Exhibit 10.2 Credit Agreement


    Exhibit
      10.2

      


      


      $350,000,000

      


      CREDIT
        AGREEMENT

      


      


      Dated
        as
        of March 29, 2007

      


      


      among

      


      


      PUGET
        SOUND ENERGY, INC.,

      


      


      VARIOUS
        FINANCIAL INSTITUTIONS,

      


      and
        

      


      JP
        MORGAN
        CHASE BANK, N.A.,

      as
        Administrative Agent, Swingline Lender
        and an
        LC Issuer,

      


      


      UNION
        BANK OF CALIFORNIA,
        N.A.,
        as Syndication Agent,

      


      


      CITIBANK,
        N.A., KEYBANK NATIONAL ASSOCIATION

       and
        WACHOVIA BANK, NATIONAL ASSOCIATION,

      as
        Co-Documentation Agents

      


      


      


      


      


      


      


      JPMORGAN
        SECURITIES INC., 

      as
        Co-Lead Arranger and Joint Book Runner

      


      and
        

      


      UNION
        BANK OF CALIFORNIA,
        N.A.,

      as
        Co-Lead Arranger and Joint Book Runner

      


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      Table
        of Contents

      
        	 	
                Page

              
	
                CREDIT
                  AGREEMENT 

              	
                1

              
	
                ARTICLE
                  1 DEFINITIONS 

              	
                1

              
	
                1.1 Defined
                  Terms 

              	
                1

              
	
                1.2 Terms
                  Generally 

              	
                14

              
	
                1.3 Accounting
                  Terms 

              	
                14

              
	
                ARTICLE
                  2 THE CREDITS 

              	
                15

              
	
                2.1 Facility 

              	
                15

              
	
                2.2 Revolving
                  Loans. 

              	
                15

              
	
                2.3 Method
                  of Borrowing 

              	
                17

              
	
                2.4 Fees;
                  Reductions in Aggregate Commitment. 

              	
                17

              
	
                2.5 Minimum
                  Amount of Each Revolving Loan; Limitation on Eurodollar
                  Loans

              	
                18

              
	
                2.6 Optional
                  Principal Payments 

              	
                18

              
	
                2.7 Changes
                  in Interest Rate, etc. 

              	
                18

              
	
                2.8 Rates
                  Applicable After Default 

              	
                18

              
	
                2.9 Method
                  of Payment 

              	
                19

              
	
                2.10 Noteless
                  Agreement; Evidence of Indebtedness. 

              	
                19

              
	
                2.11 Telephonic
                  Notices 

              	
                20

              
	
                2.12 Interest
                  Payment Dates; Interest and Fee Basis 

              	
                20

              
	
                2.13 Notification
                  of Revolving Loans, Interest Rates, Prepayments and Commitment
                  Reductions 

              	
                21

              
	
                2.14 Lending
                  Installations 

              	
                21

              
	
                2.15 Non-Receipt
                  of Funds by Administrative Agent 

              	
                21

              
	
                2.16 Facility
                  LCs. 

              	
                22

              
	
                2.17 Extension
                  of Facility Termination Date 

              	
                26

              
	
                2.18 Swingline
                  Loan Subfacility 

              	
                26

              
	
                2.19 Incremental
                  Facility 

              	
                28

              
	
                ARTICLE
                  3 YIELD PROTECTION; TAXES 

              	
                28

              
	
                3.1 Yield
                  Protection 

              	
                28

              
	
                3.2 Changes
                  in Capital Adequacy Regulations 29

              	 
	
                3.3 Availability
                  of Types of Revolving Loans 

              	
                30

              
	
                3.4 Funding
                  Indemnification 

              	
                30

              
	
                3.5 Taxes. 

              	
                31

              
	
                3.6 Statements;
                  Survival of Indemnity 

              	
                33

              
	
                3.7 Replacement
                  of Affected Lender 

              	
                33

              
	
                ARTICLE
                  4 CONDITIONS PRECEDENT 

              	
                33

              
	
                4.1 Effectiveness 

              	
                33

              
	
                4.2 Each
                  Credit Extension

              	
                34

              
	
                ARTICLE
                  5 REPRESENTATIONS AND WARRANTIES 

              	
                35

              
	
                5.1 Corporate
                  Existence, etc 

              	
                35

              
	
                5.2 Litigation
                  and Contingent Obligations 

              	
                35

              
	
                5.3 No
                  Breach 

              	
                36

              
	
                5.4 Corporate
                  Action 

              	
                36

              
	
                5.5 Approvals 

              	
                36

              
	
                5.6 Use
                  of Proceeds 

              	
                36

              
	
                5.7 ERISA 

              	
                36

              
	
                5.8 Taxes 

              	
                37

              
	
                5.9 Material
                  Adverse Change 

              	
                37

              
	
                5.10 Financial
                  Statements 

              	
                37

              
	
                5.11 Environmental
                  Matters 

              	
                37

              
	
                5.12 Investment
                  Company Act 

              	
                37

              
	
                5.13 Subsidiaries 

              	
                37

              
	
                5.14 Accuracy
                  of Information 

              	
                38

              
	
                5.15 Compliance
                  with Laws, Etc 

              	
                38

              
	
                5.16 Insurance 

              	
                38

              
	
                5.17 Properties 

              	
                38

              
	
                5.18 Anti-Terrorism
                  Laws 

              	
                38

              
	
                5.19 Compliance
                  with OFAC Rules and Regulations 

              	
                38

              
	
                5.20 Compliance
                  with FCPA 

              	
                39

              
	
                ARTICLE
                  6 COVENANTS 

              	
                39

              
	
                6.1 Preservation
                  of Existence and Business 

              	
                39

              
	
                6.2 Preservation
                  of Property 

              	
                39

              
	
                6.3 Payment
                  of Obligations 

              	
                39

              
	
                6.4 Compliance
                  with Applicable Laws and Contracts

              	
                40

              
	
                6.5 Preservation
                  of Loan Document Enforceability 

              	
                40

              
	
                6.6 Insurance 

              	
                40

              
	
                6.7 Use
                  of Proceeds 

              	
                40

              
	
                6.8 Visits,
                  Inspections and Discussions 

              	
                40

              
	
                6.9 Information
                  to Be Furnished 

              	
                40

              
	
                6.10 Liens 

              	
                41

              
	
                6.11 Debt
                  to Capitalization Ratio 

              	
                43

              
	
                6.12 Merger
                  and Consolidation 

              	
                43

              
	
                6.13 Disposition
                  of Assets 

              	
                43

              
	
                6.14 Transactions
                  with Affiliates 

              	
                43

              
	
                6.15 Investments 

              	
                44

              
	
                ARTICLE
                  7 DEFAULTS 

              	
                44

              
	
                ARTICLE
                  8 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

              	
                46

              
	
                8.1 Acceleration. 

              	
                47

              
	
                8.2 Amendments 

              	
                47

              
	
                8.3 Preservation
                  of Rights 

              	
                48

              
	
                ARTICLE
                  9 GENERAL PROVISIONS 

              	
                48

              
	
                9.1 Survival
                  of Representations 

              	
                48

              
	
                9.2 Governmental
                  Regulation 

              	
                48

              
	
                9.3 Headings 

              	
                48

              
	
                9.4 Entire
                  Agreement 

              	
                48

              
	
                9.5 Several
                  Obligations; Benefits of this Agreement 

              	
                48

              
	
                9.6 Expenses;
                  Indemnification. 

              	
                49

              
	
                9.7 Numbers
                  of Documents 

              	
                50

              
	
                9.8 Severability
                  of Provisions 

              	
                50

              
	
                9.9 Nonliability
                  of Lenders 

              	
                50

              
	
                9.10 Confidentiality 

              	
                50

              
	
                9.11 Non-Reliance 

              	
                51

              
	
                9.12 Disclosure 

              	
                51

              
	
                9.13 Counterparts 

              	
                51

              
	
                ARTICLE
                  10 THE ADMINISTRATIVE AGENT 

              	
                52

              
	
                10.1 Appointment;
                  Nature of Relationship 

              	
                52

              
	
                10.2 Powers 

              	
                53

              
	
                10.3 General
                  Immunity 

              	
                53

              
	
                10.4 No
                  Responsibility for Loans, Recitals, etc. 

              	
                53

              
	
                10.5 Action
                  on Instructions of Lenders 

              	
                53

              
	
                10.6 Employment
                  of Agents and Counsel 

              	
                54

              
	
                10.7 Reliance
                  on Documents; Counsel 

              	
                54

              
	
                10.8 Administrative
                  Agent’s Reimbursement and Indemnification 

              	
                54

              
	
                10.9 Notice
                  of Default 

              	
                54

              
	
                10.10
                  Rights as Lender 

              	
                55

              
	
                10.11
                  Lender Credit Decision 

              	
                55

              
	
                10.12
                  Successor Administrative Agent 

              	
                55

              
	
                10.13
                  Administrative Agent’s Fee 

              	
                56

              
	
                10.14
                  Delegation to Affiliates 

              	
                56

              
	
                10.15
                  Other Agents 

              	
                56

              
	
                ARTICLE
                  11 SETOFF; PAYMENTS 

              	
                56

              
	
                11.1 Setoff 

              	
                56

              
	
                11.2 Ratable
                  Payments 

              	
                57

              
	
                ARTICLE
                  12 BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

              	
                57

              
	
                12.1 Successors
                  and Assigns 

              	
                57

              
	
                12.2 Participations.

              	
                58

              
	
                12.3 Assignments. 

              	
                59

              
	
                12.4 Tax
                  Treatment

              	
                60

              
	
                ARTICLE
                  13 NOTICES 

              	
                60

              
	
                13.1 Notices 

              	
                60

              
	
                13.2 Change
                  of Address 

              	
                60

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

              	
                60

              
	
                14.1 CHOICE
                  OF LAW 

              	
                60

              
	
                14.2 CONSENT
                  TO JURISDICTION 

              	
                61

              
	
                14.3 WAIVER
                  OF JURY TRIAL 

              	
                61

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      Schedule
        1: Pricing
        Schedule

      Schedule
        2: Commitments

      Schedule
        5.10: Financial
        Statements

      Schedule
        5.13: Subsidiaries

      Schedule
        6.10: Existing
        Liens

      Schedule
        6.15: Existing
        Investments

      


      Exhibit
        A:  Revolving
        Note

      Exhibit
        B:  Borrowing
        Notice

      Exhibit
        C:  Conversion/Continuation
        Notice

      Exhibit
        D:  Compliance
        Certificate

      Exhibit
        E:  Assignment
        and Assumption

      Exhibit
        F:  Account
        Designation Letter

      Exhibit
        G:  Swingline
        Note

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


       


      CREDIT
        AGREEMENT

      


      This
        Credit Agreement dated as of March 29, 2007 is by and among Puget Sound Energy,
        Inc., a Washington corporation, the Lenders, and JPMorgan Chase Bank, N.A.,
        a
        national banking association having its principal office in New York, New
        York,
        as Swingline Lender, as an LC Issuer and as Administrative Agent. The parties
        hereto agree as follows:

      


      RECITALS

      


      A. The
        Borrower has requested that the Lenders make loans and other financial
        accommodations to the Borrower in the amount of up to $350,000,000 as more
        particularly described herein.

      


      B. The
        Lenders have agreed to make such loans and other financial accommodations
        to the
        Borrower on the terms and conditions contained herein.

      


      


      ARTICLE
        1

      DEFINITIONS

      


      1.1 Defined
        Terms.
        As used
        in this Agreement:

      


      “Account
        Designation Letter”
        means
        the Notice of Account Designation Letter dated the Closing Date from the
        Borrower to the Administrative Agent in substantially the form attached hereto
        as Exhibit F.

      


      “Acquisition”
        means
        any transaction, or series of related transactions, consummated on or after
        the
        date hereof by which the Borrower and/or any of its Subsidiaries directly
        or
        indirectly (i) acquires any ongoing business or all or substantially all
        of the
        assets of any Person (or a division thereof) engaged in any ongoing business,
        whether through a purchase of assets, a merger or otherwise, (ii) acquires
        control of securities of a Person engaged in an ongoing business representing
        more than 50% of the ordinary voting power for the election of directors
        or
        other governing position if the business affairs of such Person are managed
        by a
        board of directors or other governing body or (iii) acquires control of more
        than 50% of the ownership interest in any partnership, joint venture, limited
        liability company, business trust or other Person engaged in an ongoing business
        that is not managed by a board of directors or other governing
        body.

      


      “Administrative
        Agent”
means
        JPMorgan 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.

      


      “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
        Utilization 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 Loans, 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, J.P. Morgan Securities Inc. and Union Bank of California, N.A.,
        in
        their capacity as Co-Lead Arrangers and Joint Book Runners.

      


      “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 Financial Officer,
        any Vice President, the Treasurer or any Assistant Treasurer of the Borrower,
        acting singly.

      


      “Bankruptcy
        Code”
        means
        the Bankruptcy Code in Title 11 of the United States Code, as amended,
        modified, succeeded or replaced from time to time.

       

      “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 the Borrower or any member of the Controlled Group may have any
        liability.

      


      “Borrower”
means
        Puget Sound Energy, Inc., a Washington corporation.

      


      “Borrowing
        Date”
means
        a
        date on which a Loan 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 Loans, a day (other than a Saturday or Sunday) on which banks
        generally are open in North Carolina 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
        North Carolina and New York 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
        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 the Borrower.

      


      “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 Revolving Loans to,
        and
        to participate in Swingline Loans made to the Borrower and 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 the Borrower 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 the Borrower 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 a Revolving Loan, Swingline Loan or the issuance of a Facility
        LC
        hereunder.

      


      “Credit
        Extension Date”
means
        the Borrowing Date for a Loan or the issuance date for a Facility
        LC.

      


      “Default”
means
        an event described in Article 7.

      


      “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
        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 JPMorgan 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 JPMorgan’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 Loan 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
        April 4, 2012, 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. (New York 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 March 9, 2007 between the Borrower and the
        Administrative Agent concerning up-front fees payable to the
        Lenders.

      


      “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.

      


      “Hybrid
        Securities”
means
        (a) the outstanding principal amount of 8.231% subordinated debentures due
        June
        1, 2027 issued by the Borrower on June 6, 1997 and purchased with the proceeds
        of trust preferred securities, (b) the outstanding principal amount of other
        subordinated debentures issued by the Borrower and purchased with the proceeds
        of trust preferred securities that are similar in structure to this described
        in
        clause (a), and (c) any trust preferred securities, or deferrable interest
        subordinated debt with a maturity of at least 20 years at the time issued
        by the
        Borrower, or any business trusts, limited liability companies, limited
        partnerships (or similar entities) (i) all of the common equity, general
        partner
        or similar interests of which are owned (either directly or indirectly through
        one or more wholly owned Subsidiaries) at all times by the Borrower or any
        of
        its Subsidiaries, (ii) that have been formed for the purpose of issuing hybrid
        securities and (iii) substantially all the assets of which consist of (A)
        subordinated debt of the Borrower or a Subsidiary of the Borrower, as the
        case
        may be, and (B) payments made form time to time on subordinated
        debt.

