<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 15, 1997
REGISTRATION NO. 333-41181
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
PUGET SOUND ENERGY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------
<TABLE>
<CAPTION>
WASHINGTON 91-0374630
<S> <C>
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
411-108TH AVENUE N.E.
BELLEVUE, WASHINGTON 98004-5515
(425) 454-6363
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
JAMES P. TORGERSON
411-108TH AVENUE N.E.
BELLEVUE, WASHINGTON 98004-5515
(425) 454-6363
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
ANDREW BOR CHRISTOPHER J. KELL
PERKINS COIE SKADDEN, ARPS, SLATE, MEAGHER & FLOM
1201 THIRD AVENUE, 40TH FLOOR 919 THIRD AVENUE
SEATTLE, WASHINGTON 98101-3099 NEW YORK, NEW YORK 10022
(206) 583-8888 (212) 735-3000
</TABLE>
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this 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, 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 of 1933, 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 of 1933, 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>
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE(2)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Senior Notes........... $500,000,000 100% $500,000,000 $151,516
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Estimated solely for the purpose of computing the registration fee.
(2) Previously filed. ---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
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, AS AMENDED, OR UNTIL THIS
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. 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 DECEMBER 15, 1997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED DECEMBER 16, 1997)
$500,000,000
[LOGO OF PSE]
PUGET SOUND ENERGY, INC.
SENIOR MEDIUM-TERM NOTES, SERIES A
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
-----------
Puget Sound Energy, Inc. (the "Company") may offer from time to time its
Senior Notes, designated Senior Medium-Term Notes, Series A (the "Notes"), in
an aggregate principal amount of up to $500,000,000, subject to reduction as a
result of sales of Senior Notes, other than the Notes, as described in the
accompanying Prospectus. The Notes will be offered at varying maturities of
nine months or more from their dates of issue and may be subject to redemption
at the option of the Company or repayment at the option of the Holder prior to
maturity if specified in the applicable Pricing Supplement. Unless otherwise
indicated in the applicable Pricing Supplement, each Note will bear interest at
a fixed rate to be determined by the Company at or prior to the sale thereof.
The aggregate principal amount, issue price, interest rate, maturity date, and
optional redemption or repayment provisions for each Note will be established
at the time of issuance of such Note and will be set forth therein and in a
pricing supplement (a "Pricing Supplement") to this Prospectus Supplement. See
"Description of Senior Medium-Term Notes, Series A." Each Note will be issued
as either a Global Note registered in the name of a nominee of The Depository
Trust Company, as Depository, or a certificate in definitive form (a
"Certificated Note"), as set forth in the applicable Pricing Supplement.
Beneficial interests in the Global Notes will be shown on, and transfers
thereof will be effected only through, records maintained by the Depository and
its participants. Except as described in the accompanying Prospectus,
Certificated Notes will not be issued in exchange for the Global Notes. The
Notes will be issued in minimum denominations of $1,000 and integral multiples
thereof, unless otherwise specified in the applicable Pricing Supplement.
UNTIL THE SUBSTITUTION DATE (AS DEFINED IN THE ACCOMPANYING PROSPECTUS), THE
NOTES WILL BE SECURED BY THE COMPANY'S FIRST MORTGAGE BONDS (THE "FIRST
MORTGAGE BONDS") ISSUED UNDER ITS ELECTRIC UTILITY MORTGAGE (AS DEFINED IN THE
ACCOMPANYING PROSPECTUS) AND DELIVERED TO THE SENIOR NOTE TRUSTEE (AS DEFINED
IN THE ACCOMPANYING PROSPECTUS). SEE "DESCRIPTION OF SENIOR MEDIUM-TERM NOTES,
SERIES A--SECURITY" IN THIS PROSPECTUS SUPPLEMENT AND "DESCRIPTION OF SENIOR
NOTES--SECURITY; SUBSTITUTION DATE" IN THE ACCOMPANYING PROSPECTUS. ON THE
SUBSTITUTION DATE, THE NOTES WILL CEASE TO BE SECURED BY SUCH FIRST MORTGAGE
BONDS AND, AT THE COMPANY'S OPTION, EITHER (i) WILL BECOME UNSECURED GENERAL
OBLIGATIONS OF THE COMPANY OR (ii) WILL BE SECURED BY FIRST MORTGAGE BONDS
ISSUED UNDER A MORTGAGE INDENTURE OTHER THAN THE ELECTRIC UTILITY MORTGAGE OR
THE GAS UTILITY MORTGAGE (AS DEFINED IN THE ACCOMPANYING PROSPECTUS).
