<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 16, 1995
REGISTRATION NO. 33-61959
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
PACIFIC GAS AND ELECTRIC COMPANY PG&E CAPITAL I
(EXACT NAME OF REGISTRANT AS PG&E CAPITAL II
SPECIFIED IN CHARTER) PG&E CAPITAL III
PG&E CAPITAL IV
(EXACT NAME OF REGISTRANTS AS
SPECIFIED IN TRUST AGREEMENTS)
CALIFORNIA DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
94-0742640 (TO BE APPLIED FOR)
(I.R.S. EMPLOYER IDENTIFICATION NO.)
77 BEALE STREET
P. O. BOX 770000
SAN FRANCISCO, CALIFORNIA 94177
(415) 973-7000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
GARY P. ENCINAS, ESQ.
77 BEALE STREET
P. O. BOX 770000
SAN FRANCISCO, CALIFORNIA 94177
(415) 973-2784
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: After the
Registration Statement becomes effective, as determined by market conditions
and other factors.
---------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act Registration Statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2)(3) PRICE(2)(3) FEE
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PG&E Capital I, II, III and IV
Cumulative Quarterly Income
Preferred Securities.................................
- -----------------------------------------------------------------------------------------------------------------
Pacific Gas and Electric Company
Guarantees with respect to Preferred Securities(4)...
- -----------------------------------------------------------------------------------------------------------------
Pacific Gas and Electric Company
Deferrable Interest
Subordinated Debentures..............................
- -----------------------------------------------------------------------------------------------------------------
Total.................................................. $335,000,000 100% $335,000,000 $115,517.24
=================================================================================================================
</TABLE>
(1) There are being registered hereunder a presently indeterminate number of
Cumulative Quarterly Income Preferred Securities of PG&E Capital I, II,
III and IV with an aggregate initial public offering price not to exceed
$335,000,000 and related Guarantees and Deferrable Interest Subordinated
Debentures of Pacific Gas and Electric Company for which no separate
consideration will be received.
(2) Estimated solely for the purpose of determining the registration fee.
(3) Pursuant to Rule 457(n) and (o), the registration fee is calculated on the
basis of the proposed maximum offering price of the Cumulative Quarterly
Income Preferred Securities.
(4) This registration is deemed to include the rights of holders of the
Preferred Securities under the Guarantees and certain backup undertakings
as described in the Registration Statement.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE PROSPECTUS TO +
+WHICH IT RELATES SHALL CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN +
+OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN +
+WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO +
+REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED , 1995
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 1995
PREFERRED SECURITIES
PG&E CAPITAL I
% CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES (QUIPS SM)*, SERIES A
(LIQUIDATION PREFERENCE $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT THE SERIES A ISSUER HAS FUNDS AS SET FORTH HEREIN BY
PACIFIC GAS AND ELECTRIC COMPANY
-----------
The % Cumulative Quarterly Income Preferred Securities, Series A (the
"Series A Preferred Securities"), offered hereby represent preferred undivided
beneficial interests in the assets of PG&E Capital I, a statutory business
trust formed under the laws of the State of Delaware (the "Series A Issuer").
PG&E will be the owner of the beneficial interests represented by Common
Securities of the Series A Issuer. The First National Bank of Chicago is the
Property Trustee of the Series A Issuer. The Series A Issuer exists for the
sole purpose of issuing its trust interests and investing the proceeds thereof
in % Deferrable Interest Subordinated Debentures, Series A, Due 2025 (the
"Series A Debentures") to be issued by PG&E. The preferred interests
represented by the Series A Preferred Securities will have a preference under
certain circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the trust interests represented by
the Common Securities of the Series A Issuer. See "Description of the Preferred
Securities--Subordination of Common Securities" in the accompanying Prospectus.
Holders of the Series A Preferred Securities will be entitled to receive
cumulative cash Distributions accruing from the date of original issuance and
payable quarterly in arrears on March 31, June 30, September 30 and December 31
of each year, commencing , 1995, at the rate of % per annum, payable from
amounts received by the Series A Issuer as interest on the Series A Debentures.
So long as an Event of Default under the Indenture has not occurred and is
continuing, PG&E has the right to defer payments of interest on the Series A
Debentures by extending the interest payment period thereon at any time for up
to 20 consecutive
(Continued on next page)
-----------
SEE "RISK FACTORS" AT PAGE S-4 HEREOF FOR CERTAIN INFORMATION RELEVANT TO AN
INVESTMENT IN THE SERIES A PREFERRED SECURITIES, INCLUDING THE PERIOD AND
CIRCUMSTANCES DURING WHICH PAYMENT OF DISTRIBUTIONS ON THE SERIES A PREFERRED
SECURITIES AND SERIES A DEBENTURES MAY BE DEFERRED AND THE RELATED FEDERAL
INCOME TAX CONSEQUENCES.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH
IT RELATES.ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO THE
OFFERING PRICE COMMISSION(1) SERIES A ISSUER(2)(3)
-------------- ------------- ---------------------
<S> <C> <C> <C>
Per Series A Preferred Security.. $ (2) $
Total(4)......................... $ (2) $
</TABLE>
- -----
(1) The Series A Issuer and PG&E have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting".
(2) In view of the fact that the proceeds of the sale of the Series A Preferred
Securities will be used to purchase the Series A Debentures, the
Underwriting Agreement provides that PG&E will pay to the Underwriters, as
compensation ("Underwriters' Compensation") for their arranging the
investment therein of such proceeds, $ per Series A Preferred Security
(or $ in the aggregate). See "Underwriting".
(3) Expenses of the offering, which are payable by PG&E, are estimated to be
$ .
(4) The Series A Issuer and PG&E have granted the Underwriters an option for 30
days to purchase up to an additional Series A Preferred Securities at
the initial public offering price per Series A Preferred Security solely to
cover over-allotments. PG&E will pay Underwriters' Compensation in the
amounts per Series A Preferred Security set forth in Note 2 with respect to
such additional Series A Preferred Securities. If such option is exercised
in full, the total Initial Public Offering Price, Underwriting Commission
and Proceeds to the Series A Issuer will be $ , $ and $ ,
respectively. See "Underwriting".
-----------
The Series A Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein and subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Series A Preferred Securities will be made only
in book-entry form through the facilities of DTC on or about , 1995.
- -----
* QUIPS is a service mark of Goldman, Sachs & Co.
-----------
The date of this Prospectus Supplement is , 1995.
<PAGE>
(Continued from previous page)
quarters (each an "Extension Period"). If and for so long as interest payments
are so deferred, Distributions on the Series A Preferred Securities will also
be deferred. During an Extension Period, Distributions will continue to
accrue, and holders of Series A Preferred Securities will be required to
accrue interest income for United States federal income tax purposes. See
"Certain Terms of the Series A Debentures--Option to Extend Interest Payment
Period" and "United States Taxation--Potential Extension of Interest Payment
Period and Original Issue Discount".
The payment of Distributions and payments on liquidation of the Series A
Issuer or the redemption of the Series A Preferred Securities, as set forth
below, in each case out of funds held by the Series A Issuer are guaranteed by
PG&E under a Guarantee Agreement (the "Series A Guarantee") to the extent
described herein. If PG&E fails to make interest payments on the Series A
Debentures held by the Series A Issuer, the Series A Issuer will have
insufficient funds to pay Distributions on the Series A Preferred Securities.
The Series A Guarantee does not cover payment of Distributions when the Series
A Issuer does not have sufficient funds on hand available to pay such
Distributions. In such event, the remedy of a holder of Series A Preferred
Securities is to require the Property Trustee to enforce the rights of the
Series A Issuer under the Series A Debentures held by the Series A Issuer. The
obligations of PG&E under the Series A Guarantee are subordinate and junior in
right of payment to all liabilities of PG&E except those made pari passu or
subordinate to the Series A Guarantee expressly by their terms.
The Series A Preferred Securities are subject to mandatory redemption upon
repayment of the Series A Debentures at maturity or their earlier redemption.
PG&E will have the option at any time on or after , 2000 to redeem, in
whole or in part, the Series A Debentures. PG&E also will have the right at
any time, upon occurrence of a Special Event (as defined herein), to redeem,
in whole but not in part, the Series A Debentures. See "Certain Terms of the
Series A Debentures--Redemption".
The Series A Debentures are subordinate and junior in right of payment to
all Senior Indebtedness of PG&E. As of June 30, 1995, PG&E had approximately
$9 billion of principal amount of Senior Indebtedness. The terms of the Series
A Debentures do not limit PG&E's ability to incur additional Senior
Indebtedness. See "Description of the Debentures--Subordination" in the
accompanying Prospectus.
In the event of the liquidation of the Series A Issuer, the holders of the
Series A Preferred Securities will be entitled to receive a stated liquidation
preference of $25 per Series A Preferred Security plus accrued and unpaid
Distributions thereon to the date of payment, unless, in connection with such
liquidation, Series A Debentures are distributed to the holders of the Series
A Preferred Securities, subject to certain limitations. See "Description of
the Preferred Securities--Liquidation Distribution Upon Termination" in the
accompanying Prospectus.
The Series A Preferred Securities have been approved for listing, upon
official notice of issuance, on the American and Pacific Stock Exchanges.
The Series A Preferred Securities will be represented by global certificates
registered in the name of DTC or its nominee. Beneficial interests in the
Series A Preferred Securities will be shown on, and transfers thereof will be
effected only through, records maintained by participants in DTC. Except as
described in the accompanying Prospectus, Series A Preferred Securities in
certificated form will not be issued in exchange for the global certificates.
See "Description of the Preferred Securities--Book-Entry-Only Issuance--The
Depository Trust Company" in the accompanying Prospectus.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A
PREFERRED SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK
EXCHANGE, THE PACIFIC STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE>
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the
detailed information and financial statements incorporated herein by reference.
THE OFFERING
<TABLE>
<S> <C>
Securities Offered.............................. % Cumulative Quarterly Income Preferred
Securities, Series A
Distribution Payment Dates...................... March 31, June 30, September 30 and
December 31, commencing , 1995,
subject to deferral as described herein
Redemption...................................... As set forth on the Prospectus Supplement
cover
Use of Proceeds................................. Capital expenditures and the redemption,
repurchase, repayment or retirement of
outstanding indebtedness or preferred stock
<CAPTION>
THE COMPANY
<S> <C>
Principal Business.............................. Supplying electric and natural gas service
Utility Service Area............................ Most of Northern and Central California
Estimated Population of Utility Service Area
(December 31, 1994)............................ 13,000,000
</TABLE>
CONSOLIDATED FINANCIAL INFORMATION
(DOLLAR AMOUNT IN THOUSANDS)
<TABLE>
<CAPTION>
UNAUDITED
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED
--------------------------------------------------------- JUNE 30,
1990 1991 1992 1993 1994 1995
---------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues...... $9,470,092 $9,778,119 $10,296,088 $10,582,408 $10,447,351 $4,755,081
Net Income.............. $ 987,170 $1,026,392 $ 1,170,581 $ 1,065,495 $ 1,007,450 $ 734,207
Ratios of Earnings to
Combined Fixed Charges
and Preferred Stock
Dividends*............. 2.68x 2.85x 3.03x 2.85x 3.08x 3.97x
</TABLE>
- --------
*See "Coverage Ratios."
<TABLE>
<CAPTION>
AS OF JUNE 30, 1995
----------------------
(UNAUDITED)
AMOUNT PERCENTAGE
----------- ----------
<S> <C> <C>
Common Stock Equity...................................... $ 8,729,259 48.9%
Preferred Stock Without Mandatory Redemption............. 732,995 4.1
Preferred Stock With Mandatory Redemption................ 137,500 0.8
Long-term Debt........................................... 8,250,722 46.2
----------- -------
Total Capitalization................................. $17,850,476 100.0%
=========== =======
Current Liabilities:
Long-term Debt......................................... $ 416,939
Short-term Borrowings.................................. $ 210,000
</TABLE>
S-3
<PAGE>
The following information supplements and should be read in conjunction with
the information contained in the accompanying Prospectus. Each of the
capitalized terms used in this Prospectus Supplement has the meaning set forth
in this Prospectus Supplement or in the accompanying Prospectus.
RISK FACTORS
Prospective purchasers of the Series A Preferred Securities should carefully
review the information contained elsewhere in this Prospectus Supplement and
in the accompanying Prospectus and should particularly consider the following
matters:
SUBORDINATED OBLIGATIONS UNDER THE SERIES A GUARANTEE AND THE SERIES A
DEBENTURES
The obligations of PG&E under the Series A Guarantee issued by PG&E for the
benefit of the holders of Series A Preferred Securities are subordinate and
junior in right of payment to all liabilities of PG&E except those made pari
passu or subordinate to the Series A Guarantee expressly by their terms.
PG&E's obligations under the Series A Debentures are subordinate and junior in
right of payment to all Senior Indebtedness of PG&E. At June 30, 1995, the
Senior Indebtedness of PG&E aggregated approximately $9 billion. There are no
terms in the Series A Preferred Securities, the Series A Debentures or the
Series A Guarantee that limit PG&E's ability to incur additional indebtedness,
including indebtedness that ranks senior to the Series A Debentures and the
Series A Guarantee. See "Description of the Guarantee--Status of the
Guarantee" and "Description of the Debentures--Subordination" in the
accompanying Prospectus.
The ability of the Series A Issuer to pay amounts due on the Series A
Preferred Securities is entirely dependent upon PG&E making payments on the
Series A Debentures as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
So long as an Event of Default under the Indenture has not occurred and is
continuing, PG&E has the right at any time and from time to time to extend
interest payment periods on the Series A Debentures for up to 20 consecutive
quarters, and, as a consequence, quarterly Distributions on the Series A
Preferred Securities will be deferred by the Series A Issuer during any
Extension Period. Distributions in arrears after the quarterly payment date
therefor will accumulate additional distributions thereon at the rate per
annum of % thereof (to the extent permitted by law). In the event PG&E
exercises its right to extend the interest payment periods on the Series A
Debentures, PG&E will not, and will not permit any subsidiary of PG&E to,
declare or pay any dividend or distribution on, or redeem, purchase, acquire,
or make a liquidation or guarantee payment (other than payments under a
Guarantee) with respect to, any shares of PG&E's capital stock or any other
security of PG&E (including other Debentures) ranking pari passu with or
junior in interest to the Series A Debentures, except (i) in each case with
securities junior in interest to the Series A Debentures or (ii) for payments
made on any series of Debentures upon the stated maturity of such Debentures.
As a result, this covenant requires that an interest payment on one series of
Debentures may be extended only if the interest periods on all series of
Debentures are likewise extended. Prior to the termination of any Extension
Period, PG&E may further extend the interest payment period, provided that
such Extension Period, together with all such previous and further extensions
thereof, may not exceed 20 consecutive quarters or extend beyond the maturity
or redemption date of the Series A Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due, PG&E may select a
new Extension Period subject to the above requirements. See "Certain Terms of
the Series A Preferred Securities--Distributions" and "Certain Terms of the
Series A Debentures--Option to Extend Interest Payment Period."
S-4
<PAGE>
Should an Extension Period occur, the Series A Issuer will continue to
accrue income for United States federal income tax purposes which will be
allocated, but not distributed, to holders of the Series A Preferred
Securities. As a result, a holder of Series A Preferred Securities will
include such interest in gross income for United States federal income tax
purposes in advance of the receipt of cash, and will not receive the cash
related to such income if the holder disposes of the Series A Preferred
Securities prior to the record date for the payment of Distributions. See
"United States Taxation--Potential Extension of Interest Payment Period and
Original Issue Discount."
Should PG&E determine to exercise its right to defer payments of interest by
extending the interest payment period on the Series A Debentures, the market
price of the Series A Preferred Securities is likely to be affected. A holder
that disposes of its Series A Preferred Securities during an Extension Period,
therefore, might not receive the same return on its investment as a holder
that continues to hold its Series A Preferred Securities. In addition, as a
result of the existence of PG&E's right to defer interest payments, the market
price of the Series A Preferred Securities (which represent an undivided
beneficial interest in the Series A Debentures) may be more volatile than
other securities on which original issue discount accrues that do not have
such rights.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence and continuation of a Special Event, as described in
"Certain Terms of the Series A Preferred Securities--Special Event Redemption
or Distribution," PG&E has the right to (i) redeem the Series A Debentures and
therefore cause a mandatory redemption of the Series A Preferred Securities or
(ii) terminate the Series A Issuer and cause the Series A Debentures to be
distributed to the holders of the Series A Preferred Securities in liquidation
of such holders' interests in the Series A Issuer. See "Certain Terms of the
Series A Debentures--Redemption."
RIGHTS UNDER THE SERIES A GUARANTEE
The Series A Guarantee will be qualified as an indenture under the Trust
Indenture Act. The First National Bank of Chicago will act as the Guarantee
Trustee under the Series A Guarantee for the purposes of compliance with the
Trust Indenture Act. The Guarantee Trustee will hold the Series A Guarantee
for the benefit of the holders of the Series A Preferred Securities and will
also be the trustee for the Series A Debentures and the Property Trustee.
The Series A Guarantee guarantees on a subordinated basis to the holders of
the Series A Preferred Securities the payment (but not the collection) of (i)
any accrued and unpaid Distributions required to be paid on the Series A
Preferred Securities, if and only to the extent the Series A Issuer has funds
on hand available therefor, (ii) the Redemption Price, including all accrued
and unpaid Distributions to the date of redemption, with respect to Series A
Preferred Securities called for redemption by the Series A Issuer to the
extent the Series A Issuer has funds on hand available therefor, and (iii)
upon a voluntary or involuntary termination, winding-up or liquidation of the
Series A Issuer (unless the Series A Debentures are distributed to holders of
Series A Preferred Securities), (a) the aggregate liquidation preference of
$25 per Series A Preferred Security plus all accrued and unpaid Distributions
on the Series A Preferred Securities to the date of payment, to the extent the
Series A Issuer has funds on hand available to make such payment or, if
different, (b) the amount of assets of the Series A Issuer remaining available
for distribution to holders of the Series A Preferred Securities in
liquidation of the Series A Issuer. The holders of not less than a majority in
aggregate liquidation preference of the Series A Preferred Securities have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the Guarantee Trustee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Series A
Guarantee. If the Guarantee Trustee fails to enforce the Series A Guarantee,
any holder of Series A Preferred Securities may, after such holder's written
request to the Guarantee Trustee to enforce the Series A
S-5
<PAGE>
Guarantee, institute a legal proceeding directly against PG&E to enforce its
rights under the Series A Guarantee without first instituting a legal
proceeding against the Guarantee Trustee, the Series A Issuer or any other
person or entity. If PG&E were to default on its obligations under the Series
A Debentures, the Series A Issuer would lack available funds for the payment
of Distributions or amounts payable on redemption of the Series A Preferred
Securities or otherwise, and in such event holders of the Series A Preferred
Securities would not be able to rely upon the Series A Guarantee for payment
of such amounts. Instead, holders of the Series A Preferred Securities would
be required to rely on the enforcement by the Property Trustee of its rights,
as registered holder of the Series A Debentures, against PG&E pursuant to the
terms of the Series A Debentures. See "Description of the Guarantee--Status of
the Guarantee" and "Description of the Debentures--Subordination" in the
accompanying Prospectus. The Amended and Restated Trust Agreement of the
Series A Issuer, among PG&E, as sponsor, and the Issuer Trustees (as defined
below) (the "Series A Trust Agreement") provides that each holder of Series A
Preferred Securities by acceptance thereof agrees to the provisions of the
Series A Guarantee and the Indenture.
LIMITED VOTING RIGHTS
Holders of Series A Preferred Securities will have limited voting rights
and, except upon the occurrence of an Event of Default under the Trust
Agreement as a result of an event of default under the Indenture (a "Debenture
Event of Default"), will not be entitled to vote to appoint, remove or replace
the Property Trustee or the Delaware Trustee, which voting rights are vested
exclusively in the holder of trust interests represented by Common Securities
unless and until a Debenture Event of Default has occurred and is continuing.
In no event will the holders of the Series A Preferred Securities have the
right to vote to appoint, remove or replace the Administrative Trustees, which
voting rights are vested exclusively in the holder of the Common Securities.
See "Description of the Preferred Securities--Events of Default; Notice" in
the accompanying Prospectus.
TRADING CHARACTERISTICS OF SERIES A PREFERRED SECURITIES
The Series A Preferred Securities have been approved for listing, upon
official notice of issuance, on the American and Pacific Stock Exchanges. The
Series A Preferred Securities are expected to trade at a price that takes into
account the value, if any, of accrued and unpaid Distributions; thus,
purchasers will not pay and sellers will not receive any accrued and unpaid
interest with respect to their undivided beneficial interests in Series A
Debentures owned through the Series A Preferred Securities that is not
included in the trading price of the Series A Preferred Securities. However,
interest on the Series A Debentures will be included in the gross income of
U.S. holders of Series A Preferred Securities as it accrues, rather than when
it is paid. See "United States Taxation--Income from Series A Preferred
Securities." The trading price of the Series A Preferred Securities is likely
to be sensitive to the level of interest rates generally. If interest rates
rise in general, the trading price of the Series A Preferred Securities may
decline to reflect the additional yield requirements of the purchasers.
Conversely, a decline in interest rates may increase the trading price of the
Series A Preferred Securities, although any increase will be moderated by
PG&E's ability to redeem the Series A Debentures at any time on or after
, 2000. In addition, because payment of Distributions on the Series A
Preferred Securities is dependent upon PG&E's ability to pay interest on the
Series A Debentures, negative developments affecting PG&E may adversely affect
the trading price of the Series A Preferred Securities.
PG&E CAPITAL I
PG&E Capital I is a statutory business trust formed under Delaware law. The
Series A Issuer's business and affairs are conducted by five Issuer Trustees:
The First National Bank of Chicago, as Property Trustee, an individual who is
a resident of Delaware and an employee of an affiliate of the
S-6
<PAGE>
Property Trustee, as Delaware Trustee, and three individual Administrative
Trustees who are employees or officers of or affiliated with PG&E. The
exclusive business of the Series A Issuer is issuing the Series A Preferred
Securities and the Common Securities representing undivided beneficial
interests in the assets of the Series A Issuer, using the proceeds of the sale
of the Series A Preferred Securities and the Common Securities to acquire the
Series A Debentures and engaging in only those other activities that are
necessary or incidental thereto. All of the Common Securities of the Series A
Issuer will be owned directly or indirectly by PG&E. The Common Securities of
the Series A Issuer will rank pari passu, and payments will be made thereon
pro rata, with the Series A Preferred Securities, except that upon the
occurrence and continuance of a Debenture Event of Default under the Series A
Trust Agreement, the rights of PG&E, as holder of the Common Securities of the
Series A Issuer, to payment in respect of Distributions and payments upon
liquidation or redemption will be subordinated to the rights of the holders of
the Series A Preferred Securities. The principal place of business of the
Series A Issuer is c/o Pacific Gas and Electric Company, 77 Beale Street, P.
O. Box 770000, San Francisco, California 94177 and its telephone number is
(415) 973-7000.
PACIFIC GAS AND ELECTRIC COMPANY
Pacific Gas and Electric Company is an operating public utility engaged
principally in the business of supplying electric and natural gas service
throughout most of northern and central California. PG&E was incorporated in
California in 1905. Its principal executive office is located at 77 Beale
Street, P.O. Box 770000, San Francisco, California 94177, and its telephone
number is (415) 973-7000.
COVERAGE RATIOS
The following table sets forth the unaudited ratios of earnings to fixed
charges of PG&E and its subsidiaries for each of the years 1990 through 1994
and for the six months ended June 30, 1995.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS
------------------------------------------------------------------ ENDED
1990 1991 1992 1993 1994 JUNE 30, 1995
---- ----- ----- ----- ----- -------------
<S> <C> <C> <C> <C> <C>
3.27 3.43 3.54 3.22 3.51 4.47
</TABLE>
For the purpose of computing PG&E and its subsidiaries' ratios of earnings
to fixed charges, "earnings" represent net income adjusted for the minority
interest in losses of less than 100% owned affiliates, PG&E and its
subsidiaries' equity in undistributed income or loss of less than 50% owned
affiliates, income taxes and fixed charges (excluding capitalized interest).
"Fixed charges" include interest on long-term debt and short-term borrowings
(including a representative portion of rental expense), amortization of bond
premium, discount and expense, interest on capital leases and the pretax
earnings required to cover the preferred stock dividend requirements of
majority owned subsidiaries.
The following table sets forth the unaudited ratios of earnings to combined
fixed charges and preferred stock dividends for each of the years 1990 through
1994 and the six months ended June 30, 1995.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SIX MONTHS
------------------------------------------------------------------ ENDED
1990 1991 1992 1993 1994 JUNE 30, 1995
---- ----- ----- ----- ----- -------------
<S> <C> <C> <C> <C> <C>
2.68 2.85 3.03 2.85 3.08 3.97
</TABLE>
For the purpose of computing PG&E and its subsidiaries' ratios of earnings
to combined fixed charges and preferred stock dividends, "earnings" represent
net income adjusted for the minority interest in losses of less than 100%
owned affiliates, PG&E and its subsidiaries' equity in undistributed
S-7
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income or loss of less than 50% owned affiliates, income taxes and fixed
charges (excluding capitalized interest). "Fixed charges" include interest on
long-term debt and short-term borrowings (including a representative portion
of rental expense), amortization of bond premium, discount and expense,
interest on capital leases and the pretax earnings required to cover the
preferred stock dividend requirements of majority owned subsidiaries.
"Preferred stock dividends" represent the sum of requirements for preferred
stock dividends that are deductible for federal income tax purposes and
requirements for preferred stock dividends that are not deductible for federal
income tax purposes increased to an amount representing pretax earnings which
would be required to cover such dividend requirements.
USE OF PROCEEDS
The net proceeds from the sale of the Series A Preferred Securities will be
used by the Series A Issuer to purchase Series A Debentures. The net proceeds
of the sale of the Series A Debentures by PG&E will become part of the
treasury funds of PG&E and will be applied to capital expenditures and to the
redemption, repurchase, repayment or retirement of outstanding indebtedness or
preferred stock.
CERTAIN TERMS OF THE SERIES A PREFERRED SECURITIES
GENERAL
The following summary of certain terms and provisions of the Series A
Preferred Securities supplements the description of the terms and provisions
of the Preferred Securities set forth in the accompanying Prospectus under the
heading "Description of the Preferred Securities," to which description
reference is hereby made. This summary of certain terms and provisions of the
Series A Preferred Securities does not purport to be complete and is subject
to, and qualified in its entirety by reference to, the Trust Agreement. The
form of the Trust Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and accompanying Prospectus is a
part.
DISTRIBUTIONS
The Series A Preferred Securities represent undivided beneficial interests
in the assets of the Series A Issuer, and as a practical matter the
Distributions on each Series A Preferred Security will be payable at the
annual rate of % of the stated liquidation preference of $25, payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of
each year. Distributions in arrears after the quarterly payment date therefor
will accumulate additional Distributions thereon (to the extent permitted by
law) compounded quarterly at the rate per annum of % thereof. The term
"Distributions" as used herein shall include any such additional
Distributions. Distributions will accrue from , 1995, the date of original
issuance. The first Distribution payment date for the Series A Preferred
Securities will be , 1995, and such Distribution will be cumulative from
the date of original issuance. The amount of Distributions payable for any
period will be computed on the basis of a 360-day year of twelve 30-day
months.
So long as an Event of Default under the Indenture has not occurred and is
continuing, PG&E has the right at any time and from time to time to extend the
interest payment period on the Series A Debentures, for not more than 20
consecutive quarters, provided that any such Extension Period shall not extend
beyond the maturity date or redemption date of the Series A Debentures. As a
consequence, quarterly Distributions on the Series A Preferred Securities
would be deferred by the Series A Issuer during any Extension Period (but
would continue to accumulate additional Distributions
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thereon as set forth above). In the event that PG&E exercises this right, PG&E
will not, and will not permit any subsidiary of PG&E to, declare or pay any
dividend or distribution on, or redeem, purchase, acquire, or make a
liquidation or guarantee payment (other than payments under a Guarantee) with
respect to, any shares of PG&E's capital stock or any security of PG&E
(including other Debentures) ranking pari passu with or junior in interest to
the Series A Debentures, except (i) in each case with securities junior in
interest to the Series A Debentures or (ii) for payments made on any series of
Debentures upon the stated maturity of such Debentures. As a result, this
covenant requires that an interest payment on one series of Debentures may be
extended only if the interest periods on all series of Debentures are likewise
extended. Prior to the termination of any such extended interest payment
period, PG&E may further extend the interest payment period, provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarters or extend beyond the maturity
or redemption date of the Series A Debentures. Upon the termination of any
extension period and the payment of all amounts then due, PG&E may select a
new extended interest payment period, subject to the above requirements. See
"United States Taxation--Potential Extension of Interest Payment Period and
Original Issue Discount" and "Certain Terms of the Series A Debentures--Option
to Extend Interest Payment Period."
PG&E has no current intention of exercising its right to defer payments of
interest by extending the interest payment period on the Series A Debentures.
REDEMPTION
Upon the payment of the Series A Debentures, whether at maturity or upon
earlier redemption as provided in the Indenture, the proceeds from such
payment will be applied by the Property Trustee to redeem a Like Amount (as
defined below) of the Common Securities of the Series A Issuer and the Series
A Preferred Securities, upon not less than 30 nor more than 60 days' notice,
at a Redemption Price equal to the aggregate liquidation preference plus
accumulated and unpaid Distributions to the Redemption Date. See "Certain
Terms of the Series A Debentures--Redemption."
PG&E has the right to redeem the Series A Debentures (a) on or after ,
2000, in whole or in part, or (b) at any time, in whole but not in part, on
occurrence of a Tax Event or an Investment Company Event (each as defined
below, a "Special Event"), subject to the conditions described under "Certain
Terms of the Series A Debentures--Redemption."
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If a Special Event shall occur and be continuing with respect to the Series
A Issuer or the Series A Preferred Securities, PG&E has the right to (i)
redeem the Series A Debentures in whole (but not in part) and therefore cause
a mandatory redemption of the Series A Preferred Securities in whole (but not
in part) at the Redemption Price within 90 days following the occurrence of
such Special Event, or (ii) terminate the Series A Issuer and cause the Series
A Debentures to be distributed to the holders of the Series A Preferred
Securities in liquidation of the Series A Issuer. If at any time the Series A
Issuer is not or will not be taxed as a grantor trust but a Tax Event has not
occurred, the Depositor has the right to terminate the Series A Issuer and
cause the Series A Debentures to be distributed to the holders of the Series A
Preferred Securities in liquidation of the Series A Issuer. Under current
United States federal income tax law and interpretation and assuming the
Series A Trust is treated as a grantor trust, such a distribution should not
be a taxable event to holders of the Series A Preferred Securities. Should
there be a change in law, a change in legal interpretation, a Special Event or
other circumstances, however, the termination could be a taxable event to
holders of the Series A Preferred Securities. See "United States Taxation--
Receipt of Series A Debentures Upon Liquidation of the Series A Issuer." If
PG&E does not elect either option (i) or (ii) above, the Series A Preferred
Securities will remain outstanding.
