-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OW8e84xZOgVNzgBMFd6sgHQuHs0SuphqIh9axgxQsgtLNev+dcTxFZ/IxhMmxXle KHWVGNBggFkQaUAZcOuRGg== 0000898430-99-000786.txt : 19990308 0000898430-99-000786.hdr.sgml : 19990308 ACCESSION NUMBER: 0000898430-99-000786 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990304 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990305 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PUGET SOUND ENERGY INC CENTRAL INDEX KEY: 0000081100 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 910374630 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-04393 FILM NUMBER: 99557483 BUSINESS ADDRESS: STREET 1: 411 108TH AVE NE CITY: BELLEVUE STATE: WA ZIP: 98004-5515 BUSINESS PHONE: 4254546363 MAIL ADDRESS: STREET 1: PO BOX 97034 CITY: BELLEVUE STATE: NY ZIP: 98009-9734 FORMER COMPANY: FORMER CONFORMED NAME: PUGET SOUND POWER & LIGHT CO /WA/ DATE OF NAME CHANGE: 19920703 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________ Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 March 4, 1999 -------------------- Date of Report (Date of earliest event reported) PUGET SOUND ENERGY, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Washington 1-4393 91-0374630 - -------------------------------- ---------------------- ---------------------------------- (State or other jurisdiction of (Commission File No.) (IRS Employer Identification No.) incorporation)
411 - 108th Avenue N.E. Bellevue, Washington 98004-5515 - -------------------------------------------------------------------------------- (Address of principal executive offices, including zip code) (425) 454-6363 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Item 5. Other Events On March 3, 1999, Puget Sound Energy, Inc. (the "Company") entered into a Distribution Agreement relating to the issuance and sale by the Company from time to time of up to $500,000,000 principal amount of Senior Medium-Term Notes, Series B, due nine months or more from the date of issue (the "Senior Notes"). The Senior Notes are to be issued under and pursuant to an Indenture dated as of December 1, 1997, as supplemented by a Second Supplemental Indenture thereto, dated as of March 1, 1999, between the Company and State Street Bank and Trust Company, as trustee. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits Exhibit Number Description -------------- ----------- 1.1 Distribution Agreement, dated March 3, 1999, among the Company, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc. 1.2 Terms Agreement, dated March 4, 1999, among the Company, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc., Chase Securities, Inc., CIBC Oppenheimer Corp., First Chicago Capital Markets, Inc. and NationsBanc Montgomery Securities LLC. 4.26 Second Supplemental Indenture, dated as of March 1, 1999, to Indenture dated as of December 1, 1997, between the Company and State Street Bank and Trust Company, defining the rights of the holders of the Company's Senior Notes. 4.27 Seventy-Seventh Supplemental Indenture, dated as of March 1, 1999, to Indenture dated as of June 2, 1924, as supplemented and modified, between the Company and State Street Bank and Trust Company, defining the rights of the holders of the Company's First Mortgage Bonds. 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PUGET SOUND ENERGY, INC. Dated: March 4, 1998 By /s/ James W. Eldredge ----------------------------------- James W. Eldredge Corporate Secretary and Controller 3 INDEX TO EXHIBITS
Exhibit Number Description - ------ ----------- 1.1 Distribution Agreement, dated March 3, 1999, among the Company, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc. 1.2 Terms Agreement, dated March 4, 1999, among the Company, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc., Chase Securities, Inc., CIBC Oppenheimer Corp., First Chicago Capital Markets, Inc. and NationsBanc Montgomery Securities LLC. 4.26 Second Supplemental Indenture, dated as of March 1, 1999, to Indenture dated as of December 1, 1997, between the Company and State Street Bank and Trust Company, defining the rights of the holders of the Company's Senior Notes. 4.27 Seventy-Seventh Supplemental Indenture, dated as of March 1, 1999, to Indenture dated as of June 2, 1924, as supplemented and modified, between the Company and State Street Bank and Trust Company, defining the rights of the holders of the Company's First Mortgage Bonds.
4 EX-1.1 2 DISTRIBUTION AGREEMENT DATED MARCH 3, 1999 EXHIBIT 1.1 Puget Sound Energy, Inc. Senior Medium Term Notes, Series B DISTRIBUTION AGREEMENT March 3, 1999 MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED SALOMON SMITH BARNEY INC c/o Merrill Lynch & Co. World Financial Center North Tower, 10th Floor New York, New York 10281-1310 Ladies and Gentlemen: Puget Sound Energy, Inc. a Washington corporation (the "Company"), ------- confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Salomon Smith Barney Inc (each, an "Agent", and ----- collectively, the "Agents," which term shall also include any additional agents ------ named in any Terms Agreement (as defined herein)) with respect to the issue and sale by the Company of its Senior Medium Term Notes, Series B, Due Nine Months or More From Date of Issue (the "Notes"). The Notes are to be issued pursuant ----- to an Indenture, dated as of December 1, 1997, as supplemented by a Second Supplemental Indenture, dated as of March 1, 1999 (collectively, the "Indenture"), between the Company and State Street Bank and Trust Company, as --------- trustee (the "Trustee"). Prior to the Substitution Date (as defined in the ------- Indenture), the Notes will be secured by the delivery to the Trustee of (i) first mortgage bonds issued under the Company's electric mortgage indenture or (ii) first mortgage bonds issued under the Company's gas mortgage indenture, as specified in the Prospectus referred to below (collectively, the "Pledged ------- Bonds"). As of the date hereof, the Company has authorized the issuance and - ----- sale of up to U.S. $500,000,000 aggregate initial offering price of Notes to or through the Agents pursuant to the terms of this Agreement. It is understood, however, that the Company may from time to time authorize the issuance of additional Notes and that such additional Notes may be sold to or through the Agents pursuant to the terms of this Agreement, all as though the issuance of such Notes were authorized as of the date hereof. This Agreement provides both for the sale of Notes by the Company to one or more Agents as principal for resale to investors and other purchasers and for the sale of Notes by the Company directly to investors (as may from time to time be agreed to by the Company and the applicable Agent), in which case the applicable Agent will act as an agent of the Company in soliciting offers for the purchase of Notes. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (No. 333-65053) for the ---------- registration of the Notes, under the Securities Act of 1933, as amended (the "1933 Act") and the offering thereof from time to time in accordance with Rule - --------- 415 of the rules and regulations of the Commission under the 1933 Act (the "1933 ---- Act Regulations"), and the Company has filed such post-effective amendments - --------------- thereto as may be required prior to any acceptance by the Company of an offer for the purchase of Notes. Such registration statement (as so amended, if applicable) has been declared effective by the Commission and the Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended (the "1939 ---- Act"). Such registration statement (as so amended, if applicable) is referred - --- to herein as the "Registration Statement"; and the final prospectus and all ---------------------- applicable amendments or supplements thereto (including the final prospectus supplement and pricing supplement relating to the offering of Notes), in the form first furnished to the applicable Agent(s), are collectively referred to herein as the "Prospectus"; provided, however, that all references to the ---------- -------- ------- "Registration Statement" and the "Prospectus" shall also be deemed to include - ----------------------- ---------- all documents incorporated therein by reference pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), prior to any acceptance by -------- the Company of an offer for the purchase of Notes; provided, further, that if -------- ------- the Company files a registration statement with the Commission pursuant to Rule 462(b) of the 1933 Act Regulations 2 (the "Rule 462(b) Registration Statement"), then, after such filing, all ---------------------------------- references to the "Registration Statement" shall also be deemed to include the ---------------------- Rule 462(b) Registration Statement. A "preliminary prospectus" shall be deemed ---------------------- to refer to any prospectus used before the registration statement became effective and any prospectus furnished by the Company after the registration statement became effective and before any acceptance by the Company of an offer for the purchase of Notes which omitted information to be included upon pricing in a form of prospectus filed with the Commission pursuant to Rule 424(b) of the 1933 Act Regulations. For purposes of this Agreement, all references to the Registration Statement, Prospectus or preliminary prospectus or to any amendment or supplement thereto shall be deemed to include any copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"). ----- All references in this Agreement to financial statements and schedules and other information which is "disclosed", "contained," "included" or "stated" (or other references of like import) in the Registration Statement, Prospectus or preliminary prospectus shall be deemed to include all such financial statements and schedules and other information which is incorporated by reference in the Registration Statement, Prospectus or preliminary prospectus, as the case may be; and all references in this Agreement to amendments or supplements to the Registration Statement, Prospectus or preliminary prospectus shall be deemed to include the filing of any document under the 1934 Act which is incorporated by reference in the Registration Statement, Prospectus or preliminary prospectus, as the case may be. 1. Appointment as Agent. -------------------- (1) Appointment. Subject to the terms and conditions stated ----------- herein and subject to the reservation by the Company of the right to sell Notes directly on its own behalf, the Company hereby agrees that Notes will be sold exclusively to or through the Agents. The Company agrees that it will not appoint any other agents to act on its behalf, or to assist it, in the placement of the Notes. 3 (2) Sale of Notes. The Company shall not sell or approve the ------------- solicitation of offers for the purchase of Notes in excess of the amount which shall be authorized by the Company from time to time or in excess of the aggregate initial offering price of Notes registered pursuant to the Registration Statement. The Agents shall have no responsibility for maintaining records with respect to the aggregate initial offering price of Notes sold, or of otherwise monitoring the availability of Notes for sale, under the Registration Statement. (3) Purchases as Principal. The Agents shall not have any ---------------------- obligation to purchase Notes from the Company as principal. However, absent an agreement between an Agent and the Company that such Agent shall be acting solely as an agent for the Company, such Agent shall be deemed to be acting as principal in connection with any offering of Notes by the Company through such Agent. Accordingly, the Agents, individually or in a syndicate, may agree from time to time to purchase Notes from the Company as principal for resale to investors and other purchasers determined by such Agents. Any purchase of Notes from the Company by an Agent as principal shall be made in accordance with Section 3(a) hereof. (4) Solicitations as Agent. If agreed upon between an Agent and ---------------------- the Company, such Agent, acting solely as an agent for the Company and not as principal, will solicit offers for the purchase of Notes. Such Agent will communicate to the Company, orally, each offer for the purchase of Notes solicited by it on an agency basis other than those offers rejected by such Agent. Such Agent shall have the right, in its discretion reasonably exercised, to reject any offer for the purchase of Notes, in whole or in part, and any such rejection shall not be deemed a breach of its agreement contained herein. The Company may accept or reject any offer for the purchase of Notes, in whole or in part. Such Agent shall make reasonable efforts to assist the Company in obtaining performance by each purchaser whose offer for the purchase of Notes has been solicited by it on an agency basis and accepted by the Company. Such Agent shall not have any liability to the Company in the event that any such purchase is not consummated for any reason. If the Company shall default on its obligation to deliver Notes to a purchaser whose offer has been solicited by such Agent on an agency basis and accepted 4 by the Company, the Company shall (i) hold such Agent harmless against any loss, claim or damage arising from or as a result of such default by the Company and (ii) pay to such Agent any commission to which it would otherwise be entitled absent such default. (5) Reliance. The Company and the Agents agree that any Notes -------- purchased from the Company by one or more Agents as principal shall be purchased, and any Notes the placement of which an Agent arranges as an agent of the Company shall be placed, by such Agent in reliance on the representations, warranties, covenants and agreements of the Company contained herein and on the terms and conditions and in the manner provided herein. 2. Representations and Warranties. ------------------------------ (1) The Company represents and warrants to each Agent as of the date hereof, as of the date of each acceptance by the Company of an offer for the purchase of Notes (whether to such Agent as principal or through such Agent as agent), as of the date of each delivery of Notes (whether to such Agent as principal or through such Agent as agent) (the date of each such delivery to such Agent as principal is referred to herein as a "Settlement Date"), and as of --------------- any time that the Registration Statement or the Prospectus shall be amended or supplemented (each of the times referenced above is referred to herein as a "Representation Date"), as follows: ------------------- (1) Due Incorporation, Valid Existence and Due ------------------------------------------- Qualification of the Company. The Company has been duly organized and is ---------------------------- validly existing as a corporation under the laws of the State of Washington with corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into this Agreement and consummate the transactions contemplated in the Prospectus; the Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or be in good standing would not result in a material adverse change in 5 the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise (a "Material Adverse Effect"). -------- -------------- (2) Significant Subsidiaries. The Company has no ------------------------ significant subsidiaries (as such term is defined in Rule 1-02 of Regulation S-X promulgated under the 1933 Act). (3) Registration Statement and Prospectus. The Company ------------------------------------- meets the requirements for use of Form S-3 under the 1933 Act; the Registration Statement (including any Rule 462(b) Registration Statement) has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement (including any Rule 462(b) Registration Statement) has been issued under the 1933 Act and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are contemplated by the Commission, and any request on the part of the Commission for additional information has been complied with; the Indenture has been duly qualified under the 1939 Act; at the respective times that the Registration Statement, any Rule 462(b) Registration Statement and any post-effective amendment thereto (including the filing of the Company's most recent Annual Report on Form 10-K with the Commission (the "Annual Report on Form 10-K")) became effective and at each -------------------------- Representation Date, the Registration Statement (including any Rule 462(b) Registration Statement) and any amendments thereto complied and will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and regulations of the Commission under the 1939 Act (the "1939 Act Regulations") and did not and -------------------- will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; each preliminary prospectus and prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all material respects with the 1933 Act Regulations; each prelim- 6 inary prospectus and the Prospectus delivered to the applicable Agent(s) for use in connection with the offering of Notes are identical to any electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T; and at the date hereof, at the date of the Prospectus and at each Representation Date, neither the Prospectus nor any amendment or supplement thereto included or will include an untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations and -------- ------- warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or the Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by the Agents expressly for use in the Registration Statement or the Prospectus. (4) Incorporated Documents. The documents incorporated ---------------------- or deemed to be incorporated by reference in the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission under the 1934 Act (the "1934 ---- Act Regulations") and, when read together with the other information in the --------------- Prospectus, at the date hereof, at the date of the Prospectus and at each Representation Date, did not and will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (5) Independent Accountants. The accountants who ----------------------- certified the financial statements and any supporting schedules thereto included in the Registration Statement and the Prospectus are independent public accountants as required by the 1933 Act and the 1933 Act Regulations. 