       

      “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 the Borrower’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 Hybrid Securities;
        (b) obligations arising under Qualified Receivables Transactions;
        (c) obligations with respect to preferred stock of the Borrower outstanding
        on the date hereof; and (d) obligations with respect to preferred stock of
        the Borrower issued after the date hereof that is Subordinated.

      


      “Interest
        Period”
means,
        with respect to a Eurodollar Loan, 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.

      


      “Investment”
means
        (i) any loan, advance (other than any commission, travel or similar advance
        to
        an officer or employee made in the ordinary course of business), extension
        of
        credit (other than accounts receivable arising in the ordinary course of
        business on terms customary in the trade) or contribution of capital; (ii)
        any
        stock, bond, mutual fund, partnership interest, note, debenture or other
        such
        interest; (iii) any deposit account or certificate of deposit; and (iv) any
        structured note, derivative financial instrument or other such instrument
        or
        contract.

      


      “JPMorgan”
        means
        JPMorgan Chase Bank, N.A., a national banking association.

       

      “LC
        Fee”
is
        defined in Section 2.16.4.

      


      “LC
        Fronting Fee”
is
        defined in Section 2.16.4.

      


      “LC
        Issuer”
means
        either JPMorgan or another Lender selected by the Borrower to be another
        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 JPMorgan and any other Lender selected by the Borrower to issue
        Facility LCs, if any, in their capacities as LC Issuers.

      


      “Lending
        Installation”
means,
        with respect to a Lender, the Swingline Lender, an LC Issuer or the
        Administrative Agent, the office, branch or Affiliate of such Lender, Swingline
        Lender or LC Issuer or the Administrative Agent listed on the signature pages
        hereof or on a Schedule or otherwise selected by such Lender, Swingline 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.

      


      “LIBOR
        Market Index Rate Loan”
        means a
        Loan which, except as otherwise provided in Section 2.8, bears interest by
        reference to the LIBOR Market Index Rate.

       

      “LIBOR
        Market Index Rate”
        means,
        for any day, the 30-day rate of interest per annum appearing on Telerate
        Page 3750 (or any successor page) as the London interbank offered rate for
        deposits in Dollars at approximately 11:00 A.M. (London time) on such day,
        or if such day is not a London business day, then the immediately preceding
        London business day (or if not so reported, then as determined by the
        Administrative Agent from another recognized source or interbank quotation),
        or
        another rate as agreed to by the Administrative Agent and the
        Borrower.

       

      “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
        any Revolving Loan or Swingline Loan.

      


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

      


      “Mandatory
        Borrowing”
is
        defined in Section 2.18.2.

      


      “Material
        Adverse Effect”
means
        a
        material adverse effect on (i) the business, Property, condition (financial
        or otherwise), operations or prospects of the Borrower and its Subsidiaries
        taken as a whole, (ii) the ability of the Borrower to perform its
        obligations under the Loan Documents or (iii) the validity or
        enforceability of any of the Loan Documents with respect to and against the
        Borrower.

      


      “Material
        Indebtedness”
is
        defined in Section 7.5.

      


      “Modify”
and
        “Modification”
are
        defined in Section 2.16.1.

      


      “Mortgages”
means,
        collectively, (i) the First and Refunding Mortgage dated as of June 2,
        1924 issued by the Borrower (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, and (ii) the Indenture of First Mortgage dated as of April 1,
        1957 issued by the Borrower (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.

      


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

      


      “Net
        Worth”
means
        the Borrower’s consolidated shareholders’ equity.

      


      “Non-U.S.
        Lender”
is
        defined in Section 3.5(iv).

      


      “Notes”
        means,
        collectively, the Revolving Notes and the Swingline Note. 

      


      “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, the Swingline Lender or any LC
        Issuer or any indemnified party arising under the Loan Documents.

      


      “OFAC”
        means
        the U.S. Department of the Treasury’s Office of Foreign Assets
        Control.

      


      “Original
        Agreement”
        is
        defined in Recital A.

       

      “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 Revolving Loans outstanding at such time plus (ii) an amount equal
        to its Pro Rata Share of the LC Obligations and Swingline Loans at such
        time.

      


      “Participants”
is
        defined in Section 12.2.1.

      


      “Patriot
        Act”
is
        defined in Section 9.15.

      


      “Payment
        Date”
means
        the last day of each calendar quarter.

      


      “PBGC”
means
        the Pension Benefit Guaranty Corporation.

      


      “Permitted
        Acquisition”
means
        an Acquisition (i) that has been recommended or approved by the board of
        directors or other governing body of the Person that is the object of such
        Acquisition, (ii) that occurs when no Default or Unmatured Default exists,
        (iii)
        after giving effect to which (a) no Default or Unmatured Default will exist
        and
        (b) the Borrower will be in pro
        forma
        compliance with the financial covenant set forth in Section 6.11 (assuming
        that
        such Acquisition had occurred on the last day of the fiscal quarter most
        recently ended from the date that is one year prior to the date of such
        Acquisition), and (iv) that is of a Person in the same general line of business
        as the Borrower and its Subsidiaries.

      


      “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 the Borrower 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.

      


      “Purchasers”
is
        defined in Section 12.3.1.

      


      “Qualified
        Receivables Transaction”
means
        any transaction or series of transactions that may be entered into by the
        Borrower or any Subsidiary pursuant to which the Borrower or any Subsidiary
        may
        sell, convey, pledge or otherwise transfer to a newly-formed Subsidiary or
        other
        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
        Loan and Servicing Agreement dated as of December 20, 2005 by and among PSE
        Funding, Inc., the Borrower, as servicer, the purchasers party thereto from
        time
        to time and JPMorgan Chase Bank, N.A., as program 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 the Borrower 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 JPMorgan from time to time as its “reference rate.” Such
“reference rate” is set by JPMorgan as a general reference rate of interest,
        taking into account such factors as JPMorgan may deem appropriate, it being
        understood that many of JPMorgan’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 JPMorgan 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;
        provided
        that 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.

      


      “Revolving
        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).

      


      “Revolving
        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 Revolving
        Loans.

      


      “Risk-Based
        Capital Guidelines”
is
        defined in Section 3.2.

      


      “Sanctioned
        Country”
        means a
        country subject to a sanctions program identified on the list maintained
        by OFAC
        and available at http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html,
        or as
        otherwise published from time to time.

      


      “Sanctioned
        Person”
        means
        (i) a Person named on the list of “Specially Designated Nationals and Blocked
        Persons” maintained by OFAC available at http://www.treas.gov/offices/eotffc/ofac/sdn/index.html,
        or as
        otherwise published from time to time, or (ii) (a) an agency of the government
        of a Sanctioned Country, (b) an organization controlled by a Sanctioned Country,
        or (c) a person resident in a Sanctioned Country, to the extent subject to
        a
        sanctions program administered by OFAC.

      


      “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 the
        Borrower.

      


      “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 the Borrower.

      


      “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.

      


      “Swingline
        Committed Amount”
        is
        defined in Section 2.10.

       

      “Swingline
        Lender”
        means
        JPMorgan.

       

      “Swingline
        Loan”
        means,
        with respect to the Swingline Lender, any loan made by the Swingline Lender
        pursuant to Section 2.18.

      


      “Swingline
        Note”
means
        a
        promissory note, substantially in the form of Exhibit G, issued to the Swingline
        Lender pursuant to Section 2.10 to evidence its Swingline
        Loans.

      


      “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.

      


      “Tax-Free
        Debt”
means
        Indebtedness of the Borrower to a state, territory or possession of the United
        States or any political subdivision thereof issued in a transaction in which
        such state, territory, possession or political subdivision issued obligations
        the interest on which is excludable from gross income pursuant to the provisions
        of Section 103 of the Code (or similar provisions), as in effect at the
        time of issuance of such obligations, and debt to a bank issuing a Letter
        of
        Credit with respect to the principal of or interest on such
        obligations.

      


      “Term
        Out Maturity Date”
is
        defined in Section 2.1.3.

      


      “Total
        Capitalization”
means,
        at any time, the sum of the following for the Borrower 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 the Borrower with respect to the Hybrid Securities;
        plus

      


      (iii) the
        aggregate obligations
        of the Borrower with respect to any preferred stock of the Borrower, including
        any preferred stock subject to mandatory redemption; plus

      


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

      


      “Type”
means
        with respect to any Loan, its nature as a Floating Rate Loan, a Eurodollar
        Loan
        or a LIBOR Market Index Rate Loan.

      


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

      


      “Utilization
        Fee”
is
        defined in Section 2.4.1.

       

      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;
        provided
        that, 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 Revolving Loans to the Borrower,
        (ii) participate in Facility LCs issued upon the request of the Borrower
        and (iii) participate in Swingline Loans made upon the request of the Borrower;
        (b) each LC Issuer severally agrees to issue Facility LCs on the terms and
        conditions set forth in this Agreement; and (c) the Swingline Lender agrees
        to
        make Swingline Loans to the Borrower 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.
        

      


      (i) Subject
        to clause (ii) below, 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.

      


      (ii) On
        or
        before ten Business Days prior to the Facility Termination Date, the Borrower
        may, as long as no Default or Unmatured Default exists and is continuing,
        notify
        the Administrative Agent in writing (and the Administrative Agent shall promptly
        forward such notice to the Lenders) that, as of the Facility Termination
        Date,
        it is converting the outstanding Loans (including all Swingline Loans) to
        a term
        loan which shall be due and payable in full on the date one year subsequent
        to
        the Facility Termination Date (the “Term
        Out Maturity Date”).
        It is
        understood and agreed that subsequent to the Facility Termination Date,
        (a) the Borrower may no longer request, and the Lenders, LC Issuers and
        Swingline Lender are no longer obligated or empowered to make or issue, new
        Loans or Letters of Credit, (b) any amounts repaid may not be reborrowed,
        (c) interest shall accrue on the outstanding Loans, at the option of the
        Borrower, as Floating Rate Loans or Eurodollar Loans in accordance with the
        terms of Sections 2.2.4, 2.7 and 2.8; provided,
        that
        during the period from the Facility Termination Date through the Term Out
        Maturity Date, the outstanding Loans shall bear interest at the rate otherwise
        applicable to such Loans plus a premium of 0.25% per
        annum
        and (d)
        the Borrower shall have the right to prepay all or a portion of the outstanding
        Loans in accordance with Section 2.6. 

      


      2.2 Revolving
        Loans.

      


      2.2.1 Revolving
        Loans.
        Each
        Revolving Loan borrowing hereunder shall consist of Revolving 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 Revolving Loans.
        Revolving Loans may be Floating Rate Loans or Eurodollar Loans, 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 Revolving
        Loans.
        The
        Borrower shall select the Type of Revolving Loan and, in the case of each
        Eurodollar Loan, 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 (a) 1:30 p.m. (New York time) on the Borrowing Date of each Floating
        Rate Loan and (b) 2:00 p.m. (New York time) at least three Business Days
        before the Borrowing Date of each Eurodollar Loan. A Borrowing Notice shall
        specify:

      


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

      


      (ii) the
        aggregate amount of such Revolving Loan;

      


      (iii) the
        Type
        of Revolving Loan selected; and

      


      (iv) in
        the
        case of each Eurodollar Loan, the Interest Period applicable thereto (which
        may
        not end after the scheduled Facility Termination Date or the Term Out Maturity
        Date, as applicable).

      


      2.2.4 Conversion
        and Continuation of Outstanding Loans.
        Floating Rate Loans shall continue as Floating Rate Loans unless and until
        such
        Floating Rate Loans are either converted into Eurodollar Loans or LIBOR Market
        Index Rate Loans in accordance with this Section 2.2.4 or are repaid in
        accordance with Section 2.6. Each Eurodollar Loan shall continue as a
        Eurodollar Loan until the end of the then applicable Interest Period therefor,
        at which time such Eurodollar Loan shall be automatically converted into
        a
        Floating Rate Loan unless (x) such Eurodollar Loan 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 Loan continue as a Eurodollar
        Loan
        for the same or another Interest Period. LIBOR Market Index Rate Loans shall
        continue as LIBOR Market Index Rate Loans until they are either converted
        to
        Floating Rate Loans in accordance with this Section 2.2.4 or are repaid in
        accordance with Section 2.6 or 2.18. Subject to Section 2.5, the Borrower
        may elect from time to time to convert (i) all or any part of a Floating
        Rate
        Loan (other than Swingline Loans) into a Eurodollar Loan, (ii) convert any
        Swingline Loan that is a Floating Rate Loan into a LIBOR Market Index Rate
        Loan
        or (iii) convert any LIBOR Market Index Rate Loan into a Floating Rate Loan.
        For
        the avoidance of doubt, only Swingline Loans may be comprised of LIBOR Market
        Index Rate Loans. The Borrower shall give the Administrative Agent irrevocable
        notice in the form of Exhibit C (a “Conversion/Continuation
        Notice”)
        with
        respect to each (A) conversion of a Floating Rate Loan into a Eurodollar
        Loan or
        LIBOR Market Index Rate Loan, (B) conversion of a LIBOR Market Index Rate
        Loan
        into a Floating Rate Loan or (C) continuation of a Eurodollar Loan, not later
        than 2:00 p.m. (New York 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 Revolving Loan or Swingline Loan which is
        to be
        converted or continued and, if applicable, the Type of Loan to which such
        Revolving Loan or Swingline Loan is to be converted; and

      


      (iii) if
        any
        Loan is to be converted to a Eurodollar Loan or continued as a Eurodollar
        Loan,
        the duration of the Interest Period applicable thereto.

      


      2.3 Method
        of Borrowing.
        Not
        later than (a) 2:30 p.m. (New York time) on the Borrowing Date of each Floating
        Rate Loan and (b) 2:00 p.m. (New York time) on the Borrowing Date of each
        Eurodollar Loan, each Lender shall make available its Revolving Loan or
        Revolving Loans in funds immediately available in Houston, Texas 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) 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
        and
        (b) a utilization fee at a per
        annum
        rate
        equal to the Applicable Utilization Fee Rate on the aggregate principal amount
        of the outstanding Revolving Loans for each day on which the aggregate principal
        amount of the outstanding Revolving Loans equals or exceeds 50% of the Aggregate
        Commitment (the “Utilization
        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.
        For purposes of calculating the Commitment Fee, Swingline Loans shall not
        be
        deemed a utilization of the Aggregate Commitment. For purposes of calculating
        the Utilization Fee, Swingline Loans shall be deemed a utilization of the
        Aggregate Commitment.

      


      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 and Utilization
        Fees
        shall be payable on the effective date of any termination of the Commitments
        in
        full.

      


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

      


      2.6 Optional
        Principal Payments.
        With
        respect to Revolving Loans, the Borrower may from time to time pay, without
        penalty or premium, all outstanding Floating Rate Loans or, in an aggregate
        amount of $1,000,000 or a higher integral multiple of $500,000, any portion
        of
        the outstanding Floating Rate Loans upon one Business Day’s prior notice to the
        Administrative Agent. With respect to Revolving Loans, 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 Loans or, in an aggregate amount of $1,000,000 or a higher integral
        multiple of $500,000, any portion of the outstanding Eurodollar Loans upon
        three
        Business Days’ prior notice to the Administrative Agent. The Borrower may from
        time to time pay, without penalty or premium, all outstanding Swingline Loans
        or, in an aggregate amount of $100,000 or a higher integral multiple of
        $100,000, any portion of the outstanding Swingline Loans upon one Business
        Day’s
        prior notice to the Administrative Agent.

      


      2.7 Changes
        in Interest Rate, etc.

       

      (i) Each
        Floating Rate Loan shall bear interest on the outstanding principal amount
        thereof, for each day from and including the date such Floating Rate Loan
        is
        made or is converted from a Eurodollar Loan pursuant to Section 2.2.4 to
        but excluding the date it becomes due or is converted into a Eurodollar Loan
        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 Loan will take effect
        simultaneously with each change in the Alternate Base Rate. 

      


      (ii) Each
        Eurodollar Loan 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.

      


      (iii) Each
        LIBOR Market Index Rate Loan shall bear interest on the outstanding principal
        amount thereof, for each day from and including the date such LIBOR Market
        Index
        Rate Loan is made or is converted from a Floating Rate Loan pursuant to Section
        2.2.4 to but excluding the date it becomes due or is converted into a Floating
        Rate Loan pursuant to Section 2.2.4, at the LIBOR Market Index Rate for such
        day
        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 Revolving Loan may be made as,
        converted into or continued as a Eurodollar Loan. 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
        Loan 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 Loan shall bear interest at a rate per
        annum
        equal to
        the Alternate Base Rate in effect from time to time plus 2% per
        annum,
        (iii)
        each LIBOR Market Index Rate Loan 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
        (iv) 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), (ii) and (iii) above and the increase in
        the LC Fee set forth in clause (iv) 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 1:00 p.m. (New York time)
        on the
        date when due and shall (except in the case of (i) Reimbursement Obligations
        for
        which any LC Issuer has not been fully indemnified by the Lenders, or as
        specifically required hereunder or (ii) Swingline Loans for which the Swingline
        Lender has not been reimbursed as provided herein) 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 (a) each LC Issuer, in the case of payments required to be made
        by
        the Borrower to such LC Issuer pursuant to 2.16.6 and (b) the Swingline Lender,
        in the case of payments required to be made by the Borrower to the Swingline
        Lender pursuant to Section 2.18.

      


      2.10 Noteless
        Agreement; Evidence of Indebtedness.

      


      (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
        facie
        evidence
        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 Revolving Loans be evidenced by a Revolving Note.
        In
        such event, the Borrower shall prepare, execute and deliver to such Lender
        a
        Revolving Note payable to the order of such Lender. Thereafter, the Revolving
        Loans evidenced by such Revolving Note and interest thereon shall at all
        times
        (including after any assignment pursuant to Section 12.3) be represented by
        a Revolving 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 Revolving Note for cancellation and
        requests that such Revolving Loans once again be evidenced as described in
        paragraphs (i) and (ii) above.

      


      (v) The
        Swingline Loans shall be evidenced by a Swingline Note executed by the Borrower
        to the order of the Swingline Lender. 

      


      2.11 Telephonic
        Notices.
        The
        Borrower hereby authorizes the Lenders and the Administrative Agent to extend,
        convert or continue Loans, to effect selections of Types of Loans 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 Loan and each LIBOR Market Index Rate
        Loan shall be payable on each Payment Date, on any date on which such Floating
        Rate Loan or LIBOR Market Index Rate Loan 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 Loan converted into a
        Eurodollar Loan or LIBOR Market Index Rate Loan on a day other than a Payment
        Date shall be payable on the date of conversion. Interest accrued on that
        portion of the outstanding principal amount of any LIBOR Market Index Rate
        Loan
        converted into a Floating Rate Loan on a day other than a Payment Date shall
        be
        payable on the date of conversion. Interest accrued on each Eurodollar Loan
        shall be payable on the last day of its applicable Interest Period, on any
        date
        on which such Eurodollar Loan is paid, whether by acceleration or otherwise,
        and
        at maturity. Interest accrued on each Eurodollar Loan 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,
        Utilization 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 Loans 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 a Loan is made but not for the day of any payment on the amount
        paid
        if payment is received prior to 1:00 p.m. (New York time). If any payment
        of
        principal of or interest on a Loan 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 Revolving Loans, 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
        any LC Issuer, the Administrative Agent will notify each Lender of the contents
        of each request for issuance of a Facility LC hereunder. Promptly after receipt
        of notice thereof from the Swingline Lender, the Administrative Agent will
        notify each Lender of the contents of each request for a Mandatory Borrowing.
        The Administrative Agent will notify each Lender and the Borrower of the
        interest rate applicable to each Eurodollar Loan 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 Revolving Loans and its participations in any LC Obligations
        and Swingline Loans, each LC Issuer may book the Facility LCs issued thereby,
        and the Swingline Lender may book its Swingline Loans, at any Lending
        Installation selected by such Lender, Swingline 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 Revolving
        Loans, Swingline Loans, Facility LCs, participations in LC Obligations and
        Swingline Loans and any Notes issued hereunder shall be deemed held by each
        Lender, Swingline Lender or LC Issuer, as the case may be, for the benefit
        of
        any such Lending Installation. Each Lender, Swingline 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 Revolving 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 Revolving Loan or (y) in the case of repayment
        by the Borrower, the interest rate applicable to the relevant Revolving
        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;
        provided
        that,
        immediately after each such Facility LC is issued or Modified, 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 any 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
        2:00 p.m. (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
        annum
        equal to
        the Federal Funds Effective Rate for the first three days and, thereafter,
        to
        the rate applicable to Floating Rate Loans.

      


      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 any LC Issuer and remaining unpaid by the Borrower shall
        bear
        interest, payable on demand, for each day until paid at a rate per
        annum
        equal to
        (x) the rate applicable to Floating Rate Loans 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 Loans 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 any 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.
        No
        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 any LC Issuer for damages as contemplated by the proviso
        to the
        first sentence of Section 2.16.6.

      


      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 any 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, any 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.

      


      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.

      


      2.18 Swingline
        Loan Subfacility.

      


      2.18.1 Swingline
        Loans.
        From
        and including the Closing Date to but excluding the Facility Termination
        Date,
        the Swingline Lender, in its individual capacity, agrees to make loans to
        the
        Borrower (each
        a
“Swingline
        Loan”
        and,
        collectively, the “Swingline
        Loans”)
        for the
        purposes hereinafter set forth; provided, however,
        (i) the aggregate amount of Swingline Loans outstanding at any time shall
        not exceed THIRTY-FIVE
        MILLION DOLLARS
        ($35,000,000) (the “Swingline
        Committed Amount”),
        and
        (ii) the Aggregate Outstanding Credit Exposure shall not exceed the
        Aggregate Commitment.
        Swingline Loans hereunder may be repaid and reborrowed in accordance with
        the
        provisions hereof.

      


      2.18.2 Swingline
        Loan Borrowing.

      


      (i) Notice
        of Borrowing and Disbursement.
        Upon
        receiving a Borrowing Notice not later than 2:00 p.m. (New York time) on
        any
        Business Day requesting that a Swingline Loan be made, the Swingline Lender
        will
        make Swingline Loans available to the Borrower on the same Business Day such
        request is received by the Administrative Agent. The Borrower shall specify
        in
        the applicable Borrowing Notice with respect to such Swingline Loan (a) the
        amount of the requested Swingline Loan and (b) whether such Swingline Loan
        shall
        be a Floating Rate Loan or a LIBOR Market Index Rate Loan. Swingline Loan
        borrowings hereunder shall be made in minimum amounts of $100,000 and in
        higher
        integral multiples of $100,000. 

      


      (ii) Repayment
        of Swingline Loans.
        Each
        Swingline Loan borrowing that is a Floating Rate Loan shall be due and payable
        on the Facility Termination Date. Each Swingline Loan borrowing that is a
        LIBOR
        Market Index Rate Loan shall be due and payable on the earlier of (A) the
        Facility Termination Date and (B) fourteen days after the date such Swingline
        Loan is made. Swingline Loans that are LIBOR Market Index Rate Loans may
        not be
        refinanced with the proceeds of Swingline Loans that are LIBOR Market Index
        Rate
        Loans. The Swingline Lender may, at any time, in its sole discretion, by
        written
        notice to the Borrower and the Administrative Agent, demand repayment of
        its
        Swingline Loans by way of a Revolving Loan borrowing, in which case the Borrower
        shall be deemed to have requested a Revolving Loan borrowing comprised entirely
        of Floating Rate Loans in the amount of such Swingline Loans; provided,
        however,
        that,
        in the following circumstances, any such demand shall also be deemed to have
        been given one Business Day prior to each of (i) the Facility Termination
        Date,
        (ii) the
        occurrence of any Default under Section 7.6 or 7.7,
        (iii) upon
        acceleration of the Obligations hereunder, whether on account of a Default
        described in Section 7.6 or 7.7 or any other Default, (iv) the
        exercise of remedies in accordance with the provisions of Article 8 hereof
        and
        (v) with respect to any LIBOR Market Index Rate Loan, the fourteenth day
        after
        the making of such Loan to the extent such Loan is not repaid sooner (each
        such
        Revolving Loan borrowing made on account of any such deemed request therefor
        as
        provided herein being hereinafter referred to as “Mandatory
        Borrowing”). Each
        Lender hereby irrevocably agrees to make such Revolving Loans promptly upon
        any
        such request or deemed request on account of each Mandatory Borrowing in
        the
        amount and in the manner specified in the preceding sentence and on the same
        such date notwithstanding
        (I) the
        amount of Mandatory Borrowing may not comply with the minimum amount for
        borrowings of Revolving Loans otherwise required hereunder, (II) whether
        any
        conditions specified in Section 4.2 are then satisfied, (III) whether a
        Default or Unmatured Default then exists, (IV) failure of any such request
        or
        deemed request for Revolving Loans to be made by the time otherwise required
        hereunder, (V) the date of such Mandatory Borrowing or (VI) any reduction
        in the
        Aggregate Commitment. In the event that any Mandatory Borrowing cannot for
        any
        reason be made on the date otherwise required above (including, without
        limitation, as a result of the commencement of a proceeding under the Bankruptcy
        Code), then each Lender hereby agrees that it shall forthwith purchase (as
        of
        the date the Mandatory Borrowing would otherwise have occurred, but adjusted
        for
        any payments received from the Borrower on or after such date and prior to
        such
        purchase) from the Swingline Lender such participations in the outstanding
        Swingline Loans as shall be necessary to cause each such Lender to share
        in such
        Swingline Loans ratably based upon its Pro Rata Share (determined before
        giving
        effect to any termination of the Commitments pursuant to Article 8);
provided
        that (A)
        all interest payable on the Swingline Loans shall be for the account of the
        Swingline Lender until the date as of which the respective participation
        is
        purchased, and (B) at the time any purchase of participations pursuant to
        this
        sentence is actually made, the purchasing Lender shall be required to pay
        to the
        Swingline Lender interest on the principal amount of such participation
        purchased for each day from and including the day upon which the Mandatory
        Borrowing would otherwise have occurred to but excluding the date of payment
        for
        such participation, at the rate equal to, if paid within two (2) Business
        Days of the date of the Mandatory Borrowing, the Federal Funds Effective
        Rate,
        and thereafter at a rate equal to the Alternate Base Rate.

      


      2.18.3 Interest
        on Swingline Loans.
        Swingline Loans shall at all times be Floating Rate Loans or LIBOR Market
        Index
        Rate Loans, as selected by the Borrower in accordance with Section 2.18.1.
        Swingline Loans shall bear interest as provided in Section 2.7.

      


      2.19 Incremental
        Facility.

      


      From
        time
        to time, prior to the Facility Termination Date and upon at least 30 days'
        prior
        written notice to the Administrative Agent (which notice shall be promptly
        transmitted by the Administrative Agent to each Lender), the Borrower shall
        have
        the right, subject to the terms and conditions set forth below, to increase
        the
        aggregate amount of the Aggregate Commitment; provided
        that (a)
        no Default or Unmatured Default shall exist at the time of the request or
        the
        proposed increase in the Aggregate Commitment, (b) such increase must be
        in a
        minimum amount of $50,000,000 and in integral multiples of $5,000,000 above
        such
        amount, (c) the Aggregate Commitment shall not be increased to an amount
        greater
        than FIVE HUNDRED TWENTY-FIVE MILLION DOLLARS ($525,000,000)
        without
        the prior written consent of the Required Lenders, (d) no individual Lender's
        Commitment may be increased without such Lender's written consent, (e) the
        Borrower shall execute and deliver such Revolving Note(s) as are necessary
        and
        requested by the applicable Lenders to reflect the increase in the Aggregate
        Commitment, (f) Schedule 2 shall be amended to reflect the revised Commitments
        of the Lenders and (g) if any Revolving Loans are outstanding at the time
        of an
        increase in the Aggregate Commitment, the Borrower will prepay (provided
        that
        any such prepayment shall be subject to Section 3.4) one or more existing
        Revolving Loans in an amount necessary such that after giving effect to the
        increase in the Aggregate Commitment each Lender will hold its Pro Rata Share
        (based on its share of the revised Aggregate Commitment) of outstanding
        Revolving Loans.

      


      Any
        such
        increase in the Aggregate Commitment shall apply, at the option of the Borrower,
        to (x) the Commitment of one or more existing Lenders; provided
        that any
        Lender whose Commitment is being increased must consent in writing thereto
        and/or (y) the creation of a new Commitment to one or more institutions that
        is
        not an existing Lender; provided
        that any
        such institution (A) must be approved by the Borrower and the Administrative
        Agent (such approval not to be unreasonably withheld) and (B) must become
        a
        Lender under this Credit Agreement by execution and delivery of an appropriate
        joinder agreement or of counterparts to this Credit Agreement in a manner
        acceptable to the Borrower and the Administrative Agent.