-----------
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>
PRICE TO AGENTS' COMMISSION PROCEEDS TO
PUBLIC(1) OR DISCOUNT (1)(2) COMPANY(1)(3)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note.......... 100% .125%-.750% 99.875%-99.250%
- -------------------------------------------------------------------------------
Total............. $500,000,000 $625,000-$3,750,000 $499,375,000-$496,250,000
</TABLE>
===============================================================================
(1) Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
NationsBanc Montgomery Securities, Inc. and Salomon Smith Barney (the
"Agents"), individually or in a syndicate, may purchase Notes, as
principal, from the Company for resale to investors and other purchasers at
varying prices relating to prevailing market prices at the time of resale
as determined by the applicable Agent or, if so specified in the applicable
Pricing Supplement, for resale at a fixed offering price. Unless otherwise
specified in the applicable Pricing Supplement, any Note sold to an Agent
as principal will be purchased by such Agent at a price equal to 100% of
the principal amount thereof less a percentage of the principal amount
equal to the commission applicable to an agency sale (as described below)
of a Note of identical maturity. If agreed to by the Company and an Agent,
such Agent may utilize its reasonable efforts on an agency basis to solicit
offers to purchase the Notes at 100% of the principal amount thereof,
unless otherwise specified in the applicable Pricing Supplement. The
Company will pay a commission to an Agent, ranging from .125% to .750% of
the principal amount of a Note, depending upon its stated maturity, sold
through an Agent. Commission with respect to Notes with stated maturities
in excess of 30 years that are sold through such Agent will be negotiated
between the Company and such Agent at the time of such sale. See "Plan of
Distribution."
(2) The Company has agreed to indemnify the Agents against, and to provide
contribution with respect to, certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Plan of Distribution."
(3) Before deducting other expenses payable by the Company, including
reimbursement of certain of the Agents' expenses, estimated at $600,000.
-----------
The Notes are being offered on a continuous basis by the Company through the
Agents. Unless otherwise specified in the applicable Pricing Supplement, the
Notes will not be listed on any securities exchange, and there can be no
assurance that all or any portion of the Notes offered by this Prospectus
Supplement will be sold or that there will be a secondary market for any of the
Notes. The Company reserves the right to withdraw, cancel or modify the offer
made hereby without notice. The Company or the Agent, if it solicits the offer
on an agency basis, may reject such offer in whole or in part. See "Plan of
Distribution of Notes."
-----------
MERRILL LYNCH & CO.
NATIONSBANC MONTGOMERY SECURITIES, INC.
SALOMON SMITH BARNEY
-----------
The date of this Prospectus Supplement is December 16,1997.
<PAGE>
IN CONNECTION WITH AN OFFERING OF NOTES PURCHASED BY ONE OR MORE AGENTS AS
PRINCIPAL ON A FIXED OFFERING PRICE BASIS, SUCH AGENT(S) MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF NOTES.
SUCH TRANSACTIONS MAY INCLUDE STABILIZING AND THE PURCHASE OF NOTES TO COVER
SYNDICATE SHORT POSITIONS OF SUCH AGENT(S). FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "PLAN OF DISTRIBUTION."
THE COMPANY
Puget Sound Energy, Inc., formerly Puget Sound Power & Light Company (the
"Company"), is an investor-owned public utility incorporated in the state of
Washington furnishing electric and, since February 10, 1997, gas service in a
territory covering approximately 6,000 square miles, principally in the Puget
Sound region of Washington state. On February 10, 1997, the Company completed
a merger (the "Merger") with the Washington Energy Company ("WECo") and its
principal subsidiary, Washington Natural Gas Company ("WNG"). Seattle-based
WNG provided natural gas distribution service in an area east of Puget Sound
that included Seattle, Tacoma, Everett, Bellevue and Olympia. The Company
changed its name to Puget Sound Energy, Inc. effective with the Merger.