7 (6) Financial Statements. The consolidated financial -------------------- statements of the Company included in the Registration Statement and the Prospectus, together with the related schedules and notes, as well as those financial statements, schedules and notes of any other entity included in the Registration Statement and the Prospectus, present fairly the consolidated financial position of the Company and its subsidiaries, or such other entity, as the case may be, at the dates indicated and the consolidated statement of operations, stockholders' equity and cash flows of the Company and its subsidiaries, or such other entity, as the case may be, for the periods specified; such financial statements have been prepared in conformity with generally accepted accounting principles ("GAAP") ---- applied on a consistent basis throughout the periods involved; the supporting schedules, if any, included in the Registration Statement and the Prospectus present fairly in accordance with GAAP the information required to be stated therein; the selected financial data and the summary financial information included in the Registration Statement and the Prospectus present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included in the Registration Statement and the Prospectus; and any pro forma consolidated financial statements of the Company and its subsidiaries and the related notes thereto included in the Registration Statement and the Prospectus present fairly the information shown therein, have been prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements and have been properly --- ----- compiled on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. (7) No Material Changes. Since the respective dates as of ------------------- which information is given in the Registration Statement and the Prospectus, except as otherwise stated therein, (1) there has been no event or occurrence that would result in a Material Adverse Effect and (2) there have been no 8 transactions entered into by the Company or any of its subsidiaries, other than those in the ordinary course of business, which are material with respect to the Company and its subsidiaries considered as one enterprise. (8) Authorization, etc. of this Agreement, the Indenture, ----------------------------------------------------- the Notes and the Pledged Bonds. This Agreement has been duly authorized, ------------------------------- executed and delivered by the Company; the Indenture has been duly authorized, executed and delivered by the Company and will be a valid and legally binding agreement of the Company, enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by (1) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally or (2) general equitable principles (regardless of whether enforcement is considered in a proceeding in equity or at law); the Notes and the Pledged Bonds have been duly authorized by the Company for offer, sale, issuance and delivery pursuant to this Agreement and, when issued, authenticated and delivered in the manner provided for in the Indenture and delivered against payment of the consideration therefor, will constitute valid and legally binding obligations of the Company, enforceable against the Company in accordance with their terms, except as enforcement thereof may be limited by (1) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally or (2) general equitable principles (regardless of whether enforcement is considered in a proceeding in equity or at law); the Notes will be substantially in a form previously certified to the Agents and contemplated by the Indenture; and each holder of Notes will be entitled to the benefits of the Indenture. (9) Descriptions of the Indenture, the Notes and the ------------------------------------------------ Pledged Bonds. The Indenture, the Notes and the Pledged Bonds conform and ------------- will conform in all material respects to the statements relating thereto contained in the Prospectus and are substantially in the form filed 9 or incorporated by reference, as the case may be, as an exhibit to the Registration Statement. (10) Accuracy of Exhibits. There are no contracts or -------------------- documents which are required to be described in the Registration Statement, the Prospectus or the documents incorporated by reference therein or to be filed as exhibits thereto which have not been so described and filed as required. (11) Absence of Defaults and Conflicts. Neither the --------------------------------- Company nor any of its subsidiaries is in violation of the provisions of its charter or by-laws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound or to which any of the property or assets of the Company or any of its subsidiaries is subject (collectively, "Agreements and Instruments"), -------------------------- except for such defaults that would not result in a Material Adverse Effect; and the execution, delivery and performance of this Agreement, the Indenture, the Notes and the Pledged Bonds and any other agreement or instrument entered into or issued or to be entered into or issued by the Company in connection with the transactions contemplated by the Prospectus, the consummation of the transactions contemplated in the Prospectus (including the issuance and sale of the Notes and the use of proceeds therefrom as described in the Prospectus) and the compliance by the Company with its obligations hereunder and under the Indenture, the Notes and the Pledged Bonds and such other agreements or instruments have been duly authorized by all necessary corporate action and do not and will not, whether with or without the giving of notice or the passage of time or both, conflict with or constitute a breach of, or default or event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder's behalf) the right to require the repurchase, redemption or repayment of 10 all or a portion of such indebtedness by the Company or any of its subsidiaries (a "Repayment Event") under, or result in the creation or --------------- imposition of any lien, charge or encumbrance upon any assets, properties or operations of the Company or any of its subsidiaries pursuant to, any Agreements and Instruments, nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any of its subsidiaries or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their assets, properties or operations. (12) Absence of Proceedings. There is no action, suit, ---------------------- proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or to the knowledge of the Company, threatened, against or affecting the Company or any of its subsidiaries which is required to be disclosed in the Registration Statement and the Prospectus (other than as stated therein), or which may reasonably be expected to result in a Material Adverse Effect, or which may reasonably be expected to materially and adversely affect the assets, properties or operations thereof, the performance by the Company of its obligations under this Agreement, the Indenture, the Notes and the Pledged Bonds or the consummation of the transactions contemplated in the Prospectus; and the aggregate of all pending legal or governmental proceedings to which the Company or any of its subsidiaries is a party or of which any of their respective assets, properties or operations is the subject which are not described in the Registration Statement and the Prospectus, including ordinary routine litigation incidental to the business, may not reasonably be expected to result in a Material Adverse Effect. (13) Possession of Licenses and Permits. The Company and ---------------------------------- its subsidiaries possess such franchises, permits, licenses, approvals, consents, certificates of public convenience and necessity and other authorizations (collectively, 11 "Governmental Licenses") issued by the appropriate federal, state, local or --------------------- foreign regulatory agencies or bodies, including, without limitation, the Washington Utilities and Transportation Commission (the "Utilities --------- Commission") and cities and towns within the service territory of the ---------- Company, necessary for the Company and its subsidiaries to conduct the business now operated by them and for the Company to own and operate the its electric plant and its gas plant; the Company and its subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, singly or in the aggregate, result in a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except where the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not result in a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect. (14) Environmental Laws. Except as otherwise stated in the ------------------ Registration Statement and the Prospectus and except as would not, singly or in the aggregate, result in a Material Adverse Effect (A) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, "Hazardous Materials") or to the manufacture, processing, ------------------- distribution, use, 12 treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, "Environmental Laws"), (B) the Company and its subsidiaries ------------------ have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (C) there are no pending or threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or any of its subsidiaries and (D) there are no events or circumstances that may reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its subsidiaries relating to Hazardous Materials or any Environmental Laws. (15) No Filings, Regulatory Approvals etc. The Utilities ------------------------------------- Commission has issued an Order Establishing Compliance with RCW 80.08.040 with respect to the Notes and the Pledged Bonds (the "Order") and the Order ----- has not been rescinded, annulled or modified. No other filing with, or approval, authorization, consent, license, registration, qualification, order or decree of, any court or governmental authority or agency, domestic or foreign, is necessary or required for the performance by the Company of its obligations under this Agreement, the Indenture, the Notes and the Pledged Bonds or in connection with the transactions contemplated in the Prospectus, except such as have been previously obtained or rendered, as the case may be. (16) Investment Company Act. The Company is not, and upon ---------------------- the issuance and sale of the Notes as herein contemplated and the application of the net proceeds therefrom as described in the Prospectus will not be, an "investment company" within the meaning of the Investment Company Act of 1940, as amended (the ("1940 Act"). -------- (17) Ratings. The Medium-Term Note Program under which ------- the Notes are issued (the "Program"), as well as the Notes, are rated ------- [Baa1] 13 by Moody's Investors Service, Inc. and [A-] by Standard & Poor's Ratings Service, or such other rating as to which the Company shall have most recently notified the Agents pursuant to Section 4(a) hereof. (2) Additional Certifications. Any certificate signed by any ------------------------- officer of theCompany or any of its subsidiaries and delivered to one or more Agents or to counsel for the Agents in connection with an offering of Notes to one or more Agents as principal or through an Agent as agent shall be deemed a representation and warranty by the Company to such Agent or Agents as to the matters covered thereby on the date of such certificate and, unless subsequently amended or supplemented, at each Representation Date subsequent thereto. 3. Purchases as Principal; Solicitations as Agent. ---------------------------------------------- (1) Purchases as Principal. Notes purchased from the Company by the ---------------------- Agents, individually or in a syndicate, as principal shall be made in accordance with terms agreed upon between the Agents and the Company as set forth in a terms agreement between the Agents and the Company (the "Terms Agreement") (which terms, unless otherwise agreed, shall, to the extent applicable, include those terms specified in the form of such agreement attached as Exhibit A hereto --------- and shall be agreed upon orally, with written confirmation prepared by such Agent or Agents and mailed to the Company). An Agent's commitment to purchase Notes as principal shall be deemed to have been made on the basis of the representations and warranties of the Company herein contained and shall be subject to the terms and conditions herein set forth. Unless the context otherwise requires, references herein to "this Agreement" shall include the applicable Terms Agreement or other agreement of one or more Agents to purchase Notes from the Company as principal. Each purchase of Notes, unless otherwise agreed, shall be at a discount from the principal amount of each such Note equivalent to the applicable commission set forth in Schedule A hereto. The ---------- Agents may engage the services of any broker or dealer in connection with the resale of the Notes purchased by them as principal and may allow all or any portion of the discount received from the Company in connection with such purchases to such brokers or deal- 14 ers. At the time of each purchase of Notes from the Company by one or more Agents as principal, such Agent or Agents shall specify the requirements for the officers' certificate, opinion of counsel and comfort letter pursuant to Sections 7(b), 7(c) and 7(d) hereof. If the Company and two or more Agents enter into an agreement pursuant to which such Agents agree to purchase Notes from the Company as principal and one or more of such Agents shall fail at the Settlement Date to purchase the Notes which it or they are obligated to purchase (the "Defaulted Notes"), then the --------------- nondefaulting Agents shall have the right, within 24 hours thereafter, to make arrangements for one of them or one or more other Agents or underwriters to purchase all, but not less than all, of the Defaulted Notes in such amounts as may be agreed upon and upon the terms herein set forth; provided, however, that -------- ------- if such arrangements shall not have been completed within such 24-hour period, then: (a) if the aggregate principal amount of Defaulted Notes does not exceed 10% of the aggregate principal amount of Notes to be so purchased by all of such Agents on the Settlement Date, the nondefaulting Agents shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective initial underwriting obligations bear to the underwriting obligations of all nondefaulting Agents; or (b) if the aggregate principal amount of Defaulted Notes exceeds 10% of the aggregate principal amount of Notes to be so purchased by all of such Agents on the Settlement Date, such agreement shall terminate without liability on the part of any nondefaulting Agent. No action taken pursuant to this paragraph shall relieve any defaulting Agent from liability in respect of its default. In the event of any such default which does not result in a termination of such agreement, either the nondefaulting Agents or the Company shall have the right to postpone the Settlement Date for a period not exceeding seven days in order to effect any required changes in the Registration Statement or the Prospectus or in any other documents or arrangements. 15 (2) Solicitations as Agent. On the basis of the ---------------------- representations and warranties herein contained, but subject to the terms and conditions herein set forth, when agreed by the Company and an Agent, such Agent, as an agent of the Company, will use its reasonable efforts to solicit offers for the purchase of Notes upon the terms set forth in the Prospectus. The Agents are not authorized to appoint sub-agents with respect to Notes sold through them as agent. All Notes sold through an Agent as agent will be sold at 100% of their principal amount unless otherwise agreed upon between the Company and such Agent. The Company reserves the right, in its sole discretion, to suspend solicitation of offers for the purchase of Notes through an Agent, as an agent of the Company, commencing at any time for any period of time or permanently. As soon as practicable after receipt of instructions from the Company, such Agent will suspend solicitation of offers for the purchase of Notes from the Company until such time as the Company has advised such Agent that such solicitation may be resumed. The Company agrees to pay each Agent a commission, in the form of a discount, equal to the applicable percentage of the principal amount of each Note sold by the Company as a result of a solicitation made by such Agent, as an agent of the Company, as set forth in Schedule A hereto. ---------- (3) Administrative Procedures. The purchase price, ------------------------- interest rate or formula, maturity date and other terms of the Notes specified in Exhibit A hereto (as applicable) shall be agreed upon between the Company and --------- the applicable Agent(s) and specified in a pricing supplement to the Prospectus (each, a "Pricing Supplement") to be prepared by the Company in connection with ------------------ each sale of Notes. Except as otherwise specified in the applicable Pricing Supplement, the Notes will be issued in denominations of U.S. $1,000 or any larger amount that is an integral multiple of U.S. $1,000. Administrative procedures with respect to the issuance and sale of the Notes (the "Procedures") ---------- shall be agreed upon from time to time among the Company, the Agents and the Trustee. The Agents and the Company agree to perform, and the Company agrees to cause the Trustee to 16 agree to perform, their respective duties and obligations specifically provided to be performed by them in the Procedures. 4. Covenants of the Company. ------------------------ The Company covenants and agrees with each Agent as follows: (1) Notice of Certain Events. The Company will notify the ------------------------ and confirm such notice in writing, of (i) the effectiveness of any post- effective amendment to the Registration Statement or the filing of any amendment or supplement to the Prospectus (other than any amendment or supplement thereto providing solely for the determination of the variable terms of the Notes or relating solely to the offering of securities other than the Notes), (ii) the receipt of any comments from the Commission, (iii) any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, (iv) the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, or of any order preventing or suspending the use of any preliminary prospectus, or of the initiation of any proceedings for that purpose, (v) any change in the rating assigned by any nationally recognized statistical rating organization to the Program or any debt securities (including the Notes) of the Company, or the public announcement by any nationally recognized statistical rating organization that it has under surveillance or review, with possible negative implications, its rating of the Program or any such debt securities, or the withdrawal by any nationally recognized statistical rating organization of its rating of the Program or any such debt securities and (iv) the expected date of any Substitution Date under the Indenture. The Company will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (2) Filing or Use of Amendments. The Company will give --------------------------- the Agents advance notice of its intention to file or prepare any additional registration statement with respect to the registration of additional Notes, any amendment to the Registration Statement (in- 17 cluding any filing under Rule 462(b) of the 1933 Act Regulations) or any amendment or supplement to the prospectus included in the Registration Statement at the time it became effective or to the Prospectus (other than an amendment or supplement thereto providing solely for the determination of the variable terms of the Notes or relating solely to the offering of securities other than the Notes or an amendment or supplement pursuant to the requirements of the 1934 Act and the 1934 Act Regulations), will furnish to the Agents copies of any such document a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file any such document to which the Agents or counsel for the Agents shall object. (3) Delivery of the Registration Statement. The Company -------------------------------------- has furnished to each Agent and to counsel for the Agents, without charge, signed and conformed copies of the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein) and signed and conformed copies of all consents and certificates of experts. The Registration Statement and each amendment thereto furnished to the Agents will be identical to any electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (4) Delivery of the Prospectus. The Company will deliver --------------------------- to each Agent, without charge, as many copies of each preliminary prospectus as such Agent may reasonably request, and the Company hereby consents to the use of such copies for purposes permitted by the 1933 Act. The Company will furnish to each Agent, without charge, such number of copies of the Prospectus (as amended or supplemented) as such Agent may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Agents will be identical to any electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (5) Preparation of Pricing Supplements. The Company will ---------------------------------- prepare, with respect to any Notes to be sold to or through one or more Agents pursuant to this Agreement, a Pricing Supplement with respect to such 18 Notes in a form previously approved by the Agents. The Company will deliver such Pricing Supplement no later than 11:00 a.m., New York City time, on the business day following the date of the Company's acceptance of the offer for the purchase of such Notes and will file such Pricing Supplement pursuant to Rule 424(b)(3) under the 1933 Act not later than the close of business of the Commission on the fifth business day after the date on which such Pricing Supplement is first used. (6) Revisions of Prospectus -- Material Changes. Except ------------------------------------------- as otherwise provided in subsection (m) of this Section 4, if at any time during the term of this Agreement any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Agents or counsel for the Company, to amend the Registration Statement in order that the Registration Statement will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or to amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time the Prospectus is delivered to a purchaser, or if it shall be necessary, in the opinion of either such counsel, to amend the Registration Statement or amend or supplement the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Company shall give immediate notice, confirmed in writing, to the Agents to cease the solicitation of offers for the purchase of Notes in their capacity as agents and to cease sales of any Notes they may then own as principal, and the Agents shall as soon as practicable cease any such solicitation or sales, and the Company will promptly prepare and file with the Commission, subject to Section 4(b) hereof, such amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement and Prospectus comply with such requirements, and the Company will furnish to the Agents, without charge, such number of copies of such amendment or supplement as the Agents may reasonably request. In addition, the Company will comply with the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act Regulations so 19 as to permit the completion of the distribution of each offering of Notes. (7) Prospectus Revisions -- Periodic Financial Information. ------------------------------------------------------ Except as otherwise provided in subsection (m) of this Section 4, on or prior to the date on which there shall be released to the general public interim financial statement information related to the Company with respect to each of the first three quarters of any fiscal year or preliminary financial statement information with respect to any fiscal year, the Company shall furnish such information to the Agents, confirmed in writing, and shall, as required by the 1933 Act and the 1933 Act Regulations, cause the Prospectus to be amended or supplemented to include financial information with respect thereto and corresponding information for the comparable period of the preceding fiscal year, as well as such other information and explanations as shall be necessary for an understanding thereof or as shall be required by the 1933 Act or the 1933 Act Regulations. (8) Prospectus Revisions -- Audited Financial Information. ----------------------------------------------------- Except as otherwise provided in subsection (m) of this Section 4, on or prior to the date on which there shall be released to the general public financial information included in or derived from the audited consolidated financial statements of the Company for the preceding fiscal year, the Company shall furnish such information to the Agents, confirmed in writing, and shall, as required by the 1933 Act and the 1933 Act Regulations, cause the Prospectus to be amended or supplemented to include such audited consolidated financial statements and the report or reports, and consent or consents to such inclusion, of the independent accountants with respect thereto, as well as such other information and explanations as shall be necessary for an understanding of such consolidated financial statements or as shall be required by the 1933 Act or the 1933 Act Regulations. (9) Earnings Statements. The Company will timely file such ------------------- reports pursuant to the 1934 Act as are necessary in order to make generally available to its security holders an earnings statement for the purposes of, and to provide the benefits contemplated by, the last paragraph of Section 11(a) of the 1933 Act. 20 (10) Reporting Requirements. The Company, during the period ---------------------- when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods prescribed by the 1934 Act and the 1934 Act Regulations. (11) Restriction on Offers and Sales of Securities. Unless --------------------------------------------- otherwise agreed upon between one or more Agents acting as principal and the Company, between the date of an agreement made in accordance with Section 3(a) hereof by such Agent(s) to purchase the related Notes from the Company and the Settlement Date with respect thereto, the Company will not, without the prior written consent of such Agent(s), issue, sell, offer or contract to sell, grant any option for the sale of, or otherwise dispose of, any debt securities of the Company (other than the Notes that are to be sold pursuant to such agreement or commercial paper in the ordinary course of business). (12) Use of Proceeds. The Company will use the net proceeds --------------- received by it from the issuance and sale of the Notes in the manner specified in the Prospectus. (13) Suspension of Certain Obligations. The Company shall --------------------------------- not be required to comply with the provisions of subsections (f), (g) or (h) of this Section 4 during any period from the time (i) the Agents shall have suspended solicitation of offers for the purchase of Notes in their capacity as agents pursuant to a request from the Company and (ii) no Agent shall then hold any Notes purchased from the Company as principal, as the case may be, until the time the Company shall determine that solicitation of offers for the purchase of Notes should be resumed or an Agent shall subsequently purchase Notes from the Company as principal. 5. Conditions of Agents' Obligations. --------------------------------- The obligations of one or more Agents to purchase Notes from the Company as principal and to solicit offers for the purchase of Notes as an agent of the Company, and the obligations of any purchasers of Notes sold through an Agent as an agent of the Company, will be subject to the accuracy of the representations and war- 21 ranties on the part of the Company herein contained or contained in any certificate of an officer of the Company or any of its subsidiaries delivered pursuant to the provisions hereof, to the performance and observance by the Company of its covenants and other obligations hereunder, and to the following additional conditions precedent: (1) Effectiveness of Registration Statement. The --------------------------------------- Registration Statement (including any Rule 462(b) Registration Statement) has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act and no proceedings for that purpose shall have been instituted or shall be pending or threatened by the Commission, and any request on the part of the Commission for additional information shall have been complied with to the reasonable satisfaction of counsel to the Agents. (2) Legal Opinions. On the date hereof, the Agents shall -------------- have received the following legal opinions, dated as of the date hereof and in form and substance reasonably satisfactory to the Agents (it being understood that such legal opinions will be subject to reasonable and customary assumptions, qualifications and exclusions): (1) Opinion of Counsel for the Company. The favorable ---------------------------------- opinion of Perkins Coie LLP counsel for the Company, to the effect set forth in Exhibit B hereto and to such further effect as the Agents may reasonably request. (2) Opinion of Counsel for the Agents. The favorable --------------------------------- opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Agents, relating to statements or omissions of material facts included in the Registration Statement and the Prospectus. (3) Officer's Certificate. On the date hereof, there shall --------------------- not have been, since the respective dates as of which information is given in the Prospectus, any material adverse change in the condition, financial 22 or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, and the Agents shall have received a certificate of the President or a Vice President of the Company and of the chief financial officer, chief accounting officer or treasurer of the Company, dated as of the date hereof, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties of the Company herein contained are true and correct with the same force and effect as though expressly made at and as of the date of such certificate, (iii) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the date of such certificate, and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or, to the best of such officer's knowledge, are threatened by the Commission. (4) Comfort Letter of PricewaterhouseCoopers, LLP On --------------------------------------------- the date hereof, the Agents shall have received a letter from PricewaterhouseCoopers LLP, dated as of the date hereof and in form and substance satisfactory to the Agents, to the effect set forth in Exhibit C hereto. (5) Additional Documents. On the date hereof, counsel to -------------------- the Agents shall have been furnished with such documents and opinions as such counsel may reasonably require for the purpose of enabling such counsel to pass upon the issuance and sale of Notes as herein contemplated and related proceedings, or in order to evidence the accuracy of any of the representations and warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company in connection with the issuance and sale of Notes as herein contemplated shall be reasonably satisfactory in form and substance to the Agents and to counsel to the Agents. If any condition specified in this Section 5 shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the applicable Agent or Agents by notice to the Company at any time and any such termination shall be without liability 23 of any party to any other party except as provided in Section 10 hereof and except that Sections 8, 9, 11, 14 and 15 hereof shall survive any such termination and remain in full force and effect. 6. Delivery of and Payment for Notes Sold through an Agent as Agent. ---------------------------------------------------------------- Delivery of Notes sold through an Agent as an agent of the Company shall be made by the Company to such Agent for the account of any purchaser only against payment therefor in immediately available funds. In the event that a purchaser shall fail either to accept delivery of or to make payment for a Note on the date fixed for settlement, such Agent shall promptly notify the Company and deliver such Note to the Company and, if such Agent has theretofore paid the Company for such Note, the Company will promptly return such funds to such Agent. If such failure has occurred for any reason other than default by such Agent in the performance of its obligations hereunder, the Company will reimburse such Agent on an equitable basis for its loss of the use of the funds for the period such funds were credited to the Company's account. 7. Additional Covenants of the Company. ----------------------------------- The Company further covenants and agrees with each Agent as follows: (1) Reaffirmation of Representations and Warranties. Each ----------------------------------------------- acceptance by the Company of an offer for the purchase of Notes (whether to one or more Agents as principal or through an Agent as agent), and each delivery of Notes (whether to one or more Agents as principal or through an Agent as agent), shall be deemed to be an affirmation that the representations and warranties of the Company herein contained are true and correct at the time of such acceptance or sale, as the case may be, and an undertaking that such representations and warranties will be true and correct at the time of delivery to such Agent(s) or to the purchaser or its agent, as the case may be, of the Notes relating to such acceptance or sale, as the case may be, as though made at and as of each such time (it being understood that such representations and warranties shall relate to the Registration 24 Statement and Prospectus as amended and supplemented to each such time). (2) Subsequent Delivery of Certificates. Each time that ----------------------------------- (i) the Registration Statement or the Prospectus shall be amended or supplemented (other than by an amendment or supplement providing solely for the determination of the variable terms of the Notes or relating solely to the offering of securities other than the Notes), (ii) (if required in connection with the purchase of Notes from the Company by one or more Agents as principal) the Company sells Notes to one or more Agents as principal or (iii) the Company sells Notes in a form not previously certified to the Agents by the Company, the Company shall furnish or cause to be furnished to the Agent(s), forthwith a certificate dated the date of filing with the Commission or the date of effectiveness of such amendment or supplement, as applicable, or the date of such sale, as the case may be, in form reasonably satisfactory to the Agent(s) to the effect that the statements contained in the certificate referred to in Section 5(c) hereof which were last furnished to the Agents are true and correct at the time of the filing or effectiveness of such amendment or supplement, as applicable, or the time of such sale, as the case may be, as though made at and as of such time (except that such statements shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to such time) or, in lieu of such certificate, a certificate of the same tenor as the certificate referred to in Section 5(c) hereof, modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such certificate (it being understood that, in the case of clause (ii) above, any such certificate shall also include a certification that there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise since the date of the agreement by such Agent(s) to purchase Notes from the Company as principal). (3) Subsequent Delivery of Legal Opinions. Each time that ------------------------------------- (i) the Registration Statement or the Prospectus shall be amended or supplemented (other than by an amendment or supplement providing solely for the determination of the variable terms of the Notes or 25 relating solely to the offering of securities other than the Notes), (ii) (if required in connection with the purchase of Notes from the Company by one or more Agents as principal) the Company sells Notes to one or more Agents as principal or (iii) the Company sells Notes in a form not previously certified to the Agents by the Company, the Company shall furnish or cause to be furnished forthwith to the Agent(s) and to counsel to the Agents the written opinion of Perkins Coie LLP counsel to the Company, or other counsel reasonably satisfactory to the Agent(s), dated the date of filing with the Commission or the date of effectiveness of such amendment or supplement, as applicable, or the date of such sale, as the case may be, in form and substance reasonably satisfactory to the Agent(s), of the same tenor as the opinion referred to in Section 5(b)(1) hereof, but modified, as necessary, to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such opinion or, in lieu of such opinion, counsel last furnishing such opinion to the Agents shall furnish the Agent(s) with a letter substantially to the effect that the Agent(s) may rely on such last opinion to the same extent as though it was dated the date of such letter authorizing reliance (except that statements in such last opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such letter authorizing reliance). (4) Subsequent Delivery of Comfort Letters. Each time that -------------------------------------- (i) the Registration Statement or the Prospectus shall be amended or supplemented to include additional financial information (other than by an amendment or supplement relating solely to the issuance and/or offering of securities other than the Notes) or (ii) (if required in connection with the purchase of Notes from the Company by one or more Agents as principal) the Company sells Notes to one or more Agents as principal, the Company shall cause PricewaterhouseCoopers LLP forthwith to furnish to the Agent(s) a letter, dated the date of filing with the Commission or the date of effectiveness of such amendment or supplement, as applicable, or the date of such sale, as the case may be, in form satisfactory to the Agent(s), of the same tenor as the letter referred to in Section 5(d) hereof but modified to relate to the Registration Statement and Prospec- 26 tus as amended and supplemented to the date of such letter. 