      


      


      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 the Swingline Lender or 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, Swingline 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, Swingline Lender, LC Issuer or applicable
        Lending Installation in respect of its Eurodollar Loans, Swingline 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, Swingline Lender, LC Issuer
        or
        applicable Lending Installation (other than reserves and assessments taken
        into
        account in determining the interest rate applicable to Eurodollar Loans),
        or

      


      (iii) imposes
        any other condition the result of which is to increase the cost to any Lender,
        Swingline Lender, LC Issuer or applicable Lending Installation of making,
        funding or maintaining its Eurodollar Loans, or making, funding, maintaining
        or
        participating in Swingline Loans or of issuing or participating in Facility
        LCs,
        or reduces any amount receivable by any Lender, Swingline Lender, LC Issuer
        or
        applicable Lending Installation in connection with its Eurodollar Loans,
        Swingline Loans or participations therein, Facility LCs or participations
        therein, or requires any Lender, Swingline Lender, LC Issuer or applicable
        Lending Installation to make any payment calculated by reference to the amount
        of Eurodollar Loans, Swingline Loans or participations therein or Facility
        LCs
        or participations therein held or interest received by it, by an amount deemed
        material by such Lender, Swingline 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, Swingline
        Lender, LC Issuer or applicable Lending Installation, as the case may be,
        of (a)
        making or maintaining its Eurodollar Loans, (b) making, maintaining or
        participating in Swingline Loans, (c) making or maintaining its Commitment
        or
        (d) issuing or participating in Facility LCs or to reduce the return received
        by
        such Lender, Swingline Lender, LC Issuer or applicable Lending Installation
        in
        connection with such Eurodollar Loans, Commitment, Swingline Loans or
        participations therein, or Facility LCs or participations therein then, within
        15 days of demand by such Lender, Swingline Lender or LC Issuer, as the case
        may
        be, the Borrower shall pay such Lender, Swingline Lender or LC Issuer such
        additional amount or amounts as will compensate such Lender, Swingline 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, Swingline Lender or LC Issuer determines that the amount of capital
        required or expected to be maintained by such Lender, Swingline Lender or
        LC
        Issuer, the Lending Installation of such Lender, Swingline Lender or LC Issuer
        or any corporation controlling such Lender, Swingline Lender or LC Issuer
        is
        increased as a result of a Change, then, within 15 days of demand by such
        Lender, Swingline Lender or LC Issuer, the Borrower shall pay such Lender,
        Swingline 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, Swingline Lender or LC Issuer reasonably determines is attributable
        to this Agreement, its Outstanding Credit Exposure, its commitment to make
        Swingline Loans or its Commitment to make Loans and issue or participate
        in
        Facility LCs or Swingline Loans, as the case may be, hereunder (after taking
        into account such Lender’s, Swingline 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, Swingline Lender LC Issuer or Lending Installation
        or
        any corporation controlling any Lender, Swingline 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 Revolving Loans.
        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 Loans and any requested borrowing of, conversion into
        or
        continuation of a Eurodollar Loan shall instead be made as, remain or be
        converted into a Floating Rate Loan. Each Floating Rate Loan made pursuant
        to
        clause (a) above shall remain outstanding for the same period as the
        Eurodollar Loan 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 Loan 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 Loan is not made on the date specified by the
        Borrower (including in the case of any continuation of or conversion into
        a
        Eurodollar Loan) 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 Loan.

      


      3.5 Taxes.

      


      (i) All
        payments by the Borrower to or for the account of any Lender, Swingline 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, Swingline 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,
        Swingline 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,
        Swingline Lender 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, Swingline
        Lender 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, Swingline Lender 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 Loans under Section 3.3, so long as such
        designation is not, in the judgment of such Lender, disadvantageous to such
        Lender. The Swingline Lender and 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 the Swingline
        Lender or 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 Revolving 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 Revolving
        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 of the Borrower, certified by the Secretary or an Assistant Secretary
        of
        the Borrower to be correct and complete and in full force and effect; the
        charter documents of the Borrower, certified by the Secretary of State of
        Washington; and a certificate of good standing for the Borrower from the
        Secretary of State of Washington;

      


      (ii) resolutions
        of the Board of Directors of the Borrower, certified by the Secretary or
        an
        Assistant Secretary of the Borrower, authorizing the execution, delivery
        and
        performance of the Loan Documents;

      


      (iii) an
        incumbency certificate, executed by the Secretary or Assistant Secretary
        of the
        Borrower, which shall identify by name and title and bear the signatures
        of the
        Authorized Officers, 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) a
        certificate, signed by the Chief Financial Officer or the Vice President
        Finance
        and Treasurer of the Borrower, 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 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) a
        written
        opinion of Perkins Coie LLP, counsel for the Borrower, as to such matters
        as the
        Administrative Agent may reasonably request;

      


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

      


      (vii) 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; 

      


      (viii) an
        executed counterpart of the Account Designation Letter; 

      


      (ix) a
        certificate, for the benefit of itself and the Lenders, provided by the Borrower
        that sets forth information required by the Patriot Act (as defined in Section
        9.15) including, without limitation, the identity of the Borrower, the name
        and
        address of the Borrower and other information that will allow the Administrative
        Agent or any Lender, as applicable, to identify the Borrower in accordance
        with
        the Patriot Act; and

      


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

      


      4.2 Each
        Credit Extension.
        The
        Lenders, Swingline Lender 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 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 a Loan 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

      


      The
        Borrower represents and warrants to the Lenders that:

      


      5.1 Corporate
        Existence, etc.
        Each of
        the Borrower and its Significant Subsidiaries: (a) is a corporation duly
        organized, validly existing and in good standing under the laws of the
        jurisdiction of its incorporation; (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
        the Borrower’s knowledge, threatened (i) against or affecting the Borrower
        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 the Borrower’s Annual Report on Form 10-K for the
        year ended December 31, 2006 or (b) which, singly or in the aggregate,
        could not reasonably be expected to have a Material Adverse Effect,
        (ii) which seeks 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 the Borrower 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 report referred to in subclause (i)(a) of the
        preceding sentence. 

      


      5.3 No
        Breach.
        None of
        the execution and delivery of the Loan Documents, 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
        (except for notices to and consents of the Washington Utilities and
        Transportation Commission referred to in Section 5.5) 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;
        the
        execution, delivery and performance by the Borrower of its obligations under
        this Agreement and the other Loan Documents have been duly authorized by
        all
        necessary corporate action on its part; this Agreement has been, and each
        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
        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.
        Except
        for any required consents of the Washington Utilities and Transportation
        Commission which are and shall continue to be in full force and effect and
        required notices to such commission which have been given, no authorizations,
        approvals or consents of, and no filings (other than informational filings
        which
        have been made) 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 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.
        The
        Borrower 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 the Borrower and its Subsidiaries have
        been
        (a) examined and closed through the period ended December 31, 2000 and (b)
        examined through the period ended December 31, 2003, provided that the
        Borrower is appealing certain determinations made for the Borrower’s fiscal
        years 2001, 2002 and 2003. The Borrower and its 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 the Borrower or any of its Subsidiaries, 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 the Borrower
        and
        its Subsidiaries in respect of taxes and other governmental charges are,
        in the
        opinion of the Borrower, adequate.

      


      5.9 Material
        Adverse Change.
        As of
        the date of this Agreement and since December  31, 2006, there has been no
        change in the business, Property, condition (financial or otherwise), operations
        or prospects of the Borrower and its Subsidiaries taken as whole, as reflected
        in the financial statements referred to in Schedule 5.10, that could reasonably
        be expected to have a Material Adverse Effect.

      


      5.10 Financial
        Statements.
        Schedule 5.10 sets forth a complete list of the financial statements submitted
        prior to the date hereof by the Borrower to the Lenders in connection with
        this
        Agreement. All financial statements listed in Schedule 5.10 or delivered
        pursuant to Section 6.9(i) or (ii) are complete and correct and
        present fairly, in accordance with Agreement Accounting Principles, the
        consolidated financial position of the Borrower and its Subsidiaries as at
        their
        respective dates and the consolidated results of operations, retained earnings
        and, as applicable, changes in financial position or cash flows of the Borrower
        and its Subsidiaries for the respective periods to which such statements
        relate.

      


      5.11 Environmental
        Matters.
        In the
        ordinary course of its business, the officers of the Borrower consider the
        effect of Environmental Laws on the business of the Borrower and its
        Subsidiaries, in the course of which they identify and evaluate potential
        risks
        and liabilities accruing to the Borrower and its Subsidiaries due to
        Environmental Laws. On the basis of this consideration, the Borrower 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
        the
        Borrower 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.

      


      5.12 Investment
        Company Act.
        Neither
        the Borrower nor any Subsidiary is an “investment company” or a company
“controlled” by an “investment company,” within the meaning of the Investment
        Company Act of 1940.

      


      5.13 Subsidiaries.
        Schedule 5.13 contains an accurate list of all Subsidiaries of the Borrower
        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 the Borrower or other Subsidiaries. All of the
        issued and outstanding shares of capital stock or other ownership interests
        of
        such 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.

      


      5.14 Accuracy
        of Information.
        No
        information, exhibit or report furnished by the Borrower 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.

      


      5.15 Compliance
        with Laws, Etc.
        The
        Borrower 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.

      


      5.16 Insurance.
        The
        Borrower 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.

      


      5.17 Properties.
        Each of
        the Borrower 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.

      


      5.18 Anti-Terrorism
        Laws.
        Neither
        the Borrower nor any of its Subsidiaries is an “enemy” or an “ally of the enemy”
within the meaning of Section 2 of the Trading with the Enemy Act of the
        United
        States of America (50 U.S.C. App. §§ 1 et
        seq.),
        as
        amended. Neither the Borrower nor any of its Subsidiaries is in violation
        of (i)
        the Trading with the Enemy Act, as amended, (ii) any of the foreign assets
        control regulations of the United States Treasury Department (31 CFR, Subtitle
        B, Chapter V, as amended) or any enabling legislation or executive order
        relating thereto or (iii) the Patriot Act (as defined in Section 9.15). Neither
        the Borrower nor any of its Subsidiaries (a) is a blocked person described
        in
        section 1 of the Anti-Terrorism Order or (b) to its knowledge, engages in
        any
        dealings or transactions, or is otherwise associated, with any such blocked
        person.

      


      5.19 Compliance
        with OFAC Rules and Regulations.
        Neither
        the Borrower nor any of its Subsidiaries or Affiliates (i) is a Sanctioned
        Person, (ii) has more than 15% of its assets in Sanctioned Countries, or
        (iii)
        derives more than 15% of its operating income from investments in, or
        transactions with Sanctioned Persons or Sanctioned Countries. No part of
        the
        proceeds of any Loan or Facility LC will be used directly or indirectly to
        fund
        any operations in, finance any investments or activities in or make any payments
        to, a Sanctioned Person or a Sanctioned Country.

       

      5.20 Compliance
        with FCPA.
        Each of
        the Borrower and its Subsidiaries is in compliance with the Foreign Corrupt
        Practices Act, 15 U.S.C. §§ 78dd-1, et
        seq.,
        and any
        foreign counterpart thereto. None of the Borrower or its Subsidiaries has
        made a
        payment, offering, or promise to pay, or authorized the payment of, money
        or
        anything of value (i) in order to assist in obtaining or retaining business
        for or with, or directing business to, any foreign official, foreign political
        party, party official or candidate for foreign political office, (ii) to a
        foreign official, foreign political party or party official or any candidate
        for
        foreign political office, and (iii) with the intent to induce the recipient
        to misuse his or her official position to direct business wrongfully to such
        Person or to any other Person, in violation of the Foreign Corrupt Practices
        Act, 15 U.S.C. §§ 78dd-1, et
        seq.

      
 

      ARTICLE
        6

      COVENANTS

      


      So
        long
        as any Lender has any Commitment hereunder, any Facility LC is outstanding
        or
        any Obligation is unpaid, the Borrower shall, unless the Required Lenders
        otherwise consent in writing:

      


      6.1 Preservation
        of Existence and Business.
        Preserve and maintain, and cause each Significant Subsidiary to preserve
        and
        maintain, its corporate existence and all of its material rights, privileges,
        licenses and franchises, except as permitted by Sections 6.12 and 6.13, 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.
        Maintain, and cause 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 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 the Borrower reasonably determines that such
        discontinuation is necessary).

      


      6.3 Payment
        of Obligations.
        Pay and
        discharge, and cause 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 the
        Borrower and its Significant Subsidiaries shall not 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.
        Comply,
        and 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.
        Take
        all reasonable actions (including obtaining and maintaining in full force
        and
        effect consents and Governmental Approvals), and 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.
        Maintain, and cause each Significant Subsidiary to maintain, with responsible
        insurance companies or through the Borrower’s 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.
        Use,
        directly or indirectly, the Facility LCs and the proceeds of the Loans for
        general corporate purposes of the Borrower (in compliance with all applicable
        legal and regulatory requirements), including commercial paper backup and
        working capital and to support hedging activities of the Borrower.

      


      6.8 Visits,
        Inspections and Discussions.
        Keep,
        and 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 permit, and cause each Subsidiary
        to
        permit, representatives of any Lender or the Administrative Agent, during
        normal
        business hours and upon reasonable notice to the Borrower, 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 the
        Borrower 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 of the Borrower;
        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.
        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 the Borrower,
        a
        copy of the Quarterly Report on Form 10-Q (or any successor form) for the
        Borrower for such quarter;

      


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

      


      (iii) 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 the Borrower substantially in
        the
        form of Exhibit D;

      


      (iv) 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
        the Borrower with the SEC;

      


      (v) promptly
        upon request from time to time, such other information regarding the business,
        affairs, insurance or financial condition of the Borrower 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

      


      (vi) 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 the
        Borrower.

      


      6.10 Liens.
        Not
        permit to exist, and not permit any Significant Subsidiary 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 the Borrower or any Significant
        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 the
        Borrower 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
        the
        Borrower or any of its Significant Subsidiaries;

      


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

      


      (vi) Permitted
        Encumbrances (as defined in the Mortgages);

      


      (vii) Liens
        securing the payment of Tax-Free Debt;
        provided
        that
        each such Lien shall extend only to (a) the property, and proceeds thereof,
        being financed by the Tax-Free Debt secured thereby or (b) securities issued
        under and secured by the Mortgages;

      


      (viii) Liens
        over all or any part of the assets of the Borrower or any Significant Subsidiary
        constituting a specific construction project or generating plant as security
        for
        any indebtedness incurred for the purpose of financing all or such part,
        as the
        case may be, of such construction project or generating plant, and Liens
        and
        charges incidental to such construction;

      


      (ix) the
        right
        reserved to, or vested in, any municipality or public authority by the terms
        of
        any right, power, franchise, grant, license or permit, or by any provision
        of
        law, to purchase or recapture or designate a purchaser of any
        property;

      


      (x) Liens
        on
        property or assets of any Significant Subsidiary in favor of the Borrower
        or any
        other Significant Subsidiary;

      


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

      


      (xii) Liens
        incurred in connection with Qualified Receivables Transactions;

      


      (xiii) Liens
        on
        specific assets hereafter acquired which are created or assumed
        contemporaneously with, or within 120 days after, such acquisition, for the
        sole
        purpose of financing or refinancing the acquisition of such assets, together
        with the proceeds and products of such assets;

      


      (xiv) Liens
        on
        conservation investment assets as security for obligations incurred in financing
        or refinancing bondable conservation investments in accordance with the laws
        of
        the State of Washington;

      


      (xv) Liens
        securing Capitalized Lease Obligations;
        provided
        that any
        such Lien attaches solely to the property so leased and proceeds thereof;
        and

      


      (xvi) other
        Liens securing Indebtedness in an aggregate amount not exceeding
        $150,000,000.