As of September 30, 1997, the Company had approximately 867,200 electric
customers, consisting of 769,400 residential, 92,300 commercial, 4,100
industrial and 1,400 other customers and approximately 512,200 gas customers,
consisting of 467,300 residential, 41,800 commercial, 3,000 industrial and 100
other customers. For the first nine months of 1997, the Company added
approximately 9,900 electric customers and approximately 12,500 gas customers,
representing annual growth rates of 1.2% and 2.5%, respectively. During the
first nine months of 1997, the Company's billed revenues from electric utility
operations were derived 44% from residential customers, 33% from commercial
customers, 13% from industrial customers and 10% from sales to other utilities
and others, and the Company's billed revenues from gas utility operations were
derived 59% from residential customers, 29% from commercial customers, 9% from
industrial customers and 3% from other customers. During this period, the
largest single electric customer accounted for 2.4% of the Company's electric
utility operating revenues, and the largest single gas customer accounted for
0.5% of the Company's gas utility operating revenues.
Gross electric utility plant at September 30, 1997, was approximately $3.6
billion which consisted of 46% distribution, 26% generation, 15% transmission
and 13% general plant and other. Gross gas utility plant at September 30,
1997, was approximately $1.2 billion which consisted of 80% distribution, 4%
transmission and 16% general plant and other.
The Company and its subsidiaries had approximately 3,044 aggregate full-time
equivalent employees at September 30, 1997. The Company's executive office is
located at 411--108th Avenue N.E., Bellevue, Washington 98004-5515, and its
telephone number is (425) 454-6363.
DESCRIPTION OF SENIOR MEDIUM-TERM NOTES, SERIES A
The following description of the particular terms of the Notes supplements
the description of the general terms and provisions of the Senior Notes set
forth in the Prospectus under the caption "Description of Senior Notes," to
which description reference is hereby made. The Notes will be issued as a
separate series of Senior Notes under the Indenture, dated as of December 1,
1997 (the "Senior Note Indenture"), as supplemented by a Supplemental
Indenture dated as of December 1, 1997 (the "Supplemental Indenture"), between
the Company and the Senior Note Trustee. Provisions of the Senior Note
Indenture are more fully described under the caption "Description of Senior
Notes" in the accompanying Prospectus. Capitalized words not defined herein
are defined in the accompanying Prospectus.
S-2
<PAGE>
GENERAL
The Notes are limited to an aggregate principal amount of $500,000,000. The
Senior Note Indenture does not limit the aggregate initial offering price of
Senior Notes that may be issued thereunder, and Senior Notes may be issued
thereunder from time to time in one or more series up to the aggregate initial
offering price from time to time authorized by the Company for each series. As
of the date of this Prospectus Supplement, no Senior Notes have been issued
under the Senior Note Indenture. The Company may, from time to time, without
the consent of the holders of the Notes, provide for the issuance of Senior
Notes under the Senior Note Indenture in addition to the $500,000,000
aggregate initial offering price of the Notes offered hereby.
Each Note will be issued initially either as a Global Note or as a
Certificated Note, in either case in fully registered form without coupons.
Except as set forth in the accompanying Prospectus under the caption "Book-
Entry System," owners of beneficial interests in Global Notes will not be
entitled to receive individual Certificated Notes.
The Notes will be offered on a continuous basis and will mature at par nine
months or more from the date of issue, as selected by the purchaser and agreed
to by the Company. The Pricing Supplement applicable to each issue of Notes
will specify: (1) the designation and aggregate principal amount of such
Notes; (2) the date on which such Notes will mature; (3) the interest rate or
rates, or method of calculation of such rate or rates, on such Notes, and the
date from which such interest will accrue; (4) the dates on which such
interest will be payable; (5) the record dates for payments of interest; (6)
any redemption terms; (7) the period or periods within which, the price or
prices at which and the terms and conditions upon which such Notes may be
repaid, in whole or in part, at the option of the holder thereof; and (8)
other specific terms applicable to such Notes. Unless otherwise indicated in
the applicable Pricing Supplement, the Notes will be denominated in United
States currency in minimum denominations of $1,000 and integral multiples
thereof.
Interest rates offered by the Company with respect to the Notes may differ
depending upon, among other things, the aggregate principal amount of Notes
purchased in any single transaction.
Unless otherwise indicated in the applicable Pricing Supplement, there are
no provisions in the Senior Note Indenture or the Notes that require the
Company to redeem, or permit the holders to cause a redemption of, the Notes
or that otherwise protect the holders in the event that the Company incurs
substantial additional indebtedness (except for certain restrictions on the
Company's ability to create, assume or incur certain liens or to enter into
certain financing transactions after the Substitution Date, as described in
"Description of Senior Notes--Limitations on Liens" and "--Limitations on
Sale-Leