EXHIBIT 4.2
TO BE RECORDED AND WHEN
RECORDED RETURN TO:
BNY Western Trust Company
550 Kearny Street, Suite 600
San Francisco, CA 94108
Attn: Ms. Josephine Libunao
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FIRST SUPPLEMENTAL INDENTURE
DATED AS OF MARCH 23, 2004
SUPPLEMENT TO INDENTURE OF MORTGAGE
DATED AS OF MARCH 11, 2004
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PACIFIC GAS AND ELECTRIC COMPANY
ISSUER (MORTGAGOR)
AND
BNY WESTERN TRUST COMPANY
TRUSTEE (MORTGAGEE)
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS ...................................................................... 1
ARTICLE II ESTABLISHMENT OF BONDS OF THE INITIAL SERIES........................................ 5
SECTION 201 Designation of Bonds of the Initial Series.................................. 5
SECTION 202 Form of Bonds of the Initial Series; Exchange of Certificates
Representing Bonds of the Initial Series.................................... 5
SECTION 203 Principal Amounts of the Bonds of the Initial Series........................ 6
SECTION 204 Interest Rates and Stated Maturity of the Bonds of the Initial Series....... 6
SECTION 205 Global Securities; Appointment of Depositary for Global Securities.......... 6
SECTION 206 No Sinking Fund............................................................. 7
SECTION 207 Deposit of Proceeds of the Bonds of the Initial Series into Escrow;
Release of Escrowed Funds................................................... 7
SECTION 208 Paying Agent and Bond Registrar............................................. 7
SECTION 209 Calculation Agent........................................................... 7
SECTION 210 Other Terms of the Bonds of the Initial Series.............................. 7
ARTICLE III REDEMPTION BY THE COMPANY........................................................... 8
SECTION 301 Special Mandatory Redemption................................................ 8
SECTION 302 Optional Redemption......................................................... 8
ARTICLE IV MISCELLANEOUS....................................................................... 10
SECTION 401 Additional Provisions....................................................... 10
SECTION 402 Application of First Supplemental Indenture................................. 10
SECTION 403 Effective Date of First Supplemental Indenture.............................. 10
SECTION 404 Counterparts................................................................ 10
EXHIBIT A FORM OF FIXED RATE FIRST MORTGAGE BOND
EXHIBIT B FORM OF FLOATING RATE FIRST MORTGAGE BOND
-i-
FIRST SUPPLEMENTAL INDENTURE, dated as of March 23, 2004 (this "FIRST
SUPPLEMENTAL INDENTURE"), by and between PACIFIC GAS AND ELECTRIC COMPANY, a
California corporation (the "COMPANY"), and BNY WESTERN TRUST COMPANY, a
California banking corporation, as Trustee under the Indenture (as hereinafter
defined) (the "TRUSTEE").
RECITALS OF THE COMPANY
A. The Company and the Trustee are parties to that certain
Indenture of Mortgage, dated as of March 11, 2004 (together with all indentures
supplemental thereto, the "INDENTURE"), providing for the issuance by the
Company of Bonds (as defined in the Indenture) from time to time.
B. Under the Indenture, the Company is authorized to issue
unlimited series of Bonds and establish one or more series of Bonds at any time
in accordance with the provisions of the Indenture, and the terms of such series
of Bonds may be described by a supplemental indenture executed by the Company
and the Trustee.
C. Pursuant to Section 3.01 and Article IV of the Indenture, the
Company and the Trustee deem it advisable to enter into this First Supplemental
Indenture for the purposes of establishing the terms of the Bonds of the Initial
Series (as defined in the Indenture).
D. The execution and delivery of this First Supplemental
Indenture has been authorized by a Board Resolution (as defined in the
Indenture).
E. Concurrent with the execution hereof, the Company has caused
its counsel to deliver to the Trustee an Opinion of Counsel (as defined in the
Indenture) pursuant to Section 14.03 of the Indenture.
F. The Company has done all things necessary to make this First
Supplemental Indenture a valid agreement of the Company in accordance with its
terms.
NOW, THEREFORE, the Company and the Trustee agree, for the benefit of
each other and the equal and proportionate benefit of all Holders of Bonds of
the Initial Series, as follows:
ARTICLE I
DEFINITIONS
Unless the context otherwise requires, capitalized terms used but not
defined herein have the meaning set forth in the Indenture. The following
additional definitions are hereby established for purposes of this First
Supplemental Indenture and shall have the meanings set forth in this First
Supplemental Indenture only for purposes of this First Supplemental Indenture:
"ADJUSTED TREASURY RATE" means, with respect to any Redemption Date on
which any Bonds of the Initial Series are being redeemed pursuant to Section 302
hereof:
(a) the yield, under the heading which represents the
average for the immediately preceding week, appearing in the most
recently published statistical release designated "H.15(519) Selected
Interest Rates" or any successor publication that is published weekly
by the Board of Governors of the Federal Reserve System and that
establishes yields on actively traded United States treasury securities
adjusted to constant maturity under the caption "Treasury Constant
Maturities" for the maturity corresponding to the Comparable Treasury
Issue (if no maturity is within three months before or after the
Remaining Life, yields for the two published maturities most closely
corresponding to the Comparable Treasury issue will be determined and
the Adjusted Treasury Rate will be interpolated or extrapolated from
such yields on a straight line basis, rounding to the nearest month);
or
(b) if such release (or any successor publication) is not
published during the week preceding the calculation date or does not
contain such yields, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such Redemption Date.
The Adjusted Treasury Rate will be calculated on the third Business Day
preceding the Redemption Date.
"CALCULATION AGENCY AGREEMENT" means the Calculation Agency Agreement,
dated as of March 23, 2004, by and between the Calculation Agent and the
Company, as such agreement may be amended, modified or supplemented from time to
time.
"CALCULATION AGENT" means BNY Western Trust Company or such other
Person as the Company shall from time to time designate in accordance with the
Calculation Agency Agreement.
"COMPARABLE TREASURY ISSUE" means the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable to
the Remaining Life of the applicable series of Fixed Rate First Mortgage Bonds
to be redeemed pursuant to Section 302 that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the Remaining Life
of the applicable series of Fixed Rate First Mortgage Bonds to be redeemed
pursuant to Section 302.
"COMPARABLE TREASURY PRICE" means, with respect to any Redemption Date
on which any series of Fixed Rate First Mortgage Bonds is being redeemed
pursuant to Section 302 hereof, (a) the average of five (5) Reference Treasury
Dealer Quotations for such Redemption Date, after excluding the highest and
lowest Reference Treasury Dealer Quotations, or (b) if the Independent
Investment Banker obtains fewer than five (5) such Reference Treasury Dealer
Quotations, the average of all quotations obtained.
"DEALER" means a primary U.S. Government Securities dealer in the
United States.
"ESCROW AGENT" means BNY Western Trust Company, as escrow agent under
the Escrow Agreement, and its successors and assigns.
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"ESCROW AGREEMENT" means that certain Escrow Deposit and Disbursement
Agreement, dated as of March 23, 2004, by and among the Company, the Escrow
Agent and the Trustee.
"ESCROW FUND" means the escrow account established pursuant to Section
3(a) of the Escrow Agreement.
"FIXED RATE FIRST MORTGAGE BONDS" means, collectively, the 3.60% First
Mortgage Bonds due 2009, the 4.20% First Mortgage Bonds due 2011, the 4.80%
First Mortgage Bonds due 2014 and the 6.05% First Mortgage Bonds due 2034, in
each case issued by the Company pursuant to this First Supplemental Indenture.