8. Indemnification. --------------- (1) Indemnification of the Agents. The Company agrees to ----------------------------- indemnify and hold harmless each Agent and each person, if any, who controls such Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows: (1) against any and all loss, liability, claim and damage whatsoever, as incurred, arising out of an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, or arising out of an untrue statement or alleged untrue statement of a material fact included in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (2) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, provided that (subject to Section 8(d) hereof) any such settlement is effected with the written consent of the Company; and (3) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by such Agent), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatso- 27 ever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above; provided, however, that this indemnity does not apply to any loss, liability, - -------- ------- claim, damage or expense to the extent arising out of an untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by the Agents expressly for use in the Registration Statement (or any amendment thereto) or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto); and provided further, that such indemnity with respect to the -------- ------- Prospectus shall not inure to the benefit of any Agent (or any person controlling any Agent) from whom the person asserting any such loss, liability, claim, damage or expense purchased the Notes which are the subject thereof if such person did not receive a copy of the Prospectus (or the Prospectus as supplemented), excluding documents incorporated therein by reference, at or prior to the confirmation of the sale of such Notes to such person in any case where such delivery is required by the 1933 Act and the untrue statement or omission of a material fact contained in the Prospectus was corrected in the Prospectus as supplemented. (2) Indemnification of Company, Directors and Officers. -------------------------------------------------- Each Agent severally agrees to indemnify and hold harmless the Company, its directors, each of its officers who signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 8(a) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto) or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by the Agents expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). 28 (3) Actions Against Parties; Notification. Each ------------------------------------- indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. In the case of parties indemnified pursuant to Section 8(a) hereof, counsel to the indemnified parties shall be selected by the applicable Agent(s) and, in the case of parties indemnified pursuant to Section 8(b) hereof, counsel to the indemnified shall be selected by the Company. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party -------- ------- shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 8 or 9 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. 29 (4) Settlement without Consent if Failure to Reimburse. If -------------------------------------------------- at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable in accordance with Section 8(a)(iii) for any settlement of the nature contemplated by Section 8(a)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. 9. Contribution. If the indemnification provided for in Section 8 ------------ hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on the one hand, and the applicable Agent(s), on the other hand, from the offering of the Notes that were the subject of the claim for indemnification or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, on the one hand, and the applicable Agent(s), on the other hand, in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the applicable Agent(s), on the other hand, in connection with the offering of the Notes that were the subject of the claim for indemnification shall be deemed to be in the same respective proportions as the total net proceeds from the offering of such Notes (before deducting expenses) received by the Company and the total discount or commission received by each appli- 30 cable Agent, as the case may be, bears to the aggregate initial offering price of such Notes. The relative fault of the Company, on the one hand, and the applicable Agent(s), on the other hand, shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the applicable Agent(s) and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Agents agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined by pro rata allocation (even if the applicable Agent(s) were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 9. Notwithstanding the provisions of this Section 9, (i) no Agent shall be required to contribute any amount in excess of the amount by which the total discount or commission received by such Agent in connection with the offering of the Notes that were the subject of the claim for indemnification exceeds the amount of any damages which such Agent has otherwise been required to pay by reason of any applicable untrue or alleged untrue statement or omission or alleged omission and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. In addition, in connection with an offering of Notes purchased from the Company by two or more Agents as principal, the respective obligations of such Agents to contribute pursuant to this Section 9 are several, and not joint, in proportion to the aggregate principal amount of Notes that each such Agent has agreed to purchase from the Company. For purposes of this Section 9, each person, if any, who controls an Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Agent, and each director of the Company, each officer of the Company 31 and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. 10. Payment of Expenses. ------------------- The Company will pay all expenses incident to the performance of its obligations under this Agreement, including: (1) The preparation, filing, printing and delivery of the Registration Statement as originally filed and all amendments thereto and any preliminary prospectus, the Prospectus and any amendments or supplements thereto; (2) The preparation, printing and delivery of this Agreement and the Indenture; (3) The preparation, issuance and delivery of the Notes, including any fees and expenses relating to the eligibility and issuance of Notes in book-entry form and the cost of obtaining CUSIP or other identification numbers for the Notes; (4) The fees and disbursements of the Company's accountants, counsel and other advisors or agents (including any calculation agent) and of the Trustee and its counsel; (5) The reasonable fees and disbursements of counsel to the Agents incurred in connection with the establishment of the Program and incurred from time to time in connection with the transactions contemplated hereby; (6) The fees charged by nationally recognized statistical rating organizations for the rating of the Program and the Notes; (7) The fees and expenses incurred in connection with any listing of Notes on a securities exchange; (8) The filing fees incident to, and the reasonable fees and disbursements of counsel to the 32 Agents in connection with, the review, if any, by the National Association of Securities Dealers, Inc. (the "NASD"); and ---- (9) Any advertising and other out-of-pocket expenses of the Agents incurred with the approval of the Company. 11. Representations, Warranties and Agreements to Survive ----------------------------------------------------- Delivery. - -------- All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company or any of its subsidiaries submitted pursuant hereto or thereto shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Agents or any controlling person of an Agent, or by or on behalf of the Company, and shall survive each delivery of and payment for the Notes. 12. Termination. ----------- (1) Termination of this Agreement. This Agreement ----------------------------- (excluding any agreement by one or more Agents to purchase Notes from the Company as principal) may be terminated for any reason, at any time by either the Company or an Agent, as to itself, upon the giving of 30 days' prior written notice of such termination to the other party hereto. (2) Termination of Agreement to Purchase Notes as Principal. -------------------------------------------------------- The applicable Agent(s) may terminate any agreement by such Agent(s) to purchase Notes from the Company as principal, immediately upon notice to the Company, at any time prior to the Settlement Date relating thereto, if (i) there has been, since the date of such agreement or since the respective dates as of which information is given in the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) there has occurred any material adverse change in the financial markets in the United States or any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or 33 development or event involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the reasonable judgment of such Agent(s), impracticable to market such Notes or enforce contracts for the sale of such Notes, or (iii) trading in any securities of the Company has been suspended or limited by the Commission or a national securities exchange, or if trading generally on the New York Stock Exchange or the American Stock Exchange or in the NASDAQ National Market has been suspended or limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by either of said exchanges or by such system or by order of the Commission, the NASD or any other governmental authority, or (iv) a banking moratorium has been declared by either Federal or New York authorities, or (v) the rating assigned by any nationally recognized statistical rating organization to the Program or any debt securities (including the Notes) of the Company as of the date of such agreement shall have been lowered or withdrawn since that date or if any such rating organization shall have publicly announced that it has under surveillance or review its rating of the Program or any such debt securities, or (vi) there shall have come to the attention of such Agent(s) any facts that would cause such Agent(s) to believe that the Prospectus, at the time it was required to be delivered to a purchaser of such Notes, included an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time of such delivery, not misleading. (3) General. In the event of any such termination, neither ------- party will have any liability to the other party hereto, except that (i) the Agents shall be entitled to any commissions earned in accordance with the third paragraph of Section 3(b) hereof, (ii) if at the time of termination (a) any Agent shall own any Notes purchased by it from the Company as principal or (b) an offer to purchase any of the Notes has been accepted by the Company but the time of delivery to the purchaser or his agent of such Notes relating thereto has not occurred, the covenants set forth in Sections 4 and 7 hereof shall remain in effect until such Notes are so resold or delivered, as the case may be, and (iii) the covenant set forth in Section 4(i) hereof, the provisions 34 of Section 10 hereof, the indemnity and contribution agreements set forth in Sections 8 and 9 hereof, and the provisions of Sections 11, 14 and 15 hereof shall remain in effect. (1) 13. Notices. ------- Unless otherwise provided herein, all notices required under the terms and provisions hereof shall be in writing, either delivered by hand, by mail or by telex, telecopier or telegram, and any such notice shall be effective when received at the address specified below. If to the Company: Puget Sound Energy, Inc. 411-108th Avenue N.E. Bellevue, Washington 98004-5515 Attention: Treasurer Telecopy No.: (425) 462-3300 If to the Agents: Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated World Financial Center North Tower - 10th Floor New York, New York 10281-1310 Attention: MTN Product Management Telecopy No.: (212) 449-2234 Salomon Smith Barney Inc Seven World Trade Center New York, NY 10048 Attention: Medium Term Note Department Telecopy No.: (212) 783-2274 or at such other address as such party may designate from time to time by notice duly given in accordance with the terms of this Section 13. 14. Parties. ------- This Agreement shall inure to the benefit of and be binding upon the Agents and the Company and their 35 respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the parties hereto and their respective successors and the controlling persons, officers and directors referred to in Sections 8 and 9 hereof and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties hereto and their respective successors, and said controlling persons, officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Notes shall be deemed to be a successor by reason merely of such purchase. 15. GOVERNING LAW; FORUM. -------------------- THIS AGREEMENT AND ALL THE RIGHTS AND OBLIGATIONS OF THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY AGAINST ANY AGENT IN CONNECTION WITH OR ARISING UNDER THIS AGREEMENT SHALL BE BROUGHT SOLELY IN THE STATE OR FEDERAL COURT OF APPROPRIATE JURISDICTION LOCATED IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK. 16. Effect of Headings. ------------------ The Article and Section headings herein are for convenience only and shall not affect the construction hereof. 17. Counterparts. ------------ This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts hereof shall constitute a single instrument. 36 If the foregoing is in accordance with the Agents' understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this Distribution Agreement, along with all counterparts, will become a binding agreement among the Agents and the Company in accordance with its terms. Very truly yours, PUGET SOUND ENERGY, INC. By: /s/ Donald E. Gaines -------------------- Name: Donald E. Gaines Title: Treasurer CONFIRMED AND ACCEPTED, as of the date first above written: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ Scott Primrose ------------------------------ Authorized Signatory SALOMON SMITH BARNEY INC By: /s/ Kimberly Blue ------------------------------ Authorized Signatory 37 EX-1.2 3 TERMS AGREEMENT DATED MARCH 4, 1999 EXHIBIT 1.2 Puget Sound Energy, Inc. Senior Medium-Term Notes, Series B Due 9 Months or More from Date of Issue TERMS AGREEMENT March 4, 1999 Puget Sound Energy, Inc. 411-108th Avenue N.W. Bellevue, Washington 98004-5515 Attention: Treasurer Subject in all respects to the terms and conditions of the Distribution Agreement dated March 3, 1999 among Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney Inc. and you (the "Agreement"), the undersigned (collectively, the "Purchasers") agree to purchase the Senior Medium Term Notes, Series B (the "Notes") described below of Puget Sound Energy, Inc. (the "Company") for sale to investors or agree to arrange for the sale of Notes by the Company directly to investors. All capitalized terms not defined herein shall have the meanings ascribed to such terms in the Agreement. The Company hereby appoints each of NationsBanc Montgomery Securities LLC ("NationsBanc"), Chase Securities, Inc. ("Chase Securities"), CIBC Oppenheimer Corp. ("CIBC") and First Chicago Capital Markets, Inc. ("First Chicago") and as an agent under the Agreement in connection with the placement or purchase as principal by each of them, in the respective amounts set forth on Annex B hereto, of the Notes described herein and in the Company's Pricing Supplements, each dated March 4, 1999, to the Company's Prospectus dated October 14, 1998 and the Company's Prospectus Supplement dated March 3, 1999. The Company agrees that with respect to the Notes, each of Chase Securities, CIBC, First Chicago and NationsBanc, shall be entitled to the benefit of the representations and warranties, agreements and indemnities (including contribution) as agreed to by the Company in favor of the Agents named in the Agreement to the same extent as if each of Chase Securities, CIBC, First Chicago and NationsBanc were named as Agents thereunder. THE NOTES ---------
10 Year Notes 30 Year Notes Aggregate Principal Amount: $150,000,000 $100,000,000 Purchase Price: 99.875%-99.125% of 99.875%-99.125% of Principal Amount Principal Amount Priority: Senior Senior Issue Price: 100% of Principal Amount 100% of Principal Amount Currency or Currency Unit: United States Dollars United States Dollars Interest Rate or Method of 6.46% per annum, 7.00% per annum, Determining: accruing from March 9, accruing from March 9, 1999 1999 Date of Maturity: March 9, 2009 March 9, 2027 Interest Payment Dates: April 15 and October April 15 and October 15 of each year, except 15 of each year, except as provided in the as provided in the Pricing Supplement Pricing Supplement Closing Date: March 9, 1999 March 9, 1999