S-9
<PAGE>
"Tax Event" means that PG&E shall have received an opinion of counsel (which
may be counsel to PG&E or an affiliate but not an employee thereof and which
must be acceptable to the Property Trustee) experienced in such matters to the
effect that, as a result of any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein affecting taxation, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after the date of original issuance of the Series
A Preferred Securities, there is more than an insubstantial risk that (i) the
Series A Issuer is, or will be, subject to United States federal income tax
with respect to interest received on the Series A Debentures, (ii) interest
payable by PG&E on the Series A Debentures is not, or will not be, deductible
for United States federal income tax purposes or (iii) the Series A Issuer is,
or will be, subject to more than a de minimis amount of other taxes, duties,
assessments or other governmental charges.
"Investment Company Event" means the occurrence of a change in law or
regulation or a change in interpretation or application of law or regulation
by any legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law") to the effect that the Series A Issuer is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act of 1940, as amended, which Change in 1940 Act Law
becomes effective on or after the date of original issuance of the Series A
Preferred Securities.
"Like Amount" means (i) with respect to a redemption of the Series A
Preferred Securities and the Common Securities of the Series A Issuer
(together, the "Series A Trust Securities"), Series A Trust Securities having
an aggregate liquidation amount equal to the principal amount of Series A
Debentures to be contemporaneously redeemed in accordance with the Indenture
and the proceeds of which will be used to pay the Redemption Price of such
Series A Trust Securities and (ii) with respect to a distribution to holders
of Series A Trust Securities of Series A Debentures in connection with a
termination or liquidation of the Series A Issuer, Series A Debentures having
a principal amount equal to the aggregate liquidation amount of the Series A
Trust Securities in exchange for which such Series A Debentures are
distributed.
LIQUIDATION VALUE
The amount payable on the Series A Preferred Securities in the event of any
liquidation of the Series A Issuer is $25 per Series A Preferred Security plus
accumulated and unpaid Distributions, unless, in connection with such
liquidation, the Series A Debentures are distributed to the holders of the
Series A Preferred Securities.
CERTAIN TERMS OF THE SERIES A DEBENTURES
GENERAL
The following summary of certain terms and provisions of the Series A
Debentures supplements the description of the terms and provisions of the
Debentures set forth in the accompanying Prospectus under the heading
"Description of the Debentures," to which description reference is hereby
made. The summary of certain terms and provisions of the Series A Debentures
set forth below does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Indenture. The Indenture has
been filed as an exhibit to the Registration Statement of which this
Prospectus Supplement and accompanying Prospectus is a part.
Concurrently with the issuance of the Series A Preferred Securities, the
Series A Issuer will invest the proceeds thereof and the consideration paid by
PG&E for the Common Securities in the
S-10
<PAGE>
corresponding series of Series A Debentures issued by PG&E to the Series A
Issuer. The Series A Debentures will bear Interest at the annual rate of %
of the principal amount thereof, payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year. Interest which is accrued
and unpaid after the quarterly payment date therefor will bear the additional
interest on the amount thereof (to the extent permitted by law) at the rate
per annum of % thereof, compounded quarterly. The term "Interest" as used
herein shall include quarterly interest payments, interest on quarterly
interest payments in arrears and Additional Interest (as defined below), as
applicable. The Series A Debentures' other Interest payment provisions
correspond to the Distribution provisions of the Series A Preferred
Securities.
The Series A Debentures will be issued as a series of Debentures under the
Indenture. The Series A Debentures will mature on , 2025. The Series A
Debentures will be unsecured and will rank junior and be subordinate in right
of payment to all Senior Indebtedness of PG&E. See "Description of the
Debentures--Subordination" in the accompanying Prospectus.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
PG&E has the right at any time and from time to time, so long as an Event of
Default under the Indenture has not occurred and is continuing, to extend the
interest payment period for the Series A Debentures for up to 20 consecutive
quarters; provided that no Extension Period shall extend beyond the stated
maturity date or date of redemption of the Series A Debentures. At the end of
the Extension Period, PG&E is obligated to pay all interest then accrued and
unpaid (together with interest thereon to the extent permitted by applicable
law). During any Extension Period, PG&E will not, and will not permit any
subsidiary of PG&E to, declare or pay any dividend or distribution on, or
redeem, purchase, acquire, or make a liquidation or guarantee payment (other
than payments under a Guarantee) with respect to, any shares of PG&E's capital
stock or any security of PG&E (including other Debentures) ranking pari passu
with or junior in interest to the Debentures, except (i) in each case with
securities junior in interest to the Debentures or (ii) for payments made on
any series of Debentures upon the stated maturity of such Debentures. As a
result, this covenant requires that an interest payment on one series of
Debentures may be extended only if the interest periods on all series of
Debentures are likewise extended. Prior to the termination of any Extension
Period, PG&E may further extend the interest payment period, provided that
such Extension Period, together with all such previous and further extensions
thereof, may not exceed 20 consecutive quarters or extend beyond the maturity
or redemption date of the Series A Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due, PG&E may select a
new Extension Period subject to the above requirements. So long as the
Property Trustee shall be the sole holder of the Series A Debentures, PG&E is
required to give the Property Trustee and the Debenture Trustee notice of its
selection of such Extension Period one Business Day prior to the date the
Property Trustee or PG&E is required to give notice to any national securities
exchange on which any of the Series A Preferred Securities are listed or other
applicable self-regulatory organization or to holders of the Series A
Preferred Securities of the record date, but in any event not less than one
Business Day prior to such record date. The Property Trustee will be required
to give such notice of PG&E's selection of such Extension Period to the
holders of the Series A Preferred Securities affected thereby.
ADDITIONAL INTEREST
If the Series A Issuer would be required to pay any taxes, duties,
assessments or other governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing
authority, PG&E also will pay as additional interest on the Series A
Debentures ("Additional Interest") such amounts as shall be required so that
the net amounts received and retained by the Series A Issuer after paying any
such taxes, duties, assessments or governmental
S-11
<PAGE>
charges will be not less than the amounts the Series A Issuer would have
received had no such taxes, duties, assessments or governmental charges been
imposed.
REDEMPTION
The Series A Debentures are redeemable prior to maturity at the option of
PG&E (i) at any time on or after , 2000, in whole or in part, and (ii) if a
Special Event occurs and is continuing, in whole (but not in part), in any
case at a Redemption Price equal to 100% of the principal amount thereof plus
accrued Interest to the redemption date. The Series A Debentures will be
subject to optional redemption in whole (but not in part) upon the termination
and liquidation of the Series A Issuer pursuant to an order for the
dissolution, termination or liquidation of the Series A Issuer entered by a
court of competent jurisdiction. For so long as the Series A Trust is the
holder of all Series A Debentures outstanding, the proceeds of any redemption
described in this section shall be used by the Series A Trust to redeem the
Series A Preferred Securities in accordance with their terms. PG&E shall not
redeem the Series A Debentures in part unless all accrued and unpaid interest
(including any Additional Interest) has been paid in full on all Series A
Debentures outstanding for all quarterly interest periods on or prior to the
Redemption Date.
DISTRIBUTIONS OF SERIES A DEBENTURES
Under certain circumstances involving the termination of the Series A
Issuer, Series A Debentures may be distributed to the holders of the Series A
Preferred Securities in liquidation of the Series A Issuer after satisfaction
of liabilities to creditors of the Series A Issuer as provided by applicable
law. If distributed to holders of Series A Preferred Securities in
liquidation, the Series A Debentures will initially be issued in the form of
one or more global securities and The Depository Trust Company ("DTC"), or any
successor depositary for the Series A Preferred Securities, will act as
depositary for the Series A Debentures. It is anticipated that the depositary
arrangements for the Series A Debentures would be substantially identical to
those in effect for the Series A Preferred Securities. Neither PG&E, The First
National Bank of Chicago, as Debenture Trustee, any paying agent nor any other
agent of PG&E or the Debenture Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in a global security for such Series
A Debentures or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests. For a description of DTC and the terms
of the depositary arrangements relating to payments, transfers, voting rights,
redemption and other notices and other matters, see "Description of the
Preferred Securities--Book-Entry-Only Issuance--The Depository Trust Company"
in the accompanying Prospectus.
A global security shall be exchangeable for Series A Debentures registered
in the names of persons other than DTC or its nominee only if (i) DTC notifies
PG&E that it is unwilling or unable to continue as a depository for such
global security and no successor depository shall have been appointed, or if
at any time DTC ceases to be a clearing agency registered under the Exchange
Act at a time when DTC is required to be so registered to act as such
depository, (ii) PG&E in its sole discretion determines that such global
security shall be so exchangeable, or (iii) there shall have occurred and be
continuing an Event of Default with respect to such global security. Any
global security that is exchangeable pursuant to the preceding sentence shall
be exchangeable for definitive certificates registered in such names as DTC
shall direct. It is expected that such instructions will be based upon
directions received by DTC from its Participants with respect to ownership of
beneficial interests in such global security. In the event that Series A
Debentures are issued in definitive form, such Series A Debentures will be in
denominations of $25 and integral multiples thereof and may be transferred or
exchanged at the offices described below.
Payments on Series A Debentures represented by a global security will be
made to DTC, as the depositary for the Series A Debentures. In the event
Series A Debentures are issued in definitive form,
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principal and interest will be payable, the transfer of the Series A
Debentures will be registrable, and Series A Debentures will be exchangeable
for Series A Debentures of other denominations of a like aggregate principal
amount, at the corporate office of the Debenture Trustee in Chicago, Illinois,
or at the offices of any paying agent or transfer agent appointed by PG&E,
provided that payment of interest may be made at the option of PG&E by check
mailed to the address of the persons entitled thereto or by wire transfer. In
addition, if the Series A Debentures are issued in certificated form, the
record dates for payment of interest will be the 15th day preceding the end of
each quarter. For a description of DTC and the terms of the depositary
arrangements relating to payments, transfers, voting rights, redemptions and
other notices and other matters, see "Description of the Preferred
Securities--Book-Entry-Only Issuance--The Depository Trust Company" in the
accompanying Prospectus.
If the Series A Debentures are distributed to the holders of Series A
Preferred Securities upon the liquidation of the Series A Issuer, PG&E will
use its best efforts to list the Series A Debentures on such stock exchanges,
if any, as the Series A Preferred Securities are then listed. There can be no
assurance as to the market price of any Series A Debentures that may be
distributed to the holders of Series A Preferred Securities.
UNITED STATES TAXATION
GENERAL
This section is a summary of certain United States federal income tax
considerations that may be relevant to prospective purchasers of Series A
Preferred Securities and represents the opinion of Ballard Spahr Andrews &
Ingersoll, special tax counsel to PG&E and the Series A Issuer, insofar as it
relates to matters of law and legal conclusions. This section is based upon
current provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), existing and proposed regulations thereunder and current
administrative rulings and court decisions, all of which are subject to
change. Subsequent changes may cause tax consequences to vary substantially
from the consequences described below. Unless otherwise stated, this summary
deals only with Series A Preferred Securities held as capital assets and does
not deal with special classes of holders, such as dealers in securities or
currencies, life insurance companies, persons holding Series A Preferred
Securities as a hedge against or which are hedged against currency risks or as
a part of a straddle, or persons whose functional currency is not the United
States dollar.
POTENTIAL INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE OF SERIES A
PREFERRED SECURITIES PURSUANT TO THE OFFER AND OF THE OWNERSHIP AND
DISPOSITION OF SERIES A PREFERRED SECURITIES IN LIGHT OF THEIR PARTICULAR
CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR OTHER LAWS.
While PG&E believes, based upon the advice of its counsel, that the Series A
Debentures will be treated as indebtedness for United States federal income
tax purposes, holders of Series A Preferred Securities should note that the
Internal Revenue Service (the "IRS") may attempt to treat the Series A
Debentures as equity rather than indebtedness for tax purposes. If the IRS
were successful in such attempt, the Series A Debentures would be subject to
redemption at the option of PG&E as described under "Certain Terms of the
Series A Debentures--Redemption."
INCOME FROM SERIES A PREFERRED SECURITIES
In connection with the issuance of the Series A Debentures, Ballard Spahr
Andrews & Ingersoll will render its opinion to the effect that, under then
current law and assuming full compliance with the
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<PAGE>
terms of the Trust Agreement, the Series A Issuer will be classified as a
grantor trust and not as an association taxable as a corporation.
As a consequence, each holder of Series A Preferred Securities will be
considered the owner of a pro rata portion of the Series A Debentures held by
the Series A Issuer. As a further consequence, each holder of Series A
Preferred Securities will be required to include in gross income his or her
pro rata share of the income accrued on the Series A Debentures held by the
Series A Issuer. Such income should not exceed Distributions received by the
holders of Series A Preferred Securities on the Series A Preferred Securities
except in limited circumstances described under "Certain Terms of the Series A
Preferred Securities--Distributions." No portion of such income will be
eligible for the dividends received deduction.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT
Under the Indenture, PG&E has the option to extend from time to time the
interest payment period on the Series A Debentures to a period not exceeding
20 consecutive quarters but not beyond the maturity date of the Series A
Debentures. PG&E's option to extend the interest payment period will cause the
Series A Debentures to be treated as issued with "original issue discount" for
United States federal income tax purposes. Accordingly, a holder of Series A
Preferred Securities will accrue interest income (i.e., original issue
discount) under a constant yield basis over the term of the Series A
Debentures (including any Extension Period), regardless of the receipt of cash
with respect to the period to which such income is attributable.
As a result, holders of Series A Preferred Securities during an Extension
Period will include interest in gross income in advance of the receipts of
cash, and any holders of Series A Preferred Securities who dispose of Series A
Preferred Securities prior to the record date for the payment of Distributions
following such extension period will include interest in gross income, but
will not receive any cash related thereto. The tax basis of a Series A
Preferred Security will be increased by the amount of any original issue
discount that is included in income without a receipt of cash, and will be
decreased when and if such cash is subsequently received by the holder of the
Series A Preferred Security.
DISPOSITION OF THE SERIES A PREFERRED SECURITIES
Gain or loss will be recognized on a sale, including a redemption for cash,
of Series A Preferred Securities in an amount equal to the difference between
the amount realized and the tax basis of a holder of Series A Preferred
Securities in his or her pro rata share of Series A Debentures represented by
such Series A Preferred Securities. Gain or loss recognized by a holder of
Series A Preferred Securities on the sale or exchange of Series A Preferred
Securities held for more than one year generally will be taxable as long-term
capital gain or loss.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
holder or beneficial owner who or which is (i) a nonresident alien individual
or (ii) a foreign corporation, partnership, estate or trust, in either case
not subject to United States federal income tax on a net income basis in
respect of a Series A Preferred Security.
Under present United States federal income tax law, subject to the
discussion below with respect to backup withholding:
(i) Payments by the Series A Issuer or any of its paying agents to any
United States Alien Holder will not be subject to United States withholding
tax provided that (a) the beneficial owner of the Series A Preferred
Security does not actually or constructively own 10% or more of the total
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combined voting power of all classes of stock of PG&E, (b) the beneficial
owner of the Series A Preferred Securities is not a controlled foreign
corporation that is related to PG&E through stock ownership, and (c) either
(1) the beneficial owner of the Series A Preferred Securities certifies to
the Issuer or its agent, under penalties of perjury, that it is a United
States Alien Holder and provides its name and address or (2) the holder of
the Series A Preferred Securities is a securities clearing organization,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "financial institution"), and
such holder certifies to the Series A Issuer or its agent under penalties
of perjury that such statement has been received from the beneficial owner
by it or by a financial institution between it and the beneficial owner and
furnishes the payor with a copy thereof; and
(ii) a United States Alien Holder of a Series A Preferred Security will
not be subject to United States federal income or withholding tax on any
gain realized on the sale or exchange of a Series A Preferred Security
unless such person is present in the United States for 183 days or more in
the taxable year of sale and such person has a "tax home" in the United
States or certain other requirements are met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments to
noncorporate United States holders of the proceeds of the sale of the Series A
Preferred Securities within the United States and "backup withholding" at a
rate of 31% will apply to such payments if the seller fails to provide a
correct taxpayer identification number.
Payments of the proceeds from the sale by a United States Alien Holder of
Series A Preferred Securities made to or through a foreign office of a broker
will not be subject to information reporting or backup withholding, except
that, if the broker is a United States person, a controlled foreign
corporation for United States tax purposes or a foreign person 50% or more of
whose gross income is effectively connected with a United States trade or
business for a specified three-year period, information reporting may apply to
such payment. Payments of the proceeds from the sale of Series A Preferred
Securities to or through the United States office of a broker is subject to
information reporting and backup withholding unless the holder or beneficial
owner certifies as to its non-United States status or otherwise establishes an
exemption from information reporting and backup withholding.
RECEIPT OF SERIES A DEBENTURES UPON LIQUIDATION OF THE SERIES A ISSUER
Under certain circumstances described in "Certain Terms of the Series A
Preferred Securities--Redemption," PG&E may cause the Series A Issuer to be
terminated and cause the Series A Debentures to be distributed to the holders
of Series A Preferred Securities in liquidation of such holders' interests in
the Series A Issuer. Under current United States federal income tax law and
interpretation and assuming the Series A Trust is treated as a grantor trust,
such a distribution should not be treated as a taxable event to holders of the
Series A Preferred Securities. Such a tax-free transaction would result in the
holder of Series A Preferred Securities receiving an aggregate tax basis in
the Series A Debentures equal to such holder's aggregate tax basis in the
holder's Series A Preferred Securities. A holder's holding period for such
Series A Debentures would include the period for which the Series A Preferred
Securities were held by such holder.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD
In the event that the interest payment period on the Series A Debentures is
extended (as provided under "Certain Terms of the Series A Preferred
Securities--Distributions"), the Series A Issuer will continue to accrue
income, generally equal to the amount of the interest payment due at the end
of the Extension Period, over the length of the extended interest payment
period.
S-15
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, PG&E and
the Series A Issuer have agreed that the Series A Issuer will sell to each of
the Underwriters named below, for whom and are acting as
Representatives, and each of the Underwriters has severally agreed to purchase
from the Series A Issuer the respective number of Series A Preferred
Securities set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF SERIES A
UNDERWRITER PREFERRED SECURITIES
----------- --------------------
<S> <C>
Goldman, Sachs & Co..................................
---
Total............................................
===
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all such Series A Preferred
Securities offered hereby, if any are taken.
The Underwriters propose to offer the Series A Preferred Securities in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement, and in part to certain securities
dealers at such price less a concession of $ per Series A Preferred
Security. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per Series A Preferred Security to certain
brokers and dealers. After the Series A Preferred Securities are released for
sale to the public, the offering price and other selling terms may from time
to time be varied by the Representatives.
In view of the fact that the proceeds from the sale of the Series A
Preferred Securities will be used to purchase the Series A Debentures issued
by PG&E, the Underwriting Agreement provides that PG&E will pay as
Underwriters' Compensation for the Underwriters arranging the investment
therein of such proceeds an amount of $ per Series A Preferred Security for
the accounts of the several Underwriters.
The Series A Issuer has granted the Underwriters an option exercisable for
30 days after that date of this Prospectus Supplement to purchase up to
additional Series A Preferred Securities to cover over-allotments, if any, at
the initial public offering price (with additional Underwriters'
Compensation), as set forth on the cover page of this Prospectus Supplement.
If the Underwriters exercise their over-allotment option, the Underwriters
have severally agreed, subject to certain conditions, to purchase
approximately the same percentage thereof that the number of Series A
Preferred Securities to be purchased by each of them, as shown in the
foregoing table, bears to the number of Series A Preferred Securities offered
hereby.
PG&E and the Series A Issuer have agreed, during the period beginning from
the date of the Underwriting Agreement and continuing to and including the
earlier of (i) the date on which the distribution of the Series A Preferred
Securities ceases, as determined by the Underwriters, or (ii) 30 days after
the closing date, not to offer, sell, contract to sell or otherwise dispose of
any Preferred
S-16
<PAGE>
Securities, any other interests of the Issuers, or any preferred stock or any
other securities of the Issuers or PG&E which are substantially similar to the
Preferred Securities, including a Guarantee, or any securities convertible
into or exchangeable for Preferred Securities, preferred stock or such
substantially similar securities of either an Issuer or PG&E, without the
prior written consent of the Representatives.
Prior to this offering, there has been no public offering or market for the
Series A Preferred Securities. The Series A Preferred Securities have been
approved for listing, upon official notice of issuance, on the American and
Pacific Stock Exchanges under the symbol "PCG.CA". Trading of the Series A
Preferred Securities on the American and Pacific Stock Exchanges is expected
to commence within a seven-day period after the initial delivery of the Series
A Preferred Securities. The Representatives have advised PG&E that they intend
to make a market in the Series A Preferred Securities prior to the
commencement of trading on the American Stock Exchange, but are not obligated
to do so and may discontinue any such market making at any time without
notice.
PG&E and the Series A Issuer have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.
S-17
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED , 1995
PG&E CAPITAL I
PG&E CAPITAL II
PG&E CAPITAL III
PG&E CAPITAL IV
CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES (QUIPSSM)*
GUARANTEED TO THE EXTENT SUCH ISSUER HAS FUNDS AS SET FORTH HEREIN BY
PACIFIC GAS AND ELECTRIC COMPANY
----------
PG&E Capital I, PG&E Capital II, PG&E Capital III and PG&E Capital IV, each a
statutory business trust formed under the laws of the State of Delaware (each,
the "Issuer," and collectively, the "Issuers") may severally offer, from time
to time, their respective cumulative quarterly income preferred securities (the
"Preferred Securities") representing preferred undivided beneficial interests
in the assets of each Issuer. Pacific Gas and Electric Company, a California
corporation ("PG&E"), will be the owner of beneficial interests represented by
common securities (the "Common Securities") of each Issuer. The First National
Bank of Chicago is the Property Trustee of each Issuer. The payment of periodic
cash distributions ("Distributions") with respect to the Preferred Securities
of each Issuer and payments on liquidation or redemption with respect to such
Preferred Securities, in each case out of funds held by such Issuer, are each
guaranteed by PG&E to the extent described herein (each, a "Guarantee"). The
obligations of PG&E under each Guarantee will be subordinate and junior in
right of payment to all liabilities of PG&E except any liabilities that may be
made pari passu or subordinate to the Guarantee expressly by their terms.
Concurrently with the issuance by each Issuer of its Preferred Securities, such
Issuer will invest the proceeds thereof in a corresponding series of PG&E's
deferrable interest subordinated debentures (the "Debentures") with terms
corresponding to that Issuer's Preferred Securities. The Debentures will be
unsecured and subordinate and junior in right of payment to Senior Indebtedness
(as defined herein) of PG&E. The Debentures will be the sole assets of each
Issuer and the interest on the Debentures will be the only revenue of each
Issuer. Upon the occurrence of certain events as may be described in the
accompanying Prospectus Supplement, PG&E may redeem the Debentures or may
terminate each Issuer and cause the Debentures to be distributed to the holders
of the Preferred Securities in liquidation of their interest in such Issuer.
See "Description of the Preferred Securities--Liquidation Distribution Upon
Termination".
The Preferred Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering, provided, however, that the aggregate
initial public offering price of all Preferred Securities issued pursuant to
the Registration Statement of which this Prospectus forms a part shall not
exceed $335,000,000. Certain specific terms of a particular Issuer's Preferred
Securities in respect of which this Prospectus is being delivered will be set
forth in an accompanying Prospectus Supplement, including where applicable and
to the extent not set forth herein, the identity of that Issuer, the specific
title, the aggregate amount, the Distribution rate (or the method for
determining such rate), the stated liquidation preference, redemption
provisions, other rights, the initial public offering price, and any other
special terms, as well as any planned listing on a securities exchange, of such
Preferred Securities.
The Preferred Securities may be sold in a public offering to or through
underwriters or dealers designated from time to time. See "Plan of
Distribution". The names of any such underwriters or dealers involved in the
sale of the Preferred Securities of any particular Issuer in respect of which
this Prospectus is being delivered, the number of Preferred Securities to be
purchased by any such underwriters or dealers and any applicable commissions or
discounts will be set forth in the Prospectus Supplement. The net proceeds to
each Issuer will also be set forth in the Prospectus Supplement.
The Prospectus Supplement will also contain information concerning United
States federal income tax considerations applicable to the Preferred Securities
offered thereby.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
----------
*QUIPS is a service mark of Goldman, Sachs & Co.
The date of this Prospectus is , 1995.
<PAGE>
AVAILABLE INFORMATION
Pacific Gas and Electric Company, a California corporation ("PG&E") is
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and, in accordance therewith, files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected and copied at the public reference room of
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C., and the
public reference facilities in the Commission's Regional Offices located at
Seven World Trade Center, 7th Floor, New York, New York and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois. Copies of such
material can be obtained at prescribed rates by writing to the Securities and
Exchange Commission, Public Reference Section, Washington, D.C. 20549. Such
material can also be inspected at the New York, American and Pacific Stock
Exchanges.
PG&E and each of PG&E Capital I, PG&E Capital II, PG&E Capital III and PG&E
Capital IV, each a statutory business trust formed under the laws of the State
of Delaware, have filed with the Commission a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act"). This Prospectus does not contain all of the information set forth in
the Registration Statement as certain parts are omitted in accordance with the
rules and regulations of the Commission. For further information, reference is
hereby made to the Registration Statement.
No separate financial statements of any Issuer have been included herein.
PG&E and the Issuers do not consider that such financial statements would be
material to holders of Preferred Securities offered hereby because each Issuer
is a newly formed special purpose entity, has no operating history or
independent operations and is not engaged in, and does not propose to engage
in, any activity other than as set forth below. See "The Issuers."
----------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by PG&E with the Commission are incorporated
by reference in this Prospectus:
1. PG&E's annual report on Form 10-K for the year ended December 31,
1994.
2. PG&E's quarterly reports on Form 10-Q for the quarters ended March 31,
1995 and June 30, 1995.
3. PG&E's current reports on Form 8-K dated January 4, 1995, January 19,
1995, February 21, 1995, March 2, 1995, April 20, 1995, May 17, 1995, May
23, 1995, May 26, 1995, July 14, 1995, July 20, 1995, August 17, 1995 and
October 4, 1995.
All other documents filed by PG&E pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and the
accompanying Prospectus Supplement and prior to the termination of the
offering of the Preferred Securities shall be deemed to be incorporated by
reference in this Prospectus and the accompanying Prospectus Supplement, and
to be a part hereof from the respective dates of the filing of such documents.
Any statement contained herein or in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus and the
accompanying Prospectus Supplement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus or the
accompanying Prospectus Supplement.
2
<PAGE>
PG&E hereby undertakes to provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus has been delivered, on
the written or oral request of any such person, a copy of any or all the
documents referred to above which have been or may be incorporated in this
Prospectus by reference, other than exhibits to such documents which are not
specifically incorporated by reference in the information that this Prospectus
incorporates. Requests should be directed to Transfer Agent, Shareholder
Services, Pacific Gas and Electric Company, 77 Beale Street, Room 2600, P.O.
Box 770000, San Francisco, California 94177 (Telephone: 1-800-367-7731).
THE ISSUERS
Each of PG&E Capital I, PG&E Capital II, PG&E Capital III and PG&E Capital
IV is a statutory business trust formed under Delaware law pursuant to (i) a
trust agreement executed by PG&E, as sponsor for the Issuer, and the Issuer
Trustees (as defined herein) of such Issuer and (ii) the filing of a
certificate of trust with the Delaware Secretary of State. Each trust
agreement will be amended and restated in its entirety (each, as so amended
and restated, the "Trust Agreement") substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Each Trust Agreement will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). Each Issuer
exists for the exclusive purposes of (i) issuing and selling its Preferred
Securities and Common Securities, (ii) using the proceeds from the sale of
such Preferred Securities and Common Securities to acquire a corresponding
series of Debentures issued by PG&E and (iii) engaging in those activities
necessary, convenient or incidental thereto. All of the Common Securities will
be owned by PG&E. The Common Securities will rank pari passu, and payments
will be made thereon pro rata, with the Preferred Securities, except that upon
the occurrence and continuance of a Debenture Event of Default (as defined
herein) under the Trust Agreement, the rights of the holders of the Common
Securities to payment in respect of Distributions and payments upon
liquidation, redemption or other acquisition of Common Securities will be
subordinated to the rights of the holders of the Preferred Securities. PG&E
will acquire Common Securities in an aggregate liquidation amount equal to 3%
of the total capital of each Issuer. Each Issuer has a term of approximately
36 years, but may terminate earlier as provided in the applicable Trust
Agreement. Each Issuer's business and affairs is conducted by its trustees,
each appointed by PG&E as holder of the Common Securities: The First National
Bank of Chicago (the "Property Trustee"), a Delaware Trustee and three
individual trustees (the "Administrative Trustees") who are employees or
officers of or affiliated with PG&E (collectively, the "Issuer Trustees"). The
holder of the Common Securities, or the holders of a majority in liquidation
preference of the Preferred Securities if a Debenture Event of Default has
occurred and is continuing, will be entitled to appoint, remove or replace the
Property Trustee and the Delaware Trustee. In no event will the holders of the
Series A Preferred Securities have the right to vote to appoint, remove or
replace the Administrative Trustees, which voting rights are vested
exclusively in the holder of the Common Securities. The duties and obligations
of each of the Issuer Trustees are governed by the applicable Trust Agreement.
PG&E will pay all fees and expenses related to the Issuers and the offering of
the Preferred Securities and will pay, directly or indirectly, all ongoing
costs, expenses and liabilities of the Issuers. The principal place of
business of each Issuer is c/o Pacific Gas and Electric Company, 77 Beale
Street, P. O. Box 770000, San Francisco, California 94177, and its telephone
number is (415) 973-7000.
PACIFIC GAS AND ELECTRIC COMPANY
Pacific Gas and Electric Company is an operating public utility engaged
principally in the business of supplying electric and natural gas service
throughout most of northern and central California. PG&E was incorporated in
California in 1905. Its principal executive office is located at 77 Beale
Street, P.O. Box 770000, San Francisco, California 94177, and its telephone
number is (415) 973-7000.
3
<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES
Pursuant to the terms of each Trust Agreement, the Issuer Trustees will
issue the Preferred Securities and the Common Securities (together, the "Trust
Securities"). The Preferred Securities of a particular issue will represent
preferred undivided beneficial interests in the assets of the related Issuer
and the holders thereof will be entitled to a preference in certain
circumstances with respect to Distributions and amounts payable on redemption
or liquidation over the Common Securities of such Issuer, as well as other
benefits as described in the corresponding Trust Agreement. This summary of
certain provisions of each Trust Agreement does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, all the
provisions of each Trust Agreement, including the definitions therein of
certain terms, and the Trust Indenture Act. The form of the Trust Agreement
has been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part and each Trust Agreement has been qualified as an
indenture under the Trust Indenture Act. Each of the Issuers is a legally
separate entity and the assets of one are not available to satisfy the
obligations of any of the others.