      


      6.11 Debt
        to Capitalization Ratio.
        Not
        permit the principal amount of Consolidated Indebtedness to exceed 65% of
        Total
        Capitalization as of the last day of any fiscal quarter of the
        Borrower.

      


      6.12 Merger
        and Consolidation.
        Not
        merge or consolidate with or into any Person, unless (i) immediately after
        giving effect thereto, no event shall occur and be continuing which constitutes
        a Default or an Unmatured Default, (ii) the surviving or resulting Person,
        as the case may be, assumes and agrees in writing to pay and perform all
        of the
        obligations of the Borrower hereunder, (iii) the surviving or resulting
        Person, as the case may be, qualifies to do business in the State of Washington,
        and (iv) the surviving or resulting Person, as the case may be, has a net
        worth (as determined in accordance with Agreement Accounting Principles)
        at
        least equal to the net worth of the Borrower at the end of the fiscal quarter
        immediately preceding the effective date of such consolidation or
        merger.

      


      6.13 Disposition
        of Assets.
        Not
        sell, lease, assign, transfer or otherwise dispose of any asset or interest
        therein, except that this Section 6.13 shall not apply to (i) any
        disposition of any asset or any interest therein in the ordinary course of
        business, (ii) any disposition of obsolete or retired property not used or
        useful in its business, (iii) any disposition of any asset or interest
        therein (a) for cash or cash equivalents or (b) in exchange for
        utility plant, equipment or other utility assets, other than notes or other
        obligations, in each case equal to the fair-market value (as determined in
        good
        faith by the Board of Directors of the Borrower) of such asset or interest
        therein, and provided
        that
        such disposition does not constitute a disposition of all or substantially
        all
        of the assets of the Borrower, (iv) any disposition of an asset or any
        interest therein (exclusive of any disposition permitted by clause (v)) in
        exchange for notes or other obligations substantially equal to the fair-market
        value (as determined in good faith by the management of the Borrower or,
        if the
        consideration for such disposition exceeds $100,000,000, by the Board of
        Directors of the Borrower) of such asset or interest therein, provided that
        the
        aggregate amount of notes or other obligations received after the date hereof
        from any one obligor in one transaction or a series of transactions shall
        not
        exceed 15% of the net book value of the assets of the Borrower, (v) any
        disposition of accounts receivable, notes receivable or unbilled revenue,
        the
        rights related to any of the foregoing and property related to any of the
        foregoing in connection with Qualified Receivables Transactions and
        (vi) any disposition of an asset or interest therein (exclusive of any
        disposition permitted under any of the foregoing clauses (i) through (v))
        to an Affiliate of the Borrower in exchange for notes or other obligations
        substantially equal to the fair-market value (as determined in good faith
        by the
        Board of Directors of the Borrower) of such asset or interest therein, provided
        that the aggregate amount of notes or other obligations received by the Borrower
        from Affiliates of the Borrower in exchange for any asset or interest therein
        after the date hereof shall not exceed 7.5% of the net book value of the
        assets
        of the Borrower.

      


      6.14 Transactions
        with Affiliates.
        Without
        limiting Section 6.13(v), not, and 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 (a) in the
        ordinary course of business and pursuant to the reasonable requirements of
        the
        Borrower’s or such Subsidiary’s business and upon fair and reasonable terms no
        less favorable to the Borrower or such Subsidiary than the Borrower or such
        Subsidiary would obtain in a comparable arm’s-length transaction, (b) with
        or to a Subsidiary or (c) in connection with a Qualified Receivables
        Transaction permitted under this Agreement.

      


      6.15 Investments.
        Not,
        and not permit any Subsidiary to, make or suffer to exist any Investments
        (including loans and advances to, and other Investments in, Subsidiaries),
        or
        commitments therefor, create any Subsidiary, become or remain a partner in
        any
        partnership or joint venture or make any Acquisition, except:

      


      (i) Investments
        made in the ordinary course of business in connection with customary
        cash-management operations;

      


      (ii) existing
        Investments in Subsidiaries and other Investments in existence on the date
        hereof and described in Schedule 6.15;

      


      (iii) Permitted
        Acquisitions;

      


      (iv) any
        loan
        or advance to the Borrower by a Subsidiary;

      


      (v) capital
        contributions (whether in the form of cash, a note or other assets) or loans
        to
        a special-purpose entity created solely to engage in a Qualified Receivables
        Transaction and resulting from transfers of assets permitted by Section 6.13(v)
        to such a special-purpose entity;

      


      (vi) derivative
        financial instruments and other similar instruments entered into in the ordinary
        course of business for bona fide hedging purposes and not for speculation;
        and

      


      (vii) other
        Investments not exceeding $50,000,000 at any time outstanding.

      
 

      


      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 the Borrower or any of
        its
        Subsidiaries 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 of any of the terms or provisions of Section 6.1,
        6.6, 6.7, 6.11, 6.12, 6.13 or 6.15.

       

      7.4 The
        breach by the Borrower (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 the Borrower and/or any 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 the Borrower and/or any 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 the Borrower and/or any 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 the Borrower
        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 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 or any Significant
        Subsidiary, a receiver, trustee, examiner, liquidator or similar official
        shall
        be appointed for the Borrower 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 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 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 The
        Borrower and/or any 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 (ii) 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 The
        Borrower and/or any of its Subsidiaries shall (i) be the subject of any
        proceeding or investigation pertaining to the release by the Borrower, 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 The
        Borrower 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 the Borrower 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 the Borrower
        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
        the Borrower or any ERISA Affiliate thereof of any steps to terminate any
        such
        Benefit Plan, or (f) the receipt of notice by the Borrower 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 the Borrower and/or any ERISA Affiliates thereof to
        liability in excess of $25,000,000 in the aggregate.

      
 

      


      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 Revolving Loans hereunder,
        the
        obligation of the Swingline Lender to make Swingline 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, any LC Issuer,
        the
        Swingline Lender
        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 Revolving Loans hereunder,
        the
        obligation and the power of the Swingline Lender to make Swingline 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, such obligation and power of the Swingline Lender
        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 Revolving Loans hereunder,
        the obligation and the power of the Swingline Lender to make Swingline 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 and the Required Lenders or by the Borrower 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 (and the Swingline Lender, if 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 (and the Swingline Lender, if 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, the Swingline Lender or any LC Issuer or Arranger
        hereunder without the prior written consent of the Administrative Agent,
        Swingline Lender or such LC Issuer or Arranger, as the case may be.

      


      8.3 Preservation
        of Rights.
        No
        delay or omission of any Lender, the Swingline Lender, any 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 Swingline Lender, 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 Borrower contained in this Agreement
        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, Swingline Lender 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,
        the Administrative Agent, the LC Issuers, the Swingline Lender and the Lenders
        with respect to the subject matter hereof and supersedes all prior agreements
        and understandings among the Borrower, the Administrative Agent, the LC Issuers,
        the Swingline Lender and the Lenders relating to the subject matter hereof,
        except as specifically contemplated hereby. The Borrower acknowledges 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;
        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 Swingline Lender, 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 Swingline Lender,
        the Arrangers and the Lenders, including attorneys that are employees of
        the
        Administrative Agent, the LC Issuers, the Swingline Lender, the Arrangers
        or the
        Lenders) paid or incurred by the Administrative Agent, the Swingline Lender,
        any
        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, the Swingline Lender, 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, the Swingline Lender, any 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 on the one hand and the Lenders, the Swingline
        Lender, the LC Issuers, the Arrangers and the Administrative Agent on the
        other
        hand shall be solely that of borrower and lender. Neither the Administrative
        Agent nor any LC Issuer, Lender, Swingline Lender or Arranger shall have
        any
        fiduciary responsibilities to the Borrower. Neither the Administrative Agent
        nor
        any LC Issuer, Lender, Swingline Lender or Arranger undertakes any
        responsibility to the Borrower to review or inform the Borrower of any matter
        in
        connection with any phase of the Borrower’s business or operations. The Borrower
        agrees that neither the Administrative Agent nor any LC Issuer, Lender,
        Swingline Lender or Arranger shall have any liability to the Borrower (whether
        sounding in tort, contract or otherwise) for losses suffered by the Borrower
        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, Swingline Lender or Arranger shall have any liability with
        respect to, and the Borrower hereby waives, releases and agrees not to sue
        for,
        any special, indirect or consequential damages suffered by the Borrower 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, the Swingline Lender 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 and its obligations,
        (vii) with the consent of the Borrower 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, the Swingline Lender, any LC Issuer or any of their
        respective Affiliates on a nonconfidential basis from a source other than
        the
        Borrower.

      


      For
        purposes of this Section, “Information”
means
        all information received from the Borrower or any Subsidiary relating to
        the
        Borrower or any Subsidiary or any of their respective businesses, other than
        any
        such information that is available to the Administrative Agent, the Swingline
        Lender, any Lender or any LC Issuer on a nonconfidential basis before disclosure
        by the Borrower or any Subsidiary;
        provided
        that, in
        the case of information received from the Borrower 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 and each Lender hereby (i) acknowledge and agree that JPMorgan
        and/or its Affiliates from time to time may hold investments in, make other
        loans to or have other relationships with the Borrower and its Affiliates,
        and
        (ii) waive any liability of JPMorgan and/or its Affiliates to the Borrower
        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 JPMorgan 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. 

      


      9.14 Acknowledgments.
        In
        connection with all aspects of each transaction contemplated hereby, the
        Borrower acknowledges and agrees and
        acknowledges its Affiliates’ understanding, that: (i) the credit facilities
        provided for hereunder and any related arranging or other services in connection
        therewith (including in connection with any amendment, waiver or other
        modification hereof or of any other Loan Document) are an arm’s-length
        commercial transaction between the Borrower and its Affiliates, on the one
        hand,
        and the Administrative Agent and the Arrangers,
        on the
        other hand, and the Borrower is capable of evaluating and understanding and
        understands and accepts the terms, risks and conditions of the transactions
        contemplated hereby and by the other Loan Documents (including any amendment,
        waiver or other modification hereof or thereof); (ii) in connection with
        the
        process leading to such transaction, the Administrative Agent and each of
        the
        Arrangers is and has been acting solely as a principal and is not the financial
        advisor, agent or fiduciary, for the Borrower or any of its Affiliates,
        stockholders, creditors or employees or any other Person; (iii) neither the
        Administrative Agent nor either Arranger has assumed or will assume an advisory,
        agency or fiduciary responsibility in favor of the Borrower with respect
        to any
        of the transactions contemplated hereby or the process leading thereto,
        including with respect to any amendment, waiver or other modification hereof
        or
        of any other Loan Document (irrespective of whether the Administrative Agent
        or
        either Arranger has advised or is currently advising the Borrower or any
        of its
        Affiliates on other matters) and neither the Administrative Agent nor either
        Arranger has any obligation to the Borrower or any of its Affiliates with
        respect to the transactions contemplated hereby except those obligations
        expressly set forth herein and in the other Loan Documents; (iv) the
        Administrative Agent and the Arrangers and their respective Affiliates may
        be
        engaged in a broad range of transactions that involve interests that differ
        from
        those of the Borrower and its Affiliates, and neither the Administrative
        Agent
        nor either Arranger has any obligation to disclose any of such interests
        by
        virtue of any advisory, agency or fiduciary relationship; and (iv) the
        Administrative Agent and the Arrangers have not provided and will not provide
        any legal, accounting, regulatory or tax advice with respect to any of the
        transactions contemplated hereby (including any amendment, waiver or other
        modification hereof or of any other Loan Document) and the Borrower has
        consulted its own legal, accounting, regulatory and tax advisors to the extent
        it has deemed appropriate. The Borrower hereby waives and releases, to the
        fullest extent permitted by law, any claims that it may have against the
        Administrative Agent and the Arrangers with respect to any breach or alleged
        breach of agency or fiduciary duty.

      


      9.15 Patriot
        Act.
        Each
        Lender hereby notifies the Borrower that pursuant to the requirements of
        the USA
        PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
        (the “Patriot
        Act”),
        it is
        required to obtain, verify and record information that identifies the Borrower,
        which information includes the name and address of the Borrower and other
        information that will allow such Lender to identify the Borrower in accordance
        with the Patriot Act.

       

      


      ARTICLE
        10

      THE
        ADMINISTRATIVE AGENT

      


      10.1 Appointment;
        Nature of Relationship.
        JPMorgan 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 New York 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 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 to the Administrative
        Agent
        at such time, but is voluntarily furnished by the Borrower 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 or the Borrower
        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 the Borrower or any Subsidiary in which
        the
        Borrower 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 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 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 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 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 and the Lenders and their respective successors
        and
        assigns, except that (i) the Borrower shall not 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;
        provided
        that 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 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
        Revolving 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 North Carolina 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, 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, the Lenders or the Administrative
        Agent shall be required to release the transferor Lender with respect to
        the
        percentage of the Aggregate Commitment and Revolving 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
        Revolving Loans be evidenced by a Revolving Note, make appropriate arrangements
        so that a new Revolving Note or, as appropriate, a replacement Revolving
        Note is
        issued to such transferor Lender and a new Revolving Note or, as appropriate,
        a
        replacement Revolving 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
        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, 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 NEW YORK,
        BUT
        GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

      


      14.2 CONSENT
        TO JURISDICTION.
        THE
        BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY
        UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK
        IN
        ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
        OR
        ANY NOTE, AND THE BORROWER 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, THE SWINGLINE LENDER, ANY LC ISSUER OR ANY LENDER TO
        BRING
        PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
        ANY
        JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE ADMINISTRATIVE AGENT, THE
        SWINGLINE LENDER, ANY LC ISSUER, ANY LENDER OR ANY AFFILIATE OF THE
        ADMINISTRATIVE AGENT, THE SWINGLINE LENDER, ANY 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 NEW YORK, NEW YORK.

      


      14.3 WAIVER
        OF JURY TRIAL.
        THE
        BORROWER, THE ADMINISTRATIVE AGENT, THE SWINGLINE LENDER, ANY 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, the Lenders, the Swingline Lender, the LC
        Issuers
        and the Administrative Agent have executed this Agreement as of the date
        first
        above written.

      


      


      
        	
                PUGET
                  SOUND ENERGY, INC.

