appropriate further adjustments shall be made.

# ARTICLE 12 BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

12.1
   Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower, Puget Energy
and the Lenders and their respective successors and assigns, except that (i) neither
the Borrower nor Puget Energy shall have the right to assign its rights or obligations
under the Loan Documents and (ii) any assignment by any Lender of its rights and
obligations under the Loan Documents must be made in compliance with Section 12.3.
The parties to this Agreement acknowledge that clause (ii) of this Section 12.1
relates only to absolute assignments and does not prohibit assignments creating security
interests, including any pledge or assignment by any Lender of all or any portion of its
rights under this Agreement and any Note to a Federal Reserve Bank; provided that
no such pledge or assignment creating a security interest shall release the transferor
Lender from its obligations hereunder unless and until the parties thereto have complied
with the provisions of Section 12.3. The Administrative Agent may treat the Person
which made any Loan or which holds any Note as the owner thereof for all purposes hereof
unless and until such Person complies with Section 12.3; providedthat the
Administrative Agent may in its discretion (but shall not be required to) follow
instructions from the Person which made any Loan or which holds any Note to direct
payments relating to such Loan or Note to another Person. Any assignee of the rights to
any Loan or any Note agrees by acceptance of such assignment to be bound by all the terms
and provisions of the Loan Documents. Any request, authority or consent of any Person
that, at the time of making such request or giving such authority or consent, is the
owner of the rights to any Loan (whether or not a Note has been issued in evidence
thereof) shall be conclusive and binding on any subsequent holder or assignee of the
rights to such Loan.

12.2
   Participations.

| | 12.2.1
   Permitted Participants; Effect. Any Lender may at any time sell
to one or more banks or other entities (Participants)
participating interests in any Outstanding Credit Exposure of such Lender, any Note held
by such Lender, any Commitment of such Lender or any other interest of such Lender under
the Loan Documents; provided that such Lender shall promptly provide written
notice of such sale to the Borrower. In the event of any such sale by a Lender of
participating interests to a Participant, such Lenders obligations under the Loan
Documents shall remain unchanged, such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, such Lender shall remain
the owner of its Outstanding Credit Exposure and the holder of any Note issued to it in
evidence thereof for all purposes under the Loan Documents, all amounts payable by the
Borrower under this Agreement shall be determined as if such Lender had not sold such
participating interests, and the Borrower, Puget Energy and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with such Lenders
rights and obligations under the Loan Documents.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 12.2.2
   Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or waiver of
any provision of this Agreement other than any amendment, modification or waiver with
respect to any Credit Extension or Commitment in which such Participant has an interest
which (i) forgives principal, interest, fees or any Reimbursement Obligation, (ii) reduces
the interest rate or fees payable with respect to any such Credit Extension or
Commitment, (iii) extends the Facility Termination Date, (iv) postpones any
date fixed for any regularly-scheduled payment of principal of, or interest or fees on,
any such Credit Extension or Commitment, (v) releases any guarantor of any such
Credit Extension or (vi) releases all or substantially all of the collateral, if
any, securing any such Credit Extension.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 12.2.3
   Benefit of Setoff. The Borrower agrees that each Participant
shall be deemed to have the right of setoff provided in Section 11.1 in respect of
its participating interest in amounts owing under this Agreement to the same extent as if
the amount of its participating interest were owing directly to it as a Lender under this
Agreement; provided that each Lender shall retain the right of setoff provided in
Section 11.1 with respect to the amount of participating interests sold to each
Participant. The Lenders agree to share with each Participant, and each Participant, by
exercising the right of setoff provided in Section 11.1, agrees to share with each
Lender, any amount received pursuant to the exercise of its right of setoff, such amounts
to be shared in accordance with Section 11.2 as if each Participant were a Lender.
The Borrower further agrees that each Participant shall be entitled to the benefits of
Sections 3.1, 3.2, 3.4 and 3.5 to the same extent as if it were a Lender and had acquired
its interest by assignment pursuant to Section 12.3; provided that (i) a
Participant shall not be entitled to receive any greater payment under Section 3.1,
3.2, 3.4 or 3.5 than the Lender which sold the participating interest to such Participant
would have received had it retained such interest for its own account, unless the sale of
such interest to such Participant is made with the prior written consent of the Borrower,
and (ii) any Participant not incorporated under the laws of the United States of
America or any State thereof agrees to comply with the provisions of Section 3.5 to
the same extent as if it were a Lender.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12.3
   Assignments.

| | 12.3.1
   Permitted Assignments. Any Lender may at any time assign to one
or more banks or other entities (Purchasers) all or any
part of its rights and obligations under the Loan Documents (a Lender
Assignment). Such Lender Assignment shall be substantially in the
form of Exhibit E or in such other form as may be agreed to by the parties thereto. The
consent of the Borrower and the Administrative Agent shall be required prior to an
assignment becoming effective with respect to a Purchaser which is not a Lender or an
Affiliate thereof; provided that if a Default has occurred and is continuing, the
consent of the Borrower shall not be required. Such consents shall not be unreasonably
withheld or delayed. Each such assignment with respect to a Purchaser which is not a
Lender or an Affiliate thereof shall (unless each of the Borrower and the Administrative
Agent otherwise consents) be in an amount not less than the lesser of (i) $5,000,000
or (ii) the remaining amount of the assigning Lenders Commitment (calculated
as at the date of such assignment) or outstanding Loans (if the applicable Commitment has
been terminated).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 12.3.2
   Register. The Administrative Agent, acting solely for this
purpose as an agent of the Borrower, shall maintain at one of its offices in California a
copy of each Lender Assignment delivered to it and a register for the recording of the
names and addresses of the Lenders and their Commitments and Outstanding Credit Exposures
pursuant to the terms hereof from time to time (the Register).
The entries in the Register shall be conclusive, and the Borrower, Puget Energy, the
Administrative Agent and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 12.3.3
   Effect; Effective Date. Upon (i) delivery to the
Administrative Agent of an assignment, together with any consent(s) required by Section 12.3.1,
and (ii) payment of a $3,500 fee to the Administrative Agent by the Purchaser or
transferor Lender for processing such assignment (unless such fee is waived by the
Administrative Agent), such assignment shall become effective on the effective date
specified in such assignment. The assignment shall contain a representation by the
Purchaser to the effect that none of the consideration used to make the purchase of the
Commitment and Outstanding Credit Exposure under the applicable assignment agreement
constitutes plan assets as defined under ERISA and that the rights and
interests of the Purchaser in and under the Loan Documents will not be plan assets under
ERISA. On and after the effective date of such assignment, such Purchaser shall for all
purposes be a Lender party to this Agreement and any other Loan Document executed by or
on behalf of the Lenders and shall have all the rights and obligations of a Lender under
the Loan Documents, to the same extent as if it were an original party hereto, and no
further consent or action by the Borrower, Puget Energy, the Lenders or the
Administrative Agent shall be required to release the transferor Lender with respect to
the percentage of the Aggregate Commitment and Loans assigned to such Purchaser. Upon the
consummation of any assignment to a Purchaser pursuant to this Section 12.3.3, the
transferor Lender, the Administrative Agent and the Borrower shall, if the transferor
Lender or the Purchaser desires that its Loans be evidenced by a Note, make appropriate
arrangements so that a new Note or, as appropriate, a replacement Note is issued to such
transferor Lender and a new Note or, as appropriate, a replacement Note is issued to such
Purchaser, in each case in principal amounts reflecting their respective Commitments, as
adjusted pursuant to such assignment.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12.4
   Tax Treatment. If any interest in any Loan Document is
transferred to any Purchaser or Participant which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor Lender
shall cause such Purchaser or Participant, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 3.5(iv).

# ARTICLE 13 NOTICES

13.1
   Notices. Except as otherwise permitted by Section 2.11 with
respect to borrowing notices, all notices, requests and other communications to any party
hereunder shall be in writing (including electronic transmission, facsimile transmission
or similar writing) and shall be given to such party: (x) in the case of the
Borrower, Puget Energy or the Administrative Agent, at its address or facsimile number
set forth on the signature pages hereof, (y) in the case of any Lender, at its
address or facsimile number set forth below its signature hereto (including, as
applicable, on a Lender Assignment) or (z) in the case of any party, at such other
address or facsimile number as such party may hereafter specify for the purpose by notice
to the Administrative Agent and the Borrower in accordance with the provisions of this
Section 13.1. Each such notice, request or other communication shall be effective (i) if
given by facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail,
four Business Days after such communication is deposited in the mails with first-class
postage prepaid, addressed as aforesaid, or (iii) if given by any other means, when
delivered (or, in the case of electronic transmission, received) at the address specified
in this Section; provided that notices to the Administrative Agent under Article 2
shall not be effective until received.

13.2
   Change of Address. The Borrower, Puget Energy, the
Administrative Agent and any Lender may each change the address for service of notice
upon it by a notice in writing to the other parties hereto.

# ARTICLE 14 CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

14.1
   CHOICE OF LAW. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS (BUT WITHOUT REGARD
TO THE CONFLICT-OF-LAWS PROVISIONS) OF THE STATE OF CALIFORNIA, BUT GIVING EFFECT
TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

14.2
   CONSENT TO JURISDICTION. THE BORROWER AND PUGET ENERGY HEREBY
IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
CALIFORNIA STATE COURT SITTING IN LOS ANGELES, CALIFORNIAIN ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY NOTE, AND THE BORROWER AND
PUGET ENERGY HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, SUIT
OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVE ANY
OBJECTION THEY MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION, SUIT OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT, EITHER LC ISSUER OR ANY LENDER
TO BRING PROCEEDINGS AGAINST THE BORROWER OR PUGET ENERGY IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER OR PUGET ENERGY AGAINST THE
ADMINISTRATIVE AGENT, EITHER LC ISSUER, ANY LENDER OR ANY AFFILIATE OF THE ADMINISTRATIVE
AGENT, EITHER LC ISSUER OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN
ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY NOTE SHALL BE
BROUGHT ONLY IN A COURT IN LOS ANGELES, CALIFORNIA.

14.3   WAIVER
OF JURY TRIAL. THE BORROWER, PUGET ENERGY, THE ADMINISTRATIVE AGENT, EACH LC ISSUER
AND EACH LENDER HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY
NOTE, ANY OTHER LOAN DOCUMENT OR ANY RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.

[THE
REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.]

IN
WITNESS WHEREOF, the Borrower, Puget Energy, the Lenders, the LC Issuers and the
Administrative Agent have executed this Agreement as of the date first above written.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | INFRASTRUX GROUP, INC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | InfrastruX Group, Inc.  
                                                             10900 NE 4th Street, Suite 1900 
                                                             Bellevue, WA 98004               
                                                             Attention:  Douglas Madison      
                                                             Telephone:  425-463-1040         
                                                             FAX:  425-462-1011

| |                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------
| | PUGET ENERGY, INC.                                                                                                                         
| |                                                                                                                                            
| | By:________________________  
Name:______________________ 
Title:_______________________                                                   
| |                                                                                                                                            
| | Puget Energy, Inc.
P.O. Box 97034 PSE-08N
Bellevue, WA 98009-9734
Attention:  Elizabeth J. Rice
Telephone:  425-462-3752
FAX:  425-462-3490
| |                                                                                                                                            
| | For Courier Deliveries:                                                                                                                    
| |                                                                                                                                            
| | 10885 NE 4th Street PSE-08N
Bellevue, WA 98004-5591                                                                                        

| |                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | UNION BANK OF CALIFORNIA, N.A.,
Individually, as Administrative Agent and as LC Issuer                                                                                                                                        
| |                                                                                                                                                                                                                               
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                                                                                      
| |                                                                                                                                                                                                                               
| | Operations Contact:                                                                                                                                                                                                           
| |                                                                                                                                                                                                                               
| | Union Bank of California, N.A.
CLSO, Commercial Loan Operations
601 Potrero Grande, 2nd Floor
Monterey Park, CA 91754
Attention:  Maria Suncin
Telephone:  323-720-2870
FAX:  323-720-2252/2251
E-mail:  maria.suncin@uboc.com
| |                                                                                                                                                                                                                               
| | Credit Contact:                                                                                                                                                                                                               
| |                                                                                                                                                                                                                               
| | Union Bank of California, N.A.
445 South Figueroa Street
Los Angeles, CA 90071
Attention:  Sonja I. Sevcik
FAX:  213-236-4096                                                                                                 

| |                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | CITIBANK, N.A.                                                                                                                                                                      
| |                                                                                                                                                                                     
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                                            
| |                                                                                                                                                                                     
| | Operations Contact:                                                                                                                                                                 
| |                                                                                                                                                                                     
| | Karen Riley
2 Penns Way, Suite 110
New Castle, DE 19720
Telephone:  302-894-6084
FAX:  212-994-0847
E-mail:  karen.riley@citigroup.com                                              
| |                                                                                                                                                                                     
| | Credit Contact:                                                                                                                                                                     
| |                                                                                                                                                                                     
| | Stuart Glen
 Vice President
 388 Greenwich Street
 21st Floor  Global Power
 New York, NY 10013
 Telephone:  212-816-8553
 FAX:  212-816-8098
 E-mail:  stuart.j.glen@citigroup.com

| |                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | JPMORGAN CHASE BANK                                                                                                                                                                  
| |                                                                                                                                                                                      
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                                             
| |                                                                                                                                                                                      
| | Primary Operations Contact:                                                                                                                                                          
| |                                                                                                                                                                                      
| | Jaime Garcia
1111 Fannin Street, 10th Floor
Houston, TX 77002
Telephone:  713-750-2377
FAX:  713-427-6307
E-mail:  jaime.e.garcia@jpmchase.com                                       
| |                                                                                                                                                                                      
| | Alternate Operations Contact:                                                                                                                                                        
| |                                                                                                                                                                                      
| | Claudette Reid
1111 Fannin Street, 10th Floor
Houston, TX 77002
Telephone:  713-750-2355
FAX:  713-427-6307
E-mail:  claudette.a.reid@jpmchase.com                                   
| |                                                                                                                                                                                      
| | Credit Contact:                                                                                                                                                                      
| |                                                                                                                                                                                      
| | Michael J. DeForge
Vice President
JPMorgan Chase Bank
270 Park Ave., 4th Floor
New York, NY 10017
Telephone:  212-270-1656
FAX:  212-270-3089
E-mail:  michael.j.deforge@jpmorgan.com

| |                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------
| | KEYBANK NATIONAL ASSOCIATION                                                                                                                            
| |                                                                                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                
| |                                                                                                                                                         
| | Operations Contact:                                                                                                                                     
| |                                                                                                                                                         
| | Madhu Pandya
Deal Administrator
127 Public Square
Cleveland, OH 44114
Telephone:  216-689-5277
FAX:  216-689-5962
E-mail:  madhu_pandya@keybank.com     
| |                                                                                                                                                         
| | Credit Contact:                                                                                                                                         
| |                                                                                                                                                         
| | Keven D. Smith
Portfolio Manager
601 108th Avenue N.E.
Bellevue, WA 98004
Telephone:  425-709-4579
FAX:  425-709-4587
E-mail:  keven_d_smith@keybank.com

| |                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | WACHOVIA BANK, N.A.                                                                                                                                             
| |                                                                                                                                                                 
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                        
| |                                                                                                                                                                 
| | Operations Contact:                                                                                                                                             
| |                                                                                                                                                                 
| | Cynthia Rawson
201 S. College St., CP-9
Charlotte, NC 28288-1183
Telephone:  704-374-4425
FAX:  704-715-0097
E-mail:  cynthia.rawson@wachovia.com               
| |                                                                                                                                                                 
| | Credit Contact:                                                                                                                                                 
| |                                                                                                                                                                 
| | Rotcher Watkins
Managing Director
191 Peachtree St., NE
Atlanta, GA 30303-1740
Telephone:  404-332-6211
FAX:  404-332-4058
E-mail:  rotcher.watkins@wachovia.com

| |                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | WASHINGTON MUTUAL BANK                                                                                                                                                  
| |                                                                                                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                                
| |                                                                                                                                                                         
| | Operations Contact:                                                                                                                                                     
| |                                                                                                                                                                         
| | Toni Dale, Loan Coordinator
1201 3rd Avenue, WMT 1445
Suite 1445
Seattle, WA 98101
Telephone:  206-377-5214
FAX:  206-377-3812
E-mail:  toni.dale@wamu.net              
| |                                                                                                                                                                         
| | Primary Credit Contact:                                                                                                                                                 
| |                                                                                                                                                                         
| | Richard J. Ameny, Jr., Vice President
1201 3rd Avenue, WMT 1445
Suite 1445
Seattle, WA 98101
Telephone:  206-377-3889
FAX:  206-377-3812
E-mail:  richard.ameny@wamu.net
| |                                                                                                                                                                         
| | Alternate Credit Contact:                                                                                                                                               
| |                                                                                                                                                                         
| | Bruce Kendrex., Vice President
1201 3rd Avenue, WMT 1445
Suite 1445
Seattle, WA 98101
Telephone:  206-377-4822
FAX:  206-377-3812
E-mail:  bruce.kendrex@wamu.net       

| |                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | THE BANK OF NOVA SCOTIA                                                                                                                                                
| |                                                                                                                                                                        
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                               
| |                                                                                                                                                                        
| | Primary Operations Contact:                                                                                                                                            
| |                                                                                                                                                                        
| | Adriene Mays
One Liberty Plaza, 24th Floor
New York, NY 10006
Telephone:  212-225-5047
FAX:  212-225-5145/5271
E-mail:  adriene_mays@scotiacapital.com                 
| |                                                                                                                                                                        
| | Alternate Operations Contact:                                                                                                                                          
| |                                                                                                                                                                        
| | Cheryl Williams
One Liberty Plaza, 24th Floor
New York, NY 10006
Telephone:  212-225-5441
FAX:  212-225-5145/5271
E-mail:  cheryl_williams@scotiacapital.com           
| |                                                                                                                                                                        
| | Primary Credit Contact:                                                                                                                                                
| |                                                                                                                                                                        
| | Isabel Abella, Associate Director
One Liberty Plaza, 26th Floor
New York, NY 10006
Telephone:  212-225-5305
FAX:  212-225-5480
E-mail:  isabel_abella@scotiacapital.com
| |                                                                                                                                                                        
| | Alternate Credit Contact:                                                                                                                                              
| |                                                                                                                                                                        
| | Denis OMeara, Managing Director
One Liberty Plaza, 26th Floor
New York, NY 10006
Telephone:  212-225-5493
FAX:  212-225-5480
E-mail:  denis_omeara@scotiacapital.com  

| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | STERLING SAVINGS BANK                                                                                                                                                      
| |                                                                                                                                                                            
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                                   
| |                                                                                                                                                                            
| | Primary Operations Contact:                                                                                                                                                
| |                                                                                                                                                                            
| | Melody DeLorme, Corporate Banking
601 Union Street, Suite 1717
Seattle, WA 98101
Telephone:  206-223-8326
FAX:  206-625-9099
E-mail:  melody.delorme@sterlingsavings.com   
| |                                                                                                                                                                            
| | Alternate Operations Contact:                                                                                                                                              
| |                                                                                                                                                                            
| | Tracy Fisher, Commercial Loan Support
502 W. Riverside Avenue
Spokane, WA 99201
Telephone:  800-633-9855 x4021
FAX:  509-363-6845
E-mail:  tracy.fisher@sterlingsavings.com
| |                                                                                                                                                                            
| | Primary Credit Contact:                                                                                                                                                    
| |                                                                                                                                                                            
| | Sean W. Morreale, Corporate Banking
601 Union Street, Suite 1717
Seattle, WA 98101
Telephone:  206-223-8322
FAX:  206-625-9099
E-mail:  sean.morreale@sterlingsavings.com  
| |                                                                                                                                                                            
| | Alternate Credit Contact:                                                                                                                                                  
| |                                                                                                                                                                            
| | Colin Duffy, Corporate Banking
601 Union Street, Suite 1717
Seattle, WA 98101
Telephone:  206-223-8322
FAX:  206-625-9099
E-mail:  colin.duffy@sterlingsavings.com         

| |                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | UBS LOAN FINANCE LLC                                                                                                                                                           
| |                                                                                                                                                                                
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                                       
| |                                                                                                                                                                                
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                                       
| |                                                                                                                                                                                
| | Primary Operations & Credit Contact                                                                                                                                            
| |                                                                                                                                                                                
| | Winslowe F. Ogbourne
Associate Director
677 Washington Blvd., 6th Floor South
Stamford, CT 06901
Telephone:  203-719-3587
FAX:  203-719-3888
E-mail:  winslowe.ogbourne@ubs.com
| |                                                                                                                                                                                
| | Alternate Operations & Credit Contact:                                                                                                                                         
| |                                                                                                                                                                                
| | Denise Conzo
677 Washington Blvd., 6th Floor South
Stamford, CT 06901
Telephone:  203-719-3853
FAX:  203-719-3888
E-mail:  denise.conzo@ubs.com                                

| |                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | U.S. BANK NATIONAL ASSOCIATION                                                                                                                                                       
| |                                                                                                                                                                                      
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                                             
| |                                                                                                                                                                                      
| | Primary Operations Contact:                                                                                                                                                          
| |                                                                                                                                                                                      
| | Gail Fortun
1420 Fifth Avenue, 10th Floor, PD-WA-T10C
Seattle, WA 98101
Telephone:  206-587-5212
FAX:  206-344-3741
E-mail:  gail.fortun@usbank.com                                  
| |                                                                                                                                                                                      
| | Alternate Operations Contact:                                                                                                                                                        
| |                                                                                                                                                                                      
| | Patty Abel
555 SW Oak, Suite 780, PD-OR-P7LN
Portland, OR 97214
Telephone:  503-275-8189
FAX:  503-275-8181                                                                          
| |                                                                                                                                                                                      
| | Primary Credit Contact:                                                                                                                                                              
| |                                                                                                                                                                                      
| | Wilfred Jack, Vice President
1420 Fifth Avenue, 11th Floor, PD-WA-T10M
Seattle, WA 98101
Telephone:  206-344-3643
FAX:  206-344-3654
E-mail:  wilfred.jack@usbank.com                
| |                                                                                                                                                                                      
| | Alternate Credit Contact:                                                                                                                                                            
| |                                                                                                                                                                                      
| | Eric Trimble, Assistant Relationship Manager
1420 Fifth Avenue, 10th Floor, PD-WA-T10M
Seattle, WA 98101
Telephone:  206-344-3769
FAX:  206-344-3654
E-mail:  eric.trimble@usbank.com

| |                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | THE BANK OF NEW YORK                                                                                                                                                   
| |                                                                                                                                                                        
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                               
| |                                                                                                                                                                        
| | Primary Operations Contact:                                                                                                                                            
| |                                                                                                                                                                        
| | Lisa Williams
One Wall Street, 19th Floor
New York, NY 10286
Telephone:  212-635-7535
FAX:  212-635-7552
E-mail:  liwilliams@bankofny.com                              
| |                                                                                                                                                                        
| | Alternate Operations Contact:                                                                                                                                          
| |                                                                                                                                                                        
| | Scan Pan
One Wall Street, 19th Floor
New York, NY 10286
Telephone:  212-635-7532
FAX:  212-635-7552
E-mail:  span@bankofny.com                                         
| |                                                                                                                                                                        
| | Primary Credit Contac:                                                                                                                                                 
| |                                                                                                                                                                        
| | Jesus M. Williams, Assistant Vice President
One Wall Street, 19th Floor
New York, NY 10286
Telephone:  212-635-7609
FAX:  212-635-7923
E-mail:  jmwilliams@bankofny.com
| |                                                                                                                                                                        
| | Alternate Credit Contact:                                                                                                                                              
| |                                                                                                                                                                        
| | John Yancey, Senior Vice President
One Wall Street, 19th Floor
New York, NY 10286
Telephone:  212-635-6890
FAX:  212-635-6436
E-mail:  jyancey@bankofny.com            

| |                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------
| | LEHMAN COMMERCIAL PAPER INC.                                                                                                                     
| |                                                                                                                                                  
| | By:________________________  
Name:______________________ 
Title:_______________________                                                         
| |                                                                                                                                                  
| | Operations Contact:                                                                                                                              
| |                                                                                                                                                  
| | Priyanka Mathew
745 7th Ave., 16th Floor
New York, NY 10019   
Telephone:  212-526-6560 
FAX:  212-520-0450          
E-mail:  pmathew@lehman.com
| |                                                                                                                                                  
| | Credit Contact:                                                                                                                                  
| |                                                                                                                                                  
| | Janine Shugan 
745 7th Ave., 19th Floor 
New York, NY 10019   
Telephone:  212-526-8625 
FAX:  201-508-4654          
E-mail:  jshugan@lehman.com

| |                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | MERRILL LYNCH BANK USA                                                                                                                                        
| |                                                                                                                                                               
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                      
| |                                                                                                                                                               
| | Operations Contact:                                                                                                                                           
| |                                                                                                                                                               
| | Julie Young, Manager Operations
15 W. South Temple, Suite 300
Salt Lake City, UT 84101
Telephone:  801-526-8331
FAX:  801-359-4667
E-mail:  julie_young@ml.com
| |                                                                                                                                                               
| | Credit Contact:                                                                                                                                               
| |                                                                                                                                                               
| | Derek Befus, Portfolio Manager
15 W. South Temple, Suite 300
Salt Lake City, UT 84101
Telephone:  801-526-6814
FAX:  801-531-7470
E-mail:  derek_befus@ml.com 

| |                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | BANCA DI ROMA SPA                                                                                                                                                       
| |                                                                                                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                                
| |                                                                                                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                                
| |                                                                                                                                                                         
| | Opertions Contact:                                                                                                                                                      
| |                                                                                                                                                                         
| | Salvatore Rappa
Assistant Vice President
34 East 51st Street
New York, NY 10022
Telephone:  212-407-1812
FAX:  212-407-1684
E-mail:  ______________                     
| |                                                                                                                                                                         
| | Credit Contact:                                                                                                                                                         
| |                                                                                                                                                                         
| | Thomas C. Woodruff
Vice President
One Market, Steuart Tower, Suite 1000
San Francisco, CA 94105
Telephone:  415-977-7308
FAX:  415-357-9869
E-mail:  bdrsf@sbcglobal.net

| |                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------
| | BANK HAPOALIM B.M.                                                                                                                           
| |                                                                                                                                              
| | By:________________________  
Name:______________________ 
Title:_______________________                                                     
| |                                                                                                                                              
| | Operations Contact:                                                                                                                          
| |                                                                                                                                              
| | Dwight Ghans
1177 Avenue of the Americas
New York, NY 10036
Telephone:  212-782-2226
FAX:  212-782-2187
E-mail:  dghans@hapoalimusa.com      
| |                                                                                                                                              
| | Credit Contact:                                                                                                                              
| |                                                                                                                                              
| | Shaun Breidbart
1177 Avenue of the Americas
New York, NY 10036
Telephone:  212-782-2186
FAX:  212-782-2382
E-mail: sbreidbart@hapoalimusa.com

| |                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | REGAL FINANCIAL BANK                                                                                                                                                    
| |                                                                                                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________                                                                                
| |                                                                                                                                                                         
| | Primary Operations Contact:                                                                                                                                             
| |                                                                                                                                                                         
| | Kurban Merchant
925 4th Avenue, Suite 100
Seattle, WA 98104
Telephone:  206-621-8728
FAX:  206-621-0888
E-mail:  kmerchant@regal-bank.com                               
| |                                                                                                                                                                         
| | Alternate Operations Contact:                                                                                                                                           
| |                                                                                                                                                                         
| | Jane Rodriguez
925 4th Avenue, Suite 100
Seattle, WA 98104
Telephone:  206-621-8761
FAX:  206-621-0888
E-mail:  jrodriguez@regal-bank.com                               
| |                                                                                                                                                                         
| | Primary Credit Contact:                                                                                                                                                 
| |                                                                                                                                                                         
| | Kurban Merchant
Vice President Risk Management
925 4th Avenue, Suite 100
Seattle, WA 98104
Telephone:  206-621-8728
FAX:  206-621-0888
E-mail:  kmerchant@regal-bank.com
| |                                                                                                                                                                         
| | Alternate Credit Contact:                                                                                                                                               
| |                                                                                                                                                                         
| | Jesse Tam
925 4th Avenue, Suite 100
Seattle, WA 98104
Telephone:  206-621-0808
FAX:  206-621-0888
E-mail:  jtam@regal-bank.com                                          

SCHEDULE 1

PRICING SCHEDULE

|S&P Rating/ 
Moody's Rating        | BBB / Baa2 | BBB- /Baa3 | BBB- / Ba1 | BB+ / Ba1 | <or= BB / Ba2
|---------------------------------- | ---------- | ---------- | ---------- | --------- | -------------
|                                  
|Applicable Euro-
dollar Margin     | 1.30%      | 1.50%      | 1.625%     | 2.00%     | 2.50%        
|                                  
|Applicable Com-  
mitment Fee Rate | 0.20%      | 0.25%      | 0.30%      | 0.40%     | 0.50%        
|                                  
|Applicable LC Fee Rate             | 1.30%      | 1.50%      | 1.625%     | 2.00%     | 2.50%        

The
Applicable Eurodollar Margin, Applicable Commitment Fee Rate and Applicable LC Fee Rate
shall be determined in accordance with the foregoing table based on Puget Energys
then current Moodys Rating and S&P Rating. The credit rating in effect on any
date for purposes of this Schedule is that in effect at the close of business on such
date.

Moodys
Rating means, at any time, the rating issued by Moodys
Investors Service, Inc., and then in effect as Puget Energys issuer rating.

S&P
Rating means, at any time, the rating issued by Standard &
Poors Ratings Services, a division of The McGraw-Hill Companies, Inc., and then in
effect as Puget Energys issuer rating.

If
Puget Energy is split-rated (other than at BBB- / Ba1) and the ratings differential is one
level, the better rating will apply. If Puget Energy is split-rated and the ratings
differential is two levels or more, the intermediate rating at the midpoint will apply. If
there is no midpoint, the higher of the intermediate ratings will apply.

If
at any time Puget Energy has no Moodys Rating and no S&P Rating, the
Borrowers pricing will be at the level two levels below the lower of PSEs
issuer ratings from S&P and Moodys. (For example, if PSEs issuer ratings
were BBB- from S&P and Baa3 from Moodys, two levels below those ratings would
place the Borrower at the < BB / Ba2 level on the grid.)

SCHEDULE 2

COMMITMENTS

|Lender                         | Commitment    
|------------------------------ | --------------
|                               |               
|Union Bank of California, N.A, | $  17,700,000 
|Citibank, N.A                  | $  17,700,000 
|JPMorgan Chase Bank            | $  15,000,000 
|KeyBank National Association   | $  15,000,000 
|Wachovia Bank, N.A             | $  15,000,000 
|Washington Mutual Bank         | $  13,000,000 
|The Bank of Nova Scotia        | $    7,800,000
|Sterling Savings Bank          | $    7,800,000
|UBS Loan Finance LLC           | $    7,800,000
|U.S. Bank National Association | $    6,600,000
|The Bank of New York           | $    5,700,000
|Lehman Commercial Paper Inc.   | $    5,700,000
|Merrill Lynch Bank USA         | $    5,700,000
|Banca di Roma SpA              | $    4,500,000
|Bank Hapoalim B.M              | $    3,000,000
|Regal Financial Bank           | $    2,000,000
|                               |               
|Total                          | $150,000,000  

SCHEDULE 5.2

# LITIGATION AND
CONTINGENT OBLIGATIONS

None.

SCHEDULE 5.11

# FINANCIAL STATEMENTS

Copies of the following
financial statements 
are provided and posted to IntraLinks

InfrastruX Group,
Inc.

Year ended December 31, 2001 
Year ended December 31, 2002 
Year ended December 31, 2003 
Q1  2004 (Internal unaudited)

Puget Energy / Puget
Sound Energy, Inc.

10-K  2003

Puget Energy, Inc.