"FLOATING RATE FIRST MORTGAGE BONDS" means the Floating Rate First
Mortgage Bonds due 2006 issued by the Company pursuant to this First
Supplemental Indenture.
"INDEPENDENT INVESTMENT BANKER" means a Dealer appointed by the
Company.
"MANDATORY REDEMPTION DATE" means June 23, 2004.
"ORIGINAL ISSUE DATE" means March 23, 2004.
"REDEMPTION TRIGGER DATE" means June 21, 2004.
"REFERENCE TREASURY DEALER" means Lehman Brothers Inc., UBS Securities
LLC, the Independent Investment Banker and Dealers acceptable to the Independent
Investment Banker and their respective successors; provided, however, that if
any of the foregoing shall cease to be a Dealer, the Company will select a
substitute Dealer. However, if the Company does not select a substitute Dealer
within a reasonable period of time, then the substitute Dealer will be selected
by the Trustee after consultation with the Company.
"REFERENCE TREASURY DEALER QUOTATIONS" means, with respect to each
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker at 5:00
p.m., New York City time, on the third Business Day preceding such Redemption
Date.
"REMAINING LIFE," as of any date of calculation, means the remaining
term of the applicable series of Fixed Rate First Mortgage Bonds.
"REMAINING SCHEDULED PAYMENTS" means, with respect to each Fixed Rate
First Mortgage Bond that the Company is redeeming pursuant to Section 302, the
remaining scheduled payments of principal and interest that would be due after
the applicable Redemption Date if such Bond were not redeemed. However, if the
Redemption Date is not a scheduled Interest Payment Date with respect to that
Bond, the amount of the next succeeding scheduled interest payment on that Bond
will be reduced by the amount of interest accrued on such Bond to the Redemption
Date.
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"SPECIAL REDEMPTION PREMIUM" means (a) in the case of the 3.60% First
Mortgage Bonds due 2009, 1.00%, (b) in the case of the 4.20% First Mortgage
Bonds due 2011, 2.00%, (c) in the case of the 4.80% First Mortgage Bonds due
2014, 2.00%, (d) in the case of the 6.05% First Mortgage Bonds due 2034, 3.00%,
and (e) in the case of the Floating Rate First Mortgage Bonds due 2006, 1.00%.
"U.S. GOVERNMENT SECURITIES" means securities which are (a) direct
obligations of the United States of America for the payment on which its full
faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation of the United States of America, and which in the case of (a)
and (b) are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such U.S. Government Security or a specific
payment of interest on or principal of any such U.S. Government Security held by
such custodian for the account of the holder of a depository receipt, provided
that (except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government Security
evidenced by such depository receipt.
The words "herein," "hereof" and "hereunder" and other words of similar
import refer to this First Supplemental Indenture as a whole and not to any
particular Article, Section or other subdivision.
4
ARTICLE II
ESTABLISHMENT OF BONDS OF THE INITIAL SERIES
SECTION 201 Designation of Bonds of the Initial Series.
Pursuant to the terms hereof and Section 3.01 and Article IV of the
Indenture, the Company hereby designates the Bonds of the Initial Series as the
"3.60% First Mortgage Bonds due 2009" (the "3.60% FIRST MORTGAGE BONDS"), which
are established as the Bonds of the First Series in Article IV of the Indenture,
the "4.20% First Mortgage Bonds due 2011" (the "4.20% FIRST MORTGAGE BONDS"),
which are established as the Bonds of the Second Series in Article IV of the
Indenture, the "4.80% First Mortgage Bonds due 2014" (the "4.80% FIRST MORTGAGE
BONDS"), which are established as the Bonds of the Third Series in Article IV of
the Indenture, the "6.05% First Mortgage Bonds due 2034" (the "6.05% FIRST
MORTGAGE BONDS"), which are established as the Bonds of the Fourth Series in
Article IV of the Indenture, and the "Floating Rate First Mortgage Bonds due
2006" (the "FLOATING RATE FIRST MORTGAGE BONDS"), which are established as the
Bonds of the Fifth Series in Article IV of the Indenture. Any series of the
Bonds of the Initial Series may be reopened, from time to time, for issuances of
additional Bonds of such series, and any additional Bonds issued and comprising
Bonds of any series of the Bonds of the Initial Series shall have identical
terms as such series of Bonds of the Initial Series, except that the issue
price, issue date and, in some cases, the first Interest Payment Date may
differ.
SECTION 202 Form of Bonds of the Initial Series; Exchange of
Certificates Representing Bonds of the Initial Series.
The Fixed Rate First Mortgage Bonds shall be substantially in the form
attached as Exhibit A hereto, which exhibit is incorporated herein and made a
part hereof. The Floating Rate First Mortgage Bonds shall be substantially in
the form attached as Exhibit B hereto, which exhibit is incorporated herein and
made a part hereof.
As soon as reasonably practicable after the Release Date, each Holder
of a Bond of the Initial Series that is a Global Bond shall surrender such Bond
to the Trustee and the Trustee shall simultaneously exchange the surrendered
Global Bond for a new Bond of the Initial Series identical in all respects to
the surrendered Global Bond except that the name of such Global Bond shall be
changed from "First Mortgage Bond" to "Senior Note," all references in such Bond
to "First Mortgage Bond," "Bonds" or "Bond" shall be changed to "Senior Note,"
"Notes" or "Note," respectively, and the bracketed language in the form of the
Bond attached hereto shall be deleted. From and after the Release Date, any Bond
of the Initial Series that is not a Global Bond and that is surrendered to the
Trustee for registration of transfer or exchange shall be issued with terms
identical in all respects to the surrendered Bond except that the name of such
Bond shall be changed from "First Mortgage Bond" to "Senior Note," all
references in such Bond to "First Mortgage Bond," "Bonds" or "Bond" shall be
changed to "Senior Note," "Notes" or "Note," respectively, and the bracketed
language in the form of such Bond attached hereto shall be deleted.
5
SECTION 203 Principal Amounts of the Bonds of the Initial Series.
(a) The 3.60% First Mortgage Bonds shall be issued in an initial
aggregate principal amount of $600,000,000.
(b) The 4.20% First Mortgage Bonds shall be issued in an initial
aggregate principal amount of $500,000,000.
(c) The 4.80% First Mortgage Bonds shall be issued in an initial
aggregate principal amount of $1,000,000,000.
(d) The 6.05% First Mortgage Bonds shall be issued in an initial
aggregate principal amount of $3,000,000,000.
(e) The Floating Rate First Mortgage Bonds shall be issued in an
initial aggregate principal amount of $1,600,000,000.
SECTION 204 Interest Rates and Stated Maturity of the Bonds of the
Initial Series.
(a) The 3.60% First Mortgage Bonds shall bear interest at the rate
of 3.60% per annum and shall have a Stated Maturity of March 1, 2009.
(b) The 4.20% First Mortgage Bonds shall bear interest at the rate
of 4.20% per annum and shall have a Stated Maturity of March 1, 2011.
(c) The 4.80% First Mortgage Bonds shall bear interest at the rate
of 4.80% per annum and shall have a Stated Maturity of March 1, 2014.
(d) The 6.05% First Mortgage Bonds shall bear interest at the rate
of 6.05% per annum and shall have a Stated Maturity of March 1, 2034.
(e) The rate of interest on the Floating Rate First Mortgage Bonds
shall be calculated as set forth in the form of the Floating Rate First Mortgage
Bonds attached as Exhibit B hereto. The Stated Maturity of the Floating Rate
First Mortgage Bonds shall be April 3, 2006.
SECTION 205 Global Securities; Appointment of Depositary for Global
Securities.
The Bonds of the Initial Series shall be issued in the form of one or
more permanent Global Securities as provided in Section 3.13 of the Indenture
and deposited with, or on behalf of, the Depositary or with the Trustee, as
custodian for the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided.
The Company hereby initially appoints The Depository Trust Company
("DTC") to act as the Depositary with respect to all Bonds of the Initial
Series, and the Bonds of the Initial Series shall initially be registered in the
name of Cede & Co., as the nominee of DTC.
The Trustee is hereby authorized and requested to execute and deliver a
Letter of Representations to DTC relating to the Bonds of the Initial Series
and, in connection with any
6
successor nominee for DTC or any successor Depositary, enter into comparable
arrangements, and shall have the same rights with respect to its actions
thereunder as it has with respect to its actions under the Indenture.
None of the Company, the Trustee, any Paying Agent or any Bond
Registrar will have any responsibility or liability for any aspect of Depositary
records relating to, or payments made on account of, beneficial ownership
interests in a Global Bond or for maintaining, supervising or reviewing any
Depositary records relating to such beneficial ownership interests, or for
transfers of beneficial interests in the Bonds or any transactions between the
Depositary and beneficial owners.
SECTION 206 No Sinking Fund.
No sinking fund is provided for any of the Bonds of the Initial Series.
SECTION 207 Deposit of Proceeds of the Bonds of the Initial Series into
Escrow; Release of Escrowed Funds.
Pursuant to Section 3(a) of the Escrow Agreement, the Company shall
deposit or cause to be deposited into the Escrow Fund cash in the amount of
$6,700,000,000, being the aggregate principal amount of the Bonds of the Initial
Series, together with cash in the amount of $217,425,888.89, being the aggregate
amount of interest accruing on the Bonds of the Initial Series from the Original
Issue Date to, but not including, the Mandatory Redemption Date and the
aggregate amount of Special Redemption Premiums payable on the Bonds of the
Initial Series as set forth in Section 301 hereof. If the Effective Date does
not occur on or before the Redemption Trigger Date, the amount on deposit in the
Escrow Fund shall be applied as set forth in Section 301 hereof. If the
Effective Date occurs on or before the Redemption Trigger Date, the amount on
deposit in the Escrow Fund shall be released to the Company on the Effective
Date in accordance with the Escrow Agreement.
SECTION 208 Paying Agent and Bond Registrar.
The Trustee is hereby appointed as initial Paying Agent and initial
Bond Registrar for the Bonds of the Initial Series.
SECTION 209 Calculation Agent.
BNY Western Trust Company is hereby appointed as the initial
Calculation Agent for the Floating Rate First Mortgage Bonds.
SECTION 210 Other Terms of the Bonds of the Initial Series.
The other terms of the Bonds of the Initial Series shall be as
expressly set forth in Article III, Exhibit A (with respect to the Fixed Rate
First Mortgage Bonds) and Exhibit B (with respect to the Floating Rate First
Mortgage Bonds).
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ARTICLE III
REDEMPTION BY THE COMPANY
SECTION 301 Special Mandatory Redemption.
In the event the Effective Date has not occurred on or before the
Redemption Trigger Date, the Company shall apply the amounts in the Escrow Fund
to redeem all of the Bonds of the Initial Series on the Mandatory Redemption
Date, at a Redemption Price equal to the principal amount of the Bonds of the
Initial Series plus the applicable Special Redemption Premium on such principal
amount, and accrued and unpaid interest from the Original Issue Date to, but not
including, the Mandatory Redemption Date.
Redemption of the Bonds of the Initial Series pursuant to this Section
301 shall be made in accordance with Article VI of the Indenture, except that
notice of such redemption shall be a conditional notice of redemption and will
be in writing and mailed first-class postage-prepaid not less than 7 days nor
more than 30 days prior to the Mandatory Redemption Date, but only if the
Effective Date has not occurred on or by such date of mailing, to each Holder of
Bonds of the Initial Series at the Holder's registered address.
SECTION 302 Optional Redemption
(a) Optional Redemption of 3.60% First Mortgage Bonds.
Subject to the terms and conditions of the Indenture, the 3.60% First Mortgage
Bonds are redeemable at the option of the Company, in whole or in part at any
time after the Effective Date and prior to Maturity, at a Redemption Price equal
to the greater of:
(i) 100% of the principal amount of the 3.60%
First Mortgage Bonds to be redeemed; or
(ii) as determined by the Independent Investment
Banker, the sum of the present values of the Remaining Scheduled Payments on the
3.60% First Mortgage Bonds to be so redeemed (not including any portion of such
payments of interest accrued to the Redemption Date) discounted to the
Redemption Date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate, plus 0.15%,
plus, in either of the above cases, accrued and unpaid interest on the principal
amount of the 3.60% First Mortgage Bonds being redeemed to but not including the
Redemption Date.
(b) Optional Redemption of 4.20% First Mortgage Bonds.
Subject to the terms and conditions of the Indenture, the 4.20% First Mortgage
Bonds are redeemable at the option of the Company, in whole or in part at any
time after the Effective Date and prior to Maturity, at a Redemption Price equal
to the greater of:
(i) 100% of the principal amount of the 4.20%
First Mortgage Bonds to be redeemed; or
8
(ii) as determined by the Independent Investment
Banker, the sum of the present values of the Remaining Scheduled Payments on the
4.20% First Mortgage Bonds to be so redeemed (not including any portion of such
payments of interest accrued to the Redemption Date) discounted to the
Redemption Date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate, plus 0.15%,
plus, in either of the above cases, accrued and unpaid interest on the principal
amount of the 4.20% First Mortgage Bonds being redeemed to but not including the
Redemption Date.
(c) Optional Redemption of 4.80% First Mortgage Bonds.
Subject to the terms and conditions of the Indenture, the 4.80% First Mortgage
Bonds are redeemable at the option of the Company, in whole or in part at any
time after the Effective Date and prior to Maturity, at a Redemption Price equal
to the greater of:
(i) 100% of the principal amount of the 4.80%
First Mortgage Bonds to be redeemed; or
(ii) as determined by the Independent Investment
Banker, the sum of the present values of the Remaining Scheduled Payments on the
4.80% First Mortgage Bonds to be so redeemed (not including any portion of such
payments of interest accrued to the Redemption Date) discounted to the
Redemption Date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate, plus 0.20%,
plus, in either of the above cases, accrued and unpaid interest on the principal
amount of the 4.80% First Mortgage Bonds being redeemed to but not including the
Redemption Date.
(d) Optional Redemption of 6.05% First Mortgage Bonds.
Subject to the terms and conditions of the Indenture, the 6.05% First Mortgage
Bonds are redeemable at the option of the Company, in whole or in part at any
time after the Effective Date and prior to Maturity, at a Redemption Price equal
to the greater of:
(i) 100% of the principal amount of the 6.05%
First Mortgage Bonds to be redeemed; or
(ii) as determined by the Independent Investment
Banker, the sum of the present values of the Remaining Scheduled Payments on the
6.05% First Mortgage Bonds to be so redeemed (not including any portion of such
payments of interest accrued to the Redemption Date) discounted to the
Redemption Date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate, plus 0.25%,
plus, in either of the above cases, accrued and unpaid interest on the principal
amount of the 6.05% First Mortgage Bonds being redeemed to but not including the
Redemption Date.