              
	
                 

                 

                By:
                   /s/Donald
                  E. Gaines  

              
	
                Donald
                  E. Gaines

              
	
                Vice
                  President Finance &
                  Treasurer

              
	
                 

                Puget
                  Sound Energy, Inc.

                P.O.
                  Box 97034 PSE-08N

                Bellevue,
                  WA 98009-9734

                Attention:
                  Assistant
                  Treasurer

                Telephone:
                  425-462-3451

                FAX:
                  425-462-3490

                 

                For
                  Courier Deliveries:

                10885
                  NE 4th
                  Street PSE-08N

                Bellevue,
                  WA 98004-5591

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      
        	
                JPMORGAN
                  CHASE BANK,

                Individually,
                  as Administrative Agent, Swingline Lender and as LC
                  Issuer

              
	 
	
                By:
                  /s/Michael
                  J. DeForge  

              
	
                Name:
                   Michael
                  J. DeForge  

              
	
                Title:
                  Executive Director  

              
	
                 

                 

                Primary
                  Operations Contact:

                JPMorgan
                  Chase Bank

                1111
                  Fannin Street, 10th Floor

                Houston,
                  TX 77002

                Attention:
                  Claudeet Reid

                Telephone:
                  713-750-2355

                FAX:
                  713-427-6307

                E-mail:
                  claudette.a.reid@jpmchase.com

                 

                Alternate
                  Operations Contact:

                 

                
                  JPMorgan
                    Chase Bank

                  1111
                    Fannin Street, 10th Floor

                  Houston,
                    TX 77002

                  Attention:
                    Jaime Garcia

                  Telephone:
                    713-750-2377

                  FAX:
                    713-427-6307

                  E-mail:
                    jaime.e.garcia@jpmchase.com

                

                 

                Credit
                  Contact:

                JPMorgan
                  Chase Bank

                270
                  Park Ave., 4th
                  Floor

                New
                  York, NY 10017

                Attention:
                  Michael J. DeForge, Vice President

                Telephone:
                  212-270-1656

                FAX:
                  212-270-3089

                E-mail:
                  michael.j.deforge@jpmorgan.com

              


      

      


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      
        	
                UNION
                  BANK OF CALIFORNIA, N.A.

              
	 
	
                By:
                  /s/Efrain
                  Soto   

              
	
                Name:
                  Efrain Soto   

              
	
                Title:
                  Vice President   

              
	
                 

                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:
                  323-720-2679

                FAX:
                  323-724-6198

                E-mail:
                  maria.suncin@uboc.com

                 

                Credit
                  Contact:

                Union
                  Bank of California, N.A.

                445
                  South Figueroa Street, 15th
                  Floor

                Los
                  Angeles, CA 90071

                Attention:
                  Kevin Zitar, Senior Vice President

                Telephone:
                  213-236-5503

                FAX:
                  213-236-4096

                E-mail:
                  kevin.zitar@uboc.com

              


      

      


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      
        	
                WACHOVIA
                  BANK, NATIONAL ASSOCIATION 

              
	 
	
                By:
                  /s/Frederick
                  W. Price  

              
	
                Name:
                   Frederick
                  W. Price  

              
	
                Title:
                  Managing Director  

              
	
                 

                Operations
                  Contact:

                Wachovia
                  Bank, National Association

                201
                  S. College St., CP-8

                Charlotte,
                  NC 28288-0680

                Attention:
                  Syndication Agency Services

                Telephone:
                  704-383-1366

                FAX:
                  704-383-0288

                 

                Credit
                  Contact:

                Wachovia
                  Bank, National Association

                301
                  South College St., 6th
                  Floor

                Charlotte,
                  NC 28288

                Attention:
                  Rick Price, Managing Director

                Telephone:
                  704-374-4062

                FAX:
                  704-374-4793

                E-mail:
                  rick.price@wachovia.com

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      
        	
                CITIBANK,
                  N.A.

              
	 
	
                By:
                  /s/Scott
                  Hancock  

              
	
                Name:
                   Scott
                  Hancock   

              
	
                Title:
                  Vice President   

              
	
                 

                Operations
                  Contact:

                Citbank,
                  N.A.

                2
                  Penns Way, Suite 110

                New
                  Castle, DE 19720

                Attention:
                  Diane Stewart

                Telephone:
                  302-894-6035

                FAX:
                  212-994-0847

                E-mail:
                  patricia.d.stewart@citigroup.com

                 

                Credit
                  Contact:

                Citibank,
                  N.A. 

                388
                  Greenwich Street

                21st
                  Floor - Global Power

                New
                  York, NY 10013

                Attention:
                  Todd Davis, Vice President

                Telephone:
                  212-816-8553

                FAX:
                  646-291-5184

                E-mail:
                  todd.c.davis@citigroup.com

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      
        	
                KEYBANK
                  NATIONAL ASSOCIATION

              
	 
	
                By:
                  /s/Keven
                  D. Smith  

              
	
                Name:
                   Keven
                  D. Smith  

              
	
                Title:
                  Senior Vice President  

              
	
                 

                 

                Operations
                  Contact:

                KeyBank
                  National Association

                127
                  Public Square

                Cleveland,
                  OH 44114

                Attention:
                  Teresa K. Hockey, Deal Administrator

                Telephone:
                  216-689-4605

                FAX:
                  216-689-5962

                E-mail:
                  teresa_k_hockey@Keybank.com

                 

                Credit
                  Contact:

                KeyBank
                  National Association

                601
                  108th
                  Avenue, NE

                Bellevue,
                  WA 98004

                Attention:
                  Keven D. Smith, Senior Vice President

                Telephone:
                  425-709-4579

                FAX:
                  425-709-4565

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      
        	
                LEHMAN
                  BROTHERS BANK, FSB

              
	 
	
                By:
                  /s/Janine
                  M. Shugan  

              
	
                Name:
                   Janine
                  M. Shugan  

              
	
                Title:
                  Authorized Signatory  

              
	
                 

                Operations
                  Contact:

                Lehman
                  Brothers Bank, FSB

                745
                  7th
                  Avenue, 16th
                  Floor

                New
                  York, NY 10019

                Attention:
                  Winnie Chin

                Telephone:
                  212-526-6560

                FAX:
                  212-520-0450

                E-mail:
                  loaniqservicing@lehman.com

                 

                Credit
                  Contact:

                Lehman
                  Brothers Bank, FSB

                745
                  7th
                  Avenue, 5th
                  Floor

                New
                  York, NY 10019

                Attention:
                  Janine Shugan

                Telephone:
                  212-526-8625

                FAX:
                  917-552-0139

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      
        	
                MORGAN
                  STANLEY BANK

              
	 
	
                By:
                  /s/Daniel
                  Twenge  

              
	
                Name:
                   Daniel
                  Twenge  

              
	
                Title:
                  Authorized Signatory  

              
	
                 

                Operations
                  Contact:

                Morgan
                  Stanley Bank

                1633
                  Broadway, 25th
                  Floor

                New
                  York, NY 10019

                Attention:
                  Larry Benison

                Telephone:
                  212-537-1312

                FAX:
                  212-537-1867

                E-mail:
                  larry.benison@morganstanley.com

                 

                Credit
                  Contact:

                Morgan
                  Stanley Bank

                1633
                  Broadway, 25th
                  Floor

                New
                  York, NY 10019

                Attention:
                  Erma Dell’Aquila

                Telephone:
                  212-816-8553

                FAX:
                  212-537-1867

                E-mail:
                  erma.dell’Aquila@morganstanley.com

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      
        	
                UBS
                  LOAN FINANCE LLC

              
	 
	
                By:
                  /s/Richard
                  L. Tavrow  

              
	
                Name:
                   Richard
                  L Tavrow  

              
	
                Title:
                  Director, Banking Products Services, US

              
	 
	By:
                /s/Mary
                E. Evans  
	Name:
                 Mary
                E. Evans 
	
                Title:
                  Associate Director, Banking Products Services, US

              
	
                 

                Operations
                  Contact:

                UBS
                  Loan Finance LLC

                677
                  Washington Boulevard, 6th
                  Floor

                Stamford,
                  CT 06901

                Attention:
                  David Vitti

                Telephone:
                  203-719-5968

                FAX:
                  203-719-3888

                E-mail:
                  david.vitti@ubs.com 

                 

                Credit
                  Contact:

                UBS
                  Loan Finance LLC

                677
                  Washington Boulevard, 6th
                  Floor

                Stamford,
                  CT 06901

                Attention:
                  David Vitti

                Telephone:
                  203-719-5968

                FAX:
                  203-719-3888

                E-mail:
                  david.vitti@ubs.com

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      
        	
                THE
                  BANK OF NEW YORK

              
	 
	
                By:
                  /s/Jesus
                  Williams  

              
	
                Name:
                   Jesus
                  Williams  

              
	
                Title:
                  Vice President   

              
	
                 

                Operations
                  Contact:

                The
                  Bank of New York

                One
                  Wall Street, 19th
                  Floor

                New
                  York, NY 10286

                Attention:
                  Lisa Williams

                Telephone:
                  212-635-7535

                FAX:
                  212-635-7552

                E-mail:
                  lwilliams@bankofny.com

                 

                Credit
                  Contact:

                The
                  Bank of New York

                One
                  Wall Street, 19th
                  Floor

                New
                  York, NY 10286

                Attention:
                  Jesus M. Williams

                Telephone:
                  212-635-7609

                FAX:
                  212-635-7923

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      
        	
                THE
                  BANK OF NOVA SCOTIA

              
	 
	
                By:
                  /s/Jim
                  Trimble  

              
	
                Name:
                  Jim Trimble   

              
	
                Title:
                  Managing Director  

              
	
                 

                Operations
                  Contact:

                The
                  Bank of Nova Scotia

                720
                  King Street 2nd
                  Floor

                Toronto,
                  Ontario M5V 2T3

                Attention:
                  Vesna Vukelich

                Telephone:
                  212-225-5705

                FAX:
                  212-225-5709

                E-mail:
                  Vesna_Vukelich@scotiacapital.com

                 

                Credit
                  Contact:

                The
                  Bank of Nova Scotia

                One
                  Liberty Plaza

                New
                  York, NY 10006

                Attention:
                  Polina Gerasimova

                Telephone:
                  212-225-5395

                FAX:
                  212-225-5480

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      
        	
                U.S.
                  BANK NATIONAL ASSOCIATION

              
	 
	
                By:
                  /s/David
                  M. Purcell  

              
	
                Name:
                   David
                  M. Purcell  

              
	
                Title:
                  Vice President   

              
	
                 

                Operations
                  Contact:

                U.S.
                  Bank National Association

                1420
                  Fifth Avenue, 10th
                  Floor, PD-WA-T10C

                Seattle,
                  WA 98101

                Attention:
                  Gail Fortun

                Telephone:
                  206-587-5212

                FAX:
                  206-344-3741

                E-mail:
                  gail.fortun@usbank.com

                 

                Credit
                  Contact:

                U.S.
                  Bank National Association

                1420
                  Fifth Avenue, 10th
                  Floor, PD-WA-T10M

                Seattle,
                  WA 98101

                Attention:
                  Kurban H. Merchant, Vice President

                Telephone:
                  206-344-3769

                FAX:
                  206-344-3654

                E-mail:
                  kurbanali@usbank.com

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      
        	
                WELLS
                  FARGO BANK, N.A.

              
	 
	
                By:
                  /s/Lisa
                  Larpenteur  

              
	
                Name:
                   Lisa
                  Larpenteur  

              
	
                Title:
                  Vice President, Relationship Manager

              
	
                 

                Operations
                  Contact:

                Wells
                  Fargo Bank, N.A.

                201
                  Third Street, 8th
                  Floor

                San
                  Francisco, CA 94103

                Attention:
                  Tessie Melgar

                Telephone:
                  415-477-5260

                FAX:
                  415-975-6770

                E-mail:
                  zmelgar@wellsfargo.com

                 

                Credit
                  Contact:

                Wells
                  Fargo Bank, N.A.

                1300
                  SW Fifth Avenue, 7th
                  Floor

                Portland,
                  OR 97201

                Attention:
                  Lisa Larpenteur

                Telephone:
                  503-886-2216

                FAX:
                  503-886-2211

                E-mail:
                  larpenlm@wellsfargo.com

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      


      SCHEDULE
        1

      


      


      PRICING
        SCHEDULE

      


      
        	
                 

                S&P
                  RATING / MOODY’S RATING

                 

              	
                 

                >A-/A3

                 

              	
                 

                BBB+/Baa1

                 

              	
                 

                BBB/Baa2

                 

              	
                 

                BBB-/Baa3

                 

              	
                 

                <BBB-/Baa3

                 

              
	
                 

                Applicable
                  Eurodollar Margin

                 

              	
                 

                0.250%

                 

              	
                 

                0.350%

                 

              	
                 

                0.450%

                 

              	
                 

                0.525%

                 

              	
                 

                0.700%

                 

              
	
                 

                Applicable
                  Commitment Fee Rate

                 

              	
                 

                0.060%

                 

              	
                 

                0.080%

                 

              	
                 

                0.100%

                 

              	
                 

                0.125%

                 

              	
                 

                0.175%

                 

              
	
                 

                Applicable
                  Utilization Fee Rate

                 

              	
                 

                0.050%

                 

              	
                 

                0.050%

                 

              	
                 

                0.050%

                 

              	
                 

                0.100%

                 

              	
                 

                0.100%

                 

              
	
                 

                Applicable
                  LC Fee Rate

                 

              	
                 

                0.250%

                 

              	
                 

                0.350%

                 

              	
                 

                0.450%

                 

              	
                 

                0.525%

                 

              	
                 

                0.700%

                 

              


      

      


       

      


      The
        Applicable Eurodollar Margin, the Applicable Commitment Fee Rate, the Applicable
        Utilization Fee Rate and the Applicable
        LC Fee Rate
        shall be
        determined in accordance with the foregoing table based on the Borrower’s
        then-current Moody’s and S&P Ratings. The credit rating in effect on any
        date for the 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 with respect to the Borrower’s Issuer Rating.

      


      “S&P
        Rating”
        means,
        at any time, the rating issued by Standard and Poor's Rating Services, a
        division of The McGraw Hill Companies, Inc., and then in effect with respect
        to
        the Borrower’s Corporate Credit Rating.

      


      If
        the
        Borrower is split-rated and the ratings differential is one level, the better
        rating will apply. If the Borrower 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.

      


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      SCHEDULE
        2

      


      


      COMMITMENTS

       

      


      
        	
                Lender

              	
                        Commitment

              
	 	 
	
                JPMorgan
                  Chase Bank 

              	
                        $35,000,000

              
	
                Lehman
                  Brothers Bank, FSB

              	
                        $35,000,000

              
	
                Morgan
                  Stanley Bank

              	
                        $35,000,000

              
	
                Wachovia
                  Bank, National Association

              	
                        $30,000,000

              
	
                Citibank,
                  N.A.