Annual Report

SCHEDULE 5.14

SUBSIDIARIES

|Company                                            | Jurisdiction of
Organization | Owned By                                                                                                      | Percent Ownership
|-------------------------------------------------- | ---------------------------- | ------------------------------------------------------------------------------------------------------------- | -----------------
|InfrastruX Group, Inc.                             | Washington                   | Puget Energy, Inc.                                                                                            | 90.95%           
|UtilX Corporation                                  | Delaware                     | InfrastruX Group, Inc.                                                                                        | 100%             
|UtilX Ltd.                                         | United Kingdom               | UtilX Corporation                                                                                             | 100%             
|GI Acquisition, Inc.                               | Delaware                     | InfrastruX Group, Inc.                                                                                        | 100%             
|Texas Electric Utility Construction, Ltd.          | Texas                        | Texas Electric Utility Construction Mgmt.,
 LLC - General Partner  InsfrastruX Group,  Inc. - Limited Partner | 1%99%            
|Flowers Holding Co., Inc.                          | Texas                        | Texas Utility Construction, Ltd.                                                                              | 100%             
|Flowers Management Co., Inc.                       | Texas                        | Flowers Holding Co., Inc.                                                                                     | 100%             
|Flowers Limited Partner, Inc.                      | Nevada                       | Flowers Holding Co., Inc.                                                                                     | 100%             
|Flowers Construction Co., LP                       | Texas                        | Flowers Mgmt. Co., Inc. - General PartnerFlower Ltd Partner, Inc. - Limited Partner                           | 1%99%            
|Texas Electric Utility ConstructionManagement, LLC | Texas                        | InfrastruX Group, Inc.                                                                                        | 100%             
|Lineal Holdings, Inc.                              | Delaware                     | InfrastruX Group, Inc.                                                                                        | 100%             
|Lineal Industries, Inc.                            | Pennsylvania                 | Lineal Holdings, Inc.                                                                                         | 100%             
|InterCon Construction, Inc.                        | Wisconsin                    | Lineal Holdings, Inc.                                                                                         | 100%             
|InterCon Construction Trucking, Inc.               | Wisconsin                    | InterCon Construction, Inc.                                                                                   | 100%             
|InterPower Line Services Corporation               | Delaware                     | InterCon Construction, Inc.                                                                                   | 100%             
|Skibeck Pipeline Company, Inc.                     | New York                     | Lineal Holdings, Inc.                                                                                         | 100%             
|Skibeck PLC, Inc.                                  | New York                     | Lineal Holdings, Inc.                                                                                         | 100%             
|Trafford Corporation                               | Pennsylvania                 | Lineal Holdings, Inc.                                                                                         | 100%             
|Gill Electric Service, Ltd                         | Texas                        | Gill Electric Management LLC - General PartnerInfrastruX Group, Inc. - Limited Partner                        | 1%99%            
|B&H Maintenance & Construction, Inc.               | New Mexico                   | InfrastruX Group, Inc.                                                                                        | 100%             
|Gill Electric Management, LLC                      | Texas                        | InfrastruX Group, Inc.                                                                                        | 100%             
|Chapman Holding Co., Inc.                          | Nevada                       | InfrastruX Group, Inc.                                                                                        | 100%             
|Chapman Construction Management Co., Inc.          | Texas                        | InfrastruX Group, Inc.                                                                                        | 100%             
|Chapman Construction Co., L.P.                     | Texas                        | Chapman Construction Management, Inc. - General PartnerChapman Hoding Co., Inc. - Limited Partner             | 1%99%            
|Puget Sound Energy, Inc.                           | Washington                   | Puget Energy, Inc.                                                                                            | 100%             
|Puget Western, Inc.                                | Washington                   | Puget Sound Energy, Inc.                                                                                      | 100%             
|Hydro Energy Development Corp.                     | Washington                   | Puget Sound Energy, Inc.                                                                                      | 100%             
|GP Acquisition Corp.                               | Washington                   | Puget Sound Energy, Inc.                                                                                      | 100%             
|LP Acquisition Corp.                               | Washington                   | Puget Sound Energy, Inc.                                                                                      | 100%             
|Washington Energy Gas Marketing Company            | Washington                   | Puget Sound Energy, Inc.                                                                                      | 100%             
|WNG Cap I, Inc.                                    | Washington                   | Puget Sound Energy, Inc.                                                                                      | 100%             
|Rainier Receivables, Inc.                          | Washington                   | Puget Sound Energy, Inc.                                                                                      | 100%             
|Black Creek Hydro, Inc.                            | Washington                   | Hydro Energy Development Corp.                                                                                | 100%             
|Encogen Northwest, L.P.                            | Delaware                     | GP Acquisition Corp. - General PartnerLP Acquisition Corp. - Limited Partner                                  | 1%99%            

SCHEDULE 6.10

# EXISTING LIENS

Indebtedness
and Liens as of April 30, 2004

|Company Name                   | Total
|------------------------------ | -----
|                              
|Utilx                          |      
|GE CAPITAL                     |      
|CITICAPITAL                    |      
|ALTEC CAPITAL SERVICES         |      
|                              
|                              
|InfrastruX                     |      
|IBM FINANCE                    |      
|                              
|                              
|Chapman                        |      
|COMPASS BANK                   |      
|1st SOURCE                     |      
|COMPASS BANK                   |      
|FCC EQUIPMENT                  |      
|CATERPILLAR FINANCE            |      
|GE CAPITAL                     |      
|                              
|                              
|Skibeck                        |      
|COMMUNITY BANK                 |      
|                              
|                              
|Gill                           |      
|GE CAPITAL                     |      
|WELLS FARGO BANK               |      
|                              
|                              
|InterCon                       |      
|M&I MARSHALL & ILSLEY          |      
|CITICAPITAL                    |      
|M2 LEASE FUNDS                 |      
|M&I LEASING                    |      
|CASE                           |      
|GMAC                           |      
|JOHN DEERE                     |      
|                              
|                              
|Texas Electric                 |      
|ALTEC CAPITAL SERVICES         |      
|HDD                            |      
|LA SALLE LEASING               |      
|GE CAPITAL                     |      
|AMERICAN BANK                  |      
|                              
|                              
|Flowers                        |      
|ALTEC CAPITAL SERVICES         |      
|JOHN DEERE CREDIT              |      
|GE CAPITAL                     |      
|                              
|                              
|B&H                            |      
|GE FLEET LEASING               |      
|CIT EQUIPMENT FINANCING        |      
|CATERPILLAR FINANCIAL SERVICES |      
|GMAC                           |      
|FORD MOTOR CREDIT              |      
|WELLS FARGO BANK               |      
|                              
|                              
|Trafford                       |      
|BBL LEASING                    |      
|CASE CREDIT                    |      
|CATERPILLAR FINANCIAL SERVICES |      
|CHRYSLER FINANCIAL             |      
|JOHN DEERE CREDIT              |      
|GE CAPITAL                     |      
|GEHL FINANCE                   |      
|GMAC                           |      
|KOMATSU FINANCIAL              |      
|AUTOMOTIVE RENTALS             |      
|ALTEC CAPITAL SERVICES         |      
|GE CAPITAL                     |      
|LASALLE LEASING                |      
|NATIONAL CITY BANK             |      
|                              
|                              
|Lineal                         |      
|AUTOMOTIVE RENTALS             |      
|BBL LEASING                    |      
|CASE CREDIT                    |      
|CATERPILLAR FINANCIAL SERVICES |      
|CIT EQUIPMENT FINANCE          |      
|DITCHWITCH NM                  |      
|GE CAPITAL                     |      
|INGERSOL RAND FINANCIAL        |      
|JOHN DEERE CREDIT              |      
|LASALLE LEASING                |      
|NEW HOLLAND CREDIT             |      
|NATIONAL CITY BANK             |      
|                              
|TOTAL:                         |      

# GUARANTY

This
Guaranty, dated as of May 27, 2004, is made by (1) PUGET ENERGY, INC., a Washington
corporation (Puget Energy), GI ACQUISITION, INC., a
Delaware corporation, UTILX CORPORATION, a Delaware corporation, LINEAL HOLDINGS, INC., a
Delaware corporation, LINEAL INDUSTRIES, INC., a Pennsylvania corporation, INTERCON
CONSTRUCTION, INC., a Wisconsin corporation, INTERCON CONSTRUCTION TRUCKING, INC., a
Wisconsin corporation, INTERPOWER LINE SERVICES CORPORATION, a Delaware corporation,
TRAFFORD CORPORATION, a Pennsylvania corporation, SKIBECK PIPELINE COMPANY, INC., a New
York corporation, SKIBECK PLC, INC., a New York corporation, TEXAS ELECTRIC UTILITY
CONSTRUCTION MANAGEMENT, L.L.C., a Texas limited liability company, TEXAS ELECTRIC UTILITY
CONSTRUCTION, LTD., a Texas limited partnership, FLOWERS HOLDING CO., INC., a Texas
corporation, FLOWERS LIMITED PARTNER, INC., a Nevada corporation, FLOWERS CONSTRUCTION
CO., L.P., a Texas limited partnership, FLOWERS MANAGEMENT CO., INC., a Texas corporation,
CHAPMAN HOLDING CO., INC., a Nevada corporation, CHAPMAN CONSTRUCTION CO., L.P., a Texas
limited partnership, CHAPMAN CONSTRUCTION MANAGEMENT CO., INC., a Texas corporation, GILL
ELECTRIC MANAGEMENT, L.L.C., a Texas limited liability company, GILL ELECTRIC SERVICE,
LTD., a Texas limited partnership, B&H MAINTENANCE AND CONSTRUCTION, INC., a New
Mexico corporation, and any and all Additional Guarantors as defined in Section 6(b) (all
of the foregoing herein called the Guarantors) in favor
of (2) the financial institutions (the Lenders) party to
the Credit Agreement (as hereinafter defined) and UNION BANK OF CALIFORNIA, N.A., a
national banking association (UBOC), as administrative
agent (the Administrative Agent) for the Lenders under
the Credit Agreement.

Recitals

A.                 InfrastruX
Group, Inc., a Washington corporation (the           Borrower),
Puget Energy, the Lenders, and UBOC,           as LC Issuer and as Administrative Agent,
have entered into a Credit Agreement           dated as of May 27, 2004 (said
Agreement, as it may hereafter be amended,           restated, supplemented or otherwise
modified from time to time, herein called           the Credit Agreement).
Terms defined in the           Credit Agreement and not otherwise defined herein have the
same respective           meanings when used herein, and the provisions of Sections 1.2
and 1.3 of           the Credit Agreement are incorporated herein by reference.