GENERAL
The Preferred Securities of an Issuer will rank pari passu, and payments
will be made thereon pro rata, with the Common Securities of that Issuer
except as described under "--Subordination of Common Securities." The
Debentures will be owned by the Property Trustee and will be held in trust for
the benefit of the holders of the related Trust Securities. Each Guarantee
Agreement executed by PG&E for the benefit of the holders of each Issuer's
Preferred Securities (each, the "Guarantee") is a full and unconditional
guarantee on a subordinated basis with respect to the related Preferred
Securities but does not guarantee payment of Distributions or amounts payable
on redemption or liquidation of such Preferred Securities when the related
Issuer does not have funds on hand available to make such payments. See
"Description of the Guarantee."
DISTRIBUTIONS
Each Issuer's Preferred Securities represent undivided beneficial interests
in the assets of such Issuer, and as a practical matter the Distributions on
each Preferred Security will be payable at a rate specified in the Prospectus
Supplement for such Preferred Securities. The amount of Distributions payable
for any period will be computed on the basis of a 360-day year of twelve 30-
day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from the date of original issuance and will be payable quarterly in arrears,
on March 31, June 30, September 30 and December 31 of each year (except as
otherwise described below). In the event that any date on which Distributions
are otherwise payable on the Preferred Securities is not a Business Day,
payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect to any such delay) except that, if such Business Day is in
the next succeeding calendar year, payment of such Distribution shall be made
on the immediately preceding Business Day, in each case with the same force
and effect as if made on such date (each date on which Distributions are
otherwise payable in accordance with the foregoing, a "Distribution Date"). A
"Business Day" shall mean any day other than a Saturday or a Sunday or a day
on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed or a day on which the
corporate trust office of the Property Trustee is closed for business.
PG&E has the right under the Indenture to extend the interest payment period
from time to time on each series of the Debentures, with the consequence that
quarterly Distributions on the corresponding Preferred Securities would be
deferred.
It is anticipated that the income of each Issuer available for distribution
to its holders of Preferred Securities will be limited to payments under the
corresponding series of Debentures in which the Issuer
4
<PAGE>
will invest the proceeds from the issuance and sale of its Preferred
Securities and its Common Securities. See "Description of the Debentures." If
PG&E does not make interest payments on such Debentures, the Property Trustee
will not have funds available to pay Distributions on the corresponding
Preferred Securities.
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of such Issuer on the relevant record
dates, which, as long as the Preferred Securities remain in book-entry-only
form, will be one Business Day prior to the relevant Distribution Date.
Subject to any applicable laws and regulations and the provisions of the
applicable Trust Agreement, each such payment will be made as described under
"--Book-Entry-Only Issuance--The Depository Trust Company." In the event any
Preferred Securities are not in book-entry-only form, the relevant record date
for such Preferred Securities shall be the date 15 days prior to the relevant
Distribution Date.
REDEMPTION
Upon the repayment of any series of Debentures, whether at maturity or upon
earlier redemption as provided in the Indenture, the proceeds from such
repayment will be applied by the Property Trustee to redeem the corresponding
Trust Securities, upon not less than 30 nor more than 60 days' notice, at the
redemption price (the "Redemption Price") including all accrued and unpaid
Distributions to the redemption date (the "Redemption Date"). The redemption
terms of a particular series of Debentures and the related Preferred
Securities will be set forth in the accompanying Prospectus Supplement.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the proceeds from the contemporaneous redemption of
the corresponding series of Debentures. Redemptions of the Preferred
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer has funds on hand available
for the payment of such Redemption Price. See also "--Subordination of Common
Securities."
If an Issuer gives a notice of redemption in respect of its Preferred
Securities, then, by 12:00 noon, New York City time, on the Redemption Date,
to the extent funds are available, the Property Trustee will deposit
irrevocably with The Depository Trust Company ("DTC") funds sufficient to pay
the applicable Redemption Price and will give DTC irrevocable instructions and
authority to pay the Redemption Price to the holders of such Preferred
Securities. See "--Book Entry-Only Issuance--The Depository Trust Company." If
such Preferred Securities are no longer in book-entry-only form, the Issuer,
to the extent funds are available, will irrevocably deposit with the paying
agent for such Preferred Securities funds sufficient to pay the applicable
Redemption Price and will give such paying agent irrevocable instructions and
authority to pay the Redemption Price to the holders thereof upon surrender of
their certificates evidencing such Preferred Securities. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Preferred Securities called for redemption shall be payable to the holders of
such Preferred Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of the
holders of such Preferred Securities so called for redemption will cease,
except the right of the holders of such Preferred Securities to receive the
Redemption Price, but without interest on such Redemption Price, and such
Preferred Securities will cease to be outstanding. In the event that any date
fixed for redemption of Preferred Securities is not a Business Day, then
payment of the Redemption Price payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day falls
in the next calendar year, such
5
<PAGE>
payment will be made on the immediately preceding Business Day. In the event
that payment of the Redemption Price in respect of Preferred Securities called
for redemption is improperly withheld or refused and not paid either by the
Issuer or by PG&E pursuant to the Guarantee as described under "Description of
the Guarantee," Distributions on such Preferred Securities will continue to
accrue at the then applicable rate, from the original Redemption Date to the
date of payment, in which case the actual payment date will be considered the
date fixed for redemption for purposes of calculating the Redemption Price.
Subject to applicable law, PG&E or its subsidiaries may at any time and from
time to time purchase outstanding Preferred Securities by tender, in the open
market or by private agreement.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Debentures to holders of Preferred Securities shall be made to
the applicable recordholders thereof as they appear on the register for such
Preferred Securities on the relevant record date, which shall be one Business
Day prior to the relevant Redemption Date or liquidation date, as applicable;
provided, however, that in the event that any Preferred Securities are not in
book-entry-only form, the relevant record date for such Preferred Securities
shall be the date 15 days prior to the Redemption Date or liquidation date, as
applicable.
If less than all the securities issued by an Issuer are to be redeemed on a
Redemption Date, then the aggregate liquidation preference of such securities
to be redeemed shall be allocated 3% to its Common Securities and 97% to its
Preferred Securities. The particular Preferred Securities to be redeemed shall
be selected not more than 60 days prior to the Redemption Date by the Property
Trustee from the outstanding Preferred Securities not previously called for
redemption, by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $25 or integral multiples thereof) of the liquidation preference of
Preferred Securities of a denomination larger than $25. The Property Trustee
shall promptly notify the security registrar in writing of the Preferred
Securities selected for redemption and, in the case of any Preferred
Securities selected for partial redemption, the liquidation preference thereof
to be redeemed. For all purposes of each Trust Agreement, unless the context
otherwise requires, all provisions relating to the redemption of Preferred
Securities shall relate, in the case of any Preferred Securities redeemed or
to be redeemed only in part, to the portion of the aggregate liquidation
preference of Preferred Securities which has been or is to be redeemed.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, each Issuer's
Trust Securities, as applicable, shall be made pro rata based on the
liquidation preference of such Trust Securities; provided, however, that if on
any Distribution Date or Redemption Date a Debenture Event of Default (as
defined below, see "--Events of Default; Notice") under the applicable Trust
Agreement shall have occurred and be continuing, no payment of any
Distribution on, or Redemption Price of, any of the Issuer's Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of such Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions on all of the
Issuer's outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all of the Issuer's
outstanding Preferred Securities, shall have been made or provided for, and
all funds available to the Property Trustee shall first be applied to the
payment in full in cash of all Distributions on, or Redemption Price of, the
Issuer's Preferred Securities then due and payable.
In the case of any Event of Default under any Trust Agreement resulting from
an event of default under the Indenture (a "Debenture Event of Default"), the
holder of such Issuer's Common Securities will be deemed to have waived any
right to act with respect to such Event of Default under such Trust
6
<PAGE>
Agreement until the effect of all such Events of Default with respect to such
Preferred Securities have been cured, waived or otherwise eliminated. Until
any such Events of Default under the applicable Trust Agreement with respect
to the Preferred Securities have been so cured, waived or otherwise
eliminated, the Property Trustee shall act solely on behalf of the holders of
such Preferred Securities and not on behalf of the holder of the Issuer's
Common Securities, and only the holders of such Preferred Securities will have
the right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
Pursuant to each Trust Agreement, each Issuer shall be terminated by PG&E on
the first to occur of: (i) December 31, 2031, the expiration of the term of
such Issuer; (ii) the bankruptcy, dissolution or liquidation of PG&E; (iii)
the distribution of a Like Amount of the corresponding series of Debentures to
the holders of its Preferred Securities and Common Securities following the
occurrence of a Special Event or in the event the Issuer is not or will not be
taxed as a grantor trust but a Tax Event has not occurred; (iv) the redemption
of all of the Issuer's Preferred Securities; and (v) an order for the
termination of the Issuer shall have been entered by a court of competent
jurisdiction.
If an early termination occurs as described in clause (ii), (iii) or (v)
above, the Issuer shall be liquidated by the Issuer Trustees as expeditiously
as the Issuer Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of such Issuer as provided by
applicable law, to the holders of such Preferred Securities and Common
Securities a Like Amount of the corresponding series of Debentures, unless
such distribution is determined by the Property Trustee not to be practical,
in which event such holders will be entitled to receive out of the assets of
the Issuer available for distribution to holders, after satisfaction of
liabilities to creditors of such Issuer as provided by applicable law, an
amount equal to, in the case of holders of Preferred Securities, the aggregate
of the stated liquidation preference of $25 per Preferred Security plus
accrued and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"). If such Liquidation Distribution can be
paid only in part because such Issuer has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by such Issuer on its Preferred Securities shall be paid on a pro
rata basis. The holder(s) of such Issuer's Common Securities will be entitled
to receive distributions upon any such liquidation pro rata with the holders
of its Preferred Securities, except that if a Debenture Event of Default has
occurred and is continuing, the Preferred Securities shall have a priority
over the Common Securities. A supplemental Indenture may provide that if an
early termination occurs as described in clause (v) above, the related series
of Debentures may be subject to optional redemption in whole (but not in
part).
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under each
Trust Agreement with respect to the Preferred Securities issued thereunder
(whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of an "Event of Default" as defined the Indenture (see
"Description of the Debentures--Events of Default"); or
(ii) default by the Property Trustee in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any Preferred Security or Common Security when it becomes due and
payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trustees in such Trust Agreement
(other than a covenant or warranty a default in the performance of which or
the breach of which is dealt with in clause (ii) or (iii) above), and
continuation of such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the defaulting Issuer
Trustee or Trustees by the holders of at least 10% in aggregate liquidation
preference of the outstanding Preferred Securities of the applicable
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Issuer, a written notice specifying such default or breach and requiring it
to be remedied and stating that such notice is a "Notice of Default" under
such Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by PG&E to appoint a
successor Property Trustee within 60 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of such Issuer's Preferred
Securities, the Administrative Trustees and PG&E, as Depositor, unless such
default shall have been cured or waived. PG&E, as Depositor, and the
Administrative Trustees are required to file annually with the Property
Trustee a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
Under each Trust Agreement, if the Property Trustee fails to enforce its
rights under the Trust Agreement, to the fullest extent permitted by law, any
holder of Preferred Securities issued thereunder may, after such holder's
written request to the Property Trustee to enforce such rights, institute a
legal proceeding directly against any person to enforce the Property Trustee's
rights under the Trust Agreement without first instituting a legal proceeding
against the Property Trustee or any other person.
If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities upon
termination of each Issuer as described above. See "--Liquidation Distribution
Upon Termination."
REMOVAL OF ISSUER TRUSTEES
Unless an Event of Default shall have occurred and be continuing, any Issuer
Trustee may be removed at any time by the holder of the Common Securities. If
a Debenture Event of Default has occurred and is continuing, the Property
Trustee and the Delaware Trustee may be removed at such time by the holders of
a majority in liquidation preference of the outstanding Preferred Securities.
In no event will the holders of the Preferred Securities have the right to
vote to appoint, remove or replace the Administrative Trustees, which voting
rights are vested exclusively in the holder of the Common Securities. No
resignation or removal of an Issuer Trustee and no appointment of a successor
trustee shall be effective until the acceptance of appointment by the
successor trustee in accordance with the provisions of the Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default under a Trust Agreement shall have occurred and
be continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any
part of the Trust Property (as defined in each Trust Agreement) may at the
time be located, the holder of the applicable Common Securities and the
Administrative Trustees shall have power to appoint one or more persons either
to act as co-trustee, jointly with the Property Trustee, of all or any part of
such Trust Property, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such person or persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. In case a Debenture Event of Default under
the Indenture has occurred and is continuing, the Property Trustee alone shall
have power to make such appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any corporation into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which such Trustee shall be a party, or any
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corporation succeeding to all or substantially all the corporate trust
business of such Trustee, shall be the successor of such Trustee under the
Trust Agreements, provided such corporation shall be otherwise qualified and
eligible.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided below and under "Description of the Guarantee--Amendments
and Assignment" and as otherwise required by law and each Trust Agreement, the
holders of the Preferred Securities will have no voting rights.
A Trust Agreement may be amended from time to time by the Depositor and the
Issuer Trustees, without the consent of the holders of the Preferred
Securities, (i) to cure ambiguities or (ii) to ensure that the Issuer will be
classified for federal income tax purposes as a grantor trust, provided that
any such amendment shall not adversely affect in any material respect the
interests of any holder of Preferred Securities. A Trust Agreement may be
amended by the Depositor and the Issuer Trustees in any other respect (except
to change the amount or timing of any Distribution) with the consent of the
holders of a majority in liquidation preference of Preferred Securities and
upon receipt of an opinion of counsel to the effect that such amendment will
not affect the Issuer's status as a grantor trust for federal income tax
purposes or its exemption from regulation as an investment company under the
Investment Company Act of 1940, as amended.
So long as any Debentures are held by the Property Trustee, the Issuer
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on the Property Trustee with respect to such
Debentures, (ii) waive any past default that is waiveable under Section 513 of
the Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Debentures shall be due and payable or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the holders of a majority in aggregate
liquidation preference of all outstanding Preferred Securities; provided,
however, that where a consent under the Indenture would require the consent of
each holder of Debentures affected thereby, no such consent shall be given by
the Property Trustee without the prior consent of each holder of the
corresponding Preferred Securities. The Issuer Trustees shall not revoke any
action previously authorized or approved by a vote of the Preferred Securities
except by subsequent vote of the holders of the Preferred Securities. The
Property Trustee shall notify all holders of the Preferred Securities of any
notice of default with respect to the Debentures. In addition to obtaining the
foregoing approvals of the holders of the Preferred Securities, prior to
taking any of the foregoing actions, the Issuer Trustees shall obtain an
opinion of counsel experienced in such matters to the effect that the Issuer
will not be classified as a corporation or partnership for United States
federal income tax purposes on account of such action.
Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be
taken, to be given to each holder of record of Preferred Securities in the
manner set forth in each Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
for each Issuer to redeem and cancel its Preferred Securities in accordance
with the applicable Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned by PG&E, the Issuer Trustees or any affiliate of
PG&E or any Issuer Trustee, shall, for purposes of such vote or consent, be
treated as if they were not outstanding.
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PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to DTC, which
shall credit the relevant accounts at DTC on the applicable Distribution Dates
or, if any Issuer's Preferred Securities are not held by DTC, such payments
shall be made by check mailed to the address of the holder entitled thereto as
such address shall appear on the Register. The paying agent (the "Paying
Agent") shall initially be The First National Bank of Chicago and any co-
paying agent chosen by The First National Bank of Chicago, and acceptable to
the Property Trustee and PG&E. The First National Bank of Chicago shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and PG&E, as Depositor. In the event that The First National
Bank of Chicago shall no longer be the Paying Agent, the Property Trustee
shall appoint a successor to act as Paying Agent (which shall be a bank or
trust company).
BOOK-ENTRY-ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
DTC will act as securities depositary for all of the Preferred Securities.
The Preferred Securities will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more fully-
registered global certificates will be issued for the Preferred Securities of
each Issuer, representing in the aggregate the total number of such Issuer's
Preferred Securities, and will be deposited with DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc. (the "New York Stock Exchange"), the American Stock Exchange,
Inc. and the National Association of Securities Dealers, Inc. Access to the
DTC system is also available to others such as securities brokers and dealers,
banks and trust companies that clear through or maintain custodial
relationships with Direct Participants, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants
are on file with the Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser
of each Preferred Security ("Beneficial Owner") is in turn to be recorded on
the Direct and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial
Owners are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Direct or Indirect Participants through which the Beneficial Owners purchased
Preferred Securities. Transfers of ownership interests in the Preferred
Securities are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Preferred Securities,
except in the event that use of the book-entry system for the Preferred
Securities of such Issuer is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
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Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. as the registered holder of
the Preferred Securities. If less than all of an Issuer's Preferred Securities
are being redeemed, DTC's practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities is limited to the
holders of record of the Preferred Securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to Preferred Securities. Under its usual procedures, DTC would mail an
omnibus proxy (the "Omnibus Proxy") to the Property Trustee as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts
such Preferred Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Distribution payments on the Preferred Securities will be made by the
Property Trustee to DTC. DTC's practice is to credit Direct Participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Participant and not of DTC,
the Property Trustee, the Issuer thereof or PG&E, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
Distributions to DTC is the responsibility of the Property Trustee,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursements of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to any of the Preferred Securities at any time by giving reasonable
notice to the Property Trustee and PG&E. In the event that a successor
securities depositary is not obtained, definitive Preferred Security
certificates representing such Preferred Securities are required to be printed
and delivered. The Depositor, at its option, may decide to discontinue use of
the system of book-entry transfers through DTC (or a successor depositary).
After a Debenture Event of Default, the holders of a majority in liquidation
preference of Preferred Securities may determine to discontinue the system of
book-entry transfers through DTC. In any such event, definitive certificates
for such Issuer's Preferred Securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuers and PG&E believe to be
accurate, but the Issuers and PG&E assume no responsibility for the accuracy
thereof. Neither the Issuers nor PG&E has any responsibility for the
performance by DTC or its Participants of their respective obligations as
described herein or under the rules and procedures governing their respective
operations.
REGISTRAR AND TRANSFER AGENT
The First National Bank of Chicago will initially act as registrar and
transfer agent for the Preferred Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of each Issuer, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange.
The Issuers will not be required to register or cause to be registered the
transfer of their Preferred Securities after such Preferred Securities have
been called for redemption.
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INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee is the sole Trustee under the Trust Agreements for
purposes of the Trust Indenture Act and shall have and be subject to all of
the duties and responsibilities specified with respect to an indenture trustee
under that Act. The Property Trustee, other than during the occurrence and
continuance of an Event of Default, undertakes to perform only such duties as
are specifically set forth in the Trust Agreements and, after an Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to
this provision, the Property Trustee is under no obligation to exercise any of
the powers vested in it by the Trust Agreement at the request of any holder of
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. If no
Debenture Event of Default has occurred and is continuing and the Property
Trustee is required to decide between alternative causes of action, construe
ambiguous provisions in a Trust Agreement or is unsure of the application of
any provision of a Trust Agreement, and the matter is not one on which holders
of Preferred Securities are entitled under the Trust Agreement to vote, then
the Property Trustee shall take such action as is directed by PG&E as
Depositor and if not so directed, shall take such action as it deems advisable
and in the best interests of the holders of the Preferred Securities and the
Common Securities and will have no liability except for its own bad faith,
negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Issuers in such a way that no Issuer will be
deemed to be an "investment company" required to be registered under the
Investment Company Act of 1940 or taxed as a corporation for federal income
tax purposes and so that the Debentures will be treated as indebtedness of
PG&E for United States federal income tax purposes. In this connection, PG&E
and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of each Issuer or
each Trust Agreement, that PG&E and the Administrative Trustees determine in
their discretion to be necessary or desirable for such purposes, as long as
such action does not materially adversely affect the interests of the holders
of the related Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
No Issuer may borrow money or issue debt or mortgage or pledge any of its
assets.
Except as otherwise provided in the Trust Agreements, any action requiring
the consent or vote of the Trustees shall be approved by a majority of the
Administrative Trustees.
DESCRIPTION OF THE GUARANTEE
Each Guarantee will be executed and delivered by PG&E concurrently with the
issuance by each Issuer of its Preferred Securities for the benefit of the
holders from time to time of such Preferred Securities. The First National
Bank of Chicago will act as indenture trustee ("Guarantee Trustee") under each
Guarantee for the purposes of compliance with the Trust Indenture Act. This
summary of certain provisions of the Guarantees does not purport to be
complete and is subject to, and qualified in its entirety by reference to, all
of the provisions of each Guarantee Agreement, including the definitions
therein of certain terms, and the Trust Indenture Act. The form of the
Guarantee has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. Reference in this summary to Preferred
Securities means that Issuer's Preferred Securities to which a Guarantee
relates. The Guarantee Trustee will hold each Guarantee for the benefit of the
holders of the related Issuer's Preferred Securities.
GENERAL
PG&E will irrevocably and unconditionally agree on a subordinated basis, to
the extent set forth in each Guarantee, to pay in full, to the holders of the
related Issuer's Preferred Securities, the Guarantee
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Payments (as defined below) (except to the extent paid by or on behalf of such
Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim which such Issuer may have or assert. The following payments, to
the extent not paid by an Issuer (the "Guarantee Payments"), will be subject to
the applicable Guarantee (without duplication): (i) any accumulated and unpaid
Distributions required to be paid on such Preferred Securities, to the extent
that such Issuer has funds on hand available therefor, (ii) the Redemption
Price with respect to any Preferred Securities called for redemption to the
extent that such Issuer has funds on hand available therefor, or (iii) upon a
voluntary or involuntary dissolution, winding up or termination of such Issuer
(unless the corresponding series of Debentures are distributed to holders of
such Preferred Securities), the lesser of (a) the Liquidation Distribution and
(b) the amount of assets of such Issuer remaining available for distribution to
holders of Preferred Securities. PG&E's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by PG&E to the
holders of the applicable Preferred Securities or by causing the Issuer to pay
such amounts to such holders. While the assets of PG&E will not be available
for making Distributions on any Preferred Securities, PG&E has agreed to pay
the expenses of the related Issuer. Accordingly, each Guarantee, together with
the backup undertakings, consisting of PG&E's obligations under such agreement
to pay expenses and related covenants contained in each Trust Agreement and
certain of PG&E's obligations under the Indenture and the Debentures, provide
for PG&E's full and unconditional guarantee of the Preferred Securities as set
forth above.
STATUS OF THE GUARANTEE
Each Guarantee will constitute an unsecured obligation of PG&E and will rank
subordinate and junior in right of payment to all liabilities of PG&E except
those made pari passu or subordinate to such Guarantee expressly by their
terms. The Trust Agreements provide that each holder of Preferred Securities by
acceptance thereof agrees to the subordination provisions and other terms of
the related Guarantee.
Each Guarantee will rank pari passu with all other Guarantees issued by PG&E.
Each Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). Each
Guarantee will be held for the benefit of the holders of the related Preferred
Securities. Each Guarantee will not be discharged except by payment of the
Guarantee Payments in full to the extent not paid by the Issuer or upon
distribution to the holders of the Preferred Securities of the corresponding
series of Debentures.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the related Preferred Securities (in which case no
vote will be required), no Guarantee may be amended without the prior approval
of the holders of not less than a majority of the aggregate liquidation
preference of such outstanding Preferred Securities. The manner of obtaining
any such approval will be as set forth under "Description of the Preferred
Securities--Voting Rights; Amendment of Trust Agreement." All guarantees and
agreements contained in each Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of PG&E and shall inure to the benefit
of the holders of the related Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure of PG&E
to perform any of its payment or other obligations thereunder. The holders of
not less than a majority in aggregate liquidation preference of the related
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of such Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under such Guarantee.
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If the Guarantee Trustee fails to enforce any Guarantee, any holder of the
related Preferred Securities may, after such holder's written request to the
Guarantee Trustee to enforce such Guarantee, institute a legal proceeding
directly against PG&E to enforce its rights under such Guarantee without first
instituting a legal proceeding against the Issuer, the Guarantee Trustee or
any other person or entity.
PG&E, as guarantor, is required to file annually with the Guarantee Trustee
a certificate as to whether or not PG&E is in compliance with all the
conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by PG&E in performance of any Guarantee, undertakes to perform only
such duties as are specifically set forth in each Guarantee and, after default
with respect to any Guarantee, must exercise the same degree of care and skill
as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by any Guarantee at the
request of any holder of any Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
TERMINATION OF THE GUARANTEE
Each Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the related Preferred Securities, upon
full payment of the amounts payable upon liquidation of the related Issuer or
upon distribution of Debentures to the holders of the related Preferred
Securities. Each Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of the related
Preferred Securities must restore payment of any sums paid under such
Preferred Securities or such Guarantee.
GOVERNING LAW
Each Guarantee will be governed by and construed in accordance with the laws
of the State of California.
DESCRIPTION OF THE DEBENTURES
This summary of certain terms and provisions of the Debentures and the
Indenture does not purport to be complete and is subject to, and is qualified
in its entirety by reference to the Debentures and the Indenture, the forms of
which are filed as exhibits to the Registration Statement of which this
Prospectus forms a part.
GENERAL
Concurrently with the issuance of each Issuer's Preferred Securities, the
Issuer will invest the proceeds thereof and the consideration paid by PG&E for
the Common Securities in a corresponding series of Debentures issued by PG&E
to the Issuer. The Debentures will be unsecured subordinated obligations of
PG&E issued under the Indenture. Each series of Debentures will be in the
principal amount equal to the aggregate stated liquidation preference of the
related Preferred Securities plus PG&E's concurrent investment in the Common
Securities and will rank pari passu with all other series of Debentures. The
Indenture does not limit the aggregate principal amount of Debentures which
may be issued thereunder.
INTEREST
The Debentures will bear interest at the rate per annum specified in the
Prospectus Supplement. Such interest will be payable quarterly in arrears on
the dates in each year specified in the Prospectus
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Supplement (each, an "Interest Payment Date") to the person in whose name each
Debenture is registered, subject to certain exceptions, at the close of
business on the Business Day next preceding such Interest Payment Date. It is
anticipated that the Debentures will be held in the name of the Property
Trustee in trust for the benefit of the holders of the Preferred Securities.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Debentures is not a Business Day, then payment of
the interest payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in respect
of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date such payment was originally payable.
SUBORDINATION
The Indenture provides that all payments by PG&E in respect of the
Debentures shall be subordinate to the prior payment in full of all amounts
payable on Senior Indebtedness. The term "Senior Indebtedness" means (i) the
principal of and premium (if any) in respect of (A) indebtedness of PG&E for
money borrowed and (B) indebtedness evidenced by securities, debentures, bonds
or other similar instruments issued by PG&E; (ii) all capital lease
obligations of PG&E; (iii) all obligations of PG&E issued or assumed as the
deferred purchase price of property, all conditional sale obligations of PG&E
and all obligations of PG&E under any title retention agreement (but excluding
trade accounts payable arising in the ordinary course of business); (iv)
certain obligations of PG&E for the reimbursement of any obligor on any letter
of credit, banker's acceptance, security purchase facility, surety bond or
similar credit transaction entered into in the ordinary course of business of
PG&E; (v) all obligations of the type referred to in clauses (i) through (iv)
of other persons and all dividends of other persons (other than Preferred
Securities) for the payment of which, in either case, PG&E is responsible or
liable as obligor, guarantor or otherwise; and (vi) all obligations of the
type referred to in clauses (i) through (v) of other persons secured by any
lien on any property or asset of PG&E (whether or not such obligation is
assumed by PG&E), except for any such indebtedness that is by its terms
subordinated to or pari passu with the Debentures.
Upon any payment or distribution of assets or securities of PG&E upon any
dissolution, winding up, liquidation or reorganization of PG&E, whether
voluntary or involuntary, or in bankruptcy, insolvency, receivership or other
proceedings, all amounts due upon all Senior Indebtedness shall be paid in
full before the holders of the Debentures or the Property Trustee on behalf of
the holders shall be entitled to receive from PG&E any payment of principal
of, premium, if any, or interest on the Debentures or distributions of any
assets or securities.
No payment by or on behalf of PG&E of principal of, premium, if any, or
interest on the Debentures, whether pursuant to the terms of the Debentures or
upon acceleration or otherwise, shall be made if, at the time of such payment,
there exists a default in the payment of all or any portion of any Senior
Indebtedness or any other default pursuant to which the maturity of Senior
Indebtedness has been accelerated.
If the Debenture Trustee or the Property Trustee, as holder of the
Debentures shall have received any payment on account of the principal of,
premium, if any, or interest on the Debentures when such payment is prohibited
and before all amounts payable on Senior Indebtedness are paid in full, then
such payment shall be received and held in trust for the holders of Senior
Indebtedness and shall be paid over or delivered to the holders of the Senior
Indebtedness remaining unpaid to the extent necessary to pay such Senior
Indebtedness in full, provided that requisite notice has been given to PG&E.
15
<PAGE>
Nothing in the Indenture shall limit the right of the Debenture Trustee, the
Property Trustee or the holders of the Debentures to pursue any rights or
remedies under applicable law against PG&E; provided that all Senior
Indebtedness shall be paid before holders of the Debentures are entitled to
receive any payment from PG&E of principal of or interest on the Debentures.
Upon the payment in full of all Senior Indebtedness, the holders of the
Debentures shall be subrogated to the rights of the holders of such Senior
Indebtedness to receive payments or distributions of assets of PG&E made on
such Senior Indebtedness until the Debentures shall be paid in full.
The Indenture does not limit the aggregate amount of Senior Indebtedness
which PG&E may incur.
CERTAIN COVENANTS OF PG&E
PG&E will covenant, as to each series of Debentures, that it will not, and
will not permit any subsidiary of PG&E to, declare or pay any dividend or
distribution on, or redeem, purchase, acquire, or make a liquidation or
guarantee payment (other than payments under a Guarantee) with respect to, any
shares of PG&E's capital stock or any security of PG&E (including other
Debentures) ranking pari passu with or junior in interest to the Debentures,
except (i) in each case with securities junior in interest to the Debentures
or (ii) for payments made on any series of Debentures upon the stated maturity
of such Debentures, if at such time (i) there shall have occurred any event of
which PG&E has actual knowledge that (a) with the giving of notice or the
lapse of time, or both, would constitute an Event of Default with respect to
Debentures of such series and (b) in respect of which PG&E shall not have
taken reasonable steps to cure, (ii) PG&E shall be in default with respect to
its payment of any obligations under the Guarantee relating to the Preferred
Securities of the Trust to which Debentures of such series have been issued or
(iii) PG&E shall have given notice of its selection of an Extension Period as
provided in the Indenture with respect to Debentures of such series and such
Extension Period, or any extension thereof shall have commenced and be
continuing. PG&E will also covenant, as to each series of Debentures, (i) to
maintain directly or indirectly 100% ownership of the Common Securities of the
Issuer to which Debentures have been issued, provided that certain successors
which are permitted pursuant to the Indenture may succeed to PG&E's ownership
of the Common Securities, (ii) not to voluntarily terminate, wind-up or
liquidate any Issuer, except in (A) connection with the distribution of
Debentures to the holders of the Preferred Securities in liquidation of such
Issuer, (B) as permitted by the terms of the Debentures, or (C) in connection
with certain mergers, consolidations or amalgamations permitted by the related
Trust Agreement and (iii) to use its reasonable efforts, consistent with the
terms and provisions of the related Trust Agreement, to cause such Issuer to
remain a business trust and otherwise not to be classified as an association
taxable as a corporation for United States federal income tax purposes.
MODIFICATION OF THE INDENTURE
From time to time, PG&E and the Debenture Trustee may, without the consent
of the holders of any series of Debentures, amend, waive or supplement the
Indenture for specified purposes, including, among other things, curing
ambiguities, defects or inconsistencies, qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act, or making any
other change that does not affect the rights of any holder of Debentures in
any material respect. The Indenture contains provisions permitting PG&E and
the Debenture Trustee, with the consent of the holders of not less than a
majority in principal amount of each outstanding series of Debentures
affected, to modify the Indenture in a manner affecting the rights of the
holders of such series of the Debentures; provided that no such modification
may, without the consent of the holder of each outstanding Debenture so
affected, (i) change the stated maturity of any series of Debentures, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, reduce any premium payable upon
16
<PAGE>
redemption of the Debentures, or change any place of payment where, or the
coin or currency in which, any Debenture or any premium or interest is
payable, or impair the right to institute suit for the enforcement of any such
payment on or after the stated maturity or redemption date, or modify the
provisions of the Indenture with respect to the subordination of the
Debentures in a manner adverse to the holders of the Debentures, (ii) reduce
the percentage of principal amount of Debentures of any series, the holders of
which are required to consent to any such modification of the Indenture or
(iii) modify certain provisions of the Indenture relating to the waiver of
past defaults or compliance by PG&E with the covenants therein.
In addition, PG&E and the Debenture Trustee may execute, without the consent
of any holder of Debentures, any supplemental Indenture for the purpose of
creating any new series of Debentures.
EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to a series of Debentures that has occurred and is
continuing constitutes an "Event of Default" with respect to such series of
Debentures:
(a) failure for 30 days to pay any interest on such series of the
Debentures, including any Additional Interest in respect thereof, when due
(subject to the deferral of any due date in the case of an Extension
Period); or
(b) failure to pay any principal on such series of Debentures when due
whether at maturity, upon redemption, by declaration or otherwise; or
(c) failure to observe or perform in any material respect certain other
covenants contained in the Indenture for 90 days after written notice to
PG&E from the Debenture Trustee or the holders of at least 25% in principal
amount of such series of outstanding Debentures; or
(d) certain events in bankruptcy, insolvency or reorganization of PG&E.
The holders of a majority in outstanding principal amount of such series of
Debentures have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee. The
Debenture Trustee or the holders of not less than 25% in aggregate outstanding
principal amount of such series of Debentures may declare the principal due
and payable immediately upon an Event of Default, and should the Debenture
Trustee or such holders of such Debentures fail to make such declaration the
holders of at least 25% in aggregate liquidation preference of Preferred
Securities shall have such right. The holders of a majority in aggregate
outstanding principal amount of such series of Debentures may annul such
declaration and waive the default if the default has been cured (or, in
certain circumstances, even if the default has not been cured) and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration and any Additional Interest has been deposited
with the Debenture Trustee.
The holders of a majority in outstanding principal amount of the Debentures
affected thereby may, on behalf of the holders of all the Debentures, waive
any past default, except a default in the payment of principal or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) or a default in respect of a
covenant or provision which under the Indenture cannot be modified or amended
without the consent of the holder of each outstanding Debenture. PG&E is
required to file annually with the Debenture Trustee a certificate as to
whether or not PG&E is in compliance with all the conditions and covenants
applicable to it under the Indenture.
In case an Event of Default shall occur and be continuing as to a series of
Debentures, the Property Trustee will have the right to declare the principal
of and the interest on such Debentures
17
<PAGE>
(including any Additional Interest) and any other amounts payable under the
Indenture to be forthwith due and payable and to enforce its other rights as a
creditor with respect to such Debentures.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Indenture provides that PG&E may not consolidate with or merge with or
into any other person or sell, convey, transfer or lease its properties and
assets as an entirety or substantially as an entirety to any person, unless
(i) the successor person is a corporation, partnership, trust or other entity
organized and validly existing under the laws of the United States or any
state thereof or the District of Columbia, and expressly assumes by a
supplemental indenture all of the obligations of PG&E under the Debentures,
the Indenture and any Guarantees, (ii) immediately after giving effect to such
transaction and treating any indebtedness which becomes an obligation of PG&E
or any subsidiary as a result of such transaction as having been incurred by
it at the time of the transaction, no Event of Default, and no event which,
after notice or lapse of time or both, would become an Event of Default, shall
have occurred and be continuing, (iii) such transaction does not give rise to
any breach or violation of any Trust Agreement or any Guarantee and (iv)
certain other conditions are met.
SATISFACTION AND DISCHARGE
Under the terms of the Indenture, PG&E will be discharged from any and all
obligations in respect of any series of Debentures (except in each case for
certain obligations to register the transfer or exchange of such Debentures,
replace stolen, lost or mutilated Debentures and hold moneys for payment in
trust) if (subject to certain conditions) PG&E deposits with the Debenture
Trustee, in trust, (i) cash and/or (ii) United States Government Obligations
(as defined in the Indenture), which through the payment of interest thereon
and principal thereof in accordance with their terms will provide cash in an
amount sufficient to pay all the principal of, and interest on, such series of
Debentures on the dates such payments are due in accordance with the terms of
such Debentures.
FORM, EXCHANGE, AND TRANSFER
The Debentures will be issuable only in registered form, without coupons and
only in denominations of $25 and integral multiples thereof.
Subject to the terms of the Indenture, Debentures may be presented for
registration of transfer or exchange (duly endorsed or accompanied by
satisfactory instruments of transfer) at the office of the Security Registrar
or at the office of any transfer agent designated by PG&E for such purpose. No
service charge will be made for any registration of transfer or exchange of
Debentures, but PG&E may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith. Such transfer or
exchange will be effected upon the Security Registrar or such transfer agent,
as the case may be, being satisfied with the documents of transfer, title and
identity of the person making the request. PG&E has appointed the Debenture
Trustee as the initial Security Registrar. PG&E may at any time designate
additional transfer agents or rescind the designation of any transfer agent or
approve a change in the office through which any transfer agent acts.
If the Debentures are to be redeemed in part, PG&E will not be required to
issue, register the transfer or exchange any Debentures during a period
beginning at the opening of business 15 days before the day of mailing of a
notice of redemption of any such Debentures that may be selected for
redemption and ending at the close of business on the day of such mailing,
except the unredeemed portion of any such Debentures being redeemed in part.
18
<PAGE>
PAYMENT AND PAYING AGENTS
Payment of interest on a Debenture on any Interest Payment Date will be made
to the person in whose name such Debenture (or one or more predecessor
securities) is registered at the close of business on the Regular Record Date
(as defined in the Indenture) for such interest.
Principal or any interest on the Debentures will be payable at the office of
such Paying Agent or Paying Agents as PG&E may designate for such purpose from
time to time, except that at the option of PG&E, payment of any interest may
be made by check mailed to the address of the person entitled thereto as such
address appears in the Security Register or by wire transfer. The corporate
trust office of the Debenture Trustee in Chicago, Illinois is initially
designated as PG&E's sole Paying Agent for payments with respect to the
Debentures. PG&E may at any time designate additional Paying Agents or rescind
the designation of any Paying Agent or approve a change in the office through
which any Paying Agent acts.
GOVERNING LAW
The Indenture and the Debentures will be governed by and construed in
accordance with the laws of the State of California.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the
Trust Indenture Act. Subject to such provision, the Debenture Trustee is under
no obligation to exercise any of the powers vested in it by the Indenture at
the request of any holder of Debentures, unless offered reasonable indemnity
by such holder against the costs, expenses and liabilities which might be
incurred thereby. The Debenture Trustee is not required to expend or risk its
own funds or otherwise incur personal financial liability in the performance
of its duties if the Debenture Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.
The First National Bank of Chicago has a course of regular dealings with
PG&E in the ordinary course of business and from time to time may also make
short-term loans and revolving credit and term loans to PG&E and its
affiliates. The First National Bank of Chicago also serves as trustee for a
PG&E subsidiary's senior and subordinated indentures.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE DEBENTURES AND THE GUARANTEES
As long as payments of interest and other payments are made when due on each
series of Debentures, such payments will be sufficient to cover Distributions
and other payments due on the corresponding Preferred Securities, primarily
because (i) the aggregate principal amount of each series of Debentures will
be equal to the sum of the aggregate stated liquidation amount of the
corresponding Preferred Securities and corresponding Common Securities; (ii)
the interest rate and interest and other payment dates on each series of
Debentures will match the Distribution rate and Distribution and other payment
dates for the corresponding Preferred Securities; (iii) each Expense Agreement
entered into by PG&E pursuant to each Trust Agreement provides that PG&E shall
pay for all and any costs, expenses and liabilities of such Issuer except the
Issuer's obligations to holders of its Preferred Securities under such
Preferred Securities; and (iv) each Trust Agreement further provides that the
Issuer will not engage in any activity that is not consistent with the limited
purposes of such Issuer.
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer has funds available for the payment of such
Distributions) are guaranteed by PG&E as and to
19
<PAGE>
the extent set forth under "Description of the Guarantee." If and to the
extent that PG&E does not make payments on any series of Debentures, such
Issuer will not pay Distributions or other amounts due on its Preferred
Securities.
If the Guarantee Trustee fails to enforce any Guarantee, a holder of any
related Preferred Security may, after such holder's written request to the
Guarantee Trustee to enforce such Guarantee, institute a legal proceeding
directly against PG&E to enforce its rights under such Guarantee without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer or
any other person or entity.
Each Issuer's Preferred Securities evidence the rights of the holders
thereof to the benefits of such Issuer, and each Issuer exists for the sole
purpose of issuing its Trust Securities and investing the proceeds thereof in
a corresponding series of Debentures. A principal difference between the
rights of a holder of a Preferred Security and a holder of a Debenture is that
a holder of a Debenture will accrue, and (subject to the permissible extension
of the interest period) is entitled to receive, interest on the principal
amount of Debentures held, while a holder of Preferred Securities is only
entitled to receive Distributions if and to the extent the Issuer has funds
available for the payment of such Distributions.
Upon any voluntary or involuntary termination, winding-up or liquidation of
any Issuer involving the liquidation of the corresponding series of
Debentures, the holders of Preferred Securities will be entitled to receive,
out of assets held by such Issuer, the Liquidation Distribution in cash. See
"Description of the Preferred Securities--Liquidation Distribution Upon
Termination." Upon any voluntary or involuntary liquidation or bankruptcy of
PG&E, the Property Trustee, as holder of the Debentures, would be a
subordinated creditor of PG&E, subordinated in right of payment to all Senior
Indebtedness, but entitled to receive payment in full of principal and
interest, before any stockholders of PG&E receive payments or distributions.
Since PG&E is the guarantor under each Guarantee and has agreed to pay for all
costs, expenses and liabilities of each Issuer (other than the Issuer's
obligations to the holders of its Preferred Securities), the positions of a
holder of such Preferred Securities and a holder of such Debentures relative
to other creditors and to stockholders of PG&E in the event of liquidation or
bankruptcy of PG&E would be substantially the same.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Debentures. However, in the
event of payment defaults under, or acceleration of, Senior Indebtedness, the
subordination provisions of the Debentures provide that no payments may be
made in respect of the Debentures until such Senior Indebtedness has been paid
in full or any payment default thereunder has been cured or waived. Failure to
make required payments on any series of Debentures would constitute an Event
of Default under the Indenture.
PLAN OF DISTRIBUTION
The Preferred Securities may be sold in a public offering to or through
underwriters or dealers designated from time to time. Each Issuer may sell its
Preferred Securities as soon as practicable after effectiveness of the
Registration Statement of which the Prospectus is a part. The names of any
underwriters or dealers involved in the sale of the Preferred Securities of
any particular Issuer in respect of which this Prospectus is delivered, the
number of Preferred Securities to be purchased by any such underwriters and
any applicable commissions or discounts will be set forth in the Prospectus
Supplement.
Underwriters may offer and sell Preferred Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. In connection with the sale of Preferred Securities,
underwriters may be deemed to have received compensation from PG&E and/or the
applicable Issuer
20
<PAGE>
in the form of underwriting discounts or commissions and may also receive
commissions. Underwriters may sell Preferred Securities to or through dealers,
and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters.
Any underwriting compensation paid by PG&E and/or the applicable Issuer to
underwriters in connection with the offering of Preferred Securities, and any
discounts, concessions or commissions allowed by such underwriters to
participating dealers, will be set forth in an applicable Prospectus
Supplement. Underwriters and dealers participating in the distribution of
Preferred Securities may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of such
Preferred Securities may be deemed to be underwriting discounts and
commissions, under the Act. Underwriters and dealers may be entitled, under
agreement with PG&E and the applicable Issuer, to indemnification against and
contribution toward certain civil liabilities, including liabilities under the
Act, and to reimbursement by PG&E for certain expenses.
In connection with the offering of the Preferred Securities of any Issuer,
such Issuer may grant to the underwriters an option to purchase additional
Preferred Securities to cover over-allotments, if any, at the initial public
offering price (with an additional underwriting commission), as may be set
forth in the accompanying Prospectus Supplement. If such Issuer grants any
over-allotment option, the terms of such over-allotment option will be set
forth in the Prospectus Supplement for such Preferred Securities.
Underwriters and dealers may engage in transactions with, or perform
services for, PG&E and/or the applicable Issuer and/or any of their affiliates
in the ordinary course of business.
Each Issuer's Preferred Securities will be a new issue of securities and
will have no established trading market. Any underwriters to whom an Issuer's
Preferred Securities are sold by such Issuer for public offering and sale may
make a market in such Preferred Securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice. Such Preferred Securities may or may not be listed on a national
securities exchange. No assurance can be given as to the liquidity of or the
existence of trading markets for any Preferred Securities.
EXPERTS
The consolidated balance sheet and statement of consolidated capitalization
of PG&E and subsidiaries as of December 31, 1993 and 1994, and the related
statements of consolidated income, cash flows, common stock equity and
preferred stock, and the schedule of consolidated segment information for each
of the three years in the period ended December 31, 1994, and the related
supplemental schedule incorporated by reference in this Prospectus, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their reports with respect thereto which are incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting
and auditing in giving said reports.
LEGAL MATTERS
Certain legal matters will be passed upon for PG&E and the Issuers by Gary
P. Encinas, Esq., Chief Counsel, Corporate, of PG&E, by Richards, Layton &
Finger, special Delaware counsel to PG&E and the Issuers and by Ballard Spahr
Andrews & Ingersoll, Philadelphia, Pennsylvania, special tax counsel to PG&E.
The validity of the Preferred Securities will be passed on for the
underwriters by Sullivan & Cromwell, Los Angeles, California, who may rely on
the opinions of Mr. Encinas and of Richards, Layton & Finger as to certain
matters of California and Delaware law, respectively. Mr. Encinas and his
associates in PG&E's Law Department who will participate in consideration of
legal matters relating to the Preferred Securities, together with members of
their respective families, own in the aggregate approximately 1,700 shares of
PG&E's common stock.
21
<PAGE>
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESEN-
TATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE PRO-
SPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS SUP-
PLEMENT AND THE PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPEC-
TUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS COR-
RECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Summary........................................................ S-3
Risk Factors.............................................................. S-4
PG&E Capital I............................................................ S-6
Pacific Gas and Electric Company.......................................... S-7
Coverage Ratios........................................................... S-7
Use of Proceeds........................................................... S-8
Certain Terms of the Series A Preferred Securities........................ S-8
Certain Terms of the Series A Debentures.................................. S-10
United States Taxation.................................................... S-13
Underwriting.............................................................. S-16
PROSPECTUS
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
The Issuers............................................................... 3
Pacific Gas and Electric Company.......................................... 3
Description of the Preferred Securities................................... 4
Description of the Guarantee.............................................. 12
Description of the Debentures............................................. 14
Relationship Among the Preferred Securities, the Debentures and the
Guarantees............................................................... 19
Plan of Distribution...................................................... 20
Experts................................................................... 21
Legal Matters............................................................. 21
</TABLE>
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PREFERRED SECURITIES
PG&E CAPITAL I
% CUMULATIVE QUARTERLY
INCOME PREFERRED SECURITIES,
SERIES A
GUARANTEED TO THE EXTENT THE SERIES A
ISSUER HAS FUNDS AS SET FORTH HEREIN BY
PACIFIC GAS AND
ELECTRIC COMPANY
-----------
PROSPECTUS SUPPLEMENT
-----------
REPRESENTATIVES OF THE
UNDERWRITERS
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS
--------
<C> <S>
3-9 Form of Amended and Restated Trust Agreement (Agreements for PG&E
Capital I, PG&E Capital II, PG&E Capital III and PG&E Capital IV are
substantially identical except for names and dates).
4-5 Form of Guarantee Agreement (Agreements are substantially identical
except for names and dates).
23-1 Consent of Arthur Andersen LLP.
</TABLE>
II-1
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANTS,
PACIFIC GAS AND ELECTRIC COMPANY, PG&E CAPITAL I, PG&E CAPITAL II, PG&E
CAPITAL III AND PG&E CAPITAL IV, CERTIFY THAT THEY HAVE REASONABLE GROUNDS TO
BELIEVE THEY MEET ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAVE DULY
CAUSED THIS AMENDMENT TO ITS REGISTRATION STATEMENT TO BE SIGNED ON THEIR
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED IN THE CITY AND COUNTY OF
SAN FRANCISCO, STATE OF CALIFORNIA, ON THIS 16TH DAY OF OCTOBER, 1995.
Pacific Gas and Electric Company
By: Gabriel Togneri
--------------------------------------
PG&E Capital I
By: Pacific Gas and Electric Company, as
Sponsor
By: Gabriel Togneri
--------------------------------------
PG&E Capital II
By: Pacific Gas and Electric Company, as
Sponsor
By: Gabriel Togneri
--------------------------------------
PG&E Capital III
By: Pacific Gas and Electric Company, as
Sponsor
By: Gabriel Togneri
---------------------------------------
PG&E Capital IV
By: Pacific Gas and Electric Company, as
Sponsor
By: Gabriel Togneri
---------------------------------------
II-2
<PAGE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
A. Principal Executive Officer or Officers Chairman of the October 16, 1995
*STANLEY T. SKINNER Board, Chief
Executive Officer
and Director
B. Principal Financial Officer Senior Vice October 16, 1995
*GORDON R. SMITH President and Chief
Financial Officer
C. Controller or Principal Accounting Officer Vice President and October 16, 1995
*THOMAS C. LONG Controller
D. Directors
)))
*RICHARD A. CLARKE )
*H. M. CONGER )
*WILLIAM S. DAVILA )
*ROBERT D. GLYNN, JR.)
*RICHARD B. MADDEN )
*GEORGE A. MANEATIS )
*MARY S. METZ )
*WILLIAM F. MILLER ))) Directors October 16, 1995
*REBECCA Q. MORGAN )
*JOHN B. M. PLACE )
*SAMUEL T. REEVES )
*CARL E. REICHARDT )
*JOHN C. SAWHILL )
*ALAN SEELENFREUND )
)))
</TABLE>
*By: Gary P. Encinas
-----------------------------------
(GARY P. ENCINAS, ATTORNEY-IN-FACT)
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBERS EXHIBITS
-------- --------
<C> <S>
3-9 Form of Amended and Restated Trust Agreement (Agreements for PG&E
Capital I, PG&E Capital II, PG&E Capital III and PG&E Capital IV are
substantially identical except for names and dates).
4-5 Form of Guarantee Agreement (Agreements are substantially identical
except for names and dates).
23-1 Consent of Arthur Andersen, LLP.
</TABLE>
<PAGE>
EXHIBIT 3-9
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AMENDED AND RESTATED
TRUST AGREEMENT
AMONG
PACIFIC GAS AND ELECTRIC COMPANY
(AS DEPOSITOR)
THE FIRST NATIONAL BANK OF CHICAGO
(AS PROPERTY TRUSTEE)
THE DELAWARE TRUSTEE NAMED HEREIN
AND
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF
, 1995
PG & E CAPITAL I
- --------------------------------------------------------------------------------
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<PAGE>
PG&E CAPITAL I
CERTAIN SECTIONS OF THIS TRUST AGREEMENT RELATING TO
SECTIONS 310 THROUGH 318 OF THE
TRUST INDENTURE ACT OF 1939:
<TABLE>
<CAPTION>
TRUST AGREEMENT
TRUST INDENTURE SECTION
ACT SECTION ----------------
<S> <C>
(S) 310(a)(1).................................................. 8.07
(a)(2)......................................................... 8.07
(a)(3)......................................................... 8.09
(a)(4)......................................................... 2.07(a)(ii)
(b)............................................................ 8.08
(S) 311(a)..................................................... 8.13
(b)............................................................ 8.13
(S) 312(a)..................................................... 5.07
(b)............................................................ 5.07
(c)............................................................ 5.07
(S) 313(a)..................................................... 8.14(a)
(a)(4)......................................................... 8.14(b)
(b)............................................................ 8.14(b)
(c)............................................................ 10.08
(d)............................................................ 8.14(c)
(S) 314(a)..................................................... 8.15
(b)............................................................ Not Applicable
(c)(1)......................................................... 8.16
(c)(2)......................................................... 8.16
(c)(3)......................................................... Not Applicable
(d)............................................................ Not Applicable
(e)............................................................ 1.01, 8.16
(S) 315(a)..................................................... 8.01(a), 8.03(a)
(b)............................................................ 8.02, 10.08
(c)............................................................ 8.01(a)
(d)............................................................ 8.01, 8.03
(e)............................................................ Not Applicable
(S) 316(a)..................................................... Not Applicable
(a)(1)(A)...................................................... Not Applicable
(a)(1)(B)...................................................... Not Applicable
(a)(2)......................................................... Not Applicable
(b)............................................................ Not Applicable
(c)............................................................ 6.07
(S) 317(a)(1).................................................. Not Applicable
(a)(2)......................................................... Not Applicable
(b)............................................................ 5.09
(S) 318(a)..................................................... 10.10
</TABLE>
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Note: This reconciliation and tie sheet shall not, for any purpose, be deemed
to be a part of the Trust Agreement.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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ARTICLE I
DEFINED TERMS
<C> <S> <C>
Section 1.01. Definitions............................................... 1
ARTICLE II
ESTABLISHMENT OF THE TRUST
Section 2.01. Name...................................................... 8
Office of the Delaware Trustee; Principal Place of
Section 2.02. Business.................................................. 8
Initial Contribution of Trust Property; Organizational
Section 2.03. Expenses.................................................. 8
Section 2.04. Issuance of the Preferred Securities...................... 9
Section 2.05. Subscription and Purchase of Debentures; Issuance of the
Common Securities......................................... 9
Section 2.06. Declaration of Trust...................................... 9
Section 2.07. Authorization to Enter into Certain Transactions.......... 10
Section 2.08. Assets of Trust........................................... 12
Section 2.09. Title to Trust Property................................... 12
ARTICLE III
PAYMENT ACCOUNT
Section 3.01. Payment Account........................................... 12
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
Section 4.01. Distributions............................................. 13
Section 4.02. Redemption................................................ 13
Section 4.03. Subordination of Common Securities........................ 15
Section 4.04. Payment Procedures........................................ 15
Section 4.05. Tax Returns and Reports................................... 15
ARTICLE V
TRUST SECURITIES CERTIFICATES
Section 5.01. Initial Ownership......................................... 16
Section 5.02. The Trust Securities Certificates......................... 16
Section 5.03. Delivery of Trust Securities Certificates................. 16
Registration of Transfer and Exchange of Preferred
Section 5.04. Securities Certificates................................... 17
Mutilated, Destroyed, Lost or Stolen Trust Securities
Section 5.05. Certificates.............................................. 17
Section 5.06. Persons Deemed Securityholders............................ 17
Section 5.07. Access to List Securityholders' Names and Addresses....... 17
Section 5.08. Maintenance of Office or Agency........................... 18
Section 5.09. Appointment of Paying Agent............................... 18
Section 5.10. Ownership of Common Securities by Depositor............... 18
Book-Entry Preferred Securities Certificates; Common
Section 5.11. Securities Certificate.................................... 18
Section 5.12. Notices to Clearing Agency................................ 19
Section 5.13. Definitive Preferred Securities Certificates.............. 19
Section 5.14. Rights of Securityholders................................. 19
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
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ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
<C> <S> <C>
Section 6.01. Limitations on Voting Rights.............................. 20
Section 6.02. Notice of Meetings........................................ 20
Section 6.03. Meetings of Preferred Securityholders..................... 21
Section 6.04. Voting Rights............................................. 21
Section 6.05. Proxies, etc. ............................................ 21
Section 6.06. Securityholder Action by Written Consent.................. 21
Section 6.07. Record Date for Voting and Other Purposes................. 21
Section 6.08. Acts of Secruityholders................................... 22
Section 6.09. Inspection of Records..................................... 22
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.01. Representations and Warranties of the Bank, the Property
Trustee and the Delaware Trustee.......................... 22
ARTICLE VIII
THE TRUSTEES
Section 8.01. Certain Duties and Responsibilities....................... 24
Section 8.02. Notice of Defaults; Direct Action by Securityholders...... 24
Section 8.03. Certain Rights of Property Trustee........................ 24
Section 8.04. Not Responsible for Recitals or Issuance of Securities.... 25
Section 8.05. May Hold Securities....................................... 25
Section 8.06. Compensation; Indemnity; Fees............................. 26
Corporate Property Trustee Required; Eligibility of
Section 8.07. Trustees.................................................. 26
Section 8.08. Conflicting Interests..................................... 26
Section 8.09. Co-Trustees and Separate Trustee.......................... 26
Section 8.10. Resignation and Removal; Appointment of Successor......... 28
Section 8.11. Acceptance of Appointment by Successor.................... 29
Merger, Conversion, Consolidation or Succession to
Section 8.12. Business.................................................. 29
Preferential Collection of Claims Against Depositor or
Section 8.13. Trust..................................................... 29
Section 8.14. Reports by Property Trustee............................... 30
Section 8.15. Reports to the Property Trustee........................... 30
Section 8.16. Evidence of Complaince with Conditions Precedent.......... 30
Section 8.17. Number of Trustees........................................ 30
Section 8.18. Delegation of Power....................................... 31
Section 8.19. Voting.................................................... 31
ARTICLE IX
TERMINATION AND LIQUIDATION
Section 9.01. Termination Upon Expiration Date.......................... 31
Section 9.02. Early Termination......................................... 31
Section 9.03. Termination............................................... 31
Section 9.04. Liquidation............................................... 32
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
PAGE
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ARTICLE X
MISCELLANEOUS PROVISIONS
<C> <S> <C>
Section 10.01. Limitation of Rights of Securityholders 33
Section 10.02. Amendment................................................ 33
Section 10.03. Separability............................................. 34
Section 10.04. Governing Law............................................ 34
Section 10.05. Payments Due on Non-Business Day......................... 34
Section 10.06. Successors............................................... 34
Section 10.07. Headings................................................. 34
Section 10.08. Reports, Notices and Demands............................. 34
Section 10.09. Agreement Not to Petition................................ 35
Section 10.10. Trust Indenture Act; Conflict with Trust Indenture Act... 35
Section 10.11. Acceptance of Terms of Trust Agreement, Guarantee and
Indenture................................................ 35
Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depository Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Expense Agreement
Exhibit E Form of Preferred Securities Certificate
</TABLE>
(iii)
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT, dated as of ________ __, 1995, among (i)
Pacific Gas and Electric Company, a California corporation (the "Depositor"),
(ii) The First National Bank of Chicago, a national banking association duly
organized and existing under the laws of the United States, as trustee (the
"Property Trustee" and, in its separate corporate capacity and not in its
capacity as Trustee, the "Bank"), (iii) Michael J. Majchrzak, an individual,
as Delaware trustee (the "Delaware Trustee"), (iv) Gabriel B. Togneri, an
individual, Leslie Guliasi, an individual and Alan H. Lindstrom, an
individual, each of whose address is c/o Pacific Gas and Electric Company, 77
Beale Street, P.O. Box 770000, San Francisco, California 94120 (each an
"Administrative Trustee" and collectively the "Administrative Trustees") (the
Property Trustee, the Delaware Trustee and the Administrative Trustees
referred to collectively as the "Trustees") and (v) the several Holders, as
hereinafter defined.
WITNESSETH:
WHEREAS, the Depositor, the Bank, the Delaware Trustee and the
Administrative Trustees have heretofore duly declared and established a
business trust pursuant to the Delaware Business Trust Act by the entering
into of that certain Trust Agreement, dated as of August 14, 1995 (the
"Original Trust Agreement"), and by the execution and filing by the Property
Trustee, the Delaware Trustee and the Administrative Trustees with the
Secretary of State of the State of Delaware of the Certificate of Trust, filed
on August , 1995, attached as Exhibit A; and
WHEREAS, the Depositor, the Bank, the Delaware Trustee and the
Administrative Trustees desire to amend and restate the Original Trust
Agreement in its entirety as set forth herein to provide for, among other
things, (i) the issuance of the Common Securities by the Trust to the
Depositor, (ii) the issuance and sale of the Preferred Securities by the Trust
pursuant to the Underwriting Agreement and (iii) the acquisition by the Trust
from the Depositor of all of the right, title and interest in the Debentures;
NOW THEREFORE, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, each party, for the benefit of the other party and for
the benefit of the Securityholders, hereby amends and restates the Original
Trust Agreement in its entirety and agrees as follows:
ARTICLE I
DEFINED TERMS
Section 1.01. Definitions. For all purposes of this Trust Agreement, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to
them therein;
(c) unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of
this Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act'' has the meaning specified in Section 6.08.
1
<PAGE>
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest
(as defined in the Indenture) paid by the Depositor on a Like Amount of
Debentures for such period.
"Administrative Trustee" means each of the individuals identified as an
"Administrative Trustee" in the preamble to this Trust Agreement, solely in
his capacity as Administrative Trustee of the Trust formed and continued
hereunder and not in his individual capacity, or such Administrative Trustee's
successor in interest in such capacity, or any successor trustee appointed as
herein provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Bank" has the meaning specified in the preamble to this Trust Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in the
premises judging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjudication
or composition of or in respect of such Person under Federal bankruptcy law
or any other applicable Federal or State law, or appointing a receiver,
liquidator, assignee, trustee, sequestrator or other similar official of
such Person or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days;
or
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or of the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under
Federal bankruptcy law or any other applicable Federal or State law, or the
consent by it to the filing of such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator or similar official
of such Person or of any substantial part of its property, or the making by
it of an assignment for the benefit of creditors, or the admission by it in
writing of its inability to pay its debts generally as they become due, or
the taking of action by such Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.09.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Depositor to have been duly adopted by the
Depositor's Board of Directors or a duly authorized committee thereof and to
be in full force and effect on the date of such certification, and delivered
to the Trustee.
"Book Entry Preferred Securities Certificates" means a beneficial interest
in the Preferred Securities Certificates, ownership and transfers of which
shall be made through book entries by a Clearing Agency as described in
Section 5.11.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day on
which banking institutions in The City of New York are authorized or obligated
by law or executive order to remain closed, or (c) a day on which the Property
Trustee's Corporate Trust Office is closed for business.
"Certificate Depository Agreement" means the agreement among the Trust, the
Depositor and The Depository Trust Company, as the initial Clearing Agency,
dated as of the Closing Date, relating to the Trust Certificates,
substantially in the form attached as Exhibit B, as the same may be amended
and supplemented from time to time.
2
<PAGE>
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.
The Depository Trust Company will be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency
effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the First Time of Delivery as defined in the
Underwriting Agreement, which date is also the date of execution and delivery
of this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"Common Security" means an undivided beneficial interest in the assets of
the Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing ownership of
Common Securities, substantially in the form attached as Exhibit C.
"Corporate Trust Office" means the principal office of the Property Trustee
located in Chicago, Illinois.
"Debenture Event of Default" means an "Event of Default" as defined in the
Indenture.
"Debenture Redemption Date" means "Redemption Date" as defined in the
Indenture with respect to the Debentures.
"Debenture Trustee" means The First National Bank of Chicago, a banking
national association organized under the laws of the United States.
"Debentures" means the $______ aggregate principal amount (or up to $_____
aggregate principal amount if and to the extent the overallotment option
granted by the Trust to the purchasers of the Preferred Securities is
exercised) of the Parent's % Deferrable Interest Subordinated Debentures,
Series A, issued pursuant to the Indenture.
"Definitive Preferred Securities Certificates" means either or both (as the
context requires) of (a) Preferred Securities Certificates issued in
certificated, fully registered form as provided in Section 5.11(a) and (b)
Preferred Securities Certificates issued in certificated, fully registered
form as provided in Section 5.13.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. (S) 3801, et seq., as it may be amended from time to time.
"Delaware Trustee" means the individual identified as the "Delaware Trustee"
in the preamble to this Trust Agreement solely in his capacity as Delaware
Trustee of the Trust formed and continued hereunder and not in his individual
capacity, or his successor in interest in such capacity, or any successor
trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Distribution Date" has the meaning specified in Section 4.01(a).
3
<PAGE>
"Distributions" means amounts payable in respect of the Trust Securities as
provided in Section 4.01.
"Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Property Trustee in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(c) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Trustees in this Trust Agreement (other
than a covenant or warranty a default in whose performance or breach is
dealt with in clause (b) or (c), above) and continuation of such default or
breach for a period of 60 days after there has been given, by registered or
certified mail, to the defaulting Trustee or Trustees by the Holders of at
least 10% in Liquidation Amount of the Outstanding Preferred Securities a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder;
or
(e) the occurrence of a Bankruptcy Event with respect to the Property
Trustee and Pacific Gas and Electric Company fails to appoint a successor
Property Trustee within 60 days thereof.
"Expense Agreement" means the Agreement as to Expenses and Liabilities
between the Depositor and the Trust, substantially in the form attached as
Exhibit D, as amended from time to time.
"Guarantee" means the Guarantee Agreement executed and delivered by the
Parent and The First National Bank of Chicago, a national banking association,
as trustee, contemporaneously with the execution and delivery of this Trust
Agreement, for the benefit of the holders of the Preferred Securities, as
amended from time to time.
"Grantor Trust Event" has the meaning specified in Section 9.02(b).
"Indenture" means the Indenture, dated as of _______ __, 1995, as supplemented
by the First Supplemental Indenture, dated as of ________ __, 1995, between the
Parent and the Debenture Trustee, as trustee, as amended or supplemented from
time to time.
"Investment Company Event" means the occurrence of a change in law or
regulation or a change in interpretation or application of law or regulation
by any legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law") to the effect that the Trust is or will be
considered an "investment company" that is required to be registered under the
1940 Act, which Change in 1940 Act Law becomes effective on or after the date
of this Trust Agreement.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of trust,
adverse ownership interest, hypothecation, assignment, security interest or
preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to the principal amount of
Debentures to be contemporaneously redeemed in accordance with the Indenture
and the proceeds of which will be used to pay the Redemption Price of such
Trust Securities, and (b) with respect to a distribution to Holders of Trust
Securities of Debentures in connection with a termination or liquidation of
the Trust, Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the Holder to whom such Debentures are
distributed.
4
<PAGE>
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Liquidation Date" means each Date on which Debentures are to be distributed
to Holders of Trust Securities in connection with a termination and
liquidation of the Trust pursuant to Section 9.04(a).
"Liquidation Distribution" has the meaning specified in Section 9.04(d).
"1940 Act" means the Investment Company Act of 1940, as amended.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the President, a Senior Vice President or
a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary
or an Assistant Secretary, of the Depositor, and delivered to the appropriate
Trustee. One of the officers signing an Officers' Certificate given pursuant
to Section 8.16 shall be the principal executive, financial or accounting
officer of the Depositor. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Trust Agreement
shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Trust, the Property Trustee or the Depositor, but not an employee of
any thereof, and who shall be acceptable to the Property Trustee.
"Original Trust Agreement" has the meaning specified in the recitals to this
Trust Agreement.
"Outstanding", when used with respect to Preferred Securities, means, as of
the date of determination, all Preferred Securities theretofore executed and
delivered under this Trust Agreement, except:
(a) Preferred Securities theretofore cancelled by the Administrative
Trustees or delivered to the Administrative Trustees for cancellation;
(b) Preferred Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee
or any Paying Agent for the Holders of such Preferred Securities; provided
that, if such Preferred Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Trust Agreement; and
(c) Preferred Securities which have been paid or in exchange for or in
lieu of which other Preferred Securities have been executed and delivered
pursuant to Section 5.05; provided, however that in determining whether the
holders of the requisite Liquidation Amount of the Outstanding Preferred
Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Preferred Securities owned by the
Depositor, any Trustee or any Affiliate of the Depositor or any Trustee
shall be disregarded and deemed not to be Outstanding, except that (a) in
determining whether any Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Preferred Securities
5
<PAGE>
which such Trustee knows to be so owned shall be so disregarded and (b) the
foregoing shall not apply at any time when all of the outstanding Preferred
Securities are owned by the Depositor, one or more of the Trustees and/or
any such Affiliate. Preferred Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to
the satisfaction of the Administrative Trustees the pledgee's right so to
act with respect to such Preferred Securities and that the pledgee is not
the Depositor or any Affiliate of the Depositor.
"Owner" means each Person who is the beneficial owner of a Book Entry
Preferred Securities Certificate as reflected in the records of the Clearing
Agency or, if a Clearing Agency Participant is not the Owner, then as
reflected in the records of a Person maintaining an account with such Clearing
Agency (directly or indirectly, in accordance with the rules of such Clearing
Agency).
"Parent" has the meaning specified in the preamble to this Trust Agreement.
"Paying Agent" means any paying agent or co-paying agent appointed pursuant
to Section 5.09 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Securityholders in which all amounts paid in
respect of the Debentures will be held and from which the Property Trustee
shall make payments to the Securityholders in accordance with Section 4.01.
"Person" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization
or government or any agency or political subdivision thereof.
"Preferred Security" means an undivided beneficial interest in the assets of
the Trust, having a Liquidation Amount of $25 and having rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Preferred Securities Certificate" means a certificate evidencing ownership
of Preferred Securities, substantially in the form attached as Exhibit E.
"Property Trustee" means the commercial bank or trust company identified as
the "Property Trustee" in the preamble to this Trust Agreement solely in its
capacity as Property Trustee of the Trust heretofore formed and continued
hereunder and not in its individual capacity, or its successor in interest in
such capacity, or any successor property trustee appointed as herein provided.
"Redemption Date" means, with respect to any Trust Security to be redeemed,
the date fixed for such redemption by or pursuant to this Trust Agreement;
provided that each Debenture Redemption Date and the stated maturity of the
Debentures shall be a Redemption Date for a Like Amount of Trust Securities.
"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the date of redemption, plus the amount of the premium, if
any, paid by the Depositor upon the concurrent redemption of a Like Amount of
Debentures.
"Relevant Trustee" shall have the meaning specified in Section 8.10.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.04.
6
<PAGE>
"Securityholder" or "Holder" means a Person in whose name a Trust Security
or Securities is registered in the Securities Register; any such Person shall
be deemed to be a beneficial owner within the meaning of the Delaware Business
Trust Act.
"Special Event" has the meaning specified in Section 9.02(b).
"Tax Event" means that the Depositor shall have received an Opinion of
Counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein affecting taxation, or as a
result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change
is effective or such pronouncement or decision is announced on or after the
date of this Trust Agreement, there is more than an insubstantial risk that
(i) the Trust is, or will be, subject to United States Federal income tax with
respect to interest received on the Debentures, (ii) interest payable by the
Depositor on the Debentures is not, or will not be, deductible for United
States Federal income tax purposes or (iii) the Trust is, or will be, subject
to more than a de minimis amount of other taxes, duties, assessments or other
governmental charges.
"Trust" means the Delaware business trust created and continued hereby and
identified on the cover page to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as the
same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for
all purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment
or supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures, (b) any cash on deposit in, or
owing to, the Payment Account and (c) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Property Trustee pursuant to the trusts of this Trust
Agreement.
"Trust Security" means any one of the Common Securities or the Preferred
Securities.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
_________, 1995, among the Trust, the Depositor and the Underwriters named
therein.
"Special Event" has the meaning specified in Section 9.02(b).
"Tax Event" means that the Depositor shall have received an Opinion of
Counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein affecting taxation, or as a
result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change
is effective or such pronouncement or decision is announced on or after the
date of this Trust Agreement, there is more than an insubstantial risk that
(i) the Trust is, or will be, subject to United States Federal income tax with
respect to interest received on the Debentures, (ii) interest payable by the
Depositor on the Debentures is not, or will not be, deductible for United
States Federal income tax purposes or (iii) the Trust is, or will be, subject
to more than a de minimis amount of other taxes, duties, assessments or other
governmental charges.
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"Trust" means the Delaware business trust created and continued hereby and
identified on the cover page to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as the
same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for
all purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment
or supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures, (b) any cash on deposit in, or
owing to, the Payment Account and (c) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Property Trustee pursuant to the trusts of this Trust
Agreement.
"Trust Security" means any one of the Common Securities or the Preferred
Securities.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
________, 1995, among the Trust, the Depositor and the Underwriters named
therein.
ARTICLE II
ESTABLISHMENT OF THE TRUST
Section 2.01. Name. The Trust created and continued hereby shall be known as
"PG&E Capital I," as such name may be modified from time to time by the
Administrative Trustees following written notice to the Holders of Trust
Securities and the other Trustees, in which name the Trustees may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
Section 2.02. Office of the Delaware Trustee; Principal Place of Business.
The address of the Delaware Trustee in the State of Delaware is c/o FCC
National Bank, 300 King Street, Wilmington, Delaware 19801 or such other
address in the State of Delaware as the Delaware Trustee may designate by
written notice to the Securityholders and the Depositor. The principal place
of business of the Trust is c/o Pacific Gas and Electric Company, 77 Beale
Street, P.O. Box 770000, San Francisco, California 94177.
Section 2.03. Initial Contribution of Trust Property; Organizational
Expenses. The Property Trustee acknowledges receipt in trust from the
Depositor in connection with the Original Trust Agreement of the sum of $10,
which constituted the initial Trust Property. The Depositor shall pay
organizational expenses of the Trust as they arise or shall, upon request of
any Trustee, promptly reimburse such Trustee for any such expenses paid by
such Trustee. The Depositor shall make no claim upon the Trust Property for
the payment of such expenses.
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Section 2.04. Issuance of the Preferred Securities. On ________, 1995 the
Depositor, on behalf of the Trust and pursuant to the Original Trust
Agreement, executed and delivered the Underwriting Agreement.
Contemporaneously with the execution and delivery of this Trust Agreement, an
Administrative Trustee, on behalf of the Trust, shall execute in accordance
with Section 5.02 and deliver to the Underwriters named therein Preferred
Securities Certificates, registered in the name of the nominee of the initial
Clearing Agency, in an aggregate amount of ________ Preferred Securities having
an aggregate Liquidation Amount of $________, against receipt of the aggregate
purchase price of such Preferred Securities of $_______, which amount the
Administrative Trustees shall promptly deliver to the Property Trustee. In the
event and to the extent the overallotment option granted by the Trust pursuant
to the Underwriting Agreement is exercised by such Underwriters, an
Administrative Trustee, on behalf of the Trust, shall execute in accordance
with Section 5.02 and deliver to such Underwriters Preferred Securities
Certificates, registered in the name of the nominee of the initial Clearing
Agency, in an aggregate amount of up to _______ Preferred Securities having an
aggregate Liquidation Amount of up to $______, against receipt of the aggregate
purchase price of such Preferred Securities of up to $______, which amount the
Administrative Trustees shall promptly deliver to the Property Trustee, on the
date specified pursuant to the Underwriting Agreement.
Section 2.05. Subscription and Purchase of Debentures; Issuance of the
Common Securities. Contemporaneously with the execution and delivery of this
Trust Agreement, the Administrative Trustees, on behalf of the Trust, shall
subscribe to and purchase from the Depositor Debentures, registered in the
name of the Trust and having an aggregate principal amount equal to $_____,
and, in satisfaction of the purchase price for such Debentures, the Property
Trustee, on behalf of the Trust, shall deliver to the Depositor the sum of
$_______. Contemporaneously therewith, an Administrative Trustee, on behalf of
the Trust, shall execute in accordance with Section 5.02 and deliver to the
Depositor Common Securities Certificates, registered in the name of the
Depositor, in an aggregate amount of ________ Common Securities having an
aggregate Liquidation Amount of $________ against payment by the Depositor of
the sum of $________. In the event the overallotment option granted by the
Trust with respect to the Preferred Securities pursuant to the Underwriting
Agreement is exercised by the Underwriters named therein, the Administrative
Trustees, on behalf of the Trust, in an aggregate principal amount (determined
on a pro rata basis to the extent the overallotment option is exercised) and
contemporaneously with the delivery to the Underwriters of such Preferred
Securities, shall subscribe to and purchase from the Depositor Debentures,
registered in the name of the Trust and having an aggregate principal amount
up to $______, and, in satisfaction of the purchase price for such Debentures,
the Property Trustee, on behalf of the Trust, shall deliver to the Depositor
an amount equal to the aggregate principal amount of Debentures being
purchased. Contemporaneously therewith, an Administrative Trustee, on behalf
of the Trust, shall execute in accordance with Section 5.02 and deliver to the
Depositor Common Securities Certificates, registered in the name of the
Depositor, in an aggregate amount (determined on a pro rata basis to the
extent the overallotment option is exercised) of up to ________ Common
Securities having an aggregate Liquidation Amount of up to $_______ against
payment by the Depositor of an amount equal to the aggregate Liquidation Amount
of the Common Securities Certificates so delivered.
Section 2.06. Declaration of Trust. The exclusive purposes and functions of
the Trust are (a) to issue and sell Trust Securities and use the proceeds from
such sale to acquire the Debentures, and (b) to engage in those activities
necessary, convenient or incidental thereto. The Depositor hereby appoints the
Trustees as trustees of the Trust, to have all the rights, powers and duties
to the extent set forth herein, and the Trustees hereby accept such
appointment. The Property Trustee hereby declares that it will hold the Trust
Property in trust upon and subject to the conditions set forth herein for the
benefit of the Securityholders. The Administrative Trustees shall have all
rights, powers and duties set forth herein. The Delaware Trustee shall not be
entitled to exercise any powers, nor shall
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the Delaware Trustee have any of the duties and responsibilities, of the
Property Trustee or the Administrative Trustees set forth herein. The Delaware
Trustee shall be one of the Trustees of the Trust for the sole and limited
purpose of fulfilling the requirements of Section 3807 of the Delaware
Business Trust Act.
Section 2.07. Authorization to Enter into Certain Transactions.
(a) The Trustees shall conduct the affairs of the Trust in accordance with
the terms of this Trust Agreement. Subject to the limitations set forth in
paragraph (b) of this Section, and in accordance with the following provisions
(i) and (ii), the Trustees shall have the authority to enter into all
transactions and agreements determined by the Trustees to be appropriate in
exercising the authority, express or implied, otherwise granted to the
Trustees under this Trust Agreement, and to perform all acts in furtherance
thereof, including without limitation, the following:
(i) As among the Trustees, each Administrative Trustee shall have the
power and authority to act on behalf of the Trust with respect to the
following matters:
(A) the issuance and sale of the Trust Securities;
(B) to cause the Trust to enter into, and to execute, deliver and
perform on behalf of the Trust, the Expense Agreement and the
Certificate Depository Agreement and such other agreements as may be
necessary or desirable in connection with the purposes and function of
the Trust;
(C) assisting in the registration of the Preferred Securities under
the Securities Act of 1933, as amended, and under state securities or
blue sky laws, and the qualification of this Trust Agreement as a trust
indenture under the Trust Indenture Act;
(D) assisting in the listing of the Preferred Securities upon such
securities exchange or exchanges as shall be determined by the
Depositor and the registration of the Preferred Securities under the
Securities Exchange Act of 1934, as amended, and the preparation and
filing of all periodic and other reports and other documents pursuant
to the foregoing;
(E) the appointment of a Paying Agent, authenticating agent and
Securities Registrar in accordance with this Trust Agreement;
(F) to the extent provided in this Trust Agreement, the winding up of
the affairs of and liquidation of the Trust and the preparation,
execution and filing of the certificate of cancellation with the
Secretary of State of the State of Delaware;
(G) unless otherwise determined by the Depositor, the Property
Trustee or the Administrative Trustees, or as otherwise required by the
Delaware Business Trust Act or the Trust Indenture Act, to execute on
behalf of the Trust (either acting alone or together with any or all of
the Administrative Trustees) any documents that the Administrative
Trustees have the power to execute pursuant to this Trust Agreement;
and
(H) the taking of any action incidental to the foregoing as the
Trustees may from time to time determine is necessary or advisable to
give effect to the terms of this Trust Agreement for the benefit of the
Securityholders (without consideration of the effect of any such action
on any particular Securityholder).
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(ii) As among the Trustees, the Property Trustee shall have the power,
duty and authority to act on behalf of the Trust with respect to the
following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other payments made
in respect of the Debentures in the Payment Account;
(D) the distribution of amounts owed to the Securityholders in
respect of the Trust Securities;
(E) the exercise of all of the rights, powers and privileges of a
holder of the Debentures;
(F) the sending of notices and other information regarding the Trust
Securities and the Debentures to the Securityholders in accordance with
this Trust Agreement;
(G) the distribution of the Trust Property in accordance with the
terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the winding up of
the affairs of and liquidation of the Trust and the preparation,
execution and filing of the certificate of cancellation with the
Secretary of State of the State of Delaware;
(I) after an Event of Default the taking of any action incidental to
the foregoing as the Property Trustee may from time to time determine
is necessary or advisable to give effect to the terms of this Trust
Agreement and protect and conserve the Trust Property for the benefit
of the Securityholders (without consideration of the effect of any such
action on any particular Securityholder); and
(J) registering transfers of the Trust Securities in accordance with
this Trust Agreement.
(b) So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trustees shall not (i) acquire any investments or
engage in any activities not authorized by this Trust Agreement, (ii) sell,
assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to Securityholders,
except as expressly provided herein, (iii) take any action that would cause
the Trust to fail or cease to qualify as a "grantor trust" for federal income
tax purposes, (iv) incur any indebtedness for borrowed money or issue any
other debt or (v) take or consent to any action that would result in the
placement of a Lien on any of the Trust Property. The Administrative Trustees
shall defend all claims and demands of all Persons at any time claiming any
Lien on any of the Trust Property adverse to the interest of the Trust or the
Securityholders in their capacity as Securityholders.
(c) In connection with the issue and sale of the Preferred Securities, the
Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Depositor in furtherance of the following prior to the date of
this Trust Agreement are hereby ratified and confirmed in all respects):
(i) to prepare for filing by the Trust with the Commission and to execute
on behalf of the Trust a registration statement on Form S-3 or S-4 in
relation to the Preferred Securities, including any amendments thereto;
(ii) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and to
do any and all such acts, other than actions which must be taken by or on
behalf of the Trust, and advise the Trustees of actions they must take on
behalf of the Trust, and prepare for execution and filing any documents to
be executed and filed by the Trust or on behalf of the Trust, as the
Depositor deems necessary or advisable in order to comply with the
applicable laws of any such States;
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(iii) to prepare for filing by the Trust and to execute on behalf of the
Trust an application to the New York Stock Exchange or any other national
stock exchange or the Nasdaq National Market for listing upon notice of
issuance of any Preferred Securities;
(iv) to prepare for filing by the Trust with the Commission and to
execute on behalf of the Trust a registration statement on Form 8-A
relating to the registration of the Preferred Securities under Section
12(b) or 12(g) of the Exchange Act, including any amendments thereto;
(v) to negotiate the terms of, and execute and deliver, the Underwriting
Agreement providing for the sale of the Preferred Securities; and
(vi) any other actions necessary or desirable to carry out any of the
foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust and
to operate the Trust so that the Trust will not be deemed to be an "investment
company" required to be registered under the Investment Company Act of 1940,
as amended, or taxed as a corporation for United States federal income tax
purposes and so that the Debentures will be treated as indebtedness of the
Depositor for United States federal income tax purposes. In this connection,
the Depositor and the Administrative Trustees are authorized to take any
action, not inconsistent with applicable law, the Certificate of Trust or this
Trust Agreement, that each of the Depositor and the Administrative Trustees
determines in their discretion to be necessary or desirable for such purposes,
as long as such action does not adversely affect in any material respect the
interests of the holders of the Preferred Securities.
Section 2.08. Assets of Trust. The assets of the Trust shall consist of the
Trust Property.
Section 2.09. Title to Trust Property. Legal title to all Trust Property
shall be vested at all times in the Property Trustee (in its capacity as such)
and shall be held and administered by the Property Trustee for the benefit of
the Securityholders in accordance with this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
Section 3.01. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall establish
the Payment Account. The Property Trustee and any agent of the Property
Trustee shall have exclusive control and sole right of withdrawal with respect
to the Payment Account for the purpose of making deposits in and withdrawals
from the Payment Account in accordance with this Trust Agreement. All monies
and other property deposited or held from time to time in the Payment Account
shall be held by the Property Trustee in the Payment Account for the exclusive
benefit of the Securityholders and for distribution as herein provided,
including (and subject to) any priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly upon
receipt, all payments of principal or interest on, and any other payments or
proceeds with respect to, the Debentures. Amounts held in the Payment Account
shall not be invested by the Property Trustee pending distribution thereof.
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ARTICLE IV
DISTRIBUTIONS; REDEMPTION
Section 4.01. Distributions.
(a) Distributions on the Trust Securities shall be cumulative, and will
accumulate whether or not there are funds of the Trust available for the
payment of Distributions. Distributions shall accrue from _______, 1995, and,
except in the event that the Parent exercises its right to extend the
interest payment period for the Debentures pursuant to the Indenture, shall
be payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year, commencing on _______, 1995. If any date on which
Distributions are otherwise payable on the Trust Securities is not a
Business Day, then the payment of such Distribution shall be made on the
next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business
Day is in the next succeeding calendar year, payment of such Distribution
shall be made on the immediately preceding Business Day, in each case with
the same force and effect as if made on such date (each date on which
distributions are payable in accordance with this Section 4.01(a) a
"Distribution Date").
(b) The Trust Securities represent undivided beneficial interests in the
Trust Property, and as a practical matter the Distributions on the Trust
Securities shall be payable at a rate of ___ % per annum of the Liquidation
Amount of the Trust Securities. The amount of Distributions payable for any
full quarterly period shall be computed on the basis of a 360-day year of
twelve 30-day months. If the interest payment period for the Debentures is
extended pursuant to the Indenture, then the rate per annum at which
Distributions on the Trust Securities accumulate shall be increased by an
amount such that the aggregate amount of Distributions that accumulate on
all Trust Securities during any such extended interest payment period is
equal to the aggregate amount of interest (including interest payable on
unpaid interest at the percentage rate per annum set forth above,
compounded quarterly) that accrues during any such extended interest
payment period on the Debentures. The amount of Distributions payable for
any period shall include the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made by the Property
Trustee from the Payment Account and shall be payable on each Distribution
Date only to the extent that the Trust has funds then on hand and available
in the Payment Account for the payment of such Distributions.
(d) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities on the relevant record date,
which shall be one Business Day prior to such Distribution Date; provided,
however, that in the event that the Preferred Securities do not remain in
book-entry-only form, the relevant record date shall be the date 15 days
prior to the relevant Distribution Date.
Section 4.02. Redemption.
(a) On each Debenture Redemption Date and the stated maturity of the
Debentures, the Trust will be required to redeem a Like Amount of Trust
Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by first-
class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date to each Holder of Trust Securities to be
redeemed, at such Holder's address appearing in the Security Register. All
notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
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(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the identification and the total Liquidation Amount of the
particular Trust Securities to be redeemed; and
(v) that on the Redemption Date the Redemption Price will become due
and payable upon each such Trust Security to be redeemed and that
distributions thereon will cease to accrue on and after said date.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption of Debentures. Redemptions of the Trust Securities shall be made
and the Redemption Price shall be payable on each Redemption Date only to
the extent that the Trust has funds then on hand and available in the
Payment Account for the payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of
any Preferred Securities, then, by 12:00 noon, New York time, on the
Redemption Date, subject to Section 4.02(c), the Property Trustee will, so
long as the Preferred Securities are in book-entry-only form, irrevocably
deposit with the Clearing Agency for the Preferred Securities funds
sufficient to pay the applicable Redemption Price and will give such
Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the holders thereof. If the Preferred Securities are no
longer in book-entry-only form, the Property Trustee, subject to Section
4.02(c), will irrevocably deposit with the Paying Agent funds sufficient to
pay the applicable Redemption Price and will give the Paying Agent
irrevocable instructions and authority to pay the Redemption Price to the
holders thereof upon surrender of their Preferred Securities Certificates.
Notwithstanding the foregoing, Distributions payable on or prior to the
redemption date for any Trust Securities called for redemption shall be
payable to the Holders of such Trust Securities as they appear on the
Register for the Trust Securities on the relevant record dates for the
related Distribution Dates. If notice of redemption shall have been given
and funds deposited as required, then upon the date of such deposit, all
rights of Securityholders holding Trust Securities so called for redemption
will cease, except the right of such Securityholders to receive the
Redemption Price, but without interest, and such Securities will cease to
be outstanding. In the event that any date on which any Redemption Price is
payable is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day falls in the next calendar year,
such payment will be made on the immediately preceding Business Day, in
each case, with the same force and effect as if made on such date. In the
event that payment of the Redemption Price in respect of any Trust
Securities called for redemption is improperly withheld or refused and not
paid either by the Trust or by the Depositor pursuant to the Guarantee,
Distributions on such Trust Securities will continue to accrue, at the then
applicable rate, from the Redemption Date originally established by the
Trust for such Trust Securities to the date such Redemption Price is
actually paid, in which case the actual payment date will be the date fixed
for redemption for purposes of calculating the Redemption Price.
(e) Payment of the Redemption Price on the Trust Securities shall be made
to the recordholders thereof as they appear on the Securities Register for
the Trust Securities on the relevant record date, which shall be one
Business Day prior to the relevant Redemption Date; provided, however, that
in the event that the Preferred Securities do not remain in book-entry-only
form, the relevant record date shall be the fifteenth day prior to the
Redemption Date.
(f) If less than all the Outstanding Trust Securities are to be redeemed
on a Redemption Date, then the aggregate Liquidation Amount of Trust
Securities to be redeemed shall be allocated 3% to the Common Securities
and 97% to the Preferred Securities. The particular Preferred
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Securities to be redeemed shall be selected not more than 60 days prior to
the Redemption Date by the Property Trustee from the Outstanding Preferred
Securities not previously called for redemption, by such method as the
Property Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of portions (equal to $25 or an integral
multiple thereof) of the Liquidation Amount of Preferred Securities of a
denomination larger than $25. The Property Trustee shall promptly notify
the Security Registrar in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected for
partial redemption, the Liquidation Amount thereof to be redeemed. For all
purposes of this Trust Agreement, unless the context otherwise requires,
all provisions relating to the redemption of Preferred Securities shall
relate, in the case of any Preferred Securities redeemed or to be redeemed
only in part, to the portion of the Liquidation Amount of Preferred
Securities which has been or is to be redeemed.
Section 4.03. Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, and the Redemption Price of, the Trust Securities, as
applicable, shall be made pro rata based on the Liquidation Amount of the
Trust Securities; provided, however, that if on any Distribution Date or
Redemption Date a Debenture Event of Default shall have occurred and be
continuing, no payment of any Distribution (including Additional Amounts,
if applicable) on, or Redemption Price of, any Common Security, and no
other payment on account of the redemption, liquidation or other
acquisition of Common Securities, shall be made unless payment in full in
cash of all accumulated and unpaid Distributions (including Additional
Amounts, if applicable) on all Outstanding Preferred Securities for all
distribution periods terminating on or prior thereto, or in the case of
payment of the Redemption Price the full amount of such Redemption Price on
all Outstanding Preferred Securities, shall have been made or provided for,
and all funds immediately available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions (including
Additional Amounts, if applicable) on, or Redemption Price of, Preferred
Securities then due and payable.
(b) In the case of the occurrence of any Debenture Event of Default, the
Holder of Common Securities will be deemed to have waived any right to act
with respect to any such Event of Default under this Trust Agreement until
the effect of all such Events of Default with respect to the Preferred
Securities have been cured, waived or otherwise eliminated. Until any such
Event of Default under this Trust Agreement with respect to the Preferred
Securities have been so cured, waived or otherwise eliminated, the Property
Trustee shall act solely on behalf of the Holders of the Preferred
Securities and not the Holder of the Common Securities, and only the
Holders of the Preferred Securities will have the right to direct the
Property Trustee to act on their behalf.