              	
                        $30,000,000

              
	
                KeyBank
                  National Association

              	
                        $30,000,000

              
	
                Union
                  Bank of California, N.A.

              	
                        $30,000,000

              
	
                UBS
                  Loan Finance LLC

              	
                        $25,000,000

              
	
                The
                  Bank of New York

              	
                        $25,000,000

              
	
                The
                  Bank of Nova Scotia

              	
                        $25,000,000

              
	
                U.S.
                  Bank National Association

              	
                        $25,000,000

              
	
                Wells
                  Fargo Bank, N.A.

              	
                        $25,000,000

              
	 	 
	
                Total

              	
                        $350,000,000

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      SCHEDULE
        5.10

      


      


      FINANCIAL
        STATEMENTS

      


      


      


      The
        financial statements included in the Borrower’s Annual Report on Form 10-K for
        the year ended December 31, 2006, as filed with the Securities and Exchange
        Commission.

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      SCHEDULE
        5.13

      


      


      SUBSIDIARIES

      


      All
        listed subsidiaries are 100% owned, directly or indirectly, by the
        Borrower.

      


      	1.  	
              Puget
                Western, Inc., a Washington corporation, is a real estate investment
                and
                development company. Address: 19515 North Creek Parkway, Suite 310,
                Bothell, Washington 98011.

            


      


      	2.  	
              Hydro
                Energy Development Corp., a Washington corporation, is the holding
                company
                for a small non-utility wholesale generator, Black Creek Hydro, Inc.
                Black
                Creek Hydro, Inc.’s only asset is a small hydroelectric power plant
                licensed by the Federal Energy Regulatory Commission in the Pacific
                Northwest. Address: 10885 NE 4th
                Street, Suite 800, Bellevue, Washington
                98004.

            


      


      	3.  	
              WNG
                Cap I, Inc., a Washington corporation, markets surplus pipeline capacity
                on behalf of the Borrower. Address: 10885 NE 4th
                Street, Suite 1200, Bellevue, Washington
                98004.

            


      


      	4.  	
              PSE
                Funding, Inc., a Washington corporation, was formed for the purpose
                of
                purchasing accounts receivable, both billed and unbilled, of customers
                of
                the Borrower. Address: 10885 NE 4th
                Street, Suite 1200, Bellevue, Washington
                98004.

            


      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      SCHEDULE
        6.10

      


      


      EXISTING
        LIENS

      


      
        	
                Secured
                  Party

              	
                Description
                  of Lien

              
	
                BLC
                  Corporation

              	
                All
                  property agreed to under Master Lease Agreement dated September
                  1,
                  1988

              
	
                Cascade
                  A & E Supplies Co.

              	
                Xerox
                  Digital Plotter

              
	
                Fleet
                  Business Credit 

              	
                3830-36
                  Symmetrix and related equipment

              
	
                IOS
                  Capital LLC

              	
                Equipment
                  under Master Lease Agreement

              
	
                Vestas-American
                  Wind Technology, Inc.

              	
                Turbine
                  Equipment

              


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      SCHEDULE
        6.15

      


      


      EXISTING
        INVESTMENTS

      


      
        	
                Investments
                  by Borrower (excluding investments in Subsidiaries)

              	 
	 	 	 	 
	 	 	 	 
	
                Non-Utility
                  Property

              	 	
                $

              	
                2,500,000

              	 
	
                Company
                  Owned Life Insurance 

              	 	 	
                54,500,000

              	 
	
                Miscellaneous
                  Notes Receivable

              	 	 	
                2,400,000

              	 
	
                Total

              	 	
                $

              	
                59,400,000

              	 
	 	 	 	 	 
	 	 	 	 	 
	
                Investments
                  by Subsidiaries

              
	 	 	 	 	 
	
                Puget
                  Western Inc.

              	 	 	 	 
	
                Miscellaneous
                  Notes Receivable

              	 	
                $

              	
                14,200,000

              	 
	
                Investment
                  in Kinetic Ventures

              	 	 	
                2,000,000

              	 
	
                Other
                  Investments

              	 	 	
                44,000,000

              	 
	
                Total

              	 	
                $

              	
                60,200,000

              	 
	 	 	 	 	 
	 	 	 	 	 
	
                Hydro
                  Energy Development Corp.

              	 	 	 	 
	
                Investment
                  in Black Creek Hydro

              	 	
                $

              	
                5,400,000

              	 
	 	 	 	 	 
	
                Total
                  Investments

              	 	
                $

              	
                125,000,000

              	 


      

       

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      EXHIBIT
        A

      


      


      REVOLVING
        NOTE

      


      


      


      U.S.$_________                                                                                        _________,
        200_

      


      


      


      For
        value
        received, PUGET SOUND ENERGY, INC., a Washington corporation (the “Borrower”),
        hereby promises to pay to the order of ______________________________ (the
        “Lender”),
        on or
        before the Facility Termination Date (as defined in the Credit Agreement
        referred to below), the principal amount of ______________________________
        United States dollars (U.S.$__________) or, if less, the aggregate principal
        amount of all Revolving Loans (as defined below) made by the Lender to the
        Borrower pursuant to the Credit Agreement. Unless otherwise defined herein,
        terms defined in the Credit Agreement, when used herein, have the respective
        meanings assigned to them in the Credit Agreement.

      


      The
        Borrower promises to pay interest on the unpaid principal amount of each
        Revolving Loan, from the date of such Revolving Loan until such principal
        amount
        is paid in full, at such interest rates and at such times as specified in
        the
        Credit Agreement.

      


      Both
        principal and interest are payable in lawful money of the United States of
        America, in immediately available funds, to JPMorgan Chase Bank, N.A., a
        national banking association, as administrative agent (the “Administrative
        Agent”),
        at
        its office located at 1111 Fannin Street, 10th Floor, Houston, Texas 77002,
        or
        as otherwise directed by the Administrative Agent. Each Revolving Loan and
        all
        payments made on account of the principal thereof shall be recorded by the
        Lender and, before any transfer hereof, endorsed on the schedule attached
        hereto, which is part of this Revolving Note.

      


      This
        Revolving Note is one of the “Revolving Notes” referred to in, and is entitled
        to the benefits of, the Credit Agreement dated as of March 29, 2007 (as it
        may hereafter be amended, restated, supplemented or otherwise modified from
        time
        to time, the “Credit
        Agreement”)
        among
        the Borrower, the Lender and the other financial institutions party thereto
        and
        JPMorgan Chase Bank, N.A., as Administrative Agent and as Swingline Lender
        and
        LC Issuer. The Credit Agreement, among other things, (a) provides for the
        making of revolving loans (the “Revolving
        Loans”)
        by the
        Lender to the Borrower from time to time in an aggregate amount not to exceed
        the U.S.-dollar amount first set forth above, the indebtedness of the Borrower
        resulting from each Revolving Loan being evidenced by this Revolving Note,
        and
        (b) contains provisions for acceleration of the maturity hereof upon the
        happening of certain stated events and also for prepayments on account of
        principal hereof before the maturity hereof upon the terms and conditions
        specified therein.

      
 

      To
        the
        extent permitted by law, the Borrower hereby waives presentment, demand,
        protest
        and notice of any kind. No failure to exercise, and no delay in exercising,
        any
        rights hereunder on the part of the holder hereof shall operate as a waiver
        of
        any such rights.

      


      The
        Borrower has caused this Revolving Note to be executed by its duly authorized
        representative as of the date first written above.

      


      


      PUGET
        SOUND ENERGY, INC.

      


      


      By:
        _________________________      

      Name:
        _______________________     

      Title:
        ________________________     

      


       

      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      


       

      
        
          	 	
                  SCHEDULE
                    TO REVOLVING NOTE

                	 
	 	 	
                    

                	 	 
	 	
                   

                  Amount

                	
                  Amount
                    of

                  Principal
                    Paid

                	
                  Unpaid
                    

                  Principal

                	
                   

                  Notation

                
	
                  Date

                	
                  of
                    Loan

                	
                  or
                    Prepaid

                	
                  Balance

                	
                  Made
                    By

                


        

      

      


       

      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      


      EXHIBIT
        B

      


      


      BORROWING
        NOTICE

      


      


      


      __________,
        200_

      


      


      


      JPMorgan
        Chase Bank, N.A., as Administrative Agent

      under
        the
        Credit Agreement

      referred
        to below

      1111
        Fannin Street, 10th Floor

      Houston,
        TX 77002

      Attention:
        Kimberly Brown

      Telephone:
        713-750-2880

      FAX:
        713-427-6307

      E-mail:
        kimberly.texas.brown@jpmchase.com

       

      


      Ladies
        and Gentlemen:

      


      The
        undersigned, Puget Sound Energy, Inc., a Washington corporation, refers to
        the
        Credit Agreement dated as of March 29, 2007 (as it may hereafter be amended,
        restated, supplemented or otherwise modified from time to time, the
“Credit
        Agreement”)
        among
        the undersigned, the lenders referred to therein and JPMorgan Chase Bank,
        N.A.,
        a national banking association, as Administrative Agent and as Swingline
        Lender
        and LC Issuer. Terms defined in the Credit Agreement and not otherwise defined
        herein have the same respective meanings when used herein. Pursuant to Section
        [2.2.3][2.18.2] of the Credit Agreement, the undersigned hereby requests
        a
        [Revolving Loan][Swingline Loan] under the Credit Agreement and in that
        connection sets forth below the information relating to such [Revolving
        Loan][Swingline Loan] (the “Proposed
        Loan”),
        as
        required by Section [2.2.3][2.18.2] of the Credit Agreement.

      


      1.
        The
        date
        of the Proposed Loan is __________, 200_.

      


      2.
        The
        aggregate amount of the Proposed Loan is $_______________.

      


      3.
        The
        Proposed Loan will be composed of [Floating Rate Loans] [LIBOR Market Index
        Rate
        Loans] [Eurodollar Loans].

      


      [4.
        The
        initial Interest Period for the Eurodollar Loans composing the Proposed Loan
        is
        __________ month[s].]

      


      The
        undersigned hereby certifies that the following statements are true on the
        date
        hereof and will be true on the date of the Proposed Loan:

      


      (a) no
        event
        has occurred and is continuing, or would result from the Proposed Loan or
        from
        the application of the proceeds thereof, that constitutes a Default or an
        Unmatured Default; and

      


      (b)  the
        representations and warranties contained in Article 5 of the Credit Agreement
        are true and correct as of the date hereof and will be true and correct on
        the
        date of the Proposed Loan, 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 was true and correct on and as of such earlier
        date.

      


       

      Very
        truly yours,

      


      PUGET
        SOUND ENERGY, INC.

      


      


      By:
        _________________________     

      Name:
        _______________________     

      Title:
        ________________________    

      


      



      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      



      EXHIBIT
        C

      


      


      CONVERSION/CONTINUATION
        NOTICE

      


      


      


      JPMorgan
        Chase Bank, N.A., as Administrative Agent

      under
        the
        Credit Agreement

      referred
        to below

      1111
        Fannin Street, 10th Floor

      Houston,
        TX 77002

      Attention:
        Kimberly Brown

      Telephone:
        713-750-2880

      FAX:
        713-427-6307

      E-mail:
        kimberly.texas.brown@jpmchase.com

       

      


      Ladies
        and Gentlemen:

      


      The
        undersigned, Puget Sound Energy, Inc., a Washington corporation, refers to
        the
        Credit Agreement dated as of March 29, 2007 (as it may hereafter be amended,
        restated, supplemented or otherwise modified from time to time, the
“Credit
        Agreement”)
        among
        the undersigned, the lenders referred to therein and JPMorgan Chase Bank,
        N.A.,
        a national banking association, as Administrative Agent (in such capacity,
        the
“Administrative
        Agent”)
        and as
        Swingline Lender and LC Issuer. Terms defined in the Credit Agreement and
        not
        otherwise defined herein have the same respective meanings when used
        herein.

      


      The
        undersigned hereby notifies the Administrative Agent pursuant to the Credit
        Agreement that the undersigned elects to [convert Floating Rate Loans into
        Eurodollar Loans] [convert Swingline Loans from Floating Rate Loans into
        LIBOR
        Market Index Rate Loans] [convert Swingline Loans from LIBOR Market Index
        Rate
        Loans into Floating Rate Loans] [continue all or a portion of an outstanding
        Eurodollar Loan as a Eurodollar Loan] and in that connection sets forth below
        the information relating to such [conversion] [continuation], as required
        by the
        Credit Agreement.

      


      [Conversion:

      


      1.
          The
        date
        of such conversion is __________, 200_.

      


      2.
         
        Revolving Loans that are Floating
        Rate Loans in the aggregate principal amount of $_______________ are to be
        converted into Eurodollar Loans.

      


      3. Swingline
        Loans in the aggregate principal amount of $__________ are
        to be
        converted from [Floating Rate Loans][LIBOR Market Index Rate Loans] into
        [Floating Rate Loans][LIBOR Market Index Rate Loans].

      


      4.
         The
        Interest Period for the new Eurodollar Loan is ______ month[s].]

      


      [Continuation:

      


      1.
        The
        date
        of such continuation is __________, 200_.

      


      2.
        The
        Eurodollar Loan to be continued, in whole or in part, is in the aggregate
        principal amount of $__________ and was made on __________, 200_.

      


      3.
        [The
        entire] [$__________ in aggregate] principal amount of such Eurodollar Loan
        is
        to be continued as a Eurodollar Loan.

      


      4.
        The
        Interest Period for the Eurodollar Loan to be continued is _____
        month[s].]

      


      No
        Default or Unmatured Default has occurred and is continuing or would result
        from
        giving effect to the election to [convert] [continue] Loans made
        hereby.

      


      Very
        truly yours,

      


      PUGET
        SOUND ENERGY, INC.

      


      


      By:
        _________________________     

      Name:
        _______________________     

      Title:
        ________________________     

      


      



      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      



      EXHIBIT
        D

      


      


      COMPLIANCE
        CERTIFICATE

      


      


      


      The
        undersigned ____________________, the ____________________ of Puget Sound
        Energy, Inc., a Washington corporation (the “Borrower”),
        refers to the Credit Agreement dated as of March 29, 2007 (as amended, restated,
        supplemented or otherwise modified from time to time, the “Credit
        Agreement”)
        among
        the Borrower, the financial institutions party thereto as lenders (the
“Lenders”),
        and
        JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders (the
“Administrative
        Agent”).
        Capitalized terms used herein and not otherwise defined shall have the
        respective meanings assigned to them in the Credit Agreement. The undersigned
        hereby certifies as to the accuracy of the information set forth below as
        of
        __________, 200_ (the “Compliance
        Date”).

