SECURITY AGREEMENT Thisis a Security Agreement covering personal property as well as other propertyreal and/or personal PUGETSOUND ENERGY, INC. TO BNYMIDWEST TRUST COMPANY, TRUSTEE ____________________ THIRTY-FOURTHSUPPLEMENTAL INDENTURE Datedas of April28, 2006 SUPPLEMENTING INDENTUREOF FIRST MORTGAGE Datedas of April1, 1957

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SECURITY AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THIS THIRTY-FOURTH SUPPLEMENTAL INDENTURE, made as of the 28th day of April, 2006, by and between Puget Sound Energy, Inc., 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 BNY Midwest Trust Company, an Illinois trust company, with a principal corporate trust office at 2 North LaSalle Street, Suite 1020, Chicago, Illinois, 60602 (successor to Harris Trust and Savings Bank) (hereinafter sometimes called the "Trustee"), as Trustee under the Indenture of First Mortgage dated as of April 1, 1957 (hereinafter called the "Original Indenture" or, as heretofore supplemented and modified, hereinafter called the "Indenture"), as supplemented and modified by all indentures supplemental thereto heretofore executed and delivered, party of the second part;

 

WITNESSETH:  that

 

WHEREAS, Washington Natural Gas Company, a corporation organized and existing under the laws of the State of Delaware (hereinafter called the "First Predecessor Company"), which was merged into Washington Natural Gas Company, a corporation organized and existing under the laws of the State of Washington (hereinafter called the "Second Predecessor Company") on August 9, 1978, had heretofore executed and delivered to the Trustee its Original Indenture, in order, among other things, to secure, as provided therein, the payment of the principal of and premium, if any, and interest on its bonds (in the Indenture and herein called the "Bonds") at any time issued and outstanding thereunder according to their tenor and effect, said Bonds to be designated generally as its "First Mortgage Bonds," and to be issued in one or more series as provided in the Original Indenture; and

 

WHEREAS, the First Predecessor Company had heretofore executed and delivered sixteen indentures supplemental to the Original Indenture as follows:  First Supplemental Indenture, dated as of April 1, 1957, naming and appointing, pursuant to the provisions of Section 15.18 of the Original Indenture, R.H. Long, an individual, to act as Co-Trustee jointly with the Trustee, Second Supplemental Indenture dated as of October 1, 1959, Third Supplemental Indenture dated as of May 1, 1961, Fourth Supplemental Indenture dated as of May 1, 1963, Fifth Supplemental Indenture dated as of June 1, 1965, Sixth Supplemental Indenture dated as of August 1, 1966, Seventh Supplemental Indenture dated as of February 1, 1967, Eighth Supplemental Indenture dated as of September 1, 1967, Ninth Supplemental Indenture dated as of September 1, 1968, Tenth Supplemental Indenture dated as of June 1, 1970, Eleventh Supplemental Indenture dated as of April 1, 1971, Twelfth Supplemental Indenture dated as of November 1, 1972, Thirteenth Supplemental Indenture dated as of September 1, 1975, Fourteenth Supplemental Indenture dated as of September 15, 1975, Fifteenth Supplemental Indenture dated as of March 1, 1977 and Sixteenth Supplemental Indenture dated as of June 1, 1977, naming and appointing, pursuant to the provisions of Section 15.18 of the Original Indenture, R.G. Mason, an individual, to act as successor Co-Trustee, pursuant to each of which supplemental indentures, except said First, Seventh, and Sixteenth Supplemental Indentures, the First Predecessor Company provided for the creation of an issue of First Mortgage Bonds, and said Sixth and Seventh Supplemental Indentures provided for certain modifications of the Original Indenture; and

 