B.                 Puget
Energy is the legal and beneficial owner of approximately 90.9% of the
          outstanding capital stock of the Borrower. The Guarantors other than Puget
          Energy are Subsidiaries of the Borrower. In addition, the Guarantors have
          various business relationships with the Borrower that cause the Guarantors to
          have a substantial economic interest in the continuing health of the business,
          condition (financial and otherwise), operations, performance, properties and
          prospects of the Borrower. It is a condition precedent to the effectiveness of
          the Credit Agreement that the Guarantors execute and deliver this Guaranty.
          Accordingly, the Guarantors hereby agree as set forth below.

Section
1.    Guaranty.

(a)              Each
Guarantor hereby absolutely and unconditionally guarantees, jointly and
          severally with the other Guarantors, the punctual payment when due, whether at
          stated maturity, by acceleration or otherwise, of all obligations of the
          Borrower now or hereafter existing under the Credit Agreement and the other
Loan           Documents, including any amendments, restatements, supplements and other
          modifications thereof, whether for principal (including reimbursement for
          amounts drawn under Facility LCs), interest, fees, expenses, indemnification or
          otherwise (all of the aforementioned obligations herein called the
          GuaranteedObligations).

(b)              Each
Guarantor agrees to pay, in addition, any and all expenses (including
          reasonable counsel fees and expenses) incurred by the Administrative Agent or
          the Lenders in enforcing any rights under this Guaranty.

(c)              Without
limiting the generality of the foregoing, this Guaranty guarantees, to           the
extent provided herein, the payment of all amounts that constitute part of           the
Guaranteed Obligations and would be owed by the Borrower to the           Administrative
Agent or any of the Lenders under any Loan Document but for the           fact that they
are unenforceable or not allowable due to the existence of a           bankruptcy,
reorganization or similar proceeding involving the Borrower.

(d)              The
obligations of the Guarantors under this Guaranty are joint and several and           are
independent of the Guaranteed Obligations, and a separate action or actions           may
be brought and prosecuted against any one or more of the Guarantors to           enforce
this Guaranty up to the full amount of the Guaranteed Obligations,           irrespective
of whether any action is brought against the Borrower or whether           the Borrower
is joined in any such action or actions, and without proceeding           against any
other Guarantor or Guarantors, against any security for the           Guaranteed
Obligations, or under any other guaranty covering all or any portion           of the
Guaranteed Obligations.

(e)              It
is the intention of each Guarantor, the Lenders and the Administrative Agent
          that the amount of the Guaranteed Obligations guaranteed by each Guarantor
shall           be in, but not in excess of, the maximum amount permitted by
          fraudulent-conveyance, fraudulent-transfer and similar laws applicable to such
          Guarantor. Accordingly, notwithstanding anything to the contrary contained in
          this Guaranty or in any other agreement or instrument executed in connection
          with the payment of any of the Guaranteed Obligations, the amount of the
          Guaranteed Obligations guaranteed by each Guarantor under this Guaranty shall
be           limited to the amount equal to the largest amount that would not render such
          Guarantors obligations hereunder subject to avoidance under Section 548
of           the United States Bankruptcy Code or any comparable provision of any other
          applicable statutory or case law (collectively           law).

Section
2.   Guaranty Absolute. Each Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Credit Agreement
and the other Loan Documents, regardless of any law now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Administrative Agent or any
of the Lenders with respect thereto. The liability of each Guarantor under this Guaranty
shall be absolute and unconditional, irrespective of the following:

(a)              any
lack of validity or enforceability of, or any release or discharge of the
          Borrower or any other Guarantor from liability under, the Credit Agreement or
          any other Loan Document;

(b)              any
change in the time, manner or place of payment of, or in any other term of,           any
or all of the Guaranteed Obligations; or any other amendment or waiver of,           or
any consent to departure from, the Credit Agreement or any other Loan           Document,
including any increase in the Guaranteed Obligations resulting from           the
extension of additional credit to the Borrower;

(c)              any
taking, subordination, compromise, exchange, release, nonperfection or
          liquidation of any collateral, or any release, amendment or waiver of, or
          consent to departure from, any other guaranty, for any or all of the Guaranteed
          Obligations;

(d)              any
exercise or nonexercise by the Administrative Agent or any Lender of any           right
or privilege under this Guaranty or any of the other Loan Documents;

(e)              any
bankruptcy, insolvency, reorganization, composition, adjustment,           dissolution,
liquidation or other like proceeding relating to the Borrower or           any other
Guarantor; or any action taken with respect to this Guaranty by any           trustee,
receiver or court in any such proceeding, whether or not any Guarantor           has had
notice or knowledge of any of the foregoing;

(f)              any
assignment or other transfer, in whole or in part, of this Guaranty or any           of
the other Loan Documents;

(g)              any
acceptance of partial performance of the Guaranteed Obligations;

(h)              any
consent to the transfer of, or any bid or purchase at sale of, any           collateral
for the Guaranteed Obligations;

(i)              any
manner of application of collateral, or proceeds thereof, to any or all of           the
Guaranteed Obligations; or any manner of sale or other disposition of any
          collateral or any other assets of the Borrower or any other Guarantor;

(j)              any
change, restructuring or termination of the legal structure or existence of           the
Borrower or any other Guarantor; or any restructure or refinancing of the
          Guaranteed Obligations or any portion thereof; or

(k)              any
other circumstance (including any statute of limitations) that might           otherwise
constitute a defense available to, or a discharge of, the Borrower or           any other
Guarantor, other than payment in full in cash of the Guaranteed           Obligations.

This Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by the Administrative
Agent, any Lender or any other Person upon the insolvency, bankruptcy or reorganization of
the Borrower, any Guarantor or otherwise, all as though such payment had not been made.

Section 3.    Waivers.

(a)    
          Each Guarantor irrevocably waives the following, to the extent permitted by
          applicable law:

(i)    
          promptness, diligence, notice of acceptance and any other notice with respect
to           any of the Guaranteed Obligations or this Guaranty;

(ii)    
          any requirement that the Administrative Agent, any Lender or any other Person
          protect, secure, perfect or insure any Lien or any property subject thereto or
          exhaust any right or take any action against the Borrower, any Guarantor, any
          other Person or any collateral;

(iii)    
          any duty on the part of the Administrative Agent or any Lender to disclose to
          such Guarantor any matter, fact or thing relating to the business, operation or
          condition of the Borrower, any other Guarantor or the assets of the Borrower or
          any other Guarantor, now known or hereafter known by the Administrative Agent
or           such Lender;

(iv)    
          any rights and defenses of such Guarantor under Section 580a of the California
          Code of Civil Procedure, including the right to a judicial determination of the
          fair-market value of any security for the Guaranteed Obligations, and any other
          rights and defenses that such Guarantor may have by reason of protection
          afforded to the Borrower or such Guarantor pursuant to the antideficiency or
          other laws of California limiting or discharging the Borrowers or such
          Guarantors obligations with respect to the Guaranteed Obligations,
          including Sections 580a, 580b, 580d and 726 of the California Code of Civil
          Procedure; and

(v)    
          without limiting the generality of the foregoing or any other provision hereof,
          any rights and benefits that might otherwise be available to such Guarantor
          under any of California Civil Code Sections 2787 through 2855, 2899
          and 3433.

(b)    
          Without limiting the generality of any other provision of this Guaranty, each
          Guarantor waives all rights and defenses that it may have because the
          Borrowers debt is secured by real property. This means, among other
          things, that:

(i)    
          the Administrative Agent and the Lenders may collect from any Guarantor without
          first foreclosing on any real- or personal-property collateral pledged by the
          Borrower; and

(ii)    
          if the Administrative Agent or any Lender forecloses on any real-property
          collateral pledged by the Borrower:

(A)    
          the amount of the debt may be reduced only by the price for which that
          collateral is sold at the foreclosure sale, even if the collateral is worth
more           than the sale price; and

(B)    
          the Administrative Agent and the Lenders may collect from any Guarantor even if
          the Administrative Agent or any Lender, by foreclosing on the real-property
          collateral, has destroyed any right that such Guarantor may have to collect
from           the Borrower.

This is an unconditional and
irrevocable waiver of any rights and defenses that the Guarantors may have if the
Borrowers debt is secured by real property. These rights and defenses include, but
are not limited to, any rights and defenses based upon Section 580a, 580b, 580d or 726 of
the California Code of Civil Procedure.

(c)              Without
limiting the generality of any other provision of this Guaranty, each           Guarantor
waives all rights and defenses arising out of an election of remedies           by the
Administrative Agent or any Lender, even though that election of           remedies, such
as a nonjudicial foreclosure with respect to security for a           guaranteed
obligation, has destroyed such Guarantors rights of subrogation           and
reimbursement against the Borrower by the operation of Section 580d of the
          California Code of Civil Procedure or otherwise.