Method of Payment: Immediately available Immediately available funds funds Trustee, Paying Agent and State Street Bank and State Street Bank and Authenticating Agent: Trust Company Trust Company Modification, if any, in the Each of the documents Each of the documents requirements to deliver the required to be required to be documents specified in the delivered in accordance delivered in accordance Distribution Agreement: with the Distribution with the Distribution Agreement shall be Agreement shall be dated as of, and dated as of, and delivered to each delivered to each Purchaser on the Purchaser on the Closing Date Closing Date Other terms: The Notes shall have The Notes shall have such additional terms such additional terms as are specified in the as are specified in the form of Pricing form of Pricing Supplement, attached Supplement, attached hereto as Annex A-1 hereto as Annex A-2 Allocation among Purchasers: Each of the Purchasers Each of the Purchasers severally agrees to severally agrees to purchase the respective purchase the respective principal amount of principal amount of Notes set forth next to Notes set forth next to its name in Annex B and its name in Annex B and each Purchaser shall be each Purchaser shall be entitled to the entitled to the percentage of the total percentage of the total underwriting discounts underwriting discounts indicated in Annex B indicated in Annex B Default of Purchasers: The provisions set The provisions set forth in Annex C hereto forth in Annex C hereto are incorporated herein are incorporated herein by reference by reference
Unless otherwise agreed upon between one or more Agents acting as principal and the Company, between the date of this Agreement and the Settlement Date, the Company will not, without the prior written consent of such Agent(s), issue, sell, offer or contract to sell, grant any option for the sale of, or otherwise dispose of, any debt securities of the Company (other than the Notes that are to be sold pursuant to such agreement or commercial paper in the ordinary course of business). MERRILL LYNCH CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED SALOMON SMITH BARNEY INC. NATIONSBANK MONTGOMERY SECURITIES LLC CHASE SECURITIES, INC. CIBC OPPENHEIMER CORP. FIRST CHICAGO CAPITAL MARKETS, INC. By: Merrill Lynch, Pierce, Fenner & Smith Incorporated By: /s/ Scott G. Primrose --------------------------- Scott G. Primrose Title: Authorized Signatory Accepted: PUGET SOUND ENERGY, INC. By: /s/ Donald E. Gaines --------------------- Donald E. Gaines Treasurer EX-4.26 4 SECOND SUPPLEMENTAL INDENTURE EXHIBIT 4.26 SECOND SUPPLEMENTAL INDENTURE FROM PUGET SOUND ENERGY, INC. TO STATE STREET BANK AND TRUST COMPANY TRUSTEE ______________ DATED AS OF MARCH 1, 1999 SUPPLEMENTAL TO INDENTURE DATED AS OF DECEMBER 1, 1997 -1- This SECOND SUPPLEMENTAL INDENTURE is made as of the 1st day of March, by and PUGET SOUND ENERGY, INC., a corporation duly organized and existing under the laws of the State of Washington (the "Company"), and STATE STREET BANK AND TRUST COMPANY, a bank and trust company organized and existing under the laws of the Commonwealth of Massachusetts, as trustee (the "Trustee"). WITNESSETH: that WHEREAS, the Company has heretofore executed and delivered its Indenture (hereinafter referred to as the "Indenture"), made as of December 1, 1997; and WHEREAS, Section 2.05 of the Indenture provides that Notes shall be issued in series and that a Company Order shall specify the terms of each issue of Notes; and WHEREAS, Section 13.01 of the Indenture provides that the Company and the Trustee may enter into indentures supplemental thereto for the purposes, among others, of establishing the form of Notes or establishing or reflecting any terms of any Note and adding to the covenants of the Company; and WHEREAS, the Company has executed and delivered to the Trustee a First Supplemental Indenture, dated December 1, 1997, providing for the creation of a series of Notes designated "Senior Medium-Term Notes, Series A; and WHEREAS, as of the date of this Supplemental Indenture, the Company has issued the following series of Notes pursuant to its Indenture, as supplemented, all of which remain outstanding:
Principal Amount of Notes Series - ------------------------------- -------------------------------- Three Hundred Million Dollars Senior Medium-Term Notes, ($300,000,000) Senior A due December 1, 2027 Two Hundred Million Dollars Senior Medium-Term Notes, ($200,000,000) Series A due June 15, 2018
WHEREAS, the Company desires to establish a series of Notes to be designated "Senior Medium-Term Notes, Series B" (hereinafter sometimes referred to as the "Series B Notes"); and WHEREAS, the execution and delivery of this Second Supplemental Indenture (herein, this "Supplemental Indenture") have been duly authorized by a resolution adopted by the Board of Directors of the Company; NOW, THEREFORE, this Supplemental Indenture -2- WITNESSETH, that, in order to set forth the terms and conditions upon which the Series A Notes are, and are to be, authenticated, issued and delivered, and in consideration of the sum of one dollar duly paid to it by the Trustee at the execution of this Supplemental Indenture, the receipt whereof is hereby acknowledged, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective Holders from time to time of the Series A Notes as follows: ARTICLE ONE RELATION TO INDENTURE; DEFINITIONS Section 1.1 This Supplemental Indenture constitutes an integral part of the Indenture. Section 1.2 For all purposes of this Supplemental Indenture: (a) Capitalized terms used but not otherwise defined herein shall have the respective meanings assigned to such terms in the Indenture; (b) All references herein to Articles and Sections, unless otherwise specified, refer to the corresponding Articles and Sections of this Supplemental Indenture; and (c) The terms "hereof," "herein," "hereby," "hereto," "hereunder," and "herewith" refer to this Supplemental Indenture. ARTICLE TWO SENIOR MEDIUM-TERM NOTES, SERIES B There shall be hereby established a series of Notes, known as and entitled "Senior Medium-Term Notes, Series B." The aggregate principal amount of the Series B Notes shall not be limited and shall be initially authenticated and delivered from time to time upon delivery to the Trustee of the documents required by Section 2.05 of the Indenture, including, among other things, a Company Order specifying the following with respect to each issue of the Series B Notes: (i) any limitations on the aggregate principal amount of such issue of Series B Notes, (ii) the Original Issue Date or Dates for such issue of Series B Notes, (iii) the stated maturity of such issue of Series B Notes (provided that no Senior Note shall mature on a date less than nine months from its Original Issue Date), (iv) the interest rate or rates, or method of calculation of such rate or rates, for such issue of Series B Notes, (v) the terms, if any, regarding the optional or mandatory redemption of such issue of Series B Notes, including the redemption date or dates, if any, and the price or prices applicable to such redemption (including any premium), (vi) whether or not such issue of Series B Notes shall be entitled to the benefit of any sinking fund, and the terms, if any, of such sinking fund, (vii) whether or not such issue of Series B Notes shall be issued in whole or in part in the form of a Global Note -3- and, if so, the Depository for such Global Note, (viii) the designation of such issue of Series B Notes, (ix) if the form of such issue of Series B Notes is not as described in Exhibit A, Exhibit B, Exhibit C or Exhibit D to the Indenture, the form of such Series B Notes, (x) the maximum annual interest rate, if any, of the Series B Notes permitted for such issue, (xi) any other information necessary to complete the Series B Notes of such issue, (xii) if prior to the Substitution Date, the designation of the related issue of Pledged First Mortgage Bonds being delivered to the Trustee in connection with the issuance of such Series B Notes, (xiii) if on or after the Substitution Date, the designation of the related issue of Pledged Substituted Mortgage Bonds, if any, (xiv) the establishment of any office or agency pursuant to Section 6.02 of the Indenture and (xv) any other terms of such series not inconsistent with the Indenture or this Supplemental Indenture. ARTICLE THREE MISCELLANEOUS Section 3.1 The Trustee has accepted the amendment of the Indenture effected by this Supplemental Indenture and agrees to execute the trust created by the Indenture as hereby amended, but only upon the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee, and without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect of any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Company, or for or with respect to (a) the validity or sufficiency of this Supplemental Indenture or any of the terms or provisions hereof, (b) the proper authorization hereof by the Company by corporate action or otherwise, and (c) the due execution hereof by the Company. Section 3.2 This Supplemental Indenture shall be construed in connection with and as a part of the Indenture. Section 3.3 (a) If any provision of this Supplemental Indenture conflicts with another provision of the Indenture required to be included in indentures qualified under the Trust Indenture Act of 1939 (as enacted prior to the date of this Supplemental Indenture) by any of the provisions of Section 310 to 317, inclusive, of said act, such required provision shall control. (b) In case any one or more of the provisions contained in this Supplemental Indenture or in the Series B Notes issued hereunder should be invalid, illegal, or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected, impaired, prejudiced or disturbed thereby. -4- Section 3.4 Whenever in this Supplemental Indenture either of the parties hereto is named or referred to, this shall be deemed to include the successors or assigns of such party, and all the covenants and agreements contained in this Supplemental Indenture by or on behalf of the Company or by or on behalf of the Trustee shall bind and inure to the benefit of the respective successors and assigns of such parties, whether so expressed or not. Section 3.5 (a) This Supplemental Indenture may be simultaneously executed in several counterparts, and all such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument. (b) The descriptive headings of the several Articles of this Supplemental Indenture were formulated, used and inserted in this Supplemental Indenture for convenience only and shall not be deemed to affect the meaning or construction of any of the provisions hereof. [The remainder of this page intentionally left blank] -5- IN WITNESS WHEREOF, PUGET SOUND ENERGY, INC. has caused this Supplemental Indenture to be signed by its President, a Vice President or its Treasurer or Assistant Treasurer, and attested by its Secretary or an Assistant Secretary and STATE STREET BANK AND TRUST COMPANY, has caused this Supplemental Indenture to be signed by its President or a Vice President, and attested by a Vice President, as of March 1, 1999. PUGET SOUND ENERGY, INC. By: /s/ Donald E. Gaines ------------------------------ Donald E. Gaines Treasurer ATTEST: /s/ James W. Eldredge - --------------------------- Secretary STATE STREET BANK AND TRUST COMPANY, as Trustee By: /s/ James E. Mogavero ------------------------------ James E. Mogavero Vice President ATTEST: /s/ unintelligible - --------------------------- Authorized Officer -6- EX-4.27 5 SEVENTY-SEVENTH SUPPLEMENTAL INDENTURE Exhibit 4.27 - ------------------------------------------------------------------------------- (Real Estate Mortgage) PUGET SOUND ENERGY, INC. TO STATE STREET BANK AND TRUST COMPANY, Trustee _______________ Seventy-Seventh Supplemental Indenture Dated as of March 1, 1999 _______________ Relating to First Mortgage Bonds, Pledged Series B due Nine Months or More From Date of Issue _______________ Supplemental to Indenture dated as of June 2, 1924, as supplemented and modified _______________ - ------------------------------------------------------------------------------- (NOT PART OF INDENTURE) ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING THIS SEVENTY-SEVENTH SUPPLEMENTAL INDENTURE, made as of the 1st day of March, 1999, by and between Puget Sound Energy, Inc., formerly Puget Sound Power & Light Company, a corporation duly organized and existing under and by virtue of the laws of the State of Washington (hereinafter sometimes called the "Company"), party of the first part, and State Street Bank and Trust Company, a Massachusetts bank and trust company with its principal corporate trust office at Two International Place, in the city of Boston and Commonwealth of Massachusetts 02110 (successor to Old Colony Trust Company) (hereinafter sometimes called the "Trustee"), as Trustee under the First Mortgage (originally, and before modification thereof by certain supplemental indentures, called "First and Refunding Mortgage") from Puget Sound Power & Light Company, a Massachusetts corporation (hereinafter sometimes called the "Predecessor Company"), dated as of June 2, 1924 (said Mortgage being hereinafter sometimes called the "Original Mortgage"), as supplemented and modified by all indentures supplemental thereto heretofore executed and delivered, party of the second part; WITNESSETH: that WHEREAS, the Predecessor Company did by the Original Mortgage, filed for record in the offices of the Auditors of the Counties of Chelan, Clallam, Cowlitz, Douglas, Grant, Grays Harbor, Island, Jefferson, King, Kitsap, Kittitas, Lewis, Mason, Pacific, Pierce, Skagit, Snohomish, Thurston and Whatcom, all in the State of Washington, and left on file as a chattel mortgage in each of said counties, convey and pledge certain property therein described to Old Colony Trust Company, as Trustee, to be held upon the trusts expressed in the Original Mortgage to equally secure an unlimited authorized amount of mortgage bonds (therein and herein called the "Bonds") issued or to be issued in one or more series, all as more fully provided in the Original Mortgage; and WHEREAS, the Predecessor Company, prior to September 1, 1954, had executed and delivered to the Trustee thirty-nine supplemental indentures, supplementing and in certain respects modifying the Original Mortgage and providing for the execution, certification and delivery of Bonds of various series from time to time pursuant thereto (which Original Mortgage, as so supplemented and modified, is therein and herein sometimes called the "First Mortgage"); and Page 1 ANY WRITING, TEXT, INTIALS, REVISIIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING WHEREAS, the Predecessor Company executed and delivered to the Trustee a Fortieth Supplemental Indenture, dated as of September 1, 1954, which Supplemental Indenture is divided into two parts, designated as Part I and Part II, and Part I thereof provided for the establishment and the execution, certification and delivery initially of Twenty-Five Million Dollars ($25,000,000) principal amount of a series of Bonds, designated as First Mortgage Bonds, 3-1/2% Series due 1984, and contained certain covenants, restrictions, conditions and provisions affecting, and provided for certain modifications of, the First Mortgage (the First Mortgage, as so supplemented and modified by said Part I, being sometimes in said Fortieth Supplemental Indenture and herein called the "Revised First Mortgage") and Part II thereof provided for modifications of the Revised First Mortgage as therein set forth, which modifications became effective on October 20, 1955 (the Revised First Mortgage as so modified by Part II of the Fortieth Supplemental Indenture as heretofore, hereby, and hereafter supplemented and modified being sometimes in said Part II and herein called the "Indenture" and references herein to Sections, Articles or other provisions of the Indenture being to the revised or modified provisions thereof as set forth in Part II of the Fortieth Supplemental Indenture); and WHEREAS, the Predecessor Company has heretofore executed and delivered to the Trustee a Forty-First Supplemental Indenture dated as of December 1, 1954, a Forty-Second Supplemental Indenture dated as of July 1, 1957, a Forty-Third Supplemental Indenture dated as of May 1, 1958, a Forty-Fourth Supplemental Indenture dated as of November l, 1959, and a Forty-Fifth Supplemental Indenture dated as of April 1, 1960, all of which mortgaged, pledged, assigned, conveyed and transferred to the Trustee and subjected to the lien of the Indenture additional property acquired or constructed, and betterments, improvements and additions made to the mortgaged property, since the execution and delivery of the Fortieth Supplemental Indenture; and WHEREAS, the Company has executed and delivered to the Trustee a Forty- Sixth Supplemental Indenture dated as of November 10, 1960, whereby the Company has succeeded to the Predecessor Company with the same effect as if the Company had been named in the Indenture as the mortgagor company and in the Bonds and coupons as the obligor thereon or maker thereof, and the Predecessor Company merged into the Company on November 16, 1960, whereupon the Company acquired all the property, real, personal or mixed, including all rights, Page 2 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENTS FOR RECORDING privileges, easements, licenses and franchises, described in the Indenture and thereby conveyed and mortgaged or intended so to be, including also all such property acquired by the Predecessor Company since the execution and delivery of the Original Mortgage, which by the terms of the Indenture is subjected or intended to be subjected to the lien thereof; and WHEREAS, the Company has executed and delivered to the Trustee the supplemental indentures set forth herein:
Supplemental Indenture Dated as of ------------------------------------- ------------------- Forty-Seventh Supplemental Indenture February 1, 1961 Forty-Eighth Supplemental Indenture November 1, 1963 Forty-Ninth Supplemental Indenture May 1, 1964 Fiftieth Supplemental Indenture January 1, 1966 Fifty-First Supplemental Indenture June 1, 1967 Fifty-Second Supplemental Indenture February 1, 1969 Fifty-Third Supplemental Indenture July 1, 1970 Fifty-Fourth Supplemental Indenture October 1, 1972 Fifty-Fifth Supplemental Indenture March 1, 1974 Fifty-Sixth Supplemental Indenture November 1, 1974 Fifty-Seventh Supplemental Indenture August 1, 1975 Fifty-Eighth Supplemental Indenture October 1, 1976 Fifty-Ninth Supplemental Indenture July 1, 1978 Sixtieth Supplemental Indenture December 1, 1979 Sixty-First Supplemental Indenture December 1, 1981 Sixty-Second Supplemental Indenture July 1, 1984 Sixty-Third Supplemental Indenture January 1, 1986 Sixty-Fourth Supplemental Indenture April 1, 1986 Sixty-Fifth Supplemental Indenture April 1, 1986 Sixty-Sixth Supplemental Indenture August 1, 1986 Sixty-Seventh Supplemental Indenture November 1, 1986 Sixty-Eighth Supplemental Indenture September 1, 1987 Sixty-Ninth Supplemental Indenture February 1, 1990 Seventieth Supplemental Indenture October 1, 1990 Seventy-First Supplemental Indenture May 1, 1991
Page 3 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING
Seventy-Second Supplemental Indenture August 1, 1991 Seventy-Third Supplemental Indenture March 1, 1992 Seventy-Fourth Supplemental Indenture October 1, 1992 Seventy-Fifth Supplemental Indenture April 1, 1993 Seventy-Sixth Supplemental Indenture December 1, 1997
all of which mortgaged, pledged, assigned, conveyed and transferred to the Trustee and subjected to the lien of the Indenture additional property acquired or constructed, and betterments, improvements and additions made to the mortgaged property since the execution and delivery of the Fortieth Supplemental Indenture; and WHEREAS, all Bonds of any series heretofore executed, authenticated and delivered pursuant to the Original Mortgage, as from time to time supplemented and modified, have been retired and canceled or payment duly and irrevocably provided for, except for the series set forth herein:
Principal Amount of Bonds Series - ---------------------------------------- ----------------------------------- Twenty-Seven Million 7.05% Series due August 1, 2021 Five Hundred Thousand Dollars ($27,500,000) Twenty-Three Million 7.25% Series due August 1, 2021 Four-Hundred Thousand Dollars ($23,400,000) Twenty-Five Million Dollars Secured Medium-Term Notes, Series ($25,000,000) A due November 30, 2006 One Hundred Million Dollars Secured Medium-Term Notes, Series ($100,000,000) A due February 1, 2007 Eighty-Seven Million 6.80% Series due March 1, 2022 Five Hundred Thousand Dollars ($87,500,000)
Page 4 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING
Principal Amount of Bonds Series - ------------------------- ------ Five Million Dollars Secured Medium-Term Notes, Series ($5,000,000) A due April 9, 2012 Ten Million Dollars Secured Medium-Term Notes, Series ($10,000,000) A due May 7, 2007 Thirty Million Dollars Secured Medium-Term Notes, Series ($30,000,000) A due May 29, 2002 Forty-Six Million Dollars Secured Medium-Term Notes, Series ($46,000,000) A due June 19, 2006 Twenty-Seven Million Dollars Secured Medium-Term Notes, Series ($27,000,000) A due August 28, 2002 Five Million Dollars Secured Medium-Term Notes, Series ($5,000,000) A due September 11, 2002 Ten Million Dollars Secured Medium-Term Notes, Series ($10,000,000) A due September 15, 1999 Sixteen Million Secured Medium-Term Notes, Series Five Hundred Thousand Dollars A due September 14, 1999 ($16,500,000) Twenty Million Secured Medium-Term Notes, Series Five Hundred Thousand Dollars A due September 16, 1999 ($20,500,000) Fifty Million Dollars Secured Medium-Term Notes, Series ($50,000,000) B due December 10, 1999
Page 5 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING
Principal Amount of Bonds Series - ------------------------- ------ Twenty-Five Million Dollars Secured Medium-Term Notes, Series ($25,000,000) B due December 10, 2002 Fifty Million Dollars Secured Medium-Term Notes, Series ($50,000,000) B due December 10, 2004 Thirty Million Dollars Secured Medium-Term Notes, Series ($30,000,000) B due December 21, 2012 Ten Million Dollars Secured Medium-Term Notes, Series ($10,000,000) B due February 9, 2000 Thirty Million Dollars Secured Medium-Term Notes, Series ($30,000,000) B due February 10, 2003 Three Million Dollars Secured Medium-Term Notes, ($3,000,000) Series B due December 1, 2003 Eleven Million Dollars Secured Medium-Term Notes, ($11,000,000) Series B due December 2, 2003 Thirty Million Dollars Secured Medium-Term Notes, ($30,000,000) Series B due May 27, 2004 Twenty-Three Million Four 5.875% Series due March 1, 2020 Hundred sixty Thousand Dollars ($23,460,000)
Page 6 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING
Principal Amount of Bonds Series - ------------------------- ------ Fifty-Five Million Dollars Secured Medium-Term Notes, ($55,000,000) Series B due February 1, 2024 Three Hundred Million Dollars First Mortgage Bonds, ($300,000,000) Pledged Series A due December 1, 2027 Two Hundred Million Dollars First Mortgage Bonds, ($200,000,000) Pledged Series A due June 15, 2018
which Bonds are now outstanding and constitute the only Bonds of the Company outstanding under the Indenture; and WHEREAS, effective as of the opening of business on January 4, 1971, The First National Bank of Boston succeeded Old Colony Trust Company as Trustee under the Indenture by reason of the merger of Old Colony Trust Company into The First National Bank of Boston; and WHEREAS, effective as of October 2, 1995, State Street Bank and Trust Company succeeded The First National Bank of Boston as Trustee under the Indenture; and WHEREAS, the Company has entered into an Indenture (the "Debenture Indenture") dated as of December 1, 1997 with State Street Bank and Trust Company as trustee (in such capacity, the "Debenture Indenture Trustee") pursuant to which the Company proposes to issue from time to time its Senior Notes (the "Senior Notes") and the Company has agreed to make certain payments to the Debenture Indenture Trustee in respect of the principal of, premium, if any, and interest on such Senior Notes; and WHEREAS, in order to secure the payment and performance of its obligations under such Debenture Indenture, the Company has agreed to create new Bonds from time to time with substantially the same terms as the Senior Notes; to Page 7 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING issue and deliver such Bonds to the Debenture Indenture Trustee in trust for the benefit of the owners from time to time of the Senior Notes; and WHEREAS, the Board of Directors of the Company has established a new series of Bonds to be designated as "First Mortgage Bonds, Pledged Series B," due Nine Months or More From Date of Issue (hereinafter sometimes called "Bonds of the New Series"), and has authorized an issue of Five Hundred Million Dollars ($500,000,000) principal amount thereof, and the Company has complied or will comply with all provisions required to issue additional Bonds provided for in the Indenture; and WHEREAS, the Company desires to execute and deliver this Seventy-Seventh Supplemental Indenture, in accordance with the provisions of the Indenture, for the purpose of providing for the creation of the Bonds of the New Series, designating such series to be created and specifying the form and provisions of the Bonds of the New Series; and WHEREAS, all things necessary have been done to authorize the execution, delivery and recording of these presents validly to secure the payment of the principal of and interest on the issue of Five Hundred Million Dollars ($500,000,000) principal amount of Bonds of the New Series, and to make such Bonds, when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid and binding legal obligations of the Company, and to constitute the Indenture a valid and binding mortgage for the security of all the Bonds in accordance with its and their terms; NOW, THEREFORE, this Seventy-Seventh Supplemental Indenture WITNESSETH, that, pursuant to and in execution of the powers, authorities and obligations conferred, imposed and reserved in the Indenture, and pursuant to and in execution of every other power, authority and obligation thereto appertaining and/or enabling, in order to secure the payment of the principal of, and the premium, if any, and interest on, the Bonds of the New Series issued and to be issued under this Seventy-Seventh Supplemental Indenture, and secured thereby and hereby at any time outstanding according to their tenor and effect, and the performance of all the covenants and conditions therein and herein and in said Bonds of the New Series contained, and for the purpose of confirming the lien of the Indenture, said Puget Page 8 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING Sound Energy, Inc., organized and existing under the laws of the State of Washington, in consideration of the premises and of One Dollar ($1.00) and other good and valuable consideration to it duly paid by the Trustee, at or before the execution and delivery of these presents, the receipt whereof is hereby acknowledged, has granted, bargained, sold, conveyed, transferred, assigned, remised, released, mortgaged, set over and confirmed and by these presents does grant, bargain, sell, convey, transfer, assign, remise, release, mortgage, set over and confirm unto State Street Bank and Trust Company, as Trustee, and to its successor or successors in the trust created by the Indenture, and to said Trustee and its assigns, for the uses and purposes created by the Indenture, all property, real, personal or mixed, including all rights, privileges, easements, licenses and franchises, described in the Indenture (including all property described in the documents attached to the Company's financing statement filed on June 3, 1997, pursuant to the Uniform Commercial Code of the State of Washington, file number 97-154-0077) and thereby conveyed and mortgaged or intended so to be, including also all such property acquired by the Company since the execution and delivery of the Original Mortgage, which by the terms of the Indenture is subjected or intended to be subjected to the lien thereof, and including also all such property as the Company may hereafter acquire which by the terms of the Indenture is subjected or intended to be subjected to the lien thereof, excepting from the foregoing, however, all property included within the foregoing general description, whether now owned or hereafter acquired, which by the provisions of the Indenture is excepted or to be excepted from the conveyance and lien of the Indenture, or which has heretofore been released from the lien of the Indenture or otherwise disposed of by the Company free from the lien of the Indenture in accordance with the provisions thereof; TO HAVE AND TO HOLD all and singular the said property, and also all other property and interest of any kind and of every nature that, by virtue of any provision hereof or of the Indenture or otherwise, has or shall hereafter become subject to the Indenture, to the Trustee, its successor or successors and assigns; BUT IN TRUST NEVERTHELESS, for the equal and proportionate benefit and security (except as otherwise expressly provided) of all present and future holders of the Bonds of the New Series issued and to be issued under and secured by this Seventy-Seventh Supplemental Indenture, and to secure the payment of such Bonds of the New Series and the interest thereon, prior to the Substitution Date (as defined Page 9 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING herein), in accordance with the provisions of said Bonds of the New Series and of this Seventy-Seventh Supplemental Indenture, without priority or distinction as to lien or otherwise of any Bonds of the New Series over any other Bonds of the New Series so that, except as otherwise expressly provided, the principal of, and the premium, if any, and interest on, every such Bond shall be equally and proportionately secured by this Seventy-Seventh Supplemental Indenture, and to secure the performance of and compliance with the covenants and conditions of this Seventy-Seventh Supplemental Indenture, pursuant to and under and subject to the provisions and conditions and for the uses hereinafter and in this Seventy-Seventh Supplemental Indenture set forth; provided, however, that on the Substitution Date, the Bonds of the New Series will cease to secure the Senior Notes, and, at the option of the Company, the Senior Notes either (i) will become unsecured general obligations of the Company or (ii) will be secured by first mortgage bonds issued under another mortgage indenture; it being hereby agreed as follows, to wit: ARTICLE ONE BONDS OF THE NEW SERIES AND CERTAIN PROVISIONS RELATING THERETO SECTION 1.01 A. Terms of Bonds of the New Series There shall be hereby established a series of bonds, known as and entitled "First Mortgage Bonds, Pledged Series B" (herein referred to as the "Bonds of the New Series"). The aggregate principal amount of the Bonds of the New Series shall be limited to Five Hundred Million Dollars ($500,000,000) to be initially authenticated and delivered from time to time upon delivery to the Trustee of the documents required by the Indenture, including a resolution of the Board of Directors, or the Securities Pricing Committee of such Board of Directors, of the Company specifying the following with respect to each issue of the Bonds of the New Series: (i) any limitations (in addition to the limitation with respect to the aggregate principal amount of all Bonds of the New Series) on the aggregate principal amount of such issue of Bonds of the New Series, (ii) the Original Issue Date (as defined below) or Dates for such issue of Bonds of the New Series, (iii) the stated maturity of such issue of Bonds of the New Series (provided that no Bond of the New Series shall mature on Page 10 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING a date less than nine months from its Original Issue Date), (iv) the interest rate or rates, or method of calculation of such rate or rates, for such issue of Bonds of the New Series, (v) the terms, if any, regarding the optional or mandatory redemption of such issue of Bonds of the New Series, including the redemption date or dates, if any, and the price or prices applicable to such redemption (including any premium), (vi) whether or not such issue of Bonds of the New Series shall be entitled to the benefit of any sinking fund, and the terms, if any, of such sinking fund, (vii) the designation of such issue of Bonds of the New Series, (viii) if the form of such Bonds of the New Series is not as described herein, the form of such Bonds of the New Series, (ix) the maximum annual interest rate, if any, of the Bonds of the New Series permitted for such issue, (x) any other information necessary to complete the Bonds of the New Series of such issue and (xi) any other terms of such issue not inconsistent with the Indenture or this Seventy-Seventh Supplemental Indenture. The definitive Bonds of the New Series shall be issuable in registered form without coupons in denominations of $1,000 and integral multiples thereof or such other amount or amounts as may be authorized by a resolution of the Board of Directors or the Securities Pricing Committee of the Board of Directors. Both principal of and interest on the Bonds of the New Series (and premium, if any) are to be paid in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts at the principal corporate trust office, in the City of Boston, Massachusetts, of the Trustee. The definitive Bonds of the New Series may, at the option of the Company, be fully engraved or printed or lithographed on steel engraved borders. Notwithstanding any provision in the Indenture to the contrary, each Bond of the New Series shall be dated and issued as of the date of its authentication by the Trustee (the "Original Issue Date"). Each Bond of the New Series shall bear interest from the later of its Original Issue Date or the most recent date to which interest has been paid or duly provided for with respect to such Bond of the New Series until the principal of such Bond of the New Series is paid or made available for payment, and interest on each Bond of the New Series shall be payable on each interest payment date after the Original Issue Date. Page 11 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING Notwithstanding any provision in the Indenture to the contrary, the person in whose name any Bond of the New Series is registered at the close of business on any record date (as determined by the Board of Directors or the Securities Pricing Committee of the Board of Directors) with respect to any interest payment date for such Bond of the New Series shall be entitled to receive the interest payable on such interest payment date notwithstanding the cancellation of such Bond of the New Series upon any registration of transfer, exchange or substitution thereof subsequent to such record date and prior to such interest payment date, except that, if and to the extent that the Company shall default in the payment of the interest due on such interest payment date, then the registered holders of Bonds of the New Series on such record date shall have no further right to or claim in respect of such defaulted interest as such registered holders on such record date, and the persons entitled to receive payment of any defaulted interest thereafter payable or paid on any Bonds of the New Series shall be the registered holders of such Bonds of the New Series on the record date for payment of such defaulted interest. Unless otherwise determined by the Board of Directors or the Securities Pricing Committee of the Board of Directors, the term "record date" as used in this Section 1.01, and in the form of the Bonds of the New Series, with respect to any interest payment date applicable to any Bond of the New Series, shall mean the last day of the calendar month next preceding such interest payment date unless such interest payment date is the date of maturity of such Bond of the New Series, in which event the record date shall be the date of maturity of such Bond of the New Series. In case of failure by the Company to pay any interest when due, the claim for such interest shall be deemed to have been transferred by transfer of any Bond of the New Series registered on the books of the Company, and the Company, by not less than 10 days' written notice to the bondholders, may fix a subsequent record date, not more than 15 days or less than 10 days prior to the date fixed for the payment of such interest, for determination of the holders entitled to payment of such interest. Such provision for establishment of a subsequent record date, however, shall in no way affect the rights of the bondholders or of the Trustee consequent on any default. The Trustee hereunder shall, by virtue of its office as such Trustee, be the registrar and transfer agent of the Company for the purpose of registering and transferring Bonds of the New Series; however, the Company may also act as the registrar and transfer agent in lieu of the Trustee. Notwithstanding any provision in the Indenture to the contrary, neither the Company nor the Trustee shall be required to Page 12 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING make transfers or exchanges of Bonds of the New Series for a period of 15 days next preceding any designation of Bonds of the New Series to be redeemed, and neither the Company nor the Trustee shall be required to make transfers or exchanges of any Bonds designated in whole for redemption or that part of any Bond designated in part for redemption. Notwithstanding any other provision of the Indenture to the contrary, the Company shall receive a credit against its obligations to make any payment in respect of the principal of, or premium, if any, or interest on, any Bond of the New Series (whether at maturity, upon redemption or otherwise), and such obligations shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at the time that any such payment shall be due, the then due principal of, or premium, if any, or interest on, the Senior Notes initially issued contemporaneously with such Bond of the New Series shall have been fully or partially paid or there shall have been deposited with the Debenture Indenture Trustee pursuant to the Debenture Indenture sufficient available funds to fully or partially pay the then due principal of, or premium, if any, or interest on, such Senior Notes. The obligations of the Company hereunder to make such payment of principal of, premium, if any, or interest on, such Bond of the New Series shall be deemed to have been reduced by the amount of such credit. The Debenture Indenture requires that if any Senior Note in respect of which this Bond was delivered to the Debenture Indenture Trustee pursuant to the Debenture Indenture is deemed paid and discharged pursuant to Section 5.01 of the Debenture Indenture, the obligation of the Company to make payment with respect to the principal of and premium, if any, and interest on this Bond shall be satisfied and discharged and this Bond shall cease to secure such Senior Note in any manner and, the Debenture Indenture Trustee shall surrender this Bond, subject to the limitations of the Debenture Indenture, to the Company for cancellation. The Bonds of the New Series shall be issued and delivered pursuant to the Debenture Indenture to, registered in the name of and held by the Debenture Indenture Trustee in trust for the benefit of the owners from time to time of the Senior Notes. The Debenture Indenture Trustee shall not sell, assign or transfer any of the Bonds of the New Series except to a successor trustee under the Debenture Indenture. The Company may take such actions as it shall deem desirable to effect Page 13 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING compliance with such restrictions on transfer, including the placing of an appropriate legend on the Bonds of the New Series. B. Form of Bonds of the New Series The Bonds of the New Series, and the Trustee's authentication certificate to be executed on the Bonds of the New Series, shall be in substantially the following forms respectively: [FORM OF FACE OF BOND OF THE NEW SERIES] REGISTERED $___________ No.----------------------- PUGET SOUND ENERGY, INC. FIRST MORTGAGE BOND, PLEDGED SERIES B
Original Issue Date: Interest Rate: Maturity Date: __________________ ______________% _________________ Initial Redemption Initial Redemption Annual Redemption Date: Percentage: Percentage Reduction: __________________ _______________ _________________
PUGET SOUND ENERGY, INC., a corporation of the state of Washington (the "Company"), for value received hereby promises to pay to DOLLARS or registered assigns, the principal sum of on the Maturity Date set forth above, and to pay interest thereon from the Original Issue Date set forth above or from the most recent date to which interest has been paid Page 14 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING or duly provided for, semiannually in arrears on __________ and __________ in each year (each, an "Interest Payment Date"), commencing on the first such Interest Payment Date succeeding the Original Issue Date set forth above, at the per annum Interest Rate set forth above, until the principal hereof is paid or made available for payment. No interest shall accrue on the Maturity Date, so long as the principal amount of this Note is paid in full on the Maturity Date. The interest so payable and punctually paid or duly provided for on any such Interest Payment Date will be paid to the person in whose name this Bond is registered (the "Holder") at the close of business on the Regular Record Date for such interest, which shall be the ___________ or ___________, as the case may be, next preceding such Interest Payment Date; provided that the first Interest Payment Date for any Bond, the Original Issue Date of which is after a Regular Record Date but prior to the applicable Interest Payment Date, shall be the Interest Payment Date following the next succeeding Regular Record Date; and provided, further, that interest payable on the Maturity Date set forth above or, if applicable, upon redemption or acceleration, shall be payable to the person to whom principal shall be payable. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and shall be paid to the person in whose name this Bond is registered at the close of business on a Special Record Date for the payment of such defaulted interest to be fixed by the Trustee, notice whereof shall be given to the Holder not more than 15 days nor fewer than 10 days prior to such Special Record Date. Both principal of and interest on this Bond (and premium, if any) are to be paid in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts at the principal corporate trust office, in the City of Boston, Massachusetts, of the Trustee. If any Interest Payment Date or the date on which the principal of this Bond is required to paid is not a Business Day, then payment of principal, premium or interest need not be made on such date but may be made on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date or the date on which the principal of this Bond is required to be paid, and, in the case of timely payment thereof, no interest shall accrue for the period from and after such Interest Payment Date or the date on which the principal of this Bond is required to be paid. Page 15 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions or trust companies in the Borough of Manhattan, The City of New York, or in the city where the corporate trust office of the Debenture Indenture Trustee (as defined on the reverse hereof) is located, are obligated or authorized by law or executive order to close. This Bond shall not become obligatory for any purpose or be entitled to any security or benefit under said Indenture until the authentication certificate hereon shall have been signed by the Trustee. The provisions of this Bond are continued on the reverse hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. IN WITNESS WHEREOF, PUGET SOUND ENERGY, INC. has caused these presents to be executed in its corporate name and behalf by the facsimile of the signature of its President or one of its Vice Presidents and by the facsimile of the signature of its Treasurer or an Assistant Treasurer or its Secretary, thereunto duly authorized, and its corporate seal or a facsimile thereof to be hereto affixed. PUGET SOUND ENERGY, INC. Dated:____________________ By _________________________ Its _________________________ And by ______________________ Its _________________________ Page 16 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING [FORM OF REVERSE OF BOND OF THE NEW SERIES] PUGET SOUND ENERGY, INC. First Mortgage Bond, Pledged Series B This Bond is one of the Bonds of the above-designated series, of an unlimited authorized amount of Bonds of the Company known as First Mortgage Bonds, all issued or to be issued in one or more series under and secured by a First Mortgage dated as of June 2, 1924, executed and delivered by the Company to Old Colony Trust Company (State Street Bank and Trust Company, successor) as Trustee, as supplemented and/or modified by indentures supplemental thereto, including particularly the Fortieth Supplemental Indenture, dated as of September 1, 1954, in Part II of which are set forth the revised provisions of said First Mortgage as theretofore and then supplemented and modified, and the Seventy-Seventh Supplemental Indenture dated as of March 1, 1999, relating, among other things, to the Bonds of the above-designated series, and by all other instruments supplemental thereto (herein sometimes called the "Indenture"), reference to each and all of which is hereby made for a description of the property mortgaged and pledged as security for said Bonds, the rights and remedies of the Holder of this Bond in regard thereto, and the terms and conditions upon which Bonds may be issued. The Bonds of this series shall be issuable in registered form without coupons in denominations of $1,000 and integral multiples thereof or such other amount or amounts as may be authorized by a resolution of the Board of Directors or the Securities Pricing Committee of the Board of Directors. This Bond is issued to secure the payment and performance of the Company's obligations under the Indenture, dated as of December 1, 1997 (the "Debenture Indenture"), with State Street Bank and Trust Company, as Trustee (the "Debenture Indenture Trustee") to make payments in respect of the principal of, premium, if any, and interest on Senior Notes of the Company (the "Senior Notes") initially issued contemporaneously with this Bond. Notwithstanding any other provision of the Indenture to the contrary, the Company shall receive a credit against its obligations to make any payment in respect of the principal of, or premium, if any, or interest on, this Bond (whether at Page 17 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING maturity, upon redemption or otherwise), and such obligations shall be fully or partially, as the case may be, satisfied and discharged to the extent that, at the time that any such payment shall be due, the then due principal of, or premium, if any, or interest on, the Senior Notes of the Company initially issued contemporaneously with this Bond shall have been fully or partially paid or there shall have been deposited with the Debenture Indenture Trustee pursuant to the Debenture Indenture sufficient available funds to fully or partially pay the then due principal of, or premium, if any, or interest on, such Senior Notes. The obligations of the Company to make such payment of principal of, premium, if any, or interest on, this Bond shall be deemed to have been reduced by the amount of such credit. This Bond is not transferable except as required to effect transfer to any successor trustee under the Debenture Indenture. As provided in the Seventy-Seventh Supplemental Indenture, the Holder of this Bond, by his acceptance hereof, hereby consents, and all other holders of the Bonds of the above designated series, by their acceptance thereof, shall thereby consent, for the purpose and within the meaning of Section 18.02 of the Indenture, to a modification of the Indenture to redefine the term "minimum provision for depreciation" by deducting from operating revenues the cost of fuel used in the generation of electricity. This modification shall become effective without any further approval or consent of the holder of this Bond when a further supplemental indenture has been executed with the requisite consents of the holders of the Bonds of each other series then outstanding or when Bonds of all series issued prior to the First Mortgage Bonds, 12-5/8% Series due 1999 have ceased to be outstanding. This Bond is subject to redemption at the option of the Company on any date on and after the Initial Redemption Date, if any, specified on the face hereof (any date fixed for redemption shall hereafter be referred to as a "Redemption Date"). If no Initial Redemption Date is set forth on the face hereof, this Bond may not be redeemed at the option of the Company prior to the Maturity Date specified on the face hereof. On and after the Initial Redemption Date, if any, this Bond may be redeemed at any time in whole or from time to time in part at the option of the Company at the applicable Redemption Price (as defined below) together with interest thereon payable to the Redemption Date, on notice given not less than 30 days nor more than 60 days prior to the Redemption Date. In the event of redemption of this Page 18 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING Bond in part only, a new Bond of like tenor and series for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the surrender hereof. If this Bond is redeemable in the foregoing manner at the option of the Company, the "Redemption Price" shall initially be the Initial Redemption Percentage, specified on the face hereof, of the principal amount of this Bond to be redeemed and shall decline at each anniversary of the Initial Redemption Date by the Annual Redemption Percentage Reduction, if any, specified on the face hereof, of the principal amount to be redeemed until the Redemption Price is 100% of such principal amount. If this Bond or any portion hereof ($1,000 or any multiple thereof) is duly designated for redemption, if payment of the principal hereof or of such portion, together with accrued interest and premium, if any, is irrevocably provided for, and if notice of such redemption shall have been duly given, this Bond shall cease to be entitled to the lien of the Indenture from and after the date such payment is irrevocably so provided for and shall cease to bear interest from and after the date fixed for redemption. The Indenture provides that (1) the Company and the Trustee, with the consent of the holders of not less than 66-2/3% in principal amount of the Bonds at the time outstanding (determined as provided in the Indenture) including, if more than one series of Bonds shall be at the time outstanding, not less than 66-2/3% in principal amount of the Bonds at the time outstanding of each series affected, may effect, by an indenture supplemental to the Indenture, further modifications or alterations of the Indenture and of the rights and obligations of the Company and of the holders of the Bonds; provided, however, that no such modification or alteration shall be made without the consent of the registered owner hereof which will (a) extend the maturity of this Bond or reduce the rate or extend the time of payment of interest hereon or reduce the amount of the principal hereof or reduce any premium payable on the redemption hereof, or (b) permit the creation of any lien, not otherwise permitted, prior to or on a parity with the lien of the Indenture, or alter the equal and proportionate security afforded by the lien of the Indenture for the Bonds issued thereunder, or (c) reduce the number or percentage of the principal amount of the Bonds upon the consent of the holders of which modifications or alterations may be made as aforesaid or defaults may be waived; and (2) the holders of like percentages Page 19 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING of the principal amount of the Bonds outstanding and of each such series thereof may waive certain uncured past defaults and the consequences thereof. In certain events of default, the principal of this Bond may be declared due and payable before maturity as provided in said Indenture. The registered owner of this Bond is the Debenture Indenture Trustee. The Debenture Indenture requires that if any Senior Note in respect of which this Bond was delivered to the Debenture Indenture Trustee pursuant to the Debenture Indenture is deemed paid and discharged pursuant to Section 5.01 of the Debenture Indenture, the obligation of the Company to make payment with respect to the principal of and premium, if any, and interest on this Bond shall be satisfied and discharged and this Bond shall cease to secure such Senior Note in any manner, and the Debenture Indenture Trustee shall surrender this Bond, subject to the limitations of the Debenture Indenture, to the Company for cancellation. The Seventy-Seventh Supplemental Indenture provides that in the event of any default of the interest due on any interest payment date, such interest shall not be payable to the holder of the Bond on the original record date but shall be paid to the registered holder of such Bond on the subsequent record date established for payment of such defaulted interest. It is part of the contract herein contained that each holder hereof waives all right of recourse to any personal, statutory or other liability of any promoter, shareholder, officer or director, past, present or future, of the Company or of any predecessor or successor corporation for the collection of any indebtedness hereunder as more fully provided in said Indenture. [FORM OF TRUSTEE'S AUTHENTICATION CERTIFICATE] This is one of the Bonds, of the series designated herein, described in the within-mentioned Indenture. STATE STREET BANK AND COMPANY TRUST, as Trustee By ____________________________ Authorized Officer Page 20 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING SECTION 1.02 Redemption Provisions As designated by resolution of the Board of Directors or the Securities Pricing Committee of such Board of Directors, the Bonds of the New Series may be subject to redemption prior to maturity, as a whole at any time or in part from time to time, at the option of the Company, upon payment of the Redemption Price designated by the Board of Directors or the Securities Pricing Committee of the Board of Directors, together with interest accrued thereon to the date fixed for redemption, upon not less than 30 days' nor more than 60 days' notice given by first class mail, postage prepaid, to the holder of record at the date of such notice of each Bond of the New Series affected, at his address as shown on the Bond register. Such notice shall be sufficiently given if deposited in the United States mail within such period. Neither the failure to mail such notice, nor any defect in any notice so mailed to any holder, shall affect the sufficiency of such notice. The foregoing provision with respect to notice shall be subject to all other conditions and provisions of the Indenture not inconsistent herewith. SECTION 1.03 Depreciation Fund Notwithstanding the provisions of Section Six of Article II Part I of the Fortieth Supplemental Indenture, the Company hereby covenants that, so long as any of the Bonds of the New Series shall remain outstanding, (a) the covenants made by the Company in Section Four of Article II of Part I of the Fortieth Supplemental Indenture shall continue in full force and effect and (b) Bonds delivered, redeemed or purchased pursuant to said Section Four and any amount of unfunded Bond credits used as a credit in Item 7 of any depreciation fund certificate shall be deemed to be funded, unless and until the same shall have been reinstated as provided in said Section Four or in Section 2.03 of the Indenture. Cash deposited in the depreciation fund may not be applied to the redemption of the Bonds of the New Series. SECTION 1.04 Duration of Effectiveness of Article One This Article shall be in force and effect only so long as any of the Bonds of the New Series are outstanding. Page 21 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING SECTION 1.05 Minimum Provision for Depreciation The Company hereby covenants that the term "minimum provision for depreciation" shall have the meaning specified in Section 1.32 of the Indenture until the modification set forth in Article Four hereof shall have become effective, whereupon the term "minimum provision for depreciation" shall have the meaning specified in Section 4.01 hereof. SECTION 1.06 Execution and Delivery Bonds of the New Series in the aggregate principal amount of Five Hundred Million Dollars ($500,000,000) may forthwith, upon execution and delivery of the Seventy-Seventh Supplemental Indenture, or from time to time thereafter, and upon compliance by the Company with the provisions of Article Five of the Indenture, be executed by the Company and delivered to the Trustee and shall thereupon be authenticated and delivered by the Trustee to or upon the written order of the Company. SECTION 1.07 Substitution On the Substitution Date (as defined below), the Trustee will deliver to the Company for cancellation all Bonds of the New Series. The Company will cause the Trustee to provide notice to all holders of Bonds of the New Series prior to the occurrence of the Substitution Date. "Substitution Date" shall mean the date that all Bonds issued and outstanding under the Indenture ("Electric Bonds"), other than the Bonds of the New Series or any other Bonds issued to secure the Company's obligations on its Senior Notes, and all first mortgage bonds of the Company issued and outstanding under the Indenture of First Mortgage, dated as of April 1, 1957 (the "Gas Utility Mortgage"), from the Company, as successor to Washington Natural Gas Company, to Harris Trust and Savings Bank, as trustee, as supplemented and amended ("Gas Bonds" and, together with the Electric Bonds, the "First Mortgage Bonds"), other than Gas Bonds issued to secure the Company's obligations on its Senior Notes, have been retired (at, before or after the maturity thereof) through payment, redemption or otherwise (including those Electric Bonds deemed to be paid within the meaning of the Indenture and those Gas Bonds deemed to be paid within the meaning of the Gas Utility Mortgage). Page 22 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING SECTION 1.08 Definitions All other terms used but not otherwise defined in this Seventy-Seventh Supplemental Indenture shall be taken to have the same meaning as in the Indenture, except in cases where the context herein clearly indicates otherwise. ARTICLE TWO PRINCIPAL AMOUNT PRESENTLY TO BE OUTSTANDING SECTION 2.01 The total aggregate principal amount of Bonds of the Company issued and outstanding and presently to be issued and outstanding under the provisions of and secured by the Indenture will be One Billion Two Hundred Fifty Million Eight Hundred Sixty Thousand Dollars ($1,250,860,000); namely, the series of Bonds set forth herein:
Principal Amount of Bonds Series - ----------------------------------------- -------------------------------- Twenty-Seven Million 7.05% Series due August 1, 2021 Five Hundred Thousand Dollars ($27,500,000) Twenty-Three Million 7.25% Series due August 1, 2021 Four-Hundred Thousand Dollars ($23,400,000) Twenty-Five Million Dollars Secured Medium-Term Notes, ($25,000,000) Series A due November 30, 2006 One Hundred Million Dollars Secured Medium-Term Notes, ($100,000,000) Series A due February 1, 2007
page 23 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING
Principal Amount of Bonds Series - ----------------------------------------- -------------------------------- Eighty-Seven Million 6.80% Series due March 1, 2022 Five Hundred Thousand Dollars ($87,500,000) Five Million Dollars Secured Medium-Term Notes, ($5,000,000) Series A due April 9, 2012 Ten Million Dollars Secured Medium-Term Notes, ($10,000,000) Series A due May 7, 2007 Thirty Million Dollars Secured Medium-Term Notes, ($30,000,000) Series A due May 29, 2002 Forty-Six Million Dollars Secured Medium-Term Notes, ($46,000,000) Series A due June 19, 2006 Twenty-Seven Million Dollars Secured Medium-Term Notes, ($27,000,000) Series A due August 28, 2002 Five Million Dollars Secured Medium-Term Notes, ($5,000,000) Series A due September 11, 2002 Ten Million Dollars Secured Medium-Term Notes, ($10,000,000) Series A due September 15, 1999 Sixteen Million Secured Medium-Term Notes, Five Hundred Thousand Dollars Series A due ($16,500,000) September 14, 1999
page 24 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING
Principal Amount of Bonds Series - ----------------------------------------- -------------------------------- Twenty Million Secured Medium-Term Notes, Five Hundred Thousand Dollars Series A due ($20,500,000) September 16, 1999 Fifty Million Dollars Secured Medium-Term Notes, ($50,000,000) Series B due December 10, 1999 Twenty-Five Million Dollars Secured Medium-Term Notes, ($25,000,000) Series B due December 10, 2002 Fifty Million Dollars Secured Medium-Term Notes, ($50,000,000) Series B due December 10, 2004 Thirty Million Dollars Secured Medium-Term Notes, ($30,000,000) Series B due December 21, 2012 Ten Million Dollars Secured Medium-Term Notes, ($10,000,000) Series B due February 9, 2000 Thirty Million Dollars Secured Medium-Term Notes, ($30,000,000) Series B due February 10, 2003 Three Million Dollars Secured Medium-Term Notes, ($3,000,000) Series B due December 1, 2003 Eleven Million Dollars Secured Medium-Term Notes, ($11,000,000) Series B due December 2, 2003
Page 25 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING
Principal Amount of Bonds Series - ----------------------------------------- -------------------------------- Thirty Million Dollars Secured Medium-Term Notes, ($30,000,000) Series B due May 27, 2004 Twenty-Three Million Four Hundred Sixty 5.875% Series due Thousand Dollars March 1, 2020 ($23,460,000) Fifty-Five Million Dollars Secured Medium-Term Notes, ($55,000,000) Series B due February 1, 2024 Three Hundred Million Dollars First Mortgage Bonds, ($300,000,000) Pledged Series A due December 1, 2027 Two Hundred Million Dollars First Mortgage Bonds, ($200,000,000) Pledged Series A due June 15, 2018
now issued and outstanding, and Five Hundred Million Dollars ($500,000,000) aggregate principal amount of the Bonds of the New Series to be authenticated and delivered pursuant to Section 2.02 of this Seventy-Seventh Supplemental Indenture. Additional Bonds of the New Series and of any other series established after the execution and delivery of this Seventy-Seventh Supplemental Indenture may from time to time be authenticated, delivered and issued pursuant to the terms of the Indenture and indentures supplemental thereto. SECTION 2.02 Bonds of the New Series in the aggregate principal amount of Five Hundred Million Dollars ($500,000,000) may forthwith, upon execution and delivery of this Seventy-Seventh Supplemental Indenture, or from time to time thereafter, and upon compliance by the Company with the provisions of Article Five of the Indenture, be executed by the Company and delivered to the Trustee and shall thereupon be Page 26 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING authenticated and delivered by the Trustee to or upon the written order of the Company. ARTICLE THREE MISCELLANEOUS SECTION 3.01 This Seventy-Seventh Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Indenture, and shall form a part thereof, and the Indenture, as hereby supplemented and modified, is hereby confirmed. Except to the extent inconsistent with the express terms hereof, all the provisions, terms, covenants, and conditions of the Indenture shall be applicable to the Bonds of the New Series to the same extent as if specifically set forth herein. SECTION 3.02 The Trustee has accepted the amendment of the Indenture effected by this Seventy-Seventh Supplemental Indenture and agrees to execute the trust created by the Indenture as hereby amended, but only upon the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee, and without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect of any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Company, or for or with respect to (a) the validity or sufficiency of this Seventy-Seventh Supplemental Indenture or any of the terms or provisions hereof, (b) the proper authorization hereof by the Company by corporate action or otherwise, and (c) the due execution hereof by the Company. SECTION 3.03 The Company covenants that it is lawfully seized and possessed of all the trust estate at the date of the execution of the Seventy-Seventh Supplemental Indenture except as in the Indenture otherwise stated or permitted; that on said date the trust estate is free and clear from all liens and encumbrances other than permitted encumbrances, except as in the Indenture otherwise stated or permitted; that the Company will warrant and forever defend the trust estate and the title thereto to the Page 27 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING Trustee against the claims of all persons whomsoever except as in the Indenture otherwise stated or permitted; that it will maintain and preserve the lien of the Indenture, as a first mortgage lien, except as in the Indenture otherwise stated or permitted so long as any of the Bonds issued under the Indenture are outstanding; and that it has good right and lawful authority to subject said property to the lien of the Indenture, as provided in and by the Indenture. SECTION 3.04 This Seventy-Seventh Supplemental Indenture may be executed in several counterparts, and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts, or as many of them as the Company and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument. SECTION 3.05 Although this Seventh-Seventh Supplemental Indenture is dated for convenience and for the purpose of reference as of March 1, 1999, the actual date or dates of execution by the Company and by the Trustee are as indicated by their respective acknowledgments hereto annexed. ARTICLE FOUR MODIFICATION OF THE INDENTURE SECTION 4.01 Each holder of any of the Bonds of the New Series, by his or its acceptance thereof, shall thereby consent, for the purpose and within the meaning and intent of Section 18.02 of the Indenture, that Section 1.32 of the Indenture shall be modified (effective at the time provided in Section 4.02 hereof) to read as follows: "So long as there are outstanding any Bonds of the 1984 Series or any Bonds of any other series subsequently authenticated and delivered hereunder as to which it is so provided in the supplemental indenture establishing said Bonds or modifying this Indenture, the term "minimum provision for depreciation" for each calendar year (or monthly fractions Page 28 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING thereof) in the period being computed shall mean an amount by which 15% of the gross operating revenues of the Company derived from the operation of its utility property subject to the lien of the Indenture (after deducting from such operating revenues (a) an amount equal to the cost of electricity purchased, including any standby or service charges or similar charges for electricity and net cost of electricity interchanged, (b) all rentals and lease payments, and (c) the cost of fuel used in the generation of electricity during such period to the extent such cost is included or reflected in operating expense accounts of the Company) exceeds the charges for maintenance, repairs and renewals of such mortgaged utility property included or which should be included in operating expense pursuant to sound accounting practice." SECTION 4.02 The modification of the Indenture set forth in Section 4.01 hereof shall become effective without any further approval or consent of the holders of any Bonds of the New Series (a) when a further supplemental indenture making it effective shall have been executed with the consent of the holders of not less than 66-2/3% in principal amount of the Bonds of each other series at the time outstanding or (b) when all Bonds of all series issued prior to the First Mortgage Bonds, 12-5/8% Series due 1999 have ceased to be outstanding. [The remainder of this page intentionally left blank] Page 29 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING IN WITNESS WHEREOF, Puget Sound Energy, Inc. has caused this Seventy- Seventh Supplemental Indenture to be signed in its corporate name and behalf by its President or one of its Vice Presidents or its Treasurer or Assistant Treasurer and its corporate seal to be hereunto affixed and attested by its Secretary or one of its Assistant Secretaries, and State Street Bank and Trust Company in token of its acceptance of the trust hereby created has caused this Seventy-Seventh Supplemental Indenture to be signed in its corporate name and behalf by its Vice President or one of its Assistant Vice Presidents, and its corporate seal to be hereunto affixed and attested by one of its Vice Presidents, Assistant Vice Presidents or one of its Assistant Secretaries, all on February 25, 1999, but as of the day and year first above written. PUGET SOUND ENERGY, INC. By /s/ Donald E. Gaines --------------------- Donald E. Gaines, Treasurer Attest: /s/ James W. Eldredge --------------------- James W. Eldredge, Secretary Corporate Seal STATE STREET BANK AND TRUST COMPANY By /s/ James E. Mogavero ----------------------- Attest: /s/ Sandy Lamarr Cody --------------------- Corporate Seal Page 30 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) Donald E. Gaines and James W. Eldredge being duly sworn each for himself on oath deposes and says that he, the said Donald E. Gaines, is and at the time of the execution of the foregoing Supplemental Indenture was the Treasurer of PUGET SOUND ENERGY, INC., a corporation and the mortgagor herein named, and the same person who as Treasurer executed said Supplemental Indenture on behalf of said corporation, and that he, the said James W. Eldredge, is and at the time of the execution of said Supplemental Indenture was Secretary of said corporation, the said mortgagor, and the same person who as such Secretary attested such Supplemental Indenture on behalf of said corporation; and that the said Supplemental Indenture is made in good faith and without any design to hinder or delay or defraud creditors or any creditor of said corporation. SUBSCRIBED AND SWORN to before me this 25th day of February, 1999. /s/ Carol A Nelson ------------------------------- (Signature of Notary) Carol A. Nelson ------------------------------- (Print or stamp name of Notary) NOTARY PUBLIC in and for the State of Washington, residing in King County. My Appointment Expires: 7/20/01. Page 31 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) On this 25th day of February, 1999, before me, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared Donald E. Gaines and James W. Eldredge, to me known to be the Treasurer and the Secretary, respectively, of PUGET SOUND ENERGY, INC., one of the corporations that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said corporation for the uses and purposes therein mentioned, and on oath stated that they were authorized to execute and attest said instrument, and that the seal affixed is the corporate seal of said corporation. IN WITNESS WHEREOF I have hereunto set my hand and affixed my official seal the day and year first above written. /s/ Carol A. Nelson -------------------------------- (Signature of Notary) Carol A. Nelson -------------------------------- (Print or stamp name of Notary) NOTARY PUBLIC in and for the State of Washington, residing in King County. My Appointment Expires: 7/20/01. Page 32 ANY WRITING, TEXT, INTIALS, REVISIONS OR NOTARY SEAL APPEARING OUTSIDE THESE MARGINS MAY DISQUALIFY THIS DOCUMENT FOR RECORDING COMMONWEALTH OF MASSACHUSETTS ) ) ss. COUNTY OF SUFFOLK ) On this 26th day of February, 1999, before me personally appeared James E. Mogavero and Sandy Lamarr Cody, to me known to be an Vice President and an Vice President, respectively, of STATE STREET BANK AND TRUST COMPANY, one of the corporations that executed the within and foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said corporation for the uses and purposes therein mentioned, and on oath stated that they were authorized to and did in the name and on behalf of said corporation execute and attest said instrument, and that the seal affixed is the corporate seal of said corporation. IN WITNESS WHEREOF I have hereunto set my hand and affixed my official seal the day and year first above written. /s/ Brian J. Curtis -------------------------------- (Signature of Notary) Brian J. Curtis -------------------------------- (Print or stamp name of Notary) NOTARY PUBLIC in and for the Commonwealth of Massachusetts, residing at Arlington, MA. My Appointment Expires: April 6, 2001. Page 33 -----END PRIVACY-ENHANCED MESSAGE-----