(e) Optional Redemption of Floating Rate First Mortgage
Bonds. Subject to the terms and conditions of the Indenture, the Floating Rate
First Mortgage Bonds are redeemable at the option of the Company, in whole or in
part, on October 3, 2004 and any Interest Payment Date thereafter and prior to
Maturity, at a Redemption Price equal to 100% of the principal amount of the
Floating Rate First Mortgage Bonds being redeemed to the
9
Redemption Date, plus accrued and unpaid interest thereon to but not including
the Redemption Date.
(f) Redemption of each series of Bonds of the Initial
Series pursuant to this Section 302 shall be made in accordance with Article VI
of the Indenture.
ARTICLE IV
MISCELLANEOUS
SECTION 401 Additional Provisions.
(a) Notwithstanding Section 1.01 of the Indenture, with
respect to Bonds issued on or before the Effective Date, the term "Senior Lien
Obligations" shall not include obligations under the 1920 Mortgage.
(b) If the Company designates the Release Date pursuant
to Section 8.12 of the Indenture, then in addition to the items the Company is
required to deliver to the Trustee pursuant to Section 8.12 of the Indenture,
the Company shall deliver to the Trustee on or before the Release Date a
replacement Global Bond referenced in Section 202 hereof duly executed by the
Company for authentication by the Trustee, and the Trustee shall cancel the
replaced Global Bond and, upon a Company Request, deliver to the Company a
certificate of cancellation with respect to such replaced Global Bond.
SECTION 402 Application of First Supplemental Indenture.
Each and every term and condition contained in this First Supplemental
Indenture that modifies, amends or supplements the terms and conditions of the
Indenture shall apply only to Bonds of the Initial Series established hereby and
not to any other series of Bonds established under the Indenture. Except as
specifically amended and supplemented by, or to the extent inconsistent with,
this First Supplemental Indenture, the Indenture shall remain in full force and
effect and is hereby ratified and confirmed.
SECTION 403 Effective Date of First Supplemental Indenture.
This First Supplemental Indenture shall be effective upon the execution
and delivery hereof by each of the parties hereto.
SECTION 404 Counterparts.
This First Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed by their respective officers hereunto
duly authorized, all as of the day and year first above written.
PACIFIC GAS AND ELECTRIC COMPANY,
as Issuer (Mortgagor)
By: /s/ Kent M. Harvey
----------------------------------------------
Kent M. Harvey
Senior Vice President, Chief Financial Officer
and Treasurer
BNY WESTERN TRUST COMPANY,
as Trustee (Mortgagee)
By: /s/ Josephine Libunao
----------------------------------------------
Josephine Libunao
Vice President
[Signature Page to First Supplemental Indenture]
EXHIBIT A
[FORM OF FIXED RATE FIRST MORTGAGE BOND]
[FORM OF FACE OF BOND]
THIS BOND IS A GLOBAL BOND WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. Unless and until it is exchanged in whole or in part for Bonds
in definitive form, this Bond may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.
UNLESS THIS BOND CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY BOND CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
[THE COMPANY MAY CAUSE this BOND TO BE entirely unsecured FROM AND
AFTER THE FIRST DATE ON WHICH (I) THE RATINGS ON THE COMPANY'S long-term
UNSECURED DEBT OBLIGATIONS SHALL BE AT LEAST EQUAL TO THE ISSUANCE DATE SECURED
DEBT RATINGS AND (II) the aggregate principal AMOUNT of all outstanding Debt
secured by a Lien on any Principal Property that will be outstanding immediately
after the Release Date (EXCLUDING secured debt permitted by section 7.11(a)(i)
through (vi), inclusive, of the indenture) will not exceed 5% of THE COMPANY'S
NET TANGIBLE ASSETS, PROVIDED THAT NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED
AND IS CONTINUING (THE "RELEASE DATE").]
THE FOLLOWING SUMMARY OF TERMS IS SUBJECT TO THE INFORMATION SET FORTH
ON THE REVERSE HEREOF:
PRINCIPAL AMOUNT: $ ORIGINAL ISSUE DATE: INTEREST RATE:
March 23, 2004
MATURITY DATE: INTEREST PAYMENT DATES: THIS BOND IS A:
[X] Global Book-Entry Bond
March 1, _____ March 1 and September 1 of each year [ ] Certificated Bond
REGISTERED OWNER: Cede & Co., as
nominee of The Depository Trust Company
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PACIFIC GAS AND ELECTRIC COMPANY
___% FIRST MORTGAGE BONDS DUE 20__
(Fixed Rate)
No. ___________ Principal Amount: $_________
CUSIP No: ___________
PACIFIC GAS AND ELECTRIC COMPANY, a corporation duly organized and
existing under the laws of the State of California (herein called the "Company,"
which term includes any successor Person pursuant to the applicable provisions
of the Indenture hereinafter referred to), for value received, hereby promises
to pay to Cede & Co., as nominee for The Depository Trust Company, or registered
assigns, the Principal Amount stated above on the Maturity Date stated above,
and to pay interest thereon from and including the Original Issue Date stated
above or, in the case of a __% First Mortgage Bond Due ____ issued upon the
registration of transfer or exchange, from and including the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually in arrears on the Interest Payment Dates set forth above and on
the Maturity Date stated above, commencing September 1, 2004, at the rate of
____% per annum until the principal hereof is paid or made available for
payment. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this ___% First Mortgage Bond Due ____ (this "Bond") (or
one or more Predecessor Bonds) is registered at the close of business on the
Regular Record Date for such interest, which shall be the 15th day of the month
next preceding such Interest Payment Date; provided, however, that interest
payable at the Maturity Date or on a Redemption Date will be paid to the Person
to whom principal is 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 may either be paid to the Person in whose name this Bond (or one
or more Predecessor Bonds) 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 Holders of Bonds of this series not
less than 10 days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of the Indenture
and any securities exchange, if any, on which the Bonds of this series may be
listed, and upon such notice as may be required by any such exchange, all as
more fully provided in said Indenture.
Payments of interest on this Bond will include interest accrued to but
excluding the respective Interest Payment Dates. Interest payments for this Bond
shall be computed and paid on the basis of the 360-day year of twelve 30-day
months and will accrue from March 23, 2004 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for. In the event
that any date on which interest is payable on this Bond (other than the Maturity
Date) is not a Business Day, then payment of the interest payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or payment in respect of any such delay) with the same force and effect
as if made on the date the payment was originally
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payable. If the Maturity Date falls on a day that is not a Business Day, the
payment of principal, premium, if any, and interest may be made on the next
succeeding Business Day, and no interest on such payment shall accrue for the
period from and after maturity.
Payment of principal of, premium, if any, and interest on the Bonds of
this series shall be made in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts. Payments of principal of, premium, if any, and interest on the
Bonds of this series represented by a Global Bond shall be made by wire transfer
of immediately available funds to the Holder of such Global Bond, provided that,
in the case of payments of principal and premium, if any, such Global Bond is
first surrendered to the Paying Agent. If any of the Bonds of this series are no
longer represented by a Global Bond, (i) payments of principal, premium, if any,
and interest due on the Maturity Date or earlier redemption of such Bonds shall
be made at the office of the Paying Agent upon surrender of such Bonds to the
Paying Agent, and (ii) payments of interest shall be made, at the option of the
Company, subject to such surrender where applicable, (A) by check mailed to the
address of the Person entitled thereto as such address shall appear in the Bond
Register or (B) by wire transfer to registered Holders of at least $10,000,000
in principal amount of Bonds at such place and to such account at a banking
institution in the United States as such Holders may designate in writing to the
Trustee at least sixteen (16) days prior to the date for payment.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Bond
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: ________________
PACIFIC GAS AND ELECTRIC COMPANY
By __________________________________
By __________________________________
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds of the series designated as Bonds of the ____
Series referred to in the within-mentioned Indenture.