Section
4.   Waiver of Subrogation and Contribution. Unless and until the
Guaranteed Obligations (including, if applicable, the obligation to provide cash
collateral pursuant to the last sentence of Section 2.16.1 of the Credit Agreement) and
all amounts payable under this Guaranty have been paid in full and the Commitments have
terminated, each Guarantor hereby irrevocably waives any claims and other rights that it
now has or may hereafter acquire against the Borrower or any other Guarantor that arise
from the existence, payment, performance or enforcement of the former Guarantors
obligations under this Guaranty or any other Loan Document, including any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Administrative Agent or any Lender against the
Borrower, any other Guarantor or any collateral that the Administrative Agent or any
Lender now has or hereafter acquires, whether or not such claim, remedy or right arises
in equity or under contract, statute or common law, including the right to take or
receive from the Borrower or any other Guarantor, directly or indirectly, in cash or
other property, by setoff or in any other manner, payment or security on account of any
such claim or other right. If any amount is paid to any Guarantor in violation of the
preceding sentence, such amount shall be deemed to have been paid to such Guarantor for
the benefit of, and to be held in trust for the benefit of, the Administrative Agent and
the Lenders and shall be forthwith paid to the Administrative Agent for the benefit of
the Lenders to be credited and applied upon the Guaranteed Obligations, whether matured
or unmatured, in accordance with the terms of the other Loan Documents. Each Guarantor
acknowledges that it will receive direct and indirect benefits from the financing
arrangements contemplated by the Credit Agreement and the other Loan Documents and that
the waiver set forth in this Section 4 is knowingly made in contemplation of such
benefits. Each waiver made by the Guarantors under this Guaranty, including the waiver in
this section, shall continue to be effective or be reinstated, as the case may be, if at
any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise
be returned by the Administrative Agent, any Lender or any other Person upon the
insolvency, bankruptcy or reorganization of the Borrower, any Guarantor or otherwise, all
as though such payment had not been made.

Section
5.   Representations and Warranties. Each Guarantor represents and warrants to
the Lenders and the Administrative Agent as set forth below.

(a)              Such
Guarantor (i) is a legal entity of the type specified in the recital           of
parties to this Guaranty or in such Guarantors Guaranty Supplement (as
          defined in Section 6(b)), as applicable, duly organized, validly existing and
in           good standing under the laws of the jurisdiction so specified, (ii) is
duly           qualified or licensed, and in good standing, in each jurisdiction in which
it           owns or leases property or in which the conduct of its business requires it
to           be so qualified or licensed (except for jurisdictions in which the failure
to be           so qualified or licensed, and in good standing, could not reasonably be
expected           to have a Material Adverse Effect) and (iii) has all requisite
legal power           and authority to own or lease and operate its properties and to
carry on its           business as now conducted and as proposed to be conducted.

(b)              The
execution, delivery and performance by such Guarantor of this Guaranty and           each
other Loan Document to which such Guarantor is or is to be a party, and the
          consummation of the transactions contemplated hereby and thereby, are within
          such Guarantors legal powers, have been duly authorized by all necessary
          legal action and do not (i) contravene such Guarantors charter,
          bylaws, certificate of formation, partnership agreement or other constituent
          documents, (ii) violate any applicable law, (iii) conflict with or result
          in the breach of, or constitute a default under, any loan agreement, indenture,
          mortgage, deed of trust or lease, or any other contract or instrument, binding
          on or affecting such Guarantor, any of its Subsidiaries or any of their
          respective properties, the conflict, breach or default of which could
reasonably           be expected to have a Material Adverse Effect, or (iv) result
in or require           the creation or imposition of any Lien upon or with respect to
any of the           properties of such Guarantor or any of its Subsidiaries, except for
Liens           permitted by the Credit Agreement. Neither such Guarantor nor any of its
          Subsidiaries is in violation of any such law or in breach of any such loan
          agreement, indenture, mortgage, deed of trust, lease or other contract or
          instrument, the violation or breach of which could reasonably be expected to
          have a Material Adverse Effect.

(c)              No
Governmental Approval, and no authorization, approval or other action by, or
          notice to, any third party, is required for the due execution, delivery or
          performance by such Guarantor of this Guaranty or any other Loan Document to
          which such Guarantor is a party, or for the consummation of the transactions
          contemplated hereby or thereby, except for any Governmental Approval that has
          been duly obtained, taken, given or made and is in full force and effect.

(d)              This
Guaranty and each other Loan Document to which such Guarantor is a party           have
been duly executed and delivered by such Guarantor. This Guaranty and each
          other Loan Document to which such Guarantor is a party are the legal, valid and
          binding obligations of such Guarantor, enforceable against such Guarantor in
          accordance with their respective terms, except as the enforceability hereof or
          thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or
          other similar laws affecting creditors rights generally or by equitable
          principles relating to enforceability.

(e)              Puget
Energy is the legal and beneficial owner of approximately 90.9% of the
          outstanding capital stock of the Borrower. The Guarantors other than Puget
          Energy are Subsidiaries of the Borrower.

Section 6.
   Amendments, Etc.

(a)              No
amendment or waiver of any provision of this Guaranty or consent to any
          departure by any Guarantor therefrom shall in any event be effective unless the
          same is in writing and signed by the Administrative Agent and the Required
          Lenders, and then such waiver or consent shall be effective only in the
specific           instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing
          and signed by all of the Lenders, (i) limit the liability of any Guarantor
          hereunder, (ii) postpone any date fixed for payment hereunder or
          (iii) change the number of Lenders required to take any action hereunder;
furtherprovided, however, that any Subsidiary of the
          Borrower (A) that is not the surviving Person in a merger or consolidation of
          such Subsidiary permitted by Section 6.13 of the Credit Agreement or (B) all or
          substantially all of the assets of which or equity interests in which are
          disposed of as permitted by Section 6.14 of the Credit Agreement shall be
          released from this Guaranty, which release shall be confirmed in writing by the
          Required Lenders. Delivery by telecopier of an executed counterpart of a
          signature page to any amendment or waiver of, or consent to departure from, any
          provision of this Guaranty shall be effective as delivery of an originally
          executed counterpart of such amendment, waiver or consent.

(b)              Upon
the execution and delivery by any Person of a guaranty supplement           substantially
in the form of Exhibit A (each a           GuarantySupplement),
such           Person shall be referred to as an AdditionalGuarantor and
shall become and be a Guarantor, and           each reference in this Guaranty to Guarantor shall
also mean and be           a reference to such Additional Guarantor.

Section
7.   Addresses for Notices. All notices and other communications provided for
hereunder shall be in writing (including communication by telecopier) and shall be
mailed, telecopied or delivered to any Guarantor or the Administrative Agent, as the case
may be, at the address therefor (or, in the case of each Guarantor other than Puget
Energy, for the Borrower) set forth in the Credit Agreement or at such other address as
may be designated by any such party in a written notice to the other parties, complying
with the terms of this section. All such notices and other communications shall be
effective as provided in the Credit Agreement.

Section
8.   No Waiver; Remedies. No failure on the part of the Administrative Agent or
any Lender to exercise, and no delay in exercising, any right hereunder shall operate as
a waiver thereof, and no single or partial exercise of any right hereunder shall preclude
any other or further exercise thereof or the exercise of any other right. The remedies
provided herein are cumulative and not exclusive of any remedies provided by law.

Section
9.   Right of Setoff. Upon the occurrence and during the continuation of
any Default, each Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender to or for the credit or the account of any Guarantor
against any and all of the obligations of such Guarantor now or hereafter existing under
this Guaranty, irrespective of whether such Lender has made any demand under this
Guaranty and although such obligations may be contingent and unmatured. Each Lender
agrees to notify each affected Guarantor promptly after any such setoff and application
made by such Lender; provided, however, that the failure to give such
notice shall not affect the validity of such setoff and application. The rights of each
Lender under this section are in addition to other rights and remedies (including other
rights of setoff) that such Lender may have.

Section
10.    Continuing Guaranty. This Guaranty is a continuing guaranty and
shall (a) remain in full force and effect until payment in full of the Guaranteed
Obligations and all other amounts payable under this Guaranty and expiration or
termination of the Commitments and all Facility LCs, (b) be binding upon each
Guarantor and its successors and assigns and (c) inure to the benefit of and be
enforceable by the Administrative Agent, the Lenders and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing clause (c),
any Lender may assign or otherwise transfer any or all of its rights and obligations
under the Loan Documents to any other Person, and such other Person shall thereupon
become vested with all of the rights in respect thereof granted to such Lender herein or
otherwise, subject, however, to the provisions of Article 10 (concerning the
Administrative Agent) and Section 12.3 of the Credit Agreement.