       

      Debt
        to Capitalization Ratio

      


      (a) Consolidated
        Indebtedness $_______

      


      (b) Total
        Capitalization  $_______

      


      Ratio
        of a. to b.:  _____
        : 1.0

      


      (Section
        6.11 of the Credit Agreement requires that the Borrower not permit the principal
        amount of Consolidated Indebtedness to exceed 65% of Total Capitalization
        as of
        the last day of any fiscal quarter.)

      


      As
        of the
        Compliance Date, the undersigned represents and warrants to the Lenders and
        the
        Administrative Agent that: (a) no event has occurred and is continuing that
        constitutes a Default or an Unmatured Default; and (b) the representations
        and
        warranties contained in Article 5 of the Credit Agreement are true and correct
        as of the Compliance Date and as of the date hereof, 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 was true and correct on and
        as of
        such earlier date.

      


      The
        undersigned has executed this Certificate as of __________, 200_.

      


      


                              Name:
        _________________________

                              Title:
        __________________________

      
 

      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      


      EXHIBIT
        E

      


      


      ASSIGNMENT
        AND ASSUMPTION

      


       

      This
        Assignment and Assumption is dated as of the Effective Date set forth below
        and
        is entered into by and between _________________________ (the “Assignor”)
        and
        __________ _______________ (the “Assignee”).
        Capitalized terms used but not otherwise defined herein shall have the meanings
        given to them in the Credit Agreement identified below (as amended, restated,
        supplemented or otherwise modified from time to time, the “Credit
        Agreement”),
        receipt of a copy of which is hereby acknowledged by the Assignee. The Standard
        Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed
        to
        and incorporated herein by reference and made a part of this Assignment and
        Assumption as if set forth herein in full.

      


      For
        an
        agreed consideration, the Assignor hereby irrevocably sells and assigns to
        the
        Assignee, and the Assignee hereby irrevocably purchases and assumes from
        the
        Assignor, subject to and in accordance with the Standard Terms and Conditions
        and the Credit Agreement, as of the Effective Date inserted by the
        Administrative Agent as contemplated below, (i) all of the Assignor’s rights and
        obligations in its capacity as a Lender under the Credit Agreement and any
        other
        documents or instruments delivered pursuant thereto, to the extent related
        to
        the amount and percentage interest identified below of all of such outstanding
        rights and obligations of the Assignor under its Commitment (including, without
        limitation, any participations of the Assignor in Swingline Loans and Facility
        LCs), and (ii) to the extent permitted to be assigned under applicable law,
        all
        claims, suits, causes of action and other rights of the Assignor (in its
        capacity as a Lender) against any Person, whether known or unknown, arising
        under or in connection with the Credit Agreement, any other documents or
        instruments delivered pursuant thereto or the loan transactions governed
        thereby
        or in any way based on or related to any of the foregoing, including, but
        not
        limited to, contract claims, tort claims, malpractice claims, statutory claims
        and all other claims at law or in equity related to the rights and obligations
        sold and assigned pursuant to clause (i) above (the rights and obligations
        sold
        and assigned pursuant to clauses (i) and (ii) above being referred to herein
        collectively as the “Assigned
        Interest”).
        Such
        sale and assignment are without recourse to the Assignor and, except as
        expressly provided in this Assignment and Assumption, without representation
        or
        warranty by the Assignor.

      


      1. Assignor:  ______________________________

      


      2. Assignee:  ______________________________

      [an
        Affiliate of [identify
        Lender]]1   

      


      3. Borrower:  Puget
        Sound Energy, Inc., a Washington corporation

      


      4. Administrative

      Agent:   JPMorgan
        Chase Bank, N.A. (“JPMorgan”),
        in
        such capacity

      


      5. Credit
        Agreement: Credit
        Agreement dated as of March 29, 2007 among the Borrower, the financial
        institutions party thereto as Lenders, and JPMorgan, as Administrative Agent
        and
        as Swingline Lender and LC Issuer

      


      6. 
        Assigned
        Interest:

      


      
        	
                Aggregate
                  Amount of Commitments of all Lenders

              	
                Amount
                  of Commitment Assigned2   

              	
                Percentage
                  Assigned of Commitments3

              	
                CUSIP
                  Number

              
	 	 	 	 
	
                $

              	
                $

              	
                %

              	 


      

      


      


      [7. Trade
        Date:  ______________]4   To
        be
        completed if the Assignor and the Assignee intend that the minimum assignment
        amount is to be determined as of the Trade Date.

      


      


      Effective
        Date: __________, 200_ [To
        be
        inserted by the Administrative Agent and to be the effective date of recordation
        of transfer in the Register.]

      


      The
        terms
        set forth in this Assignment and Assumption are hereby agreed to:

      


      [NAME
        OF
        ASSIGNOR]

      


      


      By:
        _________________________     

      Name:
        _______________________     

      Title:
        ________________________     

      


      


       

      [NAME
        OF
        ASSIGNEE]

      


      


      By:
        _________________________     

      Name:
        _______________________     

      Title:
        ________________________     

      


      


      


      Consented
        to and accepted:

      


      JPMORGAN
        CHASE BANK, N.A.,

      as
        Administrative Agent

      


      


      By:
        _________________________     

      Name:
        _______________________     

      Title:
        ________________________     

      


      


      


      [Consented
        to:]5   

      


      PUGET
        SOUND ENERGY, INC.

      


      


      By:
        _________________________     

      Name:
        _______________________     

      Title:
        ________________________     

      

  ______________

      
        	
                1 

              	
                Select
                  as applicable.

              
	
                2

              	
                Amount
                  to be adjusted by the counterparties to take into account any commitment
                  reductions made between the Trade Date and the Effective
                  Date.

              
	
                3

              	
                Set
                  forth, to at least nine decimals, as a percentage of the Commitments
                  of
                  all Lenders.

              
	
                4

              	
                To
                  be completed if the Assignor and the Assignee intend that the minimum
                  assignment amount is to be determined as of the Trade
                  Date.

              
	5	 To be added
                only
                if the consent of the Borrower is required by the terms of the Credit
                Agreement.


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      ANNEX
        1

      to
        Assignment and Assumption

      


      


      STANDARD
        TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION

      


       

      


       

      


       

      1.
        Representations
        and Warranties.
        

      


      1.1
        Assignor.
        The
        Assignor (a) represents and warrants that (i) it is the legal and beneficial
        owner of the Assigned Interest, (ii) the Assigned Interest is free and clear
        of
        any lien, encumbrance or other adverse claim and (iii) it has full power
        and
        authority, and has taken all action necessary, to execute and deliver this
        Assignment and Assumption and to consummate the transactions contemplated
        hereby
        and (b) assumes no responsibility with respect to (i) any statements,
        representations or warranties made in or in connection with the Credit Agreement
        or any other Loan Document, (ii) the execution, legality, validity,
        enforceability, genuineness, sufficiency or value of the Loan Documents or
        any
        collateral thereunder, (iii) the financial condition of the Borrower, any
        of its
        Subsidiaries or Affiliates or any other Person obligated in respect of any
        Loan
        Document or (iv) the performance or observance by the Borrower, any of its
        Subsidiaries or Affiliates or any other Person of any of their respective
        obligations under any Loan Document.

      


      1.2.
        Assignee.
        The
        Assignee (a) represents and warrants that (i) it has full power and authority,
        and has taken all action necessary, to execute and deliver this Assignment
        and
        Assumption, to consummate the transactions contemplated hereby and to become
        a
        Lender under the Credit Agreement, (ii) none of the consideration used to
        make
        the purchase of the Assigned Interest under this Assignment and Assumption
        constitutes “plan assets” as defined under ERISA, and the rights and interests
        of the Assignee in and under the Loan Documents will not be “plan assets” under
        ERISA, (iii) from and after the Effective Date, it shall be bound by the
        provisions of the Credit Agreement as a Lender thereunder and, to the extent
        of
        the Assigned Interest, shall have the obligations of a Lender thereunder,
        (iv)
        it has received a copy of the Credit Agreement, together with copies of the
        most
        recent financial statements delivered pursuant to Section 6.9 thereof and
        such
        other documents and information as it has deemed appropriate to make its
        own
        credit analysis and decision to enter into this Assignment and Assumption
        and to
        purchase the Assigned Interest, on the basis of which it has made such analysis
        and decision independently and without reliance on the Administrative Agent
        or
        any other Lender, and (v) if it is a Non-U.S. Lender, attached to this
        Assignment and Assumption is any documentation required to be delivered by
        it
        pursuant to the terms of the Credit Agreement, duly completed and executed
        by
        the Assignee, and (b) agrees that (i) it will, independently and without
        reliance on the Administrative Agent, the Assignor 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 the Loan Documents, and (ii) it will perform in accordance with their
        terms all of the obligations that by the terms of the Loan Documents are
        required to be performed by it as a Lender.

      


      2.
        Payments.
        From
        and after the Effective Date, the Administrative Agent shall make all payments
        in respect of the Assigned Interest (including, without limitation, payments
        of
        principal, interest and fees) to the Assignor for amounts that have accrued
        to
        but excluding the Effective Date and to the Assignee for amounts that have
        accrued from and after the Effective Date.

      


      3.
        General
        Provisions.
        This
        Assignment and Assumption shall be binding upon, and shall inure to the benefit
        of, the parties hereto and their respective successors and assigns. This
        Assignment and Assumption may be executed in any number of counterparts,
        which
        together shall constitute one instrument. Delivery
        of an executed counterpart of a signature page of this Assignment
        and
        Assumption
        by
        telecopier shall be effective as delivery of a manually executed counterpart
        of
        this Assignment
        and
        Assumption.
        THIS
        ASSIGNMENT AND ASSUMPTION SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
        IN
        ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

      



      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      


      EXHIBIT
        F

      


      ACCOUNT
        DESIGNATION LETTER

      


      


      March
        __,
        2007

      


      


      


      JPMorgan
        Chase Bank, N.A., as Administrative Agent

      under
        the
        Credit Agreement

      referred
        to below

      1111
        Fannin Street, 10th Floor

      Houston,
        TX 77002

      Attention:
        Kimberly Brown

      Telephone:
        713-750-2880

      FAX:
        713-427-6307

      E-mail:
        kimberly.texas.brown@jpmchase.com

       

      Ladies
        and Gentlemen:

      


      This
        Account Designation Letter is delivered to you by Puget Sound Energy, Inc.
        (the
“Borrower”),
        a
        Washington corporation, pursuant to Section 4.1 of the Credit Agreement dated
        as
        of March 29, 2007 (as amended, restated or otherwise modified, the “Credit
        Agreement”)
        by and
        among the Borrower, the Lenders from time to time party thereto and JPMorgan
        Chase Bank, N.A., as Administrative Agent (the “Administrative
        Agent”).

      


      The
        Administrative Agent is hereby authorized to disburse all Loan proceeds into
        the
        following account, unless the Borrower shall designate, in writing to the
        Administrative Agent, one or more other accounts:

      


      [INSERT
        Name of Bank/

      ABA
        Routing Number/

      and
        Account Number]

      


      


      IN
        WITNESS WHEREOF, the undersigned has executed this Account Designation Letter
        this __ day of March, 2007.

      PUGET
        SOUND ENERGY, INC.

      


      


      By:
        _________________________     

      Name:
        _______________________     

      Title:
        ________________________     

      


      


      



      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      


      EXHIBIT
        G

      


      


      SWINGLINE
        NOTE

      


      


      


      U.S.$35,000,000                                                                                          March
        __,
        2007

      


      


      For
        value
        received, PUGET SOUND ENERGY, INC., a Washington corporation (the “Borrower”),
        hereby promises to pay to the order of JPMORGAN CHASE BANK, N.A., as Swingline
        Lender under the Credit Agreement referred to below (the “Lender”),
        on or
        before the Facility Termination Date (as defined in the Credit Agreement
        referred to below), the principal amount of Thirty-Five Million United States
        dollars (U.S.$35,000,000) or, if less, the aggregate principal amount of
        all
        Swingline Loans (as defined below) made by the Lender to the Borrower pursuant
        to the Credit Agreement. Unless otherwise defined herein, terms defined in
        the
        Credit Agreement, when used herein, have the respective meanings assigned
        to
        them in the Credit Agreement.

      


      The
        Borrower promises to pay interest on the unpaid principal amount of each
        Swingline Loan, from the date of such Swingline Loan until such principal
        amount
        is paid in full, at such interest rates and at such times as specified in
        the
        Credit Agreement.

      


      Both
        principal and interest are payable in lawful money of the United States of
        America, in immediately available funds, to JPMorgan Chase Bank, N.A., a
        national banking association, as administrative agent (the “Administrative
        Agent”),
        at
        its office located at 1111 Fannin Street, 10th Floor, Houston, Texas 77002
        or as
        otherwise directed by the Administrative Agent. Each Swingline Loan and all
        payments made on account of the principal thereof shall be recorded by the
        Lender and, before any transfer hereof, endorsed on the schedule attached
        hereto, which is part of this Swingline Note.

      


      This
        Swingline Note is one of the “Swingline Notes” referred to in, and is entitled
        to the benefits of, the Credit Agreement dated as of March 29, 2007 (as it
        may hereafter be amended, restated, supplemented or otherwise modified from
        time
        to time, the “Credit
        Agreement”)
        among
        the Borrower, the Lender and the other financial institutions party thereto
        and
        JPMorgan Chase Bank, N.A., as Administrative Agent and as Swingline Lender
        and
        LC Issuer. The Credit Agreement, among other things, (a) provides for the
        making of swingline loans (the “Swingline
        Loans”)
        by the
        Lender to the Borrower from time to time in an aggregate amount not to exceed
        the U.S.-dollar amount first set forth above, the indebtedness of the Borrower
        resulting from each Swingline Loan being evidenced by this Swingline Note,
        and
        (b) contains provisions for acceleration of the maturity hereof upon the
        happening of certain stated events and also for prepayments on account of
        principal hereof before the maturity hereof upon the terms and conditions
        specified therein.

       

      To
        the
        extent permitted by law, the Borrower hereby waives presentment, demand,
        protest
        and notice of any kind. No failure to exercise, and no delay in exercising,
        any
        rights hereunder on the part of the holder hereof shall operate as a waiver
        of
        any such rights.

      


      The
        Borrower has caused this Swingline Note to be executed by its duly authorized
        representative as of the date first written above.

      


      


      PUGET
        SOUND ENERGY, INC.

      


      


      By:
        _________________________     

      Name:
        _______________________     

      Title:
        ________________________     

      


      



      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      



       

      
        
          	 	
                  SCHEDULE
                    TO SWINGLINE NOTE

                	 
	 	 	
                    

                	 	 
	 	
                   

                  Amount

                	
                  Amount
                    of

                  Principal
                    Paid

                	
                  Unpaid
                    

                  Principal

                	
                   

                  Notation

                
	
                  Date

                	
                  of
                    Loan

                	
                  or
                    Prepaid

                	
                  Balance

                	
                  Made
                    By