____________________________________,
As Trustee
By __________________________________
Authorized Signatory
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[FORM OF REVERSE OF BOND]
This __% First Mortgage Bond due ____ is one of a duly authorized issue
of Bonds of the Company (the "Bonds"), issued and issuable in one or more series
under [and equally secured by] an Indenture of Mortgage, dated as of March 11,
2004 (such Indenture as originally executed and delivered and as supplemented or
amended from time to time thereafter, together with any constituent instruments
establishing the terms of particular Bonds, being herein called the
"Indenture"), between the Company and BNY Western Trust Company, as Trustee
(herein called the "Trustee," which term includes any successor trustee under
the Indenture), and reference is hereby made to the Indenture for a description
of [the property mortgaged, pledged and held in trust, the nature and extent of
the security and] the respective rights, limitations of rights, duties and
immunities of the Company, the Trustee and the Holders of Bonds thereunder and
of the terms and conditions upon which Bonds are, and are to be, authenticated
and delivered. The acceptance of this Bond shall be deemed to constitute the
consent and agreement by the Holder hereof to all of the terms and provisions of
the Indenture.
The Bonds of this series are subject to mandatory redemption
("Mandatory Redemption") in whole on June 23, 2004 (the "Mandatory Redemption
Date"), in the event the Effective Date has not occurred on or before June 21,
2004, at a redemption price equal to the principal amount of the Bonds of this
series plus a redemption premium of ___% on such principal amount, and accrued
and unpaid interest from March 23, 2004 to but not including the Mandatory
Redemption Date.
Subject to the terms and conditions of the Indenture, the Bonds of this
series are also redeemable at the option of the Company ("Optional Redemption"),
in whole or in part, at any time after the Effective Date and prior to Maturity,
at a Redemption Price equal to the greater of:
(a) 100% of the principal amount of the Bonds of this series
to be redeemed; or
(b) as determined by the Independent Investment Banker, the
sum of the present values of the Remaining Scheduled Payments on the
Bonds of this series to be so redeemed (not including any portion of
such payments of interest accrued to the Redemption Date) discounted to
the Redemption Date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus
___ %,
plus, in either of the above cases, accrued and unpaid interest on the principal
amount of the Bonds of this series being redeemed to but not including the
Redemption Date.
Interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to Holders of such Bonds, or one or more
Predecessor Bonds, of record at the close of business on the relevant Record
Dates referred to on the face hereof, all as provided in the Indenture.
In the case of a Mandatory Redemption, a conditional notice of
Mandatory Redemption will be in writing and mailed first-class postage-prepaid
not less than 7 days nor more than 30 days prior to the Mandatory Redemption
Date, but only if the Effective Date has not occurred on or by such date of
mailing, to each Holder of Bonds of this series at the Holder's registered
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address. If moneys are applied to effect a Mandatory Redemption on the Mandatory
Redemption Date therefor, immediately after such Mandatory Redemption Date
interest shall cease to accrue on such Bonds.
In the case of an Optional Redemption, notice of redemption will be in
writing and mailed first-class postage-prepaid not less than 30 days nor more
than 60 days prior to the Redemption Date to each Holder of Bonds of this series
to be redeemed at the Holder's registered address. If money sufficient to pay
the Redemption Price of all Bonds of this series (or portions thereof) to be
redeemed on the Redemption Date is deposited with the Paying Agent or the
Trustee on or prior to the Redemption Date, from and after such Redemption Date
such Bonds or portions thereof shall cease to bear interest. Bonds of this
series in denominations larger than $1,000 in principal amount may be redeemed
in part but only in integral multiples of $1,000.
In the event of redemption of this Bond in part only, a new Bond or
Bonds of this series and of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the surrender hereof.
As provided in the Indenture and subject to certain limitations therein
set forth, this Bond or any portion of the principal amount hereof will be
deemed to have been paid for all purposes of the Indenture and to be no longer
Outstanding thereunder, and the Company's entire indebtedness in respect thereof
will be satisfied and discharged, if there has been irrevocably deposited with
the Trustee or any Paying Agent (other than the Company), in trust, money in an
amount which will be sufficient and/or Eligible Obligations, the principal of
and interest on which when due, without regard to any reinvestment thereof, will
provide moneys which, together with money, if any, deposited with or held by the
Trustee or such Paying Agent, will be sufficient to pay when due the principal
of and premium, if any, and interest on this Bond when due.
If an Event of Default shall occur and be continuing, the Trustee or
the Holders of not less than a majority, prior to the Release Date, or 33%, on
or after the Release Date, in aggregate principal amount of the Outstanding
Bonds, considered as one class, may declare the principal amount of all Bonds
then Outstanding to be due and payable immediately by notice in writing to the
Company (and to the Trustee if given by Holders); provided, however, that with
respect to certain Events of Default relating to bankruptcy, insolvency and
similar events, the principal amount of all Bonds then Outstanding shall be due
and payable immediately without further action by the Trustee or the Holders.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee to enter into one or more supplemental indentures for
the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, the Indenture with the consent of the
Holders of not less than a majority in aggregate principal amount of the Bonds
at the time Outstanding, considered as one class; provided, however, that if
there shall be Bonds of more than one series Outstanding under the Indenture and
if a proposed supplemental indenture shall directly affect the rights of the
Holders of Bonds of one or more, but less than all, of such series, then the
consent only of the Holders of a majority in aggregate principal amount of the
Outstanding Bonds of all series so directly affected, considered as one class,
shall be
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required; and provided, further, that if the Bonds of any series shall have been
issued in more than one Tranche and if a proposed supplemental indenture shall
directly affect the rights of the Holders of Bonds of one or more, but less than
all, of such Tranches, then the consent only of the Holders of a majority in
aggregate principal amount of the Outstanding Bonds of all Tranches so directly
affected, considered as one class, shall be required; and provided, further,
that the Indenture permits the Company and the Trustee to enter into one or more
supplemental indentures for certain purposes without the consent of any Holders
of Bonds. The Indenture also contains provisions permitting the Holders of a
majority in aggregate principal amount of Bonds, on behalf of the Holders of all
such Bonds, to waive certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Bond shall be
conclusive and binding upon such Holder and upon all future Holders of this Bond
and of any Bond issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Bond.
As provided in and subject to the provisions of the Indenture, the
Holder of this Bond shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default, the Holders of at least
33% in aggregate principal amount of the Bonds at the time Outstanding shall
have made written request to the Trustee to institute proceedings in respect of
such Event of Default as Trustee and offered the Trustee reasonable indemnity,
and the Trustee shall not have received from the Holders of at least a majority
in aggregate principal amount of Bonds at the time Outstanding a direction
inconsistent with such written request, and shall have failed to institute any
such proceeding for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Bond for the enforcement of any payment of principal hereof or any premium
or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Bond or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Bond at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Bond is registrable in the Bond Register, upon
surrender of this Bond for registration of transfer at the office or agency of
the Company in any place where the principal of and any premium and interest on
this Bond are payable, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company, the Trustee or the Bond
Registrar, as the case may be, duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Bonds of this series and of like tenor, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Bonds of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Bonds of this series are exchangeable for a like
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aggregate principal amount of Bonds of this series and of like tenor of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Company shall not be required to execute or to provide for the
registration of the transfer of or the exchange of (A) any Bond of this series
during a period of 15 days immediately preceding the date notice is to be given
identifying the serial numbers of the Bonds of this series called for
redemption, or (B) any Bond of this series selected for redemption in whole or
in part, except the unredeemed portion of any Bond of this series being redeemed
in part.