WHEREAS, the Second Predecessor Company has heretofore executed and delivered a Seventeenth Supplemental Indenture dated as of August 9, 1978, whereby the Second Predecessor Company succeeded to the First Predecessor Company with the same effect as if the Second Predecessor 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 First Predecessor Company merged into the Second Predecessor Company on August 9, 1978 whereupon the Second Predecessor Company acquired all the property, real, personal or mixed, including all rights, privileges, immunities and franchises, described in the Indenture and thereby conveyed and mortgaged or intended so to be, including also all such property acquired by the First Predecessor Company since the execution and delivery of the Original Indenture, which by the terms of the Original Indenture is subject or intended to be subjected to the lien thereof; and

 

WHEREAS, the Second Predecessor Company has also heretofore executed and delivered an Eighteenth Supplemental Indenture dated as of September 1, 1979, a Nineteenth Supplemental Indenture dated as of January 15, 1982, a Twentieth Supplemental Indenture dated as of August 15, 1983, a Twenty-first Supplemental Indenture dated as of August 15, 1983, a Twenty-second Supplemental Indenture dates as of July 15, 1986, a Twenty-third Supplemental Indenture dated as of July 15, 1986, a Twenty-fourth Supplemental Indenture dated as of December 15, 1987, a Twenty-fifth Supplemental Indenture dated as of August 15, 1988, a Twenty-sixth Supplemental Indenture dated as of September 1, 1990, a Twenty-seventh Supplemental Indenture dated as of September 1, 1990, a Twenty-eighth Supplemental Indenture dated as of July 1, 1991, a Twenty-ninth Supplemental Indenture dated as of June 1, 1993 and a Thirtieth Supplemental Indenture dated as of August 15, 1995 pursuant to each of which supplemental indentures the Second Predecessor Company provided for the creation of an issue of First Mortgage Bonds, and said Twenty-second and Twenty-eighth Supplemental Indentures provided for certain modifications of the Original Indenture; and

 

WHEREAS, the Company has heretofore executed and delivered a Thirty-first Supplemental Indenture dated as of February 10, 1997, whereby the Company succeeded to the Second Predecessor Company with the same effect as if the Company had been named in the Original Indenture as the mortgagor company and in the Bonds and coupons as the obligor thereon or maker thereof, and the Second Predecessor Company merged into the Issuer on February 10, 1997 whereupon the Company acquired all the property, real, personal or mixed, including all rights, privileges, immunities and franchises, described in the Indenture 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 Indenture, which by the terms of the Indenture is subject or intended to be subjected to the lien thereof, such Thirty-first Supplemental Indenture further provided for certain modifications of the original indenture;

 

WHEREAS, the Company has also heretofore executed and delivered a Thirty-Second Supplemental Indenture dated as of April 28, 2006, pursuant to such supplemental indentures the Company provided for the creation of an issue of First Mortgage Bonds; and

 

WHEREAS, pursuant to the Original Indenture, as heretofore supplemented and modified, there have been executed, authenticated, delivered and issued and there are outstanding as of the date hereof, First Mortgage Bonds of series and in principal amounts as follows:

Principal Amount of Bonds	Series
Twenty-Five Million Dollars ($25,000,000)	9.57% First Mortgage Bonds due 2020
Four Million Five Hundred Thousand Dollars ($4,500,000)	6.51% and 6.10% Secured Medium-Term Notes, Series B due 2008
Thirteen Million Dollars ($13,000,000)	6.83% and 6.90% Secured Medium-Term Notes, Series B due 2013
Thirty-One Million Dollars ($31,000,000)	6.92% and 6.93% Secured Medium-Term Notes, Series C due 2005
Ten Million Dollars ($10,000,000)	6.58% Secured Medium-Term Notes, Series C due 2006
Twenty-Five Million Dollars ($25,000,000)	7.02% and 7.04% Secured Medium-Term Notes, Series C due 2007
Eight Million Dollars ($8,000,000)	6.61% and 6.62% Secured Medium-Term Notes, Series C due 2009
Seven Million Dollars ($7,000,000)	7.12% Secured Medium-Term Notes, Series C due 2010
Twelve Million Dollars ($12,000,000)	7.35% and 7.36% Secured Medium-Term Notes, Series C due 2015
Seventeen Million Dollars ($17,000,000)	7.15% and 7.20% Secured Medium-Term Notes, Series C due 2025

 

WHEREAS, R.G. Mason, the successor Co-Trustee, resigned on July 31, 1993 and no successor trustee was appointed to replace him;

 

WHEREAS, Harris Trust and Savings Bank (the "Original Trustee") resigned as Trustee, Paying Agent and Registrar under the Indenture on April 1, 2002;

 

WHEREAS, effective April 1, 2002, the Company appointed BNY Midwest Trust Company to act as Trustee, Paying Agent and Registrar to succeed the Original Trustee in such capacities under the Indenture;

 

WHEREAS, the Company has entered into an Indenture (the "Debenture Indenture") dated as of December 1, 1997 with U.S. Bank National Association (as successor to 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 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 "Pledged First Mortgage Bonds" due Nine Months or More From Date of Issue (hereinafter sometimes called "Bonds of the New Series"), and has authorized the issuance of an unlimited aggregate 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 Thirty-Fourth Supplemental Indenture, in accordance with the provisions of the Indenture, for the purpose of confirming the lien of the Indenture on certain property acquired or constructed by the Company since the execution and delivery of the Mortgage and on certain betterments, improvements and additions made by the Company to property previously described in the Indenture.

 

NOW, THEREFORE, 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 issued and to be issued under the 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 contained, and for the purpose of confirming the lien of the Indenture, said Puget 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 BNY Midwest Trust Company, as Trustee, and to its successor or successors in the trust created by the Indenture, and to said Trustee and its assigns forever, 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 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 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:

 

INCLUDING NEVERTHELESS in the property hereby conveyed and confirmed to the Trustee (without limiting the generality of the foregoing general description of such property and without prejudice to the conveyance and confirmance of all such property by such general description) the following:

 

All property, real, personal or mixed, together with all buildings or improvements thereon and the appurtenances thereto, located in the State of Washington and described below or conveyed to the Company by the deeds listed on the list of properties and deeds below, to which deeds and the records thereof in the County Auditor’s office of the respective counties in the State of Washington below stated (in all cases where said deeds and/or records are below specified) reference is hereby made for a more particular description of the property hereby conveyed and confirmed to the Trustee and its respective successor or successors and assigns as aforesaid, to wit:

 

 

 

 

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Described in Any Prior Supplemental Indenture**

 

 

 

Section:	25
Township:	22 North
Range:	04 East, W.M.
Description:	LOT 1 OF KING COUNTY SHORT PLAT NO. 684072, RECORDED UNDER RECORDING NO.  ###-###-#### OF KING COUNTY RECORDS, BEING A PORTION OF LOTS 1 AND 2, HORSESHOE ACRE TRACTS TO KENT, ACCORDING TO PLAT THEREOF RECORDED IN VOLUME 15 OF PLATS, PAGE 10, IN KING COUNTY, WASHINGTON; EXCEPT THOSE PORTIONS CONVEYED TO KING COUNTY BY DEEDS RECORDED UNDER RECORDING NUMBERS ###-###-#### AND ###-###-####.   SUBJECT TO:  AS PER EXHIBIT “A” ATTACHED AND MADE A PART BY REFERENCE   EXHIBIT “A”   1.EASEMENT AND THE TERMS AND CONDITIONS REFERENCED THEREIN, INCLUDING, BUT NOT LIMITED TO, THE FOLLOWING:   GRANTEE:  The County of King, a municipal corporation PURPOSE:  The right to construct and maintain a rip-rap bank protection and remove debris AREA AFFECTED:  Along the right bank of Green River RECORDED:  February 20, 1962 RECORDING NUMBER:  5395757   2.EASEMENT AND THE TERMS AND CONDITIONS REFERENCED THEREIN, INCLUDING, BUT NOT LIMITED TO, THE FOLLOWING:   GRANTEE:  Puget Sound Power & Light Company, a Washington corporation PURPOSE:  Electric transmission and/or distribution lines with all necessary or convenient appurtenances thereto AREA AFFECTED:  The east 20 feet RECORDED:  December 2, 1986 RECORDING NUMBER:  8612021324   3.DECLARATION OF COVENANT AND THE TERMS AND CONDITIONS THEREOF:   PURPOSE:  Electric transmission and/or distribution lines with all necessary or convenient appurtenances thereto BY:  Harold L. Bartley and Irene B. Bartley, husband and wife RECORDED:  March 11, 1981 RECORDING NUMBER:  8103110276   4.COVENANTS, CONDITIONS, RESTRICTIONS AND EASEMENTS CONTAINED IN SHORT PLAT, COPY ATTACHED:   RECORDED:  June 24, 1985 RECORDING NUMBER:  8506240936   5.NOTICE OF ON SITE SEWAGE SYSTEM AND THE TERMS AND CONDITIONS THEREOF:   RECORDED:  June 19, 2001 RECORDING NUMBER:  20010619002020   6.Any question that may arise due to shifting and changing in course of Green River.   7.Any prohibition of or limitation of use, occupancy or improvement of the land resulting from the rights of the public or riparian owners to use any portion which is now or has been formerly covered by water.   8.Paramount rights and easements in favor of the United States for commerce, navigation, fisheries and the production of power.   9.Matters disclosed on a survey recorded under Recording Number 20011019900016
Deed From:	Victor Payment and Mary Payment, husband and wife
Deed Records Auditors File No.	20051201001756
Assessor’s Tax Parcel ID#	346280-0006-02

 

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Section:	08
Township:	29 North
Range:	05 East, W.M.
Description:	That portion of Lot 2A of City of Everett Binding Site Plan Number 1-95, recorded September 22, 1999 under Recording Number 199909225011, being a revision of recording number ###-###-####, described as follows   Commencing at a corner common to Lots 2A, 3, and 5 of said Binding Site Plan, also being the most Easterly corner of said Lot 2A,; Thence South 23°48’30” West along the East line of said Lot 2A a distance of 47.85 feet, Thence North 66°11’30” West at right angles to said East line 30 00 feet to a point on the Westerly margin of an existing 30 foot wide access easement and the True Point of Beginning. Thence South 23°48’30” West along said Westerly margin 11.75 feet to a point of curve to the left. Thence Southerly along said curve to the left having a radius of 90 00 feet through a central angle of 17°25’26”, an arc length of 27 37 feet, Thence North 68°07’25” West 98.46 feet, Thence North 21°52’35” East 75 00 feet, Thence South 68°07’25” East 85 00 feet to said Westerly easement margin, also being a point on a curve whose radius point bears South 77°10’19” West 60 00 feet, Thence Southerly along said curve to the right through a central angle of 36°38’11”, an arc length of 38.37 feet to the True Point of Beginning,   Together with that certain access easement shown across Lots 2A and 2B of said Binding Site Plan   Situate in the City of Everett, County of Snohomish, State of Washington
Deed From:	Northwest Pipeline Corporation
Deed Records Auditors File No.	200504220543
Assessor’s Tax Parcel ID#	29-0508-001-019-00

 

 

 