Section 4.04. Payment Procedures. Payments in respect of the Preferred
Securities shall be made by check mailed to the address of the Person entitled
thereto as such address shall appear on the Securities Register or, if the
Preferred Securities are held by a Clearing Agency, such Distributions shall
be made to the Clearing Agency in immediately available funds, which shall
credit the relevant Persons' accounts at such Clearing Agency on the
applicable distribution dates. Payments in respect of the Common Securities
shall be made in such manner as shall be mutually agreed between the Property
Trustee and the Common Securityholder.
Section 4.05. Tax Returns and Reports. The Administrative Trustees shall
prepare (or cause to be prepared), at the Depositor's expense, and file all
Federal, state and local tax and information returns and reports required to
be filed by or in respect of the Trust. In this regard, the Administrative
Trustees shall (a) prepare and file (or cause to be prepared or filed) the
appropriate Internal Revenue Service Form required to be filed in respect of
the Trust in each taxable year of the Trust and
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(b) prepare and furnish (or cause to be prepared and furnished) to each
Securityholder the related Internal Revenue Service Form 1099 OID, or any
successor form or the information required to be provided on such form. The
Administrative Trustees shall provide the Depositor and the Property Trustee
with a copy of all such returns, reports and schedules promptly after such
filing or furnishing. The Trustees shall comply with United States federal
withholding and backup withholding tax laws and information reporting
requirements with respect to any payments to Securityholders under the Trust
Securities.
ARTICLE V
TRUST SECURITIES CERTIFICATES
Section 5.01. Initial Ownership. Upon the formation of the Trust and the
contribution by the Depositor pursuant to Section 2.03 and until the issuance
of the Trust Securities, and at any time during which no Trust Securities are
outstanding, the Depositor shall be the sole beneficial owner of the Trust.
Section 5.02. The Trust Securities Certificates. The Preferred Securities
Certificates shall be issued in minimum denominations of $25 Liquidation
Amount and integral multiples thereof, and the Common Securities Certificates
shall be issued in denominations of $25 Liquidation Amount and integral
multiples thereof. The Trust Securities Certificates shall be executed on
behalf of the Trust by manual signature of at least one Administrative
Trustee. Trust Securities Certificates bearing the manual signatures of
individuals who were, at the time when such signatures shall have been
affixed, authorized to sign on behalf of the Trust, shall be validly issued
and entitled to the benefits of this Trust Agreement, notwithstanding that
such individuals or any of them shall have ceased to be so authorized prior to
the delivery of such Trust Securities Certificates or did not hold such
offices at the date of delivery of such Trust Securities Certificates. A
transferee of a Trust Securities Certificate shall become a Securityholder,
and shall be entitled to the rights and subject to the obligations of a
Securityholder hereunder, upon due registration of such Trust Securities
Certificate in such transferee's name pursuant to Section 5.04.
Section 5.03. Delivery of Trust Securities Certificates. On the Closing Date
and on any date on which Preferred Securities are required to be delivered
pursuant to the exercise of the overallotment option provided for in the
Underwriting Agreement, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Sections 2.04 and 2.05, to be executed on behalf of the Trust and delivered to
or upon the written order of the Depositor, signed by its chairman of the
board, its president, any senior vice president or any vice president, without
further corporate action by the Depositor, in authorized denominations.
Section 5.04. Registration of Transfer and Exchange of Preferred Securities
Certificates. The Securities Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 5.08, a Securities Register in
which, subject to such reasonable regulations as it may prescribe, the
Securities Registrar shall provide for the registration of Preferred
Securities Certificates and Common Securities Certificates (subject to Section
5.10 in the case of the Common Securities Certificates) and registration of
transfers and exchanges of Preferred Securities Certificates as herein
provided. The Property Trustee shall be the initial Securities Registrar.
Upon surrender for registration of transfer of any Preferred Securities
Certificate at the office or agency maintained pursuant to Section 5.08, the
Administrative Trustees or any one of them shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Preferred
Securities Certificates in authorized denominations of a like aggregate
Liquidation Amount dated the date of execution by such Administrative Trustee
or Trustees. The Securities Registrar shall not be required to register the
transfer of any Preferred Securities that have been called for
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redemption. At the option of a Holder, Preferred Securities Certificates may
be exchanged for other Preferred Securities Certificates in authorized
denominations of the same class and of a like aggregate Liquidation Amount
upon surrender of the Preferred Securities Certificates to be exchanged at the
office or agency maintained pursuant to Section 5.08.
Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Administrative Trustees and
the Securities Registrar duly executed by the Holder or his attorney duly
authorized in writing. Each Preferred Securities Certificate surrendered for
registration of transfer or exchange shall be cancelled and subsequently
disposed of by the Administrative Trustees in accordance with their customary
practice.
No service charge shall be made for any registration of transfer or exchange
of Preferred Securities Certificates, but the Securities Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer or exchange of Preferred Securities
Certificates.
Section 5.05. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates. If (a) any mutilated Trust Securities Certificate shall be
surrendered to the Securities Registrar, or if the Securities Registrar shall
receive evidence to its satisfaction of the destruction, loss or theft of any
Trust Securities Certificate and (b) there shall be delivered to the
Securities Registrar and the Administrative Trustees such security or
indemnity as may be required by them to save each of them harmless, then in
the absence of notice that such Trust Securities Certificate shall have been
acquired by a bona fide purchaser, the Administrative Trustees, or any one of
them, on behalf of the Trust shall execute and make available for delivery, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust
Securities Certificate, a new Trust Securities Certificate of like class,
tenor and denomination. In connection with the issuance of any new Trust
Securities Certificate under this Section, the Administrative Trustees or the
Securities Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Trust Securities Certificate issued pursuant to this Section
shall constitute conclusive evidence of an undivided beneficial interest in
the assets of the Trust, as if originally issued, whether or not the lost,
stolen or destroyed Trust Securities Certificate shall be found at any time.
Section 5.06. Persons Deemed Securityholders. The Administrative Trustees or
the Securities Registrar shall treat the Person in whose name any Trust
Securities Certificate shall be registered in the Securities Register as the
owner of such Trust Securities Certificate for the purpose of receiving
distributions and for all other purposes whatsoever, and neither the Trustees
nor the Securities Registrar shall be bound by any notice to the contrary.
Section 5.07. Access to List of Securityholders' Names and Addresses. The
Administrative Trustees or the Depositor shall furnish or cause to be
furnished (a) to the Property Trustee, semi-annually on or before January 15
and July 15 in each year, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Securityholders as of
the most recent Record Date and (b) to the Property Trustee, promptly after
receipt by any Administrative Trustee or the Depositor of a request therefor
from the Property Trustee in order to enable the Property Trustee to discharge
its obligations under this Trust Agreement, in each case to the extent such
information is in the possession or control of the Administrative Trustees or
the Depositor and is not identical to a previously supplied list or has not
otherwise been received by the Property Trustee in its capacity as Securities
Registrar. The rights of Securityholders to communicate with other
Securityholders with respect to their rights under this Trust Agreement or
under the Trust Securities, and the corresponding rights of the Trustee shall
be as provided in the Trust Indenture Act. Each Holder, by receiving and
holding a Trust Securities Certificate, and each Owner shall be deemed to have
agreed not to hold the Depositor, the Property Trustee or the Administrative
Trustees accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
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Section 5.08. Maintenance of Office or Agency. The Property Trustee shall
maintain in Chicago, Illinois, an office or offices or agency or agencies
where Preferred Securities Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Trustees in
respect of the Trust Securities Certificates may be served. The Property
Trustee shall give prompt written notice to the Depositor and to the
Securityholders of any change in the location of the Securities Register or
any such office or agency.
Section 5.09. Appointment of Paying Agent. The Paying Agent shall make
distributions to Securityholders from the Payment Account and shall report the
amounts of such distributions to the Property Trustee and the Administrative
Trustees. Any Paying Agent shall have the revocable power to withdraw funds
from the Payment Account for the purpose of making the distributions referred
to above. The Administrative Trustees may revoke such power and remove the
Paying Agent if such Trustees determine in their sole discretion that the
Paying Agent shall have failed to perform its obligations under this Trust
Agreement in any material respect. The Paying Agent shall initially be the
Property Trustee, and any co-paying agent chosen by the Bank, and acceptable
to the Administrative Trustees and the Depositor. Any Person acting as Paying
Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Administrative Trustees, the Property Trustee and the Depositor.
In the event that the Bank shall no longer be the Paying Agent or a successor
Paying Agent shall resign or its authority to act be revoked, the
Administrative Trustees shall appoint a successor that is acceptable to the
Property Trustee and the Depositor to act as Paying Agent (which shall be a
bank or trust company). The Administrative Trustees shall cause such successor
Paying Agent or any additional Paying Agent appointed by the Administrative
Trustees to execute and deliver to the Trustees an instrument in which such
successor Paying Agent or additional Paying Agent shall agree with the
Trustees that as Paying Agent, such successor Paying Agent or additional
Paying Agent will hold all sums, if any, held by it for payment to the
Securityholders in trust for the benefit of the Securityholders entitled
thereto until such sums shall be paid to such Securityholders. The Paying
Agent shall return all unclaimed funds to the Property Trustee and upon
removal of a Paying Agent such Paying Agent shall also return all funds in its
possession to the Property Trustee. The provisions of Sections 8.01, 8.03 and
8.06 shall apply to the Bank also in its role as Paying Agent, for so long as
the Bank shall act as Paying Agent and, to the extent applicable, to any other
paying agent appointed hereunder. Any reference in this Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.
Section 5.10. Ownership of Common Securities by Depositor. On the Closing
Date and on each other date provided for in Section 2.05, the Depositor shall
acquire and retain beneficial and record ownership of the Common Securities.
To the fullest extent permitted by law, any attempted transfer of the Common
Securities shall be void. The Administrative Trustees shall cause each Common
Securities Certificate issued to the Depositor to contain a legend stating
"THIS CERTIFICATE IS NOT TRANSFERABLE".
Section 5.11. Book-Entry Preferred Securities Certificates; Common
Securities Certificate.
(a) The Preferred Securities Certificates, upon original issuance, will be
issued in the form of a typewritten Preferred Securities Certificate or
Certificates representing Book-Entry Preferred Securities Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Trust. Such Preferred Securities Certificate or Certificates
shall initially be registered on the Securities Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no beneficial owner will
receive a Definitive Preferred Securities Certificate representing such
beneficial owner's interest in such Preferred Securities, except as provided
in Section 5.13. Unless and until Definitive Preferred Securities Certificates
have been issued to beneficial owners pursuant to Section 5.13:
(i) the provisions of this Section 5.11(a) shall be in full force and
effect;
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(ii) the Securities Registrar and the Trustees shall be entitled to deal
with the Clearing Agency for all purposes of this Trust Agreement relating
to the Book-Entry Preferred Securities Certificates (including the payment
of principal of and interest on the Book-Entry Preferred Securities and the
giving of instructions or directions to Owners of Book-Entry Preferred
Securities) as the sole Holder of Book-Entry Preferred Securities and shall
have no obligations to the Owners thereof;
(iii) to the extent that the provisions of this Section 5.11 conflict
with any other provisions of this Trust Agreement, the provisions of this
Section 5.11 shall control; and
(iv) the rights of the Owners of the Book-Entry Preferred Securities
Certificates shall be exercised only through the Clearing Agency and shall
be limited to those established by law and agreements between such Owners
and the Clearing Agency and/or the Clearing Agency Participants. Pursuant
to the Certificate Depository Agreement, unless and until Definitive
Preferred Securities Certificates are issued pursuant to Section 5.13, the
initial Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit payments on the Preferred
Securities to such Clearing Agency Participants.
(b) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
Section 5.12. Notices to Clearing Agency. To the extent that a notice or
other communication to the Owners is required under this Trust Agreement,
unless and until Definitive Preferred Securities Certificates shall have been
issued to Owners pursuant to Section 5.13, the Trustees shall give all such
notices and communications specified herein to be given to Owners to the
Clearing Agency, and shall have no obligations to the Owners.
Section 5.13. Definitive Preferred Securities Certificates. If (a) the
Depositor advises the Trustees in writing that the Clearing Agency is no
longer willing or able to properly discharge its responsibilities with respect
to the Preferred Securities Certificates, and the Depositor is unable to
locate a qualified successor, (b) the Depositor at its option advises the
Trustees in writing that it elects to terminate the book-entry system through
the Clearing Agency or (c) after the occurrence of a Debenture Event of
Default, Owners of Preferred Securities Certificates representing beneficial
interests aggregating at least a majority of the Liquidation Amount advise the
Clearing Agency in writing that the continuation of a book-entry system
through the Clearing Agency is no longer in the best interest of the Owners of
Preferred Securities Certificates, then the Clearing Agency shall notify all
Owners of Preferred Securities Certificates and the Trustees of the occurrence
of any such event and of the availability of the Definitive Preferred
Securities Certificates to Owners of such class or classes, as applicable,
requesting the same. Upon surrender to the Administrative Trustees of the
typewritten Preferred Securities Certificate or Certificates representing the
Book Entry Preferred Securities Certificates by the Clearing Agency,
accompanied by registration instructions, the Administrative Trustees, or any
one of them, shall execute the Definitive Preferred Securities Certificates in
accordance with the instructions of the Clearing Agency. Neither the
Securities Registrar nor the Trustees shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Preferred Securities Certificates, the Trustees shall recognize the Holders of
the Definitive Preferred Securities Certificates as Securityholders. The
Definitive Preferred Securities Certificates shall be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Administrative Trustees, as evidenced by the execution thereof by the
Administrative Trustees or any one of them.
Section 5.14. Rights of Securityholders. The legal title to the Trust
Property is vested exclusively in the Property Trustee (in its capacity as
such) in accordance with Section 2.09, and the Securityholders shall not have
any right or title therein other than the undivided beneficial interest in
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the assets of the Trust conferred by their Trust Securities and they shall
have no right to call for any partition or division of property, profits or
rights of the Trust except as described below. The Trust Securities shall be
personal property giving only the rights specifically set forth therein and in
this Trust Agreement. The Trust Securities shall have no preemptive or similar
rights and when issued and delivered to Securityholders against payment of the
purchase price therefor will be fully paid and nonassessable by the Trust. The
Holders of the Trust Securities, in their capacities as such, shall be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit organized under the General Corporation Law
of the State of Delaware.
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
Section 6.01. Limitations on Voting Rights.
(a) Except as provided in this Section, in Section 10.02 and in the
Indenture and as otherwise required by law, no Holder of Preferred Securities
shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Trust or the obligations of
the parties hereto, nor shall anything herein set forth, or contained in the
terms of the Trust Securities Certificates, be construed so as to constitute
the Securityholders from time to time as partners or members of an
association.
(b) So long as any Debentures are held by the Property Trustee, the Trustees
shall not (i) direct the time, method and place of conducting any proceeding
for any remedy available to the Debenture Trustee, or executing any trust or
power conferred on the Debenture Trustee with respect to such Debentures, (ii)
waive any past default which is waivable under Section 513 of the Indenture,
(iii) exercise any right to rescind or annul a declaration that the principal
of all the Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Debentures,
where such consent shall be required, without, in each case, obtaining the
prior approval of the Holders of at least a majority in Liquidation Amount of
all outstanding Preferred Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee
without the prior written consent of each holder of Preferred Securities. The
Trustees shall not revoke any action previously authorized or approved by a
vote of the Preferred Securities, except by a subsequent vote of the Preferred
Securities. The Property Trustee shall notify all Holders of the Preferred
Securities of any notice of default received from the Debenture Trustee with
respect to the Debentures. In addition to obtaining the foregoing approvals of
the Holders of the Preferred Securities, prior to taking any of the foregoing
actions, the Trustees shall, at the expense of the Depositor, obtain an
Opinion of Counsel experienced in such matters to the effect that the Trust
will not be classified as an association taxable as a corporation or
partnership for United States federal income tax purposes on account of such
action.
(c) If any proposed amendment to the Trust Agreement provides for, or the
Trustees otherwise propose to effect, (i) any action that would adversely
affect in any material respect the powers, preferences or special rights of
the Preferred Securities, whether by way of amendment to the Trust Agreement
or otherwise, or (ii) the dissolution, winding-up or termination of the Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Preferred Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a majority in Liquidation
Amount of the Outstanding Preferred Securities.
Section 6.02. Notice of Meetings. Notice of all meetings of the Preferred
Securityholders, stating the time, place and purpose of the meeting, shall be
given by the Property Trustee pursuant to Section 10.08 to each Preferred
Securityholder of record, at his registered address, at least 15 days and not
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more than 90 days before the meeting. At any such meeting, any business
properly before the meeting may be so considered whether or not stated in the
notice of the meeting. Any adjourned meeting may be held as adjourned without
further notice.
Section 6.03. Meetings of Preferred Securityholders. No annual meeting of
Securityholders is required to be held. The Administrative Trustees, however,
shall call a meeting of Securityholders to vote on any matter upon the written
request of the Preferred Securityholders of record of 25% of the Preferred
Securities (based upon their Liquidation Amount) and the Administrative
Trustees or the Property Trustee may, at any time in their discretion, call a
meeting of Preferred Securityholders to vote on any matters as to the which
Preferred Securityholders are entitled to vote.
Preferred Securityholders of record of 50% of the Preferred Securities
(based upon their Liquidation Amount), present in person or by proxy, shall
constitute a quorum at any meeting of Securityholders.
If a quorum is present at a meeting, an affirmative vote by the Preferred
Securityholders of record present, in person or by proxy, holding more than a
majority of the Preferred Securities (based upon their Liquidation Amount)
held by the Preferred Securityholders of record present, either in person or
by proxy, at such meeting shall constitute the action of the Securityholders,
unless this Trust Agreement requires a greater number of affirmative votes.
Section 6.04. Voting Rights. Securityholders shall be entitled to one vote
for each $25 of Liquidation Amount represented by their Trust Securities in
respect of any matter as to which such Securityholders are entitled to vote.
Section 6.05. Proxies, etc. At any meeting of Securityholders, any
Securityholder entitled to vote thereat may vote by proxy, provided that no
proxy shall be voted at any meeting unless it shall have been placed on file
with the Administrative Trustees, or with such other officer or agent of the
Trust as the Administrative Trustees may direct, for verification prior to the
time at which such vote shall be taken. Pursuant to a resolution of the
Property Trustee, proxies may be solicited in the name of the Property Trustee
or one or more officers of the Property Trustee. Only Securityholders of
record shall be entitled to vote. When Trust Securities are held jointly by
several persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be
executed by or on behalf of a Securityholder shall be deemed valid unless
challenged at or prior to its exercise, and the burden of proving invalidity
shall rest on the challenger. No proxy shall be valid more than three years
after its date of execution.
Section 6.06. Securityholder Action by Written Consent. Any action which may
be taken by Securityholders at a meeting may be taken without a meeting if
Securityholders holding more than a majority of all Outstanding Trust
Securities (based upon their Liquidation Amount) entitled to vote in respect
of such action (or such larger proportion thereof as shall be required by any
express provision of this Trust Agreement) shall consent to the action in
writing.
Section 6.07. Record Date for Voting and Other Purposes. For the purposes of
determining the Securityholders who are entitled to notice of and to vote at
any meeting or by written consent, or to participate in any distribution on
the Trust Securities in respect of which a record date is not otherwise
provided for in this Trust Agreement, or for the purpose of any other action,
the Administrative Trustees may from time to time fix a date, not more than 90
days prior to the date of any meeting of Securityholders or the payment of
distribution or other action, as the case may be, as a record date for the
determination of the identity of the Securityholders of record for such
purposes.
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Section 6.08. Acts of Securityholders. Any request, demand, authorization,
direction, notice, consent, waiver or other action provided or permitted by
this Trust Agreement to be given, made or taken by Securityholders or Owners
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Securityholders or Owners in person or by an
agent duly appointed in writing; and, except as otherwise expressly provided
herein, such action shall become effective when such instrument or instruments
are delivered to an Administrative Trustee. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Securityholders or Owners signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Trust Agreement and (subject to Section 8.01) conclusive in favor of the
Trustees, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgements of deeds, certifying that the individual signing such
instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Trustee receiving the same deems sufficient.
The ownership of Preferred Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Securityholder of any Trust Security shall bind every future
Securityholder of the same Trust Security and the Securityholder of every
Trust Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered
to be done by the Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Securityholder entitled hereunder to take
any action hereunder with regard to any particular Trust Security may do so
with regard to all or any part of the Liquidation Amount of such Trust
Security or by one or more duly appointed agents each of which may do so
pursuant to such appointment with regard to all or any part of such
liquidation amount.
If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder
or Trustee under this Article VI, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
Section 6.09. Inspection of Records. Upon reasonable notice to the
Administrative Trustees and the Property Trustee, the records of the Trust
shall be open to inspection by Securityholders during normal business hours
for any purpose reasonably related to such Securityholder's interest as a
Securityholder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 7.01. Representations and Warranties of the Bank, the Property
Trustee and the Delaware Trustee. The Bank, the Property Trustee and the
Delaware Trustee, each severally on behalf of and as to itself, hereby
represents and warrants for the benefit of the Depositor and the
Securityholders that:
(a) the Bank is a national banking association duly organized, validly
existing and in good standing under the laws of the United States;
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(b) the Bank has full corporate power, authority and legal right to
execute, deliver and perform its obligations under this Trust Agreement and
has taken all necessary action to authorize the execution, delivery and
performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed and delivered
by the Bank and constitutes the valid and legally binding agreement of the
Bank enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles;
(d) the Trust Securities Certificates issued on the Closing Date on
behalf of the Trust have been, and any Trust Securities Certificates to be
issued at the time of exercise, if any, of the overallotment option under
the Underwriting Agreement will be, duly authorized and will have been, as
of each such date, duly and validly executed, issued and delivered by the
Trustees pursuant to the terms and provisions of, and in accordance with
the requirements of, this Trust Agreement and the Securityholders will be,
as of each such date, entitled to the benefits of this Trust Agreement;
(e) the execution, delivery and performance by the Bank of this Trust
Agreement and the issuance of the Trust Securities pursuant to this Trust
Agreement have been duly authorized by all necessary corporate or other
action on the part of the Bank, the Property Trustee, and the Delaware
Trustee and do not require any approval of stockholders of the Bank and
such execution, delivery and performance will not (i) violate the Bank's
Charter or By-laws, (ii) violate any provision of, or constitute, with or
without notice or lapse of time, a default under, or result in the creation
or imposition of, any Lien on any properties included in the Trust Property
pursuant to the provisions of, any indenture, mortgage, credit agreement,
license or other agreement or instrument to which the Property Trustee, the
Bank or the Delaware Trustee is a party or by which it is bound, or (iii)
violate any law, governmental rule or regulation of the United States or
the State of Delaware, as the case may be, governing the banking or trust
powers of the Bank and the Property Trustee or the Delaware Trustee (as
appropriate in context) or any order, judgment or decree applicable to the
Property Trustee, the Bank or the Delaware Trustee;
(f) neither the authorization, execution or delivery by the Bank of this
Trust Agreement nor the consummation of any of the transactions by the
Bank, the Property Trustee or the Delaware Trustee (as appropriate in
context) contemplated herein or therein nor the issuance of the Trust
Securities Certificates pursuant to this Trust Agreement require the
consent or approval of, the giving of notice to, the registration with or
the taking of any other action with respect to any governmental authority
or agency under any existing federal law governing the banking or trust
powers of the Bank or under the laws of the United States or the State of
Delaware;
(g) there are no taxes, fees or other governmental charges payable by the
Trust (or the Trustees on behalf of the Trust) under the laws of the United
States or the State of Delaware or any political subdivision thereof in
connection with the execution, delivery and performance by the Bank, the
Property Trustee or the Delaware Trustee, as the case may be, of this Trust
Agreement; and
(h) there are no proceedings pending or, to the best of the Bank's and
the Delaware Trustee's knowledge, threatened against or affecting the Bank,
the Property Trustee or the Delaware Trustee in any court or before any
governmental authority, agency or arbitration board or tribunal which,
individually or in the aggregate, would materially and adversely affect the
Trust or would question the right, power and authority of the Bank to enter
into or perform its obligations as one of the Trustees under this Trust
Agreement.
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ARTICLE VIII
THE TRUSTEES
Section 8.01. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Trustees shall be as provided by
this Trust Agreement and, in the case of the Property Trustee, by the Trust
Indenture Act. The Property Trustee, other than during the occurrence and
continuance of an Event of Default, undertakes to perform only such duties as
are specifically set forth in this Trust Agreement and, after an Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. The Trustees
shall have all the privileges, rights, and immunities provided by the Delaware
Business Trust Act. Notwithstanding the foregoing, no provision of this Trust
Agreement shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers, if they
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. Whether or not therein expressly so provided, every provision of this
Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustees shall be subject to the provisions of
this Section. Nothing in this Trust Agreement shall be construed to release
the Property Trustee from liability for its own negligent action, its own
failure to act, or its own willful misconduct. To the extent that, at law or
in equity, an Administrative Trustee has duties (including fiduciary duties)
and liabilities relating thereto to the Trust or to the Securityholders, such
Administrative Trustee shall not be liable to the Trust or to any
Securityholder for such Trustee's good faith reliance on the provisions of
this Trust Agreement. The provisions of this Trust Agreement, to the extent
that they restrict the duties and liabilities of the Administrative Trustees
otherwise existing at law or in equity, are agreed by the Depositor and the
Securityholders to replace such other duties and liabilities of the
Administrative Trustees.
(b) All payments made by the Property Trustee or a Paying Agent in respect
of the Trust Securities shall be made only from the income and proceeds from
the Trust Property. Each Securityholder, by its acceptance of a Trust
Security, agrees that it will look solely to the income and proceeds from the
Trust Property to the extent legally available for distribution to it as
herein provided and that the Trustees are not personally liable to it for any
amount distributable in respect of any Trust Security or for any other
liability in respect of any Trust Security. This Section 8.01(b) does not
limit the liability of the Trustees expressly set forth elsewhere in this
Trust Agreement or, in the case of the Property Trustee, in the Trust
Indenture Act.
Section 8.02. Notice of Defaults; Direct Action by Securityholders. Within
five Business Days after the occurrence of any Event of Default actually known
to the Property Trustee, the Property Trustee shall transmit, in the manner
and to the extent provided in Section 10.08, notice of such Event of Default
to the Securityholders, the Administrative Trustees and the Depositor, unless
such Event of Default shall have been cured or waived. If the Property Trustee
fails to enforce its rights under this Trust Agreement, to the fullest extent
permitted by law, any Securityholder may, after such Securityholder's written
request to the Property Trustee to enforce such rights, institute a legal
proceeding directly against any Person to enforce the Property Trustee's
rights under this Trust Agreement without first instituting a legal proceeding
against the Property Trustee or any other Person.
Section 8.03. Certain Rights of Property Trustee. Subject to the provisions
of Section 8.01:
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of
Counsel, certificate, written representation of a Holder or transferee,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
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(b) if, other than during the occurrence and continuance of an Event of
Default, (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of
action or (ii) in construing any of the provisions in this Trust Agreement
the Property Trustee finds the same ambiguous or inconsistent with any
other provisions contained herein or (iii) the Property Trustee is unsure
of the application of any provision of this Trust Agreement, then, except
as to any matter as to which the Preferred Securityholders are entitled to
vote under the terms of this Trust Agreement, the Property Trustee shall
deliver a notice to the Depositor requesting written instructions of the
Depositor as to the course of action to be taken. The Property Trustee
shall take such action, or refrain from taking such action, as the Property
Trustee shall be instructed in writing to take, or to refrain from taking,
by the Depositor; provided, however, that if the Property Trustee does not
receive such instructions of the Depositor within ten Business Days after
it has delivered such notice, or such reasonably shorter period of time set
forth in such notice (which to the extent practicable shall not be less
than two Business Days), it may, but shall be under no duty to, take or
refrain from taking such action not inconsistent with this Trust Agreement
as it shall deem advisable and in the best interests of the
Securityholders, in which event the Property Trustee shall have no
liability except for its own bad faith, negligence or willful misconduct;
(c) the Property Trustee may consult with counsel or other experts and
the written advice or opinion of such counsel and experts with respect to
legal matters or advice within the scope of such experts' area of expertise
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(d) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Securityholders pursuant to this Trust Agreement,
unless such Securityholders shall have offered to the Property Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request
or direction;
(e) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other
paper or document, but the Property Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters as it may
see fit; and
(f) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
its agents or attorneys and the Property Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
Section 8.04. Not Responsible for Recitals or Issuance of Securities. The
recitals contained herein and in the Trust Securities Certificates shall be
taken as the statements of the Trust, and the Trustees do not assume any
responsibility for their correctness. The Trustees shall not be accountable
for the use or application by the Depositor of the proceeds of the Debentures.
Section 8.05. May Hold Securities. Except as provided in the definition of
the term "Outstanding" in Article I, any Trustee or any other agent of any
Trustee or the Trust, in its individual or any other capacity, may become the
owner or pledgee of Trust Securities and, subject to Sections 8.08 and 8.13,
may otherwise deal with the Trust with the same rights it would have if it
were not a Trustee or such other agent.
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Section 8.06. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay to the Trustees from time to time reasonable compensation for
all services rendered by them hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and
advances incurred or made by the Trustees in accordance with any provision
of this Trust Agreement (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to its negligence
or bad faith; and
(c) to indemnify each of the Trustees or any predecessor Trustee for, and
to hold the Trustees harmless against, any loss, damage, claims, liability,
penalty or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of
this Trust Agreement, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
No Trustee may claim any lien or charge on any Trust Property as a result of
any amount due pursuant to this Section 8.06.
Section 8.07. Corporate Property Trustee Required; Eligibility of Trustees.
(a) There shall at all times be a Property Trustee hereunder with respect to
the Trust Securities. The Property Trustee shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000. If any such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Property Trustee with respect to the Trust
Securities shall cease to be eligible in accordance with the provisions of
this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with respect to the Trust
Securities. The Delaware Trustee shall either be (i) a natural person who is
at least 21 years of age and a resident of the State of Delaware or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law that shall
act through one or more persons authorized to bind such entity.
Section 8.08. Conflicting Interests. If the Property Trustee has or shall
acquire a conflicting interest within the meaning of the Trust Indenture Act,
the Property Trustee shall either eliminate such interest or resign, to the
extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Trust Agreement.