Prior to due presentment of this Bond for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Bond is registered as the owner hereof for all
purposes, whether or not this Bond is overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
This Bond shall be governed by, and construed and enforced in
accordance with, the laws of the State of California without regard to the
principles of conflicts of laws thereunder, except to the extent that the Trust
Indenture Act shall be applicable.
As provided in the Indenture, no recourse shall be had for the payment
of the principal of, premium, if any, or interest with respect to this Bond, or
any part thereof, or for any claim based hereon or otherwise in respect hereof,
or of the indebtedness represented hereby, or upon any obligation, covenant or
agreement under the Indenture, against any incorporator, shareholder, officer or
director, as such, past, present or future, of the Company or of any predecessor
or successor corporation (either directly or through the Company or a
predecessor or successor corporation), whether by virtue of any constitutional
provision, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise; it being expressly agreed and understood that the
Indenture and all the Bonds are solely corporate obligations and that any such
personal liability is hereby expressly waived and released as a condition of,
and as part of the consideration for, the execution of the Indenture and the
issuance of this Bond.
All terms used in this Bond which are not defined herein shall have the
meanings assigned to them in the Indenture.
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ASSIGNMENT FORM
To assign this Bond, fill in the form below: (I) or (we) assign and transfer
this Bond to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Bond on the books of the Company. The agent may substitute
another to act for him.
Date: ___________
Your signature:_______________________________
(Sign exactly as your name appears on the face
of this Bond)
Tax Identification No.:
SIGNATURE GUARANTEE:
______________________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the
requirements of the Bond Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Bond Registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of
1934, as amended.
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EXHIBIT B
[FORM OF FLOATING RATE FIRST MORTGAGE BOND]
[FORM OF FACE OF BOND]
THIS BOND IS A GLOBAL BOND WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. Unless and until it is exchanged in whole or in part for Bonds
in definitive form, this Bond may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.
UNLESS THIS BOND CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY BOND CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
[THE COMPANY MAY CAUSE this BOND TO BE entirely unsecured FROM AND
AFTER THE FIRST DATE ON WHICH (I) THE RATINGS ON THE COMPANY'S long-term
UNSECURED DEBT OBLIGATIONS SHALL BE AT LEAST EQUAL TO THE ISSUANCE DATE SECURED
DEBT RATINGS AND (II) the aggregate principal AMOUNT of all outstanding Debt
secured by a Lien on any Principal Property that will be outstanding immediately
after the Release Date (EXCLUDING secured debt permitted by section 7.11(a)(i)
through (vi), inclusive, of the indenture) will not exceed 5% of THE COMPANY'S
NET TANGIBLE ASSETS, PROVIDED THAT NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED
AND IS CONTINUING (THE "RELEASE DATE").]
THE FOLLOWING SUMMARY OF TERMS IS SUBJECT TO THE INFORMATION SET FORTH
ON THE REVERSE HEREOF:
PRINCIPAL AMOUNT: $ ORIGINAL ISSUE DATE: INITIAL INTEREST RATE:
March 23, 2004
MATURITY DATE: INTEREST RATE: LIBOR PLUS 0.70% PER THIS BOND IS A:
ANNUM [X] Global Book-Entry Bond
April 3, 2006 [ ] Certificated Bond
INTEREST PAYMENT DATES:
January 3, April 3, July 3 and October
3 of each year
REGISTERED OWNER: Cede & Co., as
nominee of The Depository Trust Company
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PACIFIC GAS AND ELECTRIC COMPANY
FLOATING RATE FIRST MORTGAGE BONDS DUE 2006
(Floating Rate)
No. ___________ Principal Amount: $_________
CUSIP No: __________________
PACIFIC GAS AND ELECTRIC COMPANY, a corporation duly organized and
existing under the laws of the State of California (herein called the "Company,"
which term includes any successor Person pursuant to the applicable provisions
of the Indenture hereinafter referred to), for value received, hereby promises
to pay to Cede & Co., as nominee for The Depository Trust Company, or registered
assigns, the Principal Amount stated above on the Maturity Date stated above,
and to pay interest thereon from and including the Original Issue Date stated
above or, in the case of a Floating Rate First Mortgage Bond Due 2006 issued
upon the registration of transfer or exchange, from and including the most
recent Interest Payment Date to which interest has been paid or duly provided
for, quarterly in arrears on each Interest Payment Date as specified above,
commencing on July 3, 2004, and on the Maturity Date stated above, at a floating
rate of interest as determined below, computed and paid on the basis of a
360-day year and the actual number of days in each interest payment period,
until the principal hereof is paid or made available for payment. The interest
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in such Indenture, be paid to the Person in whose name
this Floating Rate First Mortgage Bond Due 2006 (this "Bond") (or one or more
Predecessor Bonds) is registered at the close of business on the Regular Record
Date for such interest, which shall be the 15th day of the month next preceding
such Interest Payment Date; provided, however, that interest payable at the
Maturity Date or on a Redemption Date will be paid to the Person to whom
principal is 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 may either be paid to the Person in whose name this Bond (or one or more
Predecessor Bonds) 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 Holders of Bonds of this series not less than
10 days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of the Indenture and any
securities exchange, if any, on which the Bonds of this series may be listed,
and upon such notice as may be required by any such exchange, all as more fully
provided in said Indenture.
Payments of interest on this Bond will include interest accrued to but
excluding the respective Interest Payment Dates. In the event that any Interest
Payment Date is not a Business Day (other than an Interest Payment Date that
falls on the Maturity Date), then such Interest Payment Date will be postponed
to the next succeeding day that is a Business Day unless the Interest Payment
Date falls in the next succeeding calendar month in which case the Interest
Payment Date will be the immediately preceding Business Day. If the Maturity
Date falls on a day that is not a Business Day, the payment of principal,
premium, if any, and interest may be
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made on the next succeeding Business Day, and no interest on such payment shall
accrue for the period from and after maturity.
Payment of principal of, premium, if any, and interest on the Bonds of
this series shall be made in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts. Payments of principal of, premium, if any, and interest on the
Bonds of this series represented by a Global Bond shall be made by wire transfer
of immediately available funds to the Holder of such Global Bond, provided that,
in the case of payments of principal and premium, if any, such Global Bond is
first surrendered to the Paying Agent. If any of the Bonds of this series are no
longer represented by a Global Bond, (i) payments of principal, premium, if any,
and interest due on the Maturity Date or earlier redemption of such Bonds shall
be made at the office of the Paying Agent upon surrender of such Bonds to the
Paying Agent, and (ii) payments of interest shall be made, at the option of the
Company, subject to such surrender where applicable, (A) by check mailed to the
address of the Person entitled thereto as such address shall appear in the Bond
Register or (B) by wire transfer to registered Holders of at least $10,000,000
in principal amount of Bonds at such place and to such account at a banking
institution in the United States as such Holders may designate in writing to the
Trustee at least sixteen (16) days prior to the date for payment.
Reference is hereby made to the further provisions of this BOND set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof, directly or through an
Authenticating Agent, by manual signature of an authorized signatory, this Bond
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: ________________
PACIFIC GAS AND ELECTRIC COMPANY
By ____________________________________
By ____________________________________
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds of the series designated as Bonds of the Fifth
Series referred to in the within-mentioned Indenture.
______________________________________,
As Trustee
By_____________________________________
Authorized Signatory
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[FORM OF REVERSE OF BOND]
This Floating Rate First Mortgage Bond due 2006 is one of a duly
authorized issue of Bonds of the Company (the "Bonds"), issued and issuable in
one or more series under [and equally secured by] an Indenture of Mortgage,
dated as of March 11, 2004 (such Indenture as originally executed and delivered
and as supplemented or amended from time to time thereafter, together with any
constituent instruments establishing the terms of particular Bonds, being herein
called the "Indenture"), between the Company and BNY Western Trust Company, as
Trustee (herein called the "Trustee," which term includes any successor trustee
under the Indenture), and reference is hereby made to the Indenture for a
description of [the property mortgaged, pledged and held in trust, the nature
and extent of the security and] the respective rights, limitations of rights,
duties and immunities of the Company, the Trustee and the Holders of Bonds
thereunder and of the terms and conditions upon which Bonds are, and are to be,
authenticated and delivered. The acceptance of this Bond shall be deemed to
constitute the consent and agreement by the Holder hereof to all of the terms
and provisions of the Indenture.
The interest rate on this Bond will be reset quarterly on each Interest
Payment Date (each an "Interest Reset Date"); provided, however, that the
interest rate in effect from the Original Issue Date stated above to July 3,
2004 will be the Initial Interest Rate specified on the face hereof. If any
Interest Reset Date would otherwise be a day that is not a Business Day, the
Interest Reset Date shall be postponed to the next day that is a Business Day
except that if such Business Day is in the next succeeding calendar month, such
Interest Reset Date shall be the immediately preceding Business Day. Subject to
applicable provisions of law, on each Interest Reset Date, the rate of interest
on this Bond shall be determined in accordance with the following provisions:
With respect to any Interest Determination Date (as defined below),
LIBOR will be the rate for deposits in U.S. Dollars having a maturity of three
months for a period commencing on the second London Business Day immediately
following such Interest Determination Date in amounts of not less than
$1,000,000, as that rate appears on the display on Moneyline Telerate Page 3750
as of 11:00 a.m., London time, on such Interest Determination Date. "Moneyline
Telerate Page 3750" means the display designated as page "3750" on Moneyline
Telerate (or such other page as may replace the 3750 page on any successor
service for the purpose of displaying London interbank rates of major banks for
U.S. dollar deposits).
If no rate appears on Moneyline Telerate Page 3750 at approximately
11:00 a.m., London time on an Interest Determination Date, the Calculation Agent
will determine LIBOR in respect of such Interest Determination Date as follows:
the Calculation Agent will request the principal London offices of each of four
major reference banks in the London interbank market, as selected by the
Calculation Agent (after consultation with the Company), to provide the
Calculation Agent with its offered quotation for deposits in U.S. Dollars for
the period of three months commencing on the second London Business Day
immediately following such Interest Determination Date to prime banks in the
London interbank market at approximately 11:00 a.m., London time, on such
Interest Determination Date and in a principal amount equal to an amount not
less than $1,000,000 that is representative of a single transaction in U.S.
Dollars in such market at such time, and (a) if at least two such quotations are
provided, LIBOR determined on such Interest Determination Date will be the
arithmetic mean (rounded, if necessary, to the
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nearest one-hundred-thousandth of a percentage point (0.000001%), with
five-millionths of a percentage point (0.0000005%) rounded upwards) of such
quotations, or (b) if fewer than two quotations are provided, LIBOR determined
on such Interest Determination Date will be the arithmetic mean (rounded, if
necessary, to the nearest one-hundred-thousandth of a percentage point
(0.000001%), with five-millionths of a percentage point (0.0000005%) rounded
upwards) of the rates quoted at approximately 11:00 a.m., in The City of New
York, on such Interest Determination Date, by three major banks in The City of
New York selected by the Calculation Agent (after consultation with the Company)
for loans in U.S. Dollars to leading European banks, having a maturity of three
months commencing on the second London Business Day immediately following such
Interest Determination Date and in a principal amount equal to an amount not
less than $1,000,000 that is representative for a single transaction in U.S.
Dollars in such market at such time; provided, however, that if the banks
selected by the Calculation Agent are not providing quotations in the manner
mentioned in this sentence, LIBOR will remain the LIBOR then in effect on such
Interest Determination Date.
Interest will be payable on January 3, April 3, July 3 and October 3
(each an "Interest Payment Date"), commencing on July 3, 2004, and at Maturity.
If any Interest Payment Date would otherwise be a day that is not a Business
Day, the Interest Payment Date shall be postponed to the next day that is a
Business Day, except that if such Business Day is in the next succeeding
calendar month, such Interest Payment Date shall be the immediately preceding
Business Day. If the Maturity Date falls on a day that is not a Business Day,
the payment of principal and interest may be made on the next succeeding
Business Day, and no interest on such payment shall accrue for the period from
and after maturity.
"Business Day" means with respect to any Bond, any London Business Day
except a Saturday, a Sunday or a legal holiday in The City of New York on which
banking institutions are authorized or required by law, regulation or executive
order to close. "London Business Day" means any day on which dealings in
deposits in U.S. Dollars are transacted or, with respect to any future date, are
expected to be transacted, in the London interbank market.
The Interest Determination Date pertaining to an Interest Reset Date
will be the second London Business Day preceding such Interest Reset Date.
Unless otherwise specified on the face hereof, interest payments, if
any, will be the amount of interest accrued from and including the last date in
respect of which interest has been paid or duly provided for (or from and
including the Original Issue Date stated above if no interest has been paid or
provided for with respect to this Bond) to but excluding the Interest Payment
Date or the date of Maturity. Accrued interest hereon from the Original Issue
Date stated above or from the last date to which interest hereon has been paid
is calculated by multiplying the face amount hereof by an accrued interest
factor. Such accrued interest factor is computed by adding the interest factor
calculated for each day from the Original Issue Date stated above or from the
last date to which interest shall have been paid, to the date for which accrued
interest is being calculated. The interest factor for each day shall be computed
by dividing the interest rate applicable to such day by 360. All percentages
resulting from any calculation hereon will be rounded to the nearest one
hundred-thousandth of a percentage point, with five-one millionths of a
percentage point rounded upwards. For example, 9.876545% (or
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..09876545) would be rounded to 9.87655% (or .0987655). All dollar amounts used
in or resulting from any calculation hereon will be rounded to the nearest cent.
The interest rate on this Bond will in no event be higher than the
maximum rate permitted by California law as the same may be modified by United
States law of general applicability.
The Calculation Agent will, upon the request of the Holder of this
Bond, provide to such Holder the interest rate hereon then in effect and, if
different, the interest rate which will become effective as a result of a
determination made on the most recent Interest Determination Date.
The Bonds of this series are subject to mandatory redemption
("Mandatory Redemption") in whole on June 23, 2004 (the "Mandatory Redemption
Date"), in the event the Effective Date has not occurred on or before June 21,
2004, at a redemption price equal to the principal amount of the Bonds of this
series plus a redemption premium of 1.00% on such principal amount, and accrued
and unpaid interest from March 23, 2004 to but not including the Mandatory
Redemption Date.
Subject to the terms and conditions of the Indenture, the Bonds of this
series are also redeemable at the option of the Company ("Optional Redemption"),
in whole or in part, on October 3, 2004 and on any Interest Payment Date
thereafter and prior to Maturity, at a Redemption Price equal to 100% of the
principal amount of the Bonds of this series to be redeemed, plus accrued and
unpaid interest on the principal amount of the Bonds of this series being
redeemed to but not including the Redemption Date.
Interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to Holders of such Bonds, or one or more
Predecessor Bonds, of record at the close of business on the relevant Record
Dates referred to on the face hereof, all as provided in the Indenture.
In the case of a Mandatory Redemption, a conditional notice of
Mandatory Redemption will be in writing and mailed first-class postage-prepaid
not less than 7 days nor more than 30 days prior to the Mandatory Redemption
Date, but only if the Effective Date has not occurred on or by such date of
mailing, to each Holder of Bonds of this series at the Holder's registered
address. If moneys are applied to effect a Mandatory Redemption on the Mandatory
Redemption Date therefor, immediately after such Mandatory Redemption Date
interest shall cease to accrue on such Bonds.
In the case of an Optional Redemption, notice of redemption will be in
writing and mailed first-class postage-prepaid not less than 30 days nor more
than 60 days prior to the Redemption Date to each Holder of Bonds of this series
to be redeemed at the Holder's registered address. If money sufficient to pay
the Redemption Price of all Bonds of this series (or portions thereof) to be
redeemed on the Redemption Date is deposited with the Paying Agent or the
Trustee on or prior to the Redemption Date, from and after such Redemption Date
such Bonds or portions thereof shall cease to bear interest. Bonds of this
series in denominations larger than $1,000 in principal amount may be redeemed
in part but only in integral multiples of $1,000.
B-8
In the event of redemption of this Bond in part only, a new Bond or
Bonds of this series and of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the surrender hereof.
As provided in the Indenture and subject to certain limitations therein
set forth, this Bond or any portion of the principal amount hereof will be
deemed to have been paid for all purposes of the Indenture and to be no longer
Outstanding thereunder, and the Company's entire indebtedness in respect thereof
will be satisfied and discharged, if there has been irrevocably deposited with
the Trustee or any Paying Agent (other than the Company), in trust, money in an
amount which will be sufficient and/or Eligible Obligations, the principal of
and interest on which when due, without regard to any reinvestment thereof, will
provide moneys which, together with money, if any, deposited with or held by the
Trustee or such Paying Agent, will be sufficient to pay when due the principal
of and premium, if any, and interest on this Bond when due.
If an Event of Default shall occur and be continuing, the Trustee or
the Holders of not less than a majority, prior to the Release Date, or 33%, on
or after the Release Date, in aggregate principal amount of the Outstanding
Bonds, considered as one class, may declare the principal amount of all Bonds
then Outstanding to be due and payable immediately by notice in writing to the
Company (and to the Trustee if given by Holders); provided, however, that with
respect to certain Events of Default relating to bankruptcy, insolvency and
similar events, the principal amount of all Bonds then Outstanding shall be due
and payable immediately without further action by the Trustee or the Holders.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee to enter into one or more supplemental indentures for
the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, the Indenture with the consent of the
Holders of not less than a majority in aggregate principal amount of the Bonds
at the time Outstanding, considered as one class; provided, however, that if
there shall be Bonds of more than one series Outstanding under the Indenture and
if a proposed supplemental indenture shall directly affect the rights of the
Holders of Bonds of one or more, but less than all, of such series, then the
consent only of the Holders of a majority in aggregate principal amount of the
Outstanding Bonds of all series so directly affected, considered as one class,
shall be required; and provided, further, that if the Bonds of any series shall
have been issued in more than one Tranche and if a proposed supplemental
indenture shall directly affect the rights of the Holders of Bonds of one or
more, but less than all, of such Tranches, then the consent only of the Holders
of a majority in aggregate principal amount of the Outstanding Bonds of all
Tranches so directly affected, considered as one class, shall be required; and
provided, further, that the Indenture permits the Company and the Trustee to
enter into one or more supplemental indentures for certain purposes without the
consent of any Holders of Bonds. The Indenture also contains provisions
permitting the Holders of a majority in aggregate principal amount of Bonds, on
behalf of the Holders of all such Bonds, to waive certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Holder
of this Bond shall be conclusive and binding upon such Holder and upon all
future Holders of this Bond and of any Bond issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Bond.
B-9
As provided in and subject to the provisions of the Indenture, the
Holder of this Bond shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default, the Holders of at least
33% in aggregate principal amount of the Bonds at the time Outstanding shall
have made written request to the Trustee to institute proceedings in respect of
such Event of Default as Trustee and offered the Trustee reasonable indemnity,
and the Trustee shall not have received from the Holders of at least a majority
in aggregate principal amount of Bonds at the time Outstanding a direction
inconsistent with such written request, and shall have failed to institute any
such proceeding for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Bond for the enforcement of any payment of principal hereof or any premium
or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Bond or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Bond at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Bond is registrable in the Bond Register, upon
surrender of this Bond for registration of transfer at the office or agency of
the Company in any place where the principal of and any premium and interest on
this Bond are payable, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company, the Trustee or the Bond
Registrar, as the case may be, duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Bonds of this series and of like tenor, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Bonds of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Bonds of this series are exchangeable for a like aggregate principal amount of
Bonds of this series and of like tenor of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Company shall not be required to execute or to provide for the
registration of the transfer of or the exchange of (A) any Bond of this series
during a period of 15 days immediately preceding the date notice is to be given
identifying the serial numbers of the Bonds of this series called for
redemption, or (B) any Bond of this series selected for redemption in whole or
in part, except the unredeemed portion of any Bond of this series being redeemed
in part.
Prior to due presentment of this Bond for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this
B-10
Bond is registered as the owner hereof for all purposes, whether or not this
Bond is overdue, and neither the Company, the Trustee nor any such agent shall
be affected by notice to the contrary.
This Bond shall be governed by, and construed and enforced in
accordance with, the laws of the State of California without regard to the
principles of conflicts of laws thereunder, except to the extent that the Trust
Indenture Act shall be applicable.
As provided in the Indenture, no recourse shall be had for the payment
of the principal of, premium, if any, or interest with respect to this Bond, or
any part thereof, or for any claim based hereon or otherwise in respect hereof,
or of the indebtedness represented hereby, or upon any obligation, covenant or
agreement under the Indenture, against any incorporator, shareholder, officer or
director, as such, past, present or future, of the Company or of any predecessor
or successor corporation (either directly or through the Company or a
predecessor or successor corporation), whether by virtue of any constitutional
provision, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise; it being expressly agreed and understood that the
Indenture and all the Bonds are solely corporate obligations and that any such
personal liability is hereby expressly waived and released as a condition of,
and as part of the consideration for, the execution of the Indenture and the
issuance of this Bond.
All terms used in this Bond which are not defined herein shall have the
meanings assigned to them in the Indenture.
B-11
ASSIGNMENT FORM
To assign this Bond, fill in the form below: (I) or (we) assign and transfer
this Bond to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Bond on the books of the Company. The agent may substitute
another to act for him.
Date: ___________
Your signature:_______________________________
(Sign exactly as your name appears on the face
of this Bond)
Tax Identification No.:
SIGNATURE GUARANTEE:
______________________________________________
Signatures must be guaranteed by an "eligible
guarantor institution" meeting the
requirements of the Bond Registrar, which
requirements include membership or
participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other
"signature guarantee program" as may be
determined by the Bond Registrar in addition
to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of
1934, as amended.
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