Section
11.    Headings.The section and subsection headings used herein have been
inserted for convenience of reference only and do not constitute matters to be considered
in interpreting this Guaranty.

Section
12.    Execution in Counterparts. This Guaranty may be executed in any
number of counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement. Delivery by telecopier of an executed
counterpart of a signature page to this Guaranty shall be effective as delivery of an
originally executed counterpart of this Guaranty.

Section
13.    CHOICE OF LAW.THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS (BUT WITHOUT REGARD TO THE
CONFLICT-OF-LAWS PROVISIONS) OF THE STATE OF CALIFORNIA, BUT GIVING EFFECT TO FEDERAL
LAWS APPLICABLE TO NATIONAL BANKS.

Section
14.    CONSENT TO JURISDICTION. EACH GUARANTOR HEREBY
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR
CALIFORNIA STATE COURT SITTING IN LOS ANGELES, CALIFORNIA IN ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY, AND EACH GUARANTOR HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, SUIT OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW
OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN SUCH
A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT
OF THE ADMINISTRATIVE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY GUARANTOR IN
THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY GUARANTOR AGAINST
THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY AFFILIATE OF THE ADMINISTRATIVE AGENT OR ANY
LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO OR CONNECTED WITH THIS GUARANTY SHALL BE BROUGHT ONLY IN A COURT IN LOS ANGELES,
CALIFORNIA.

[THE
REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.]

Section
15.   WAIVER OF JURY TRIAL. EACH GUARANTOR, THE ADMINISTRATIVE
AGENT AND EACH LENDER HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS GUARANTY OR ANY
RELATIONSHIP ESTABLISHED HEREUNDER.

The
parties hereto have caused this Guaranty to be executed by their respective duly
authorized representatives as of the date first written above.

| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | PUGET ENERGY, INC.                                                                      
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________
| |                                                                                         
| |                                                                                         
| | GI ACQUISITION, INC.                                                                    
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________
| |                                                                                         
| |                                                                                         
| | UTILX COPORATION                                                                        
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________
| |                                                                                         
| |                                                                                         
| | LINEAL HOLDINGS, INC.                                                                   
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________
| |                                                                                         
| |                                                                                         
| | LINEAL INDUSTRIES, INC.                                                                 
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________
| |                                                                                         
| |                                                                                         
| | INTERCON CONSTRUCTION, INC.                                                             
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________
| |                                                                                         
| |                                                                                         
| | INTERCON CONSTRUCTION TRUCING, INC.                                                     
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________
| |                                                                                         
| |                                                                                         
| | INTERPOWER LINE SERVICES CORPORATION                                                    
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________
| |                                                                                         
| |                                                                                         
| | TRAFFORD CORPORATION                                                                    
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________
| |                                                                                         
| |                                                                                         
| | SKIBECK PIPELINE COMPANY, INC.                                                          
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________
| |                                                                                         
| |                                                                                         
| | SKIBECK PLC, INC.                                                                       
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________
| |                                                                                         
| |                                                                                         
| | TEXAS ELECTRIC UTILITY CONSTRUCTION MANAGEMENT, L.L.C.                                  
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________

| |                                           |                                                                                         
| | ----------------------------------------- | ----------------------------------------------------------------------------------------
| | TEXAS ELECTRIC UTILITY CONSTRUCTION, LTD.
| |                                           |                                                                                         
| | By:                                       | TEXAS ELECTRIC UTILITY CONSTRUCTION MANAGEMENT, L.L.C.
          Its General Partner    
| |                                           |                                                                                         
| |                                           | By:________________________  
Name:______________________ 
Title:_______________________

| |                                                                                         
| | ----------------------------------------------------------------------------------------
| |                                                                                         
| | FLOWERS HOLDING CO., INC.                                                               
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________
| |                                                                                         
| |                                                                                         
| | FLOWERS LIMITED PARTNER, INC.                                                           
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________

| |                                |                                                                                         
| | ------------------------------ | ----------------------------------------------------------------------------------------
| | FLOWERS CONSTRUCTION CO., L.P.
| |                                |                                                                                         
| | By:                            | FLOWERS MANAGEMENT CO., INC.
          Its General Partner                              
| |                                |                                                                                         
| |                                | By:________________________  
Name:______________________ 
Title:_______________________

| |                                                                                         
| | ----------------------------------------------------------------------------------------
| |                                                                                         
| | FLOWERS MANAGEMENT CO., INC.                                                            
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________
| |                                                                                         
| |                                                                                         
| | CHAPMAN HOLDING CO., INC.                                                               
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________

| |                                |                                                                                         
| | ------------------------------ | ----------------------------------------------------------------------------------------
| | CHAPMAN CONSTRUCTION CO., L.P.
| |                                |                                                                                         
| | By:                            | CHAPMAN CONSTRUCTION
          MANAGEMENT CO., INC.
          Its General Partner       
| |                                |                                                                                         
| |                                | By:________________________  
Name:______________________ 
Title:_______________________

| |                                                                                         
| | ----------------------------------------------------------------------------------------
| |                                                                                         
| | CHAPMAN CONSTRUCTIONMANAGEMENT CO., INC.                                                
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________
| |                                                                                         
| |                                                                                         
| | GILL ELECTRIC MANAGEMENT, L.L.C.                                                        
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________

| |                             |                                                                                         
| | --------------------------- | ----------------------------------------------------------------------------------------
| | GILL ELECTRIC SERVICE, LTD.
| |                             |                                                                                         
| | By:                         | GILL ELCTRIC MANAGMENT, L.L.C.
          Its General Partner                            
| |                             |                                                                                         
| |                             | By:________________________  
Name:______________________ 
Title:_______________________

| |                                                                                         
| | ----------------------------------------------------------------------------------------
| |                                                                                         
| | B&H MAINTENCE AND CONSTRUCTION                                                          
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________

EXHIBIT A to Guaranty

GUARANTY SUPPLEMENT

__________, 200_

Union
Bank of California, N.A.,
   as Administrative Agent 
445 South Figueroa Street
Los Angeles, California 90071

|Attention: |  | Sonja I. Sevcik
|---------- |  | ---------------

| |  | Vice President
| |  | --------------

|Re: |  | Guaranty
 dated  as of May 27,  2004  made by  Puget  Energy,  Inc.,  GI  Acquisition,  Inc.,
 Utilx                   Corporation,  Lineal Holdings, Inc., Lineal Industries, Inc.,
InterCon Construction,  Inc., InterCon                   Construction  Trucking,  Inc.,
InterPower Line Services Corporation,  Trafford Corporation,  Skibeck
                  Pipeline Company, Inc., Skibeck PLC, Inc., Texas Electric Utility
Construction  Management,  L.L.C.,                   Texas Electric  Utility
 Construction,  Ltd.,  Flowers Holding Co., Inc.,  Flowers Limited  Partner,
                  Inc.,  Flowers  Construction  Co., L.P.,  Flowers  Management Co.,
Inc.,  Chapman Holding Co., Inc.,                   Chapman  Construction  Co.,  L.P.,
 Chapman   Construction   Management  Co.,  Inc.,  Gill  Electric
                  Management,  L.L.C., Gill Electric Service, Ltd., B&H Maintenance and
Construction,  Inc., et al. in                   favor of the Lenders  referred  to
therein and Union Bank of  California,  N.A.,  as  Administrative                   Agent
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Ladies and Gentlemen:

Reference
is made to the above-captioned Guaranty (said Guaranty, as in effect on the date hereof
and as it may hereafter be amended, restated, supplemented or otherwise modified from time
to time, herein called the Guaranty). Terms defined in the Guaranty and not
otherwise defined herein are used herein as defined therein.

The
undersigned hereby agrees that, as of the date first set forth above, (1) it is a
Guarantor under the Guaranty as if it were an original party thereto and (2) each
reference in the Guaranty to Guarantor also means and is a reference to the
undersigned.

The
undersigned hereby absolutely and unconditionally guarantees, jointly and severally with
the other Guarantors, the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all of the Guaranteed Obligations, in accordance with the
terms of the Guaranty.

The
undersigned hereby makes, as of the date of this Guaranty Supplement, each representation
and warranty set forth in Section 5 of the Guaranty to the same extent as each other
Guarantor and hereby agrees to be bound as a Guarantor by all of the terms and provisions
of the Guaranty to the same extent as each other Guarantor.

THIS
LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THE STATE OF
CALIFORNIA.

| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | Very truly yours,                                                                       
| |                                                                                         
| | [ADDITIONAL GUARANTOR],                                                                 
| | a________________________                                                               
| |                                                                                         
| | By:________________________  
Name:______________________ 
Title:_______________________