Section 8.09. Co-Trustees and Separate Trustee. Unless an Event of Default
shall have occurred and be continuing, at any time or times, for the purpose
of meeting the legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust Property may at the time be
located,
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the Depositor and the Administrative Trustees, by agreed action of the
majority of such Trustees, shall have power to appoint, and upon the written
request of the Administrative Trustees, the Depositor shall for such purpose
join with the Administrative Trustees in the execution, delivery, and
performance of all instruments and agreements necessary or proper to appoint,
one or more Persons approved by the Property Trustee either to act as co-
trustee, jointly with the Property Trustee, of all or any part of such Trust
Property, or to the extent required by law to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Section. If the Depositor
does not join in such appointment within 15 days after the receipt by it of a
request so to do, or in case a Debenture Event of Default has occurred and is
continuing, the Property Trustee alone shall have power to make such
appointment. Any co-trustee or separate trustee appointed pursuant to this
Section shall either be (i) a natural person who is at least 21 years of age
and a resident of the United States or (ii) a legal entity with its principal
place of business in the United States that shall act through one or more
persons authorized to bond such entity.
Should any written instrument from the Depositor be required by any co-
trustee or separate trustee so appointed for more fully confirming to such co-
trustee or separate trustee such property, title, right, or power, any and all
such instruments shall, on request, be executed, acknowledged, and delivered
by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by law,
but to such extent only, be appointed subject to the following terms, namely:
(a) he Trust Securities shall be executed and delivered and all rights,
powers, duties, and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustees specified hereunder, shall be
exercised, solely by such Trustees and not by such co-trustee or separate
trustee.
(b) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by
such appointment shall be conferred or imposed upon and exercised or
performed by the Property Trustee or by the Property Trustee and such co-
trustee or separate trustee jointly, as shall be provided in the instrument
appointing such co-trustee or separate trustee, except to the extent that
under any law of any jurisdiction in which any particular act is to be
performed, the Property Trustee shall be incompetent or unqualified to
perform such act, in which event such rights, powers, duties, and
obligations shall be exercised and performed by such co-trustee or separate
trustee.
(c) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may accept
the resignation of or remove any co-trustee or separate trustee appointed
under this Section, and, in case an Event of Default under the Indenture
has occurred and is continuing, the Property Trustee shall have power to
accept the resignation of, or remove, any such co-trustee or separate
trustee without the concurrence of the Depositor. Upon the written request
of the Property Trustee, the Depositor shall join with the Property Trustee
in the execution, delivery, and performance of all instruments and
agreements necessary or proper to effectuate such resignation or removal. A
successor to any co-trustee or separate trustee so resigned or removed may
be appointed in the manner provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Property Trustee, or any
other trustee hereunder.
(e) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.
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(f) Any Act of Holders delivered to the Property Trustee shall be deemed
to have been delivered to each such co-trustee and separate trustee.
Section 8.10. Resignation and Removal; Appointment of Successor. No
resignation or removal of any Trustee (the "Relevant Trustee") and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 8.11.
Any Trustee may resign at any time with respect to the Trust Securities by
giving written notice thereof to the Securityholders. If the instrument of
acceptance by the successor Trustee required by Section 8.11 shall not have
been delivered to the Relevant Trustee within 30 days after the giving of such
notice of resignation, the Relevant Trustee may petition, at the expense of
the Company, any court of competent jurisdiction for the appointment of a
successor Relevant Trustee with respect to the Trust Securities.
Unless a Debenture Event of Default shall have occurred and be continuing,
any Trustee may be removed at any time by Act of the Common Securityholder. If
a Debenture Event of Default shall have occurred and be continuing, the
Property Trustee or the Delaware Trustee, or both of them, may be removed at
such time by Act of the Holders of a majority in Liquidation Amount of the
Preferred Securities, delivered to the Relevant Trustee (in its individual
capacity and on behalf of the Trust). An Administrative Trustee may be removed
by the Common Securityholder at any time.
If any Trustee shall resign, be removed or become incapable of acting as
Trustee, or if a vacancy shall occur in the office of any Trustee for any
cause, at a time when no Event of Default shall have occurred and be
continuing, the Common Securityholder, by Act of the Common Securityholder
delivered to the retiring Trustee, shall promptly appoint a successor Trustee
or Trustees with respect to the Trust Securities and the Trust, and the
retiring Trustee shall comply with the applicable requirements of Section
8.11. If the Property Trustee or the Delaware Trustee shall resign, be removed
or become incapable of continuing to act as the Property Trustee or the
Delaware Trustee, as the case may be, at a time when a Debenture Event of
Default is continuing, the Preferred Securityholders, by Act of the
Securityholders of a majority in Liquidation Amount of the Preferred
Securities then Outstanding delivered to the retiring Relevant Trustee, shall
promptly appoint a successor Relevant Trustee or Trustees with respect to the
Trust Securities and the Trust, and such successor Trustee shall comply with
the applicable requirements of Section 8.11. If an Administrative Trustee
shall resign, be removed or become incapable of acting as Adminstrative
Trustee, at a time when a Debenture Event of Default shall have occured and be
continuing, the Common Securityholder shall appoint a successor or
Administrative Trustees. If no successor Relevant Trustee with respect to the
Trust Securities shall have been so appointed by the Common Securityholder or
the Preferred Securityholders and accepted appointment in the manner required
by Section 8.11, any Securityholder who has been a Securityholder of Trust
Securities for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Relevant Trustee with respect to the Trust
Securities.
The Property Trustee shall give notice of each resignation and each removal
of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 10.08 and shall give notice
to the Depositor. Each notice shall include the name of the successor Relevant
Trustee and the address of its Corporate Trust Office if it is the Property
Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who
is a natural person dies or becomes, in the opinion of the Depositor,
incompetent or incapacitated, the vacancy created by such death, incompetence
or incapacity may be filled by (a) the unanimous act of remaining
Administrative Trustees if there are at least two of them or (b) otherwise by
the Depositor (with the successor in each case being a Person who satisfies
the eligibility requirement for Administrative Trustees set forth in Section
8.07).
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Section 8.11. Acceptance of Appointment by Successor. In case of the
appointment hereunder of a successor Trustee such successor Trustee so
appointed shall execute, acknowledge and deliver to the Trust and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Depositor or the successor Trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of
the retiring Trustee and if the Property Trustee is the resigning Trustee
shall duly assign, transfer and deliver to the successor Trustee all property
and money held by such retiring Property Trustee hereunder.
In case of the appointment hereunder of a successor Relevant Trustee with
respect to the Trust Securities and the Trust, the retiring Relevant Trustee
and each successor Relevant Trustee with respect to the Trust Securities shall
execute and deliver an amendment hereto wherein each successor Relevant
Trustee shall accept such appointment and which (a) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and
to vest in, each successor Relevant Trustee all the rights, powers, trusts and
duties of the retiring Relevant Trustee with respect to the Trust Securities
and the Trust and (b) shall add to or change any of the provisions of this
Trust Agreement as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Relevant Trustee, it
being understood that nothing herein or in such amendment shall constitute
such Relevant Trustees co-trustees of the same trust and that each such
Relevant Trustee shall be trustee of a trust or trusts hereunder separate and
apart from any trust or trusts hereunder administered by any other such
Relevant Trustee and upon the execution and delivery of such amendment the
resignation or removal of the retiring Relevant Trustee shall become effective
to the extent provided therein and each such successor Relevant Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Relevant Trustee with
respect to the Trust Securities and the Trust; but, on request of the Trust or
any successor Relevant Trustee such retiring Relevant Trustee shall duly
assign, transfer and deliver to such successor Relevant Trustee all Trust
Property, all proceeds thereof and money held by such retiring Relevant
Trustee hereunder with respect to the Trust Securities and the Trust.
Upon request of any such successor Relevant Trustee, the Trust shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Relevant Trustee all such rights, powers and trusts referred
to in the first or second preceding paragraph, as the case may be.
No successor Relevant Trustee shall accept its appointment unless at the
time of such acceptance such successor Relevant Trustee shall be qualified and
eligible under this Article.
Section 8.12. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which such Relevant Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust
business of such Relevant Trustee, shall be the successor of such Relevant
Trustee hereunder, provided such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or
any further act on the part of any of the parties hereto.
Section 8.13. Preferential Collection of Claims Against Depositor or Trust.
If and when the Property Trustee or the Delaware Trustee shall be or become a
creditor of the Depositor or the Trust (or any other obligor upon the
Debentures or the Trust Securities), the Property Trustee or the
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Delaware Trustee, as the case may be, shall be subject to and shall take all
actions necessary in order to comply with the provisions of the Trust
Indenture Act regarding the collection of claims against the Depositor or
Trust (or any such other obligor).
Section 8.14. Reports by Property Trustee.
(a) Within 60 days after December 31 of each year commencing with December
31, 1995 the Property Trustee shall transmit to all Securityholders in
accordance with Section 10.08, and to the Depositor, a brief report dated as
of such December 31 with respect to:
(i) its eligibility under Section 8.07 or, in lieu thereof, if to the
best of its knowledge it has continued to be eligible under said Section, a
written statement to such effect;
(ii) a statement that the Property Trustee has complied with all of its
obligations under this Trust Agreement during the twelve-month period (or,
in the case of the initial report, the period since the Closing Date)
ending with such December 31 or, if the Property Trustee has not complied
in any material respect with such obligations, a description of such non-
compliance; and
(iii) any change in the property and funds in its possession as Property
Trustee since the date of its last report and any action taken by the
Property Trustee in the performance of its duties hereunder which it has
not previously reported and which in its opinion materially affects the
Trust Securities.
(b) In addition the Property Trustee shall transmit to Securityholders such
reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Property Trustee with each stock exchange upon which
the Trust Securities are listed, with the Commission and with the Depositor.
Section 8.15. Reports to the Property Trustee. The Depositor and the
Administrative Trustees on behalf of the Trust shall provide to the Property
Trustee such documents, reports and information as required by Section 314 of
the Trust Indenture Act (if any) and the compliance certificate required by
Section 314(a) of the Trust Indenture Act in the form, in the manner and at
the times required by Section 314 of the Trust Indenture Act.
Section 8.16. Evidence of Compliance with Conditions Precedent. Each of the
Depositor and the Administrative Trustees on behalf of the Trust shall provide
to the Property Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Trust Agreement that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) of the Trust Indenture Act shall be given in the form of an
Officers' Certificate.
Section 8.17. Number of Trustees.
(a) The number of Trustees shall be five, provided that the Holder of all of
the Common Securities by written instrument may increase or decrease the
number of Administrative Trustees.
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 8.17(a), or if the
number of Trustees is increased pursuant to Section 8.17(a), a vacancy shall
occur. The vacancy shall be filled with a Trustee appointed in accordance with
Section 8.10.
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(c) The death, resignation, retirement, removal, bankruptcy, incompetence or
incapacity to perform the duties of a Trustee shall not operate to annul the
Trust. Whenever a vacancy in the number of Administrative Trustees shall
occur, until such vacancy is filled by the appointment of an Administrative
Trustee in accordance with Section 8.10, the Administrative Trustees in
office, regardless of their number (and notwithstanding any other provision of
this Agreement), shall have all the powers granted to the Administrative
Trustees and shall discharge all the duties imposed upon the Administrative
Trustees by this Trust Agreement.
Section 8.18. Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
2.07(a), including any registration statement or amendment thereto filed with
the Commission, or making any other governmental filing; and
(b) the Administrative Trustees shall have power to delegate from time to
time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Administrative Trustees or otherwise as the Administrative Trustees may
deem expedient, to the extent such delegation is not prohibited by applicable
law or contrary to the provisions of the Trust, as set forth herein.
Section 8.19. Voting.
Except as otherwise provided in this Trust Agreement, the consent or vote of
the Trustees shall be approved by not less than a majority of the
Administrative Trustees.
ARTICLE IX
TERMINATION AND LIQUIDATION
Section 9.01. Termination Upon Expiration Date. Unless earlier terminated,
the Trust shall automatically terminate on December 31, 2031 (the "Expiration
Date"), following the distribution of the Trust Property in accordance with
Section 9.04.
Section 9.02. Early Termination. The first to occur of any of the following
events is an "Early Termination Event":
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Depositor;
(b) the occurrence of a Tax Event or an Investment Company Event (each, a
"Special Event"), or the Trust is or will not be taxed as a grantor trust
but a Tax Event has not occurred (a "Grantor Trust Event"), and written
direction to the Property Trustee from the Depositor within 45 days of such
Special Event or Grantor Trust Event (which direction is optional and
wholly within the discretion of the Depositor) to terminate the Trust and
distribute Debentures to Securityholders in accordance with Section 9.04;
(c) the redemption of all of the Preferred Securities; and
(d) an order for dissolution of the Trust shall have been entered by a
court of competent jurisdiction.
Section 9.03. Termination. The respective obligations and responsibilities
of the Trustees and the Trust created and continued hereby shall terminate
upon the latest to occur of the following: (a) the distribution by the
Property Trustee to Securityholders upon the liquidation of the Trust pursuant
to Section 9.04, or upon the redemption of all of the Trust Securities
pursuant to Section 4.02, of all amounts required to be distributed hereunder
upon the final payment of the Trust Securities; (b) the payment of any
expenses owed by the Trust; and (c) the discharge of all administrative duties
of the Administrative Trustees, including the performance of any tax reporting
obligations with respect to the Trust or the Securityholders.
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Section 9.04. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or (d) of
Section 9.02 occurs or upon the Expiration Date, the Trust shall be liquidated
by the Trustees as expeditiously as the Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to each Securityholder a Like Amount of
Debentures, subject to Section 9.04(d). Notice of liquidation shall be given
by the Property Trustee by first-class mail, postage prepaid, mailed not later
than 30 nor more than 60 days prior to the Liquidation Date to each Holder of
Trust Securities at such Holder's address appearing in the Securities
Register. All notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the Trust Securities
will no longer be deemed to be outstanding and any Trust Securities
Certificates not surrendered for exchange will be deemed to represent a
Like Amount of Debentures; and
(iii) provide such information with respect to the mechanics by which
Holders may exchange Trust Securities Certificates for Debentures, or if
Section 9.04(d) applies receive a Liquidation Distribution, as the
Administrative Trustees or the Property Trustee shall deem appropriate.
(b) Except where Section 9.02(c) or 9.04(d) applies, in order to effect the
liquidation of the Trust and distribution of the Debentures to
Securityholders, the Property Trustee shall establish a record date for such
distribution (which shall be not more than 45 days prior to the Liquidation
Date) and, either itself acting as exchange agent or through the appointment
of a separate exchange agent, shall establish such procedures as it shall deem
appropriate to effect the distribution of Debentures in exchange for the
Outstanding Trust Securities Certificates.
(c) Except where Section 9.02(c) or 9.04(d) applies, after the Liquidation
Date, (i) the Trust Securities will no longer be deemed to be Outstanding,
(ii) certificates representing a Like Amount of Debentures will be issued to
Holders of Trust Securities Certificates, upon surrender of such certificates
to the Administrative Trustees or their agent for exchange, (iii) any Trust
Securities Certificates not so surrendered for exchange will be deemed to
represent a Like Amount of Debentures, accruing interest at the rate provided
for in the Debentures from the last Distribution Date on which a Distribution
was made on such Trust Certificates until such certificates are so surrendered
(and until such certificates are so surrendered, no payments or interest or
principal will be made to Holders of Trust Securities Certificates with
respect to such Debentures) and (iv) all rights of Securityholders holding
Trust Securities will cease, except the right of such Securityholders to
receive Debentures upon surrender of Trust Securities Certificates.
(d) In the event that, notwithstanding the other provisions of this Section
9.04, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Debentures in the
manner provided herein is determined by the Property Trustee not to be
practical, the Trust Property shall be liquidated, and the Trust shall be
dissolved, wound-up or terminated, by the Property Trustee in such manner as
the Property Trustee determines. In such event, on the date of the
dissolution, winding-up or other termination of the Trust, Securityholders
will be entitled to receive out of the assets of the Trust available for
distribution to Securityholders, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, an amount equal to the
Liquidation Amount per Trust Security plus accrued and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If, upon any such dissolution, winding up or termination, the
Liquidation Distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then, subject to the next succeeding sentence, the amounts
payable by the Trust on the Trust Securities shall be paid on a pro rata basis
(based upon Liquidation Amounts). The Holder of the Common Securities will be
entitled to receive Liquidation Distributions upon any such dissolution,
winding-up or termination pro rata (determined as aforesaid)
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with Holders of Preferred Securities, except that, if a Debenture Event of
Default has occurred and is continuing, the Preferred Securities shall have a
priority over the Common Securities.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Limitation of Rights of Securityholders. The death or
incapacity of any person having an interest, beneficial or otherwise, in Trust
Securities shall not operate to terminate this Trust Agreement, nor entitle
the legal representatives or heirs of such person or any Securityholder for
such person, to claim an accounting, take any action or bring any proceeding
in any court for a partition or winding up of the arrangements contemplated
hereby, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
Section 10.02. Amendment.
(a) This Trust Agreement may be amended from time to time by the Trustees
and the Depositor, without the consent of any Securityholders, (i) to cure any
ambiguity, correct or supplement any provision herein or therein which may be
inconsistent with any other provision herein or therein, or to make any other
provisions with respect to matters or questions arising under this Trust
Agreement, which shall not be inconsistent with the other provisions of this
Trust Agreement, or (ii) to modify, eliminate or add to any provisions of this
Trust Agreement to such extent as shall be necessary to ensure that the Trust
will be classified for Federal income tax purposes as a grantor trust at all
times that any Trust Securities are outstanding; provided, however, that such
action shall not adversely affect in any material respect the interests of any
Securityholder and, in the case of clause (i), any amendments of this Trust
Agreement shall become effective when notice thereof is given to the
Securityholders.
(b) Except as provided in Section 10.02(c) hereof, any provision of this
Trust Agreement may be amended by the Trustees and the Depositor with (i) the
consent of Trust Securityholders representing not less than a majority (based
upon Liquidation Amounts) of the Trust Securities then Outstanding and (ii)
receipt by the Trustees of an Opinion of Counsel to the effect that such
amendment or the exercise of any power granted to the Trustees in accordance
with such amendment will not affect the Trust's status as a grantor trust for
federal income tax purposes or the Trust's exemption from regulation as an
"investment company" under the Investment Company Act of 1940, as amended.
(c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Securityholder (such consent
being obtained in accordance with Section 6.03 or 6.06 hereof), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount
of any Distribution required to be made in respect of the Trust Securities as
of a specified date or (ii) restrict the right of a Securityholder to
institute suit for the enforcement of any such payment on or after such date;
notwithstanding any other provision herein without the unanimous consent of
the Securityholders (such consent being obtained in accordance with Section
6.03 or 6.06 hereof), paragraph (b) of this Section 10.02 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no Trustee
shall enter into or consent to any amendment to this Trust Agreement which
would cause the Trust to fail or cease to qualify for the exemption from
regulation as an "investment company" under the Investment Company Act of
1940, as amended.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor, this Trust Agreement may not be amended
in a manner which imposes any additional obligation on the Depositor.
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(f) In the event that any amendment to this Trust Agreement is made, the
Administrative Trustees shall promptly provide to the Depositor a copy of such
amendment.
Section 10.03. Separability. In case any provision in this Trust Agreement
or in the Trust Securities Certificates shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 10.04. GOVERNING LAW. THIS TRUST AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF EACH OF THE SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH
RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
Section 10.05. Payments Due on Non-Business Day. If the date fixed for any
payment on any Trust Security shall be a day which is not a Business Day, then
such payment need not be made on such date but may be made on the next
succeeding day which is a Business Day (except as otherwise provided in
Section 4.01(a)), with the same force and effect as though made on the date
fixed for such payment, and no interest shall accrue thereon for the period
after such date.
Section 10.06. Successors. This Trust Agreement shall be binding upon and
shall inure to the benefit of any successor to the Trust or the Relevant
Trustee or both, including any successor by operation of law.
Section 10.07. Headings. The Article and Section headings are for
convenience only and shall not affect the construction of this Trust
Agreement.
Section 10.08. Reports, Notices and Demands. Any report, notice, demand or
other communication which by any provision of this Trust Agreement is required
or permitted to be given or served to or upon any Securityholder or the
Depositor may be given or served in writing by deposit thereof, first-class
postage prepaid, in the United States mail, hand delivery or facsimile
transmission, in each case, addressed, (a) in the case of a Preferred
Securityholder, to such Preferred Securityholder as such Securityholder's name
and address may appear on the Securities Register; and (b) in the case of the
Common Securityholder or the Depositor, to Pacific Gas and Electric Company,
P.O. Box 770000, 77 Beale Street, San Francisco, California 94177, Attention:
Treasurer, facsimile no.: (415) 973-7059. Any notice to Preferred
Securityholders shall also be given to such owners as have, within two years
preceding the giving of such notice, filed their names and addresses with the
Property Trustee for that purpose. Such notice, demand or other communication
to or upon a Securityholder shall be deemed to have been sufficiently given or
made, for all purposes, upon hand delivery, mailing or transmission.
Any notice, demand or other communication which by any provision of this
Trust Agreement is required or permitted to be given or served to or upon the
Trust, the Property Trustee or the Administrative Trustees shall be given in
writing addressed (until another address is published by the Trust) as
follows: (a) with respect to the Property Trustee to The First National Bank
of Chicago, One First National Plaza, Suite 0126, Chicago, Illinois 60670-
0126, Attention: Corporate Trust Services Division; (b) with respect to the
Delaware Trustee, to Michael J. Majchrzak, c/o FCC National Bank, 300 King
Street, Wilmington, Delaware 19801; and (c) with respect to the Administrative
Trustees, to them at the address above for notices to the Depositor, marked
"Attention: Administrative Trustees of PG&E Capital I c/o Treasury
Department." Such notice, demand or other communication to or upon the Trust
or the Property Trustee shall be deemed to have been sufficiently given or
made only upon actual receipt of the writing by the Trust or the Property
Trustee.
34
<PAGE>
Section 10.09. Agreement Not to Petition. Each of the Trustees and the
Depositor agree for the benefit of the Securityholders that, until at least
one year and one day after the Trust has been terminated in accordance with
Article IX, they shall not file, or join in the filing of, a petition against
the Trust under any bankruptcy, reorganization, arrangement, insolvency,
liquidation or other similar law (including, without limitation, the United
States Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in
the commencement of any proceeding against the Trust under any Bankruptcy Law.
In the event the Depositor takes action in violation of this Section 10.09,
the Property Trustee agrees, for the benefit of Securityholders, that at the
expense of the Depositor, it shall file an answer with the bankruptcy court or
otherwise properly contest the filing of such petition by the Depositor
against the Trust or the commencement of such action and raise the defense
that the Depositor has agreed in writing not to take such action and should be
stopped and precluded therefrom and such other defenses, if any, as counsel
for the Trustee or the Trust may assert. The provisions of this Section 10.09
shall survive the termination of this Trust Agreement.
Section 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.
(a) This Trust Agreement is subject to the provisions of the Trust Indenture
Act that are required to be part of this Trust Agreement and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a trustee for
the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by
any of the provisions of the Trust Indenture Act, such required provision
shall control. If any provision of this Trust Agreement modifies or excludes
any provision of the Trust Indenture Act which may be so modified or excluded,
the latter provision shall be deemed to apply to this Trust Agreement as so
modified or to be excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement shall
not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
Section 10.11. Acceptance of Terms of Trust Agreement, Guarantee and
Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR
ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE
OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST
IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT
AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE
AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH
SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST
AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND
SUCH SECURITYHOLDER AND SUCH OTHERS.
PACIFIC GAS AND ELECTRIC COMPANY
By:
---------------------------------
Name:
Title:
35
<PAGE>
THE FIRST NATIONAL BANK OF
CHICAGO as Property Trustee
By:
---------------------------------
Name:
Title:
MICHAEL J. MAJCHRZAK,
as Delaware Trustee
-------------------------------------
GABRIEL B. TOGNERI,
as Administrative Trustee
-------------------------------------
LESLIE GULIASI,
as Administrative Trustee
-------------------------------------
KATHLEEN RUEGER,
as Administrative Trustee
-------------------------------------
36
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST
OF
PG&E CAPITAL I
THIS CERTIFICATE OF TRUST of PG&E Capital I (the "Trust"), dated August 14,
1995, is being duly executed and filed by the undersigned, as trustees, to
form a business trust under the Delaware Business Trust Act (12 Del. C. (S)
3801 et seq.).
(i) Name. The name of the business trust being formed hereby is PG&E Capital
I.
(ii) Delaware Trustee. The name and business address of the trustee of the
Trust with a principal place of business in the State of Delaware are Michael
J. Majchrzak, c/o FCC National Bank, 300 King Street, Wilmington, Delaware
19801.
(iii) Counterparts. This Certificate of Trust may be executed in one or more
counterparts, all of which together shall constitute one and the same
instrument.
(iv) Effective Date. This Certificate of Trust shall be effective as of its
filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust, have
executed this Certificate of Trust as of the date first above written.
THE FIRST NATIONAL BANK OF
CHICAGO, as Trustee
- ------------------------------------- By:
Gabriel B. Togneri, as Trustee ---------------------------------
Name:John R. Prendiville
Title:Vice President
- -------------------------------------
Leslie Guliasi, as Trustee -------------------------------------
Michael J. Majchrzak, as Trustee
- -------------------------------------
Alan H. Lindstrom, as Trustee
A-1
<PAGE>
EXHIBIT B
___________ __, 1995
The Depository Trust Company,
55 Water Street, 49th Floor,
New York, New York 10041-0099.
Attention:_____________________
General Counsel's Office
Re: PG&E Capital I Preferred Securities
-----------------------------------
Ladies and Gentlemen:
The purpose of this letter is to set forth certain matters relating to the
issuance and deposit with The Depository Trust Company ("DTC") of the PG&E
Capital I __% Cumulative Quarterly Income Preferred Securities, Series A (the
"Preferred Securities"), of PG&E Capital Trust I, a Delaware business trust
(the "Issuer"), formed pursuant to a Trust Agreement between Pacific Gas and
Electric Company ("PG&E"), The First National Bank of Chicago, as Property
Trustee, the Delaware Trustee and the Administrative Trustees named therein.
The payment of distributions on the Preferred Securities to the extent the
Issuer has funds available for the payment thereof, and payments due upon
liquidation of Issuer or redemption of the Preferred Securities are guaranteed
by PG&E to the extent set forth in a Guarantee Agreement dated ____ __, 1995
by PG&E with respect to the Preferred Securities. PG&E and the Issuer propose
to sell the Preferred Securities to certain Underwriters (the "Underwriters")
pursuant to an Underwriting Agreement dated ______ __,1995 by and among the
Underwriters, the Issuer and PG&E dated _______ __,1995, and the Underwriters
wish to take delivery of the Preferred Securities through DTC. First National
Bank of Chicago is acting as transfer agent and registrar with respect to the
Preferred Securities (the "Transfer Agent and Registrar").
To induce DTC to accept the Preferred Securities as eligible for deposit at
DTC, and to act in accordance with DTC's rules with respect to the Preferred
Securities, the Issuer, the Transfer Agent and Registrar and DTC agree among
each other as follows:
1. Prior to the closing of the sale of the Preferred Securities to the
Underwriters, which is expected to occur on or about _______ __, 1995, there
shall be deposited with DTC one or more global certificates (individually
and collectively, the "Global Certificate") registered in the name of DTC's
nominee, Cede & Co., representing an aggregate of _____ Preferred
Securities and bearing the following legend:
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Issuer
or its agent for registration of transfer, exchange, or payment, and
any 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.
2. The Amended and Restated Trust Agreement of the Issuer provides for
the voting by holders of the Preferred Securities under certain limited
circumstances. The Issuer shall establish a record date for such purposes
and shall, to the extent possible, give DTC notice of such record date not
less than 15 calendar days in advance of such record date.
B-1
<PAGE>
3. In the event of a stock split, conversion, recapitalization,
reorganization or any other similar transaction resulting in the
cancellation of all or any part of the Preferred Securities outstanding,
the Issuer or the Transfer Agent and Registrar shall send DTC a notice of
such event at least 5 business days prior to the effective date of such
event.
4. In the event of distribution on, or an offering or issuance of rights
with respect to, the Preferred Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice specifying: (a) the
amount of and conditions, if any, applicable to the payment of any such
distribution or any such offering or issuance of rights; (b) any applicable
expiration or deadline date, or any date by which any action on the part of
the holders of Preferred Securities is required; and (c) the date any
required notice is to be mailed by or on behalf of the Issuer to holders of
Preferred Securities or published by or on behalf of the Issuer (whether by
mail or publication, the "Publication Date"). Such notice shall be sent to
DTC by a secure means (e.g., legible telecopy, registered or certified
mail, overnight delivery) in a timely manner designed to assure that such
notice is in DTC's possession no later than the close of business on the
business day before the Publication Date. The Issuer or the Transfer Agent
and Registrar will forward such notice either in a separate secure
transmission for each CUSIP number or in a secure transmission of multiple
CUSIP numbers (if applicable) that includes a manifest or list of each
CUSIP number submitted in that transmission. (The party sending such notice
shall have a method to verify subsequently the use of such means and the
timeliness of such notice.) The Publication Date shall be not less than 30
calendar days nor more than 60 calendar days prior to the payment of any
such distribution or any such offering or issuance of rights with respect
to the Preferred Securities. After establishing the amount of payment to be
made on the Preferred Securities, the Issuer or the Transfer Agent and
Registrar will notify DTC's Dividend Department of such payment 5 business
days prior to payment date. Notices to DTC's Dividend Department by
telecopy shall be sent to (212) 709-1723. Such notices by mail or by any
other means shall be sent to:
Manager, Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
The Issuer or the Transfer Agent and Registrar shall confirm DTC's
receipt of such telecopy by telephoning the Dividend Department at (212)
709-1270.
5. In the event of a redemption by the Issuer of the Preferred
Securities, notice specifying the terms of the redemption and the
Publication Date of such notice shall be sent by the Issuer or the Transfer
Agent and Registrar to DTC not less than 30 calendar days prior to such
event by a secure means in the manner set forth in paragraph 4. Such
redemption notice shall be sent to DTC's Call Notification Department at
(516) 227-4164 or (516) 227-4190, and receipt of such notice shall be
confirmed by telephoning (516) 227-4070. Notice by mail or by any other
means shall be sent to:
Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530-4719
6. In the event of any invitation to tender the Preferred Securities,
notice specifying the terms of the tender and the Publication Date of such
notice shall be sent by the Issuer or the Transfer Agent and Registrar to
DTC by a secure means and in a timely manner as described in paragraph 4.
Notices to DTC pursuant to this paragraph and notices of other corporate
actions (including mandatory tenders, exchanges and capital changes), shall
be sent, unless notification to another
B-2
<PAGE>
department is expressly provided for herein, by telecopy to DTC's
Reorganization Department at (212) 709-1093 or (212) 709-1094 and receipt
of such notice shall be confirmed by telephoning (212) 709-6884, or by mail
or any other means to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
7. All notices and payment advices sent to DTC shall contain the CUSIP
number or numbers of the Preferred Securities and the accompanying
designation of the Preferred Securities, which, as of the date of this
letter, is "PG&E Capital I __% Cumulative Quarterly Income Preferred
Securities, Series A".