Section:	5
Township:	29 North
Range:	06 East, W.M.
Description:	Lots 1, 2 and 3, Block 6, Town of Ferry, according to the plat thereof recorded in Volume 2 of Plats, page 25, records of Snohomish County, Washington, lying Southeasterly of State Highway,   Together with vacated Davis Street, North half of vacated Second Street and Vacated alley in Block 6 lying adjacent to the above described Lots   Subject to All matters of record if any Subject to Any building placed on the land will have an exterior appearance as nearly as practical to pre stressed concrete type utility buildings, as discussed between the Grantor and the Grantee.   The Grantor, Northwest Pipeline Corporation, reserves an exclusive 75 foot wide right of-way and easement to locate, survey, construct, entrench, maintain, repair, replace, protect, inspect and operate a Natural Gas Pipeline or Pipelines, including cathodic equipment and/or appurtenances which may be constructed on or above the surface including but not limited to valves and metering equipment; electrical and/or communications cable, underground conduit, splicing boxes; and roads and facilities" which may be over, under and through the land described in this document, the reserved easement shall run with the land and shall inure to the benefit of the successors and assigns of Northwest Pipeline Corporation.  Shown as incorporated in Exhibits "A" and "B".   EXHIBIT “A”   THE WEST 113.5 FEET OF LOTS 1 AND 2, BLOCK 6 OF THE PLAT TOWN OF FERRY RECORDED IN VOLUME 2 OF PLATS PAGE 25 LYING SOUTHERLY OF STATE ROUTE 92:   ALSO THAT PORTION OF THE NORTH 1/2 OF VACATED SECOND STREET LYING EASTERLY OF THE WEST LINE OF SAID LOTS 1 AND 2 EXTENDED SOUTHERLY TO THE CENTERLINE OF SAID VACATED SECOND STREET AND LYING WESTERLY OF A LINE PARALLEL WITH SAID WEST LINE AND 113.5 FEET EASTERLY EXTENDED TO THE CENTERLINE OF SAID VACATED SECOND STREET.   SITUATE IN THE COUNTY OF SNOHOMISH, STATE OF WASHINGTON.
Deed From:	Northwest Pipeline Corporation
Deed Records Auditors File No.	200505190493
Assessor’s Tax Parcel ID#	00-4447-006-001-00

 

 

 

 

This Thirty-Fourth 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.

 

 

The Trustee has accepted the amendment of the Indenture effected by this Thirty-Fourth 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 Thirty-Fourth 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.

 

 

The Company covenants that it is lawfully seized and possessed of all the trust estate at the date of the execution of the Thirty-Fourth 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 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.

 

 

This Thirty-Fourth 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.

 

 

Although this Thirty-Fourth Supplemental Indenture is dated for convenience and for the purpose of reference as of April 28, 2006, the actual date or dates of execution by the Company and by the Trustee are as indicated by their respective acknowledgments hereto annexed.

 

 

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IN WITNESS WHEREOF, Puget Sound Energy, Inc. has caused this Thirty-Fourth Supplemental Indenture to be signed in its corporate name and behalf by its President or one of its Vice Presidents and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, all on April _25, 2006, but as of the day and year first above written.

 

 

PUGET SOUND ENERGY, INC.

 

 

By         /s/ Donald E. Gaines                                                                

Donald E. Gaines

Vice President Finance and Treasurer

 

 

Attest:

 

 

/s/ James D. Sant                                                      

James D. Sant

Assistant Treasurer

 

 

STATE OF WASHINGTON	)
	)  ss:
COUNTY OF KING	)

 

On this _25th_ day of _April________, 2006, before me, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared Donald E. Gaines, to me known to be the Vice President Finance and Treasurer of Puget Sound Energy, Inc., a Washington corporation, the corporation named in and which executed the foregoing instrument; and he acknowledged to me that he signed the same as the free and voluntary act and deed of said corporation for the uses and purposes therein mentioned, being authorized so to do.

 

WITNESS my hand and official seal the day and year in this certificate above written.

 

_/s/ Corinne Scowcroft___________

Notary Name:  Corinne Scowcroft

Notary Public in and for the State of

Washington__, residing at _Sammamish___.

My commission expires _12/30/06___.

 

 

STATE OF WASHINGTON	)
	)  ss:
COUNTY OF KING	)

 

On this _25th_ day of _April________, 2006, before me, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared James D. Sant, to me known to be the Assistant Treasurer of Puget Sound Energy, Inc., a Washington corporation, the corporation named in and which executed the foregoing instrument; and he acknowledged to me that he signed the same as the free and voluntary act and deed of said corporation for the uses and purposes therein mentioned, being authorized so to do.

 

WITNESS my hand and official seal the day and year in this certificate above written.

 

__/s/ Karen Campbell________________

Notary Name:  Karen Campbell

Notary Public in and for the State of

_Washington_, residing at _Bellevue_______.

My commission expires _7/18/06____.