8. Distribution payments or other cash payments with respect to the
Preferred Securities evidenced by the Global Certificate shall be received
by Cede & Co., as nominee of DTC, or its registered assigns in next day
funds on each payment date (or in accordance with existing arrangements
between the Issuer or the Transfer Agent and Registrar and DTC). Such
payments shall be made payable to the order of Cede & Co., and shall be
addressed as follows:
NDFS Redemption Department
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
9. DTC may by prior written notice direct the Issuer and the Transfer
Agent and Registrar to use any other telecopy number or address of DTC as
the number or address to which notices or payments may be sent.
10. In the event of a conversion, redemption, or any other similar
transaction (e.g., tender made and accepted in response to the Issuer's or
the Transfer Agent and Registrar's invitation) necessitating a reduction in
the aggregate number of Preferred Securities outstanding evidenced by the
Global Certificate, DTC, in its discretion: (a) may request the Issuer or
the Transfer Agent and Registrar to issue and countersign a new Global
certificate; or (b) may make an appropriate notation on the Global
Certificate indicating the date and amount of such reduction.
11. DTC may discontinue its services as a securities depositary with
respect to the Preferred Securities at any time by giving at least 90 days'
prior written notice to the Issuer and the Transfer Agent and Registrar (at
which time DTC will confirm with the Issuer or the Transfer Agent and
Registrar the aggregate number of Preferred Securities deposited with it)
and discharging its responsibilities with respect thereto under applicable
law. Under such circumstances, the Issuer may determine to make alternative
arrangements for book-entry settlement for the Preferred Securities, make
available one or more separate global certificates evidencing Preferred
Securities to any Participant having Preferred Securities credited to its
DTC account, or issue definitive Preferred Securities to the beneficial
holders thereof, and in any such case, DTC agrees to cooperate fully with
the Issuer and the Transfer Agent and Registrar and to return the Global
certificate, duly endorsed for transfer as directed by the Issuer or the
Transfer Agent and Registrar, together with any other documents of transfer
reasonably requested by the Issuer or the Transfer Agent and Registrar.
12. In the event that the Issuer determines that beneficial owners of
Preferred Securities shall be able to obtain definitive Preferred
Securities, the Issuer or the Transfer Agent and Registrar shall notify DTC
of the availability of certificates. In such event, the Issuer or the
Transfer Agent
B-3
<PAGE>
and Registrar shall issue, transfer and exchange certificates in
appropriate amounts, as required by DTC and others, and DTC agrees to
cooperate fully with the Issuer and the Transfer Agent and Registrar and to
return the Global Certificate, duly endorsed for transfer as directed by
the Issuer or the Transfer Agent and Registrar, together with any other
documents of transfer reasonably requested by the Issuer or the Transfer
Agent and Registrar.
13. This letter may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Nothing herein shall be deemed to require the Transfer Agent and Registrar
to advance funds on behalf of PG&E Capital I.
Very truly yours,
PG&E CAPITAL I
(As Issuer) By: [Name of Trustee]
Administrative Trustee
By
----------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO,
(As Transfer Agent and Registrar)
By
----------------------------------
Name:
Title:
RECEIVED AND ACCEPTED:
THE DEPOSITORY TRUST COMPANY
By
----------------------------------
Authorized Officer
B-4
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE
Certificate Number Number of Common Securities
C-1
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
PG&E CAPITAL I
___% COMMON SECURITIES
(LIQUIDATION AMOUNT $25 PER COMMON SECURITY)
PG&E Capital I, a statutory business trust formed under the laws of the State
of Delaware (the "Trust"), hereby certifies that Pacific Gas and Electric
Company (the "Holder") is the registered owner of ____ (____) common securities
of the Trust representing undivided beneficial interests in the assets of the
Trust and designated the __% Common Securities (liquidation amount $25 per
Common Security) (the "Common Securities"). In accordance with Section 5.10 of
the Trust Agreement (as defined below) the Common Securities are not
transferable and any attempted transfer hereof shall be void. The designations,
rights, privileges, restrictions, preferences and other terms and provisions of
the Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject
to the terms and provisions of, the Amended and Restated Trust Agreement of the
Trust dated as of _______, 1995, as the same may be amended from time to time
(the "Trust Agreement") including the designation of the terms of the Common
Securities as set forth therein. The Trust will furnish a copy of the Trust
Agreement to the Holder without charge upon written request to the Trust at its
principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust Agreement
and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ____ day of ____, 1995.
PG&E CAPITAL I
By:_____________________________
Name:
Administrative Trustee
C-1
<PAGE>
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of __________, 1995, between Pacific Gas and Electric
Company, a California corporation ("PG&E"), and PG&E Capital I, a Delaware
business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the "Common
Securities") to and receive Debentures from PG&E and to issue and sell %
Cumulative Quarterly Income Preferred Securities, Series A (the "Preferred
Securities") with such powers, preferences and special rights and restrictions
as are set forth in the Amended and Restated Trust Agreement of the Trust
dated as of __________, 1995 as the same may be amended from time to time (the
"Trust Agreement");
WHEREAS, PG&E will directly or indirectly own all of the Common Securities
of Trust and will issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, which purchase PG&E hereby agrees shall benefit PG&E and
which purchase PG&E acknowledges will be made in reliance upon the execution
and delivery of this Agreement, PG&E and Trust hereby agree as follows:
ARTICLE I
Section 1.01. Guarantee by PG&E. Subject to the terms and conditions hereof,
PG&E hereby irrevocably and unconditionally guarantees to each person or
entity to whom the Trust is now or hereafter becomes indebted or liable (the
"Beneficiaries") the full payment, when and as due, of any and all Obligations
(as hereinafter defined) to such Beneficiaries. As used herein, "Obligations"
means any costs, expenses or liabilities of the Trust, other than obligations
of the Trust to pay to holders of any Preferred Securities or other similar
interests in the Trust the amounts due such holders pursuant to the terms of
the Preferred Securities or such other similar interests, as the case may be.
This Agreement is intended to be for the benefit of, and to be enforceable by,
all such Beneficiaries, whether or not such Beneficiaries have received notice
hereof.
Section 1.02. Term of Agreement. This Agreement shall terminate and be of no
further force and effect upon the later of (a) the date on which full payment
has been made of all amounts payable to all holders of all the Preferred
Securities (whether upon redemption, liquidation, exchange or otherwise) and
(b) the date on which there are no Beneficiaries remaining; provided, however,
that this Agreement shall continue to be effective or shall be reinstated, as
the case may be, if at any time any holder of Preferred Securities or any
Beneficiary must restore payment of any sums paid under the Preferred
Securities, under any Obligation, under the Guarantee Agreement dated the date
hereof by PG&E and The First National Bank of Chicago as guarantee trustee or
under this Agreement for any reason whatsoever. This Agreement is continuing,
irrevocable, unconditional and absolute.
Section 1.03. Waiver of Notice. PG&E hereby waives notice of acceptance of
this Agreement and of any Obligation to which it applies or may apply, and
PG&E hereby waives presentment, demand for payment, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
Section 1.04. No Impairment. The obligations, covenants, agreements and
duties of PG&E under this Agreement shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
D-1
<PAGE>
(a) the extension of time for the payment by the Trust of all or any
portion of the Obligations or for the performance of any other obligation
under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the part of the
Beneficiaries to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Beneficiaries with respect to the Obligations or
any action on the part of the Trust granting indulgence or extension of any
kind; or
(c) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt or, or other similar proceedings affecting, the Trust
or any of the assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or
obtain the consent of, PG&E with respect to the happening of any of the
foregoing.
Section 1.05. Enforcement. A Beneficiary may enforce this Agreement directly
against PG&E and PG&E waives any right or remedy to require that any action be
brought against the Trust or any other person or entity before proceeding
against PG&E.
ARTICLE II
Section 2.01. Binding Effect. All guarantees and agreements contained in
this Agreement shall bind the successors, assigns, receivers, trustees and
representatives of PG&E and shall inure to the benefit of the Beneficiaries.
Section 2.02. Amendment. So long as there remains any Beneficiary or any
Preferred Securities of any series are outstanding, this Agreement shall not
be modified or amended in any manner adverse to such Beneficiary or to the
holders of the Preferred Securities.
Section 2.03. Notices. Any notice, request or other communication required
or permitted to be given hereunder shall be given in writing by delivering the
same against receipt therefor by facsimile transmission (confirmed by mail),
telex or by registered or certified mail, addressed as follows (and if so
given, shall be deemed given when mailed or upon receipt of an answer-back, if
sent by telex):
PG&E Capital I
c/o The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, Illinois 60670-0126
Facsimile No.: (312) 407-4656
Attention: Corporate Trust Secvices Division
Pacific Gas and Electric Company
77 Beale Street
P.O. Box 770000
San Francisco, California 94120
Facsimile No.: (415) 973-7000
Attention: Treasurer
Section 2.04 THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
D-2
<PAGE>
THIS AGREEMENT is executed as of the day and year first above written.
PACIFIC GAS AND ELECTRIC COMPANY
By:
--------------------------------
Name:
Title:
PG&E CAPITAL I
By:
--------------------------------
Name:
Administrative Trustee
D-3
<PAGE>
EXHIBIT E
IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT--This
Preferred Security is a Global Certificate within the meaning of the Trust
Agreement hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depository") or a nominee of the Depository.
This Preferred Security is exchangeable for Preferred Securities registered in
the name of a person other than the Depository or its nominee only in the
limited circumstances described in the Trust Agreement and no transfer of this
Preferred Security (other than a transfer of this Preferred Security as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository) may be
registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York) to Pacific Gas and
Electric Financing Trust I or its agent for registration of transfer, exchange
or payment, and any Preferred Security issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative of
The Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
Certificate Number Number of Preferred Securities
P- CUSIP NO.
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
PG&E CAPITAL I
___% CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES,
SERIES A
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
PG&E Capital I, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that ______ (the "Holder")
is the registered owner of ____ (____) preferred securities of the Trust
representing an undivided beneficial interest in the assets of the Trust and
designated the PG&E Capital I __% Cumulative Quarterly Income Preferred
Securities, Series A (liquidation amount $25 per Preferred Security) (the
"Preferred Securities"). The Preferred Securities are transferable on the
books and records of the Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for
transfer as provided in Section 5.04 of the Trust Agreement (as defined
below). The designations, rights, privileges, restrictions, preferences and
other terms and provisions of the Preferred Securities are set forth in, and
this certificate and the Preferred Securities represented hereby are issued
and shall in all respects be subject to the terms and provisions of, the
Amended and Restated Trust Agreement of the Trust dated as of ______ __, 1995,
as the same may be amended from time to time (the "Trust Agreement") including
the designation of the terms of Preferred Securities as set forth therein. The
Holder is entitled to the benefits of the Guarantee Agreement entered into by
Pacific Gas and Electric Company, a California corporation, and The First
National Bank of Chicago as guarantee trustee, dated as of ______ __, 1995
(the "Guarantee") to the extent provided therein. The Trust will furnish a
copy of the Trust Agreement and the Guarantee to the Holder without charge
upon written request to the Trust at its principal place of business or
registered office.
E-1
<PAGE>
Upon receipt of this certificate, the Holder is bound by the Trust Agreement
and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this _____ day of ___________, 1995.
PG&E CAPITAL I
By:
-------------------------------
Name:
Administrative Trustee
E-2
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
agent to transfer this Preferred Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date:_________________________
Signature:_________________________________
(Sign exactly as your name appears on the other side of this Preferred
Security Certificate)
E-3
<PAGE>
EXHIBIT 4-5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE AGREEMENT
BETWEEN
PACIFIC GAS AND ELECTRIC COMPANY
(AS GUARANTOR)
AND
THE FIRST NATIONAL BANK OF CHICAGO
(AS TRUSTEE)
DATED AS OF
_____________, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
DEFINITIONS
<C> <S> <C>
SECTION 1.01. Definitions............................................... 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application.......................... 3
SECTION 2.02. Lists of Holders.......................................... 3
SECTION 2.03. Reports by the Guarantee Trustee.......................... 3
SECTION 2.04. Periodic Reports to Guarantee Trustee..................... 4
SECTION 2.05. Evidence of Compliance with Conditions Precedent.......... 4
SECTION 2.06. Events of Default; Waiver................................. 4
SECTION 2.07. Event of Default; Notice.................................. 4
SECTION 2.08. Conflicting Interests..................................... 4
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.01. Powers and Duties of the Guarantee Trustee................ 4
SECTION 3.02. Certain Rights of Guarantee Trustee....................... 6
SECTION 3.03. Indemnity................................................. 7
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01. Guarantee Trustee; Eligibility............................ 7
Appointment, Removal and Resignation of the Guarantee
SECTION 4.02. Trustee................................................... 7
ARTICLE V
GUARANTEE
SECTION 5.01. Guarantee................................................. 8
SECTION 5.02. Waiver of Notice and Demand............................... 8
SECTION 5.03. Obligations Not Affected.................................. 8
SECTION 5.04. Rights of Holders......................................... 9
SECTION 5.05. Guarantee of Payment...................................... 9
SECTION 5.06. Subrogation............................................... 9
SECTION 5.07. Independent Obligations................................... 9
ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 6.01. Subordination............................................. 9
SECTION 6.02. Pari Passu Guarantees..................................... 10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
ARTICLE VII
TERMINATION
<C> <S> <C>
SECTION 7.01. Termination................................................ 10
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Successors and Assigns..................................... 10
SECTION 8.02. Amendments................................................. 10
SECTION 8.03. Notices.................................................... 10
SECTION 8.04. Benefit.................................................... 11
SECTION 8.05. Interpretation............................................. 11
SECTION 8.06. Governing Law.............................................. 12
</TABLE>
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
SECTION OF SECTION OF
TRUST INDENTURE ACT GUARANTEE
OF 1939, AS AMENDED AGREEMENT
- ------------------- ----------------
<S> <C>
310(a)......................................................... 4.01(a)
310(b)......................................................... 4.01(c), 2.08
310(c)......................................................... Inapplicable
311(a)......................................................... 2.02(b)
311(b)......................................................... 2.02(b)
311(c)......................................................... Inapplicable
312(a)......................................................... 2.02(a)
312(b)......................................................... 2.02(b)
313............................................................ 2.03
314(a)......................................................... 2.04
314(b)......................................................... Inapplicable
314(c)......................................................... 2.05
314(d)......................................................... Inapplicable
314(e)......................................................... 1.01, 2.05, 3.02
314(f)......................................................... 2.01, 3.02
315(a)......................................................... 3.01(d)
315(b)......................................................... 2.07
315(c)......................................................... 3.01
315(d)......................................................... 3.01(d)
316(a)......................................................... 1.01, 2.06, 5.04
316(b)......................................................... 5.03
316(c)......................................................... 8.02
317(a)......................................................... Inapplicable
317(b)......................................................... Inapplicable
318(a)......................................................... 2.01(b)
318(b)......................................................... 2.01
318(c)......................................................... 2.01(a)
</TABLE>
- --------
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
<PAGE>
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of _______ __, 1995, is executed and
delivered by Pacific Gas and Electric Company, a California corporation (the
"Guarantor"), and The First National Bank of Chicago, a banking association
organized under the laws of the United States, as trustee (the "Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to
time of the Preferred Securities (as defined herein) of PG&E Capital I, a
Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of _______ __, 1995 among the Issuer Trustees named
therein, the Guarantor, as Depositor, and the Holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing up to $______ aggregate liquidation preference of its __% Cumulative
Quarterly Income Preferred Securities, Series A (liquidation preference $25
per preferred security) (the "Preferred Securities") representing preferred
undivided beneficial interests in the assets of the Issuer and having the
terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof will be used to purchase the Debentures (as defined in the
Trust Agreement) of the Guarantor which will be deposited with The First
National Bank of Chicago, as Property Trustee under the Trust Agreement, as
trust assets; and
WHEREAS, as incentive for the Holders to purchase Preferred Securities the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth herein, to pay to the Holders of the Preferred Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of Preferred
Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders from time to time of the Preferred Securities.
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this Guarantee Agreement, the terms
set forth below shall, unless the context otherwise requires, have the
following meanings. Capitalized or otherwise defined terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Trust Agreement as in effect on the date hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Common Securities" means the securities representing common beneficial
interests in the assets of the Issuer.
"Event of Default" means a default by the Guarantor on any of its payment or
other obligations under this Guarantee Agreement; provided, however, that,
except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default and shall not have cured such
default within 60 days after receipt of such notice.
<PAGE>
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid
or made by or on behalf of the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Preferred Securities, to the extent the Issuer shall have funds on hand
available therefor, (ii) the redemption price, including all accrued and
unpaid Distributions to the date of redemption (the "Redemption Price"), with
respect to the Preferred Securities called for redemption by the Issuer to the
extent the Issuer shall have funds on hand available therefor, and (iii) upon
a voluntary or involuntary termination, winding-up or liquidation of the
Issuer, unless Debentures are distributed to the Holders, (a) the aggregate of
the liquidation preference of $25 per Preferred Security plus accrued and
unpaid Distributions on the Preferred Securities to the date of payment to the
extent the Issuer shall have funds on hand available to make such payment or,
if different, (b) the amount of assets of the Issuer remaining available for
distribution to Holders in liquidation of the Issuer (in either case, the
"Liquidation Distribution").
"Guarantee Trustee" means The First National Bank of Chicago, until a
Successor Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Guarantee Agreement and thereafter
means each such Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of the
Issuer, of any Preferred Securities; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any Affiliate of the Guarantor.
"Indenture" means the Indenture dated as of _____________, 1995, as
supplemented and amended to date between the Guarantor (the "Debenture
Issuer") and The First National Bank of Chicago, as trustee.
"List of Holders" has the meaning specified in Section 2.02(a).
"Majority in liquidation preference of the Securities" means, except as
provided by the Trust Indenture Act, a vote by the Holder(s), voting
separately as a class, of more than 50% of the liquidation preference of all
then outstanding Preferred Securities issued by the Issuer.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman of the Board, Vice Chairman of the Board, the
President, a Senior Vice President or a Vice President, and by the Treasurer,
an Assistant Treasurer, the Secretary or an Assistant Secretary of such
Person, and delivered to the Guarantee Trustee. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate and upon which the statements contained therein are based;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
2
<PAGE>
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
"Responsible Officer" means, with respect to the Guarantee Trustee, any
Senior Vice President, any Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer,
any Trust Officer or Assistant Trust Officer or any other officer of the
Corporate Trust Department of the Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Senior Indebtedness" means Senior Indebtedness as defined in the Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee possessing
the qualifications to act as Guarantee Trustee under Section 4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Section 310 to
317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.02. Lists of Holders.
(a) The Guarantor shall furnish or cause to be furnished to the Guarantee
Trustee (a) semiannually, on or before January 15 and July 15 of each year,
a list, in such form as the Guarantee Trustee may reasonably require, of
the names and addresses of the Holders ("List of Holders") as of a date not
more than 15 days prior to the delivery thereof, and (b) at such other
times as the Guarantee Trustee may request in writing, within 30 days after
the receipt by the Guarantor of any such request, a List of Holders as of a
date not more than 15 days prior to the time such list is furnished, in
each case to the extent such information is in the possession or control of
the Guarantor and is not identical to a previously supplied list of Holders
or has not otherwise been received by the Guarantee Trustee in its capacity
as such. The Guarantee Trustee may destroy any List of Holders previously
given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under Section
311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.03. Reports by the Guarantee Trustee. Within 60 days after
December 31 of each year, the Guarantee Trustee shall provide to the Holders
such reports as are required by Section 313 of the Trust Indenture Act, if
any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Guarantee Trustee shall also comply with the requirements
of Section 313(d) of the Trust Indenture Act.
3
<PAGE>
SECTION 2.04. Periodic Reports to Guarantee Trustee. The Guarantor shall
provide to the Guarantee Trustee, the Securities and Exchange Commission and
the Holders such documents, reports and information, if any, as required by
Section 314 of the Trust Indenture Act and the compliance certificate required
by Section 314 of the Trust Indenture Act in the form, in the manner and at
the times required by Section 314 of the Trust Indenture Act.
SECTION 2.05. Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with such conditions precedent, if any, provided for in this Guarantee
Agreement that relate to any of the matters set forth in Section 314(c) of the
Trust Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.06. Events of Default; Waiver. The Holders of a Majority in
liquidation preference of the Preferred Securities may, by vote, on behalf of
the Holders, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every
purpose of this Guarantee Agreement, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
therefrom.
SECTION 2.07. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence of
an Event of Default, transmit by mail, first class postage prepaid, to the
Holders, notices of all Events of Default known to the Guarantee Trustee,
unless such defaults have been cured before the giving of such notice,
provided, that, except in the case of a default in the payment of a
Guarantee Payment, the Guarantee Trustee shall be protected in withholding
such notice if and so long as the Board of Directors, the executive
committee or a trust committee of directors and/or Responsible Officers of
the Guarantee Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of any
Event of Default unless the Guarantee Trustee shall have received written
notice, or a Responsible Officer charged with the administration of the
Trust Agreement shall have obtained written notice, of such Event of
Default.
SECTION 2.08. Conflicting Interests. The Trust Agreement shall be deemed to
be specifically described in this Guarantee Agreement for the purposes of
clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE
GUARANTEE TRUSTEE
SECTION 3.01. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee for
the benefit of the Holders, and the Guarantee Trustee shall not transfer
this Guarantee Agreement to any Person except a Holder exercising his or
her rights pursuant to Section 5.04(iv) or to a Successor Guarantee Trustee
on acceptance by such Successor Guarantee Trustee of its appointment to act
as Successor Guarantee Trustee. The right, title and interest of the
Guarantee Trustee shall automatically vest in any Successor Guarantee
Trustee, upon acceptance by such Successor Guarantee Trustee of its
appointment hereunder, and such vesting and cessation of title shall be
4
<PAGE>
effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section
2.06), the Guarantee Trustee shall exercise such of the rights and powers
vested in it by this Guarantee Agreement, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise or
use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee
Agreement, and the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are specifically
set forth in this Guarantee Agreement; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Guarantee Trustee and conforming to the requirements of this
Guarantee Agreement; but in the case of any such certificates or
opinions that by any provision hereof or of the Trust Indenture Act
are specifically required to be furnished to the Guarantee Trustee,
the Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment
was made;
(iii) the Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in
liquidation preference of the Preferred Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement;
and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if the Guarantee
Trustee shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate indemnity against such
risk or liability is not reasonably assured to it.
5
<PAGE>
SECTION 3.02. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.01:
(i) The Guarantee Trustee may rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee Agreement,
the Guarantee Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and rely upon an Officers' Certificate which, upon receipt of
such request from the Guarantee Trustee, shall be promptly delivered by
the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and the
written advice or opinion of such legal counsel with respect to legal
matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or opinion.
Such legal counsel may be legal counsel to the Guarantor or any of its
Affiliates and may be one of its employees. The Guarantee Trustee shall
have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement at
the request or direction of any Holder, unless such Holder shall have
provided to the Guarantee Trustee such adequate security and indemnity
as would satisfy a reasonable person in the position of the Guarantee
Trustee, against the costs, expenses (including attorneys' fees and
expenses) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advances as
may be requested by the Guarantee Trustee; provided that, nothing
contained in this Section 3.02(a)(v) shall be taken to relieve the
Guarantee Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this
Guarantee Agreement.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys, and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee Agreement the
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (A) may request instructions from the
Holders, (B) may refrain from enforcing such remedy or right or taking
such other action until such instructions are received, and (C) shall
be protected in acting in accordance with such instructions.
6
<PAGE>
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts
or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts or to exercise any such right, power,
duty or obligation. No permissive power or authority available to the
Guarantee Trustee shall be construed to be a duty to act in accordance with
such power and authority.
SECTION 3.03. Indemnity. The Guarantor agrees to indemnify the Guarantee
Trustee for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on the part of the Guarantee Trustee,
arising out of or in connection with the acceptance or administration of this
Guarantee Agreement, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder. The Guarantee Trustee will not claim
or exact any lien or charge on any Guarantee Payments as a result of any
amount due to it under this Guarantee Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust Indenture Act
to act as such and has a combined capital and surplus of at least 50
million U.S. dollars ($50,000,000), and shall be a corporation meeting
the requirements of Section 310(c) of the Trust Indenture Act. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining
authority, then, for the purposes of this Section and to the extent
permitted by the Trust Indenture Act, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to so
act under Section 4.01(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 4.02(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act,
the Guarantee Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.02. Appointment, Removal and Resignation of the Guarantee Trustee.
(a) Subject to Section 4.02(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and
delivered to the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal
or resignation. The Guarantee Trustee may resign from office (without need
for prior or subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which resignation
7
<PAGE>
shall not take effect until a Successor Guarantee Trustee has been
appointed and has accepted such appointment by instrument in writing
executed by such Successor Guarantee Trustee and delivered to the Guarantor
and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.02 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court
of competent jurisdiction for appointment of a Successor Guarantee Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may
deem proper, appoint a Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.01. Guarantee. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without
duplication of amounts theretofore paid by or on behalf of the Issuer), as and
when due, regardless of any defense, right of set-off or counterclaim which
the Issuer may have or assert. The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Issuer to pay such amounts to the
Holders.
SECTION 5.02. Waiver of Notice and Demand. The Guarantor hereby waives
notice of acceptance of the Guarantee Agreement and of any liability to which
it applies or may apply, presentment, demand for payment, any right to require
a proceeding first against the Guarantee Trustee, Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
SECTION 5.03. Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities
to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment
of Distributions that results from the extension of any interest payment
period on the Debentures as so provided in the Indenture), Redemption
Price, Liquidation Distribution or any other sums payable under the terms
of the Preferred Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;
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(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent
of this Section 5.03 that the obligations of the Guarantor hereunder shall
be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.04. Rights of Holders. The Guarantor expressly acknowledges that:
(i) this Guarantee Agreement will be deposited with the Guarantee Trustee to
be held for the benefit of the Holders; (ii) the Guarantee Trustee has the
right to enforce this Guarantee Agreement on behalf of the Holders; (iii) the
Holders of a Majority in liquidation preference of the Preferred Securities
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of
this Guarantee Agreement or exercising any trust or power conferred upon the
Guarantee Trustee under this Guarantee Agreement; and (iv) if the Guarantee
Trustee fails to enforce this Guarantee Agreement as above provided, any
Holder may, after such Holder's written request to the Guarantee Trustee to
enforce this Guarantee Agreement, institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee Agreement,
without first instituting a legal proceeding against the Guarantee Trustee,
the Issuer or any other Person.
SECTION 5.05. Guarantee of Payment. This Guarantee Agreement creates a
guarantee of payment and not of collection. This Guarantee Agreement will not
be discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Issuer) or upon distribution of
Debentures to Holders as provided in the Trust Agreement.
SECTION 5.06. Subrogation. The Guarantor shall be subrogated to all (if any)
rights of the Holders against the Issuer in respect of any amounts paid to the
Holders by the Guarantor under this Guarantee Agreement and shall have the
right to waive payment by the Issuer pursuant to Section 5.01; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights
which it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Guarantee
Agreement, if, at the time of any such payment, any amounts are due and unpaid
under this Guarantee Agreement. If any amount shall be paid to the Guarantor
in violation of the preceding sentence, the Guarantor agrees to hold such
amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.07. Independent Obligations. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of the Issuer with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof.
ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 6.01. Subordination. This Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank subordinate and junior in
right of payment to all liabilities of the Guarantor, including the
Debentures, except those made pari passu or subordinate to the Guarantee
expressly by their terms.
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SECTION 6.02. Pari Passu Guarantees. This Guarantee Agreement shall rank
pari passu with any similar Guarantee Agreements issued by the Guarantor on
behalf of the holders of Preferred Securities issued by PG&E Capital II, PG&E
Capital III and PG&E Capital IV.
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Guarantee Agreement shall terminate and be
of no further force and effect upon (i) full payment of the Redemption Price
of all Preferred Securities, (ii) the distribution of Debentures to the
Holders in exchange for all of the Preferred Securities or (iii) full payment
of the amounts payable in accordance with the Trust Agreement upon liquidation
of the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid with respect to
Preferred Securities or this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Successors and Assigns. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to
the benefit of the Holders of the Preferred Securities then outstanding.
Except in connection with a consolidation, merger or sale involving the
Guarantor that is permitted under Article Eight of the Indenture and pursuant
to which the assignee agrees in writing to perform the Guarantor's obligations
hereunder, the Guarantor shall not assign its obligations hereunder.
SECTION 8.02. Amendments. Except with respect to any changes which do not
adversely affect the rights of the Holders in any material respect (in which
case no consent of the Holders will be required), this Guarantee Agreement may
only be amended with the prior approval of the Holders of not less than a
Majority in liquidation preference of all the outstanding Preferred
Securities. The provisions of Article VI of the Trust Agreement concerning
meetings of the Holders shall apply to the giving of such approval.
SECTION 8.03. Notices. Any notice, request or other communication required
or permitted to be given hereunder shall be in writing, duly signed by the
party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:
(a) if given to the Guarantor, to the address set forth below or such
other address as the Guarantor may give notice of to the Holders:
Pacific Gas and Electric Company
77 Beale Street
P.O. Box 770000
San Francisco, CA 94120
Facsimile No: (415) 973-7000
Attention: Treasurer
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(b) if given to the Issuer, in care of the Guarantee Trustee, at the
Issuer's (and the Guarantee Trustee's) address set forth below or such
other address as the Guarantee Trustee on behalf of the Issuer may give
notice to the Holders:
PG&E Capital I
c/o Pacific Gas and Electric Company
77 Beale Street
P.O. Box 770000
San Francisco, CA 94120
Facsimile No: (415) 973-7059
Attention: Treasurer
with a copy to:
First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, Illinois 60670-0126
Facsimile No: (312) 407-4656
Attention: Corporate Trust Services Division
(c) if given to any Holder, at the address set forth on the books and
records of the Issuer.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 8.04. Benefit. This Guarantee Agreement is solely for the benefit of
the Holders and is not separately transferable from the Preferred Securities.
SECTION 8.05. Interpretation. In this Guarantee Agreement, unless the
context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement but not defined in
the preamble hereto have the respective meanings assigned to them in
Section 1.01;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(d) all references in this Guarantee Agreement to Articles and Sections
are to Articles and Sections of this Guarantee Agreement unless otherwise
specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa; and
(g) the masculine, feminine or neuter genders used herein shall include
the masculine, feminine and neuter genders.
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SECTION 8.06. GOVERNING LAW. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
This instrument 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.
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
PACIFIC GAS AND ELECTRIC COMPANY
By: _________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
as Guarantee Trustee
By: _________________________________
Name:
Title:
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EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement as amended of our reports dated
February 6, 1995, included or incorporated by reference in Pacific Gas and
Electric Company's Form 10-K for the year ended December 31, 1994, and to all
references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
San Francisco, California
October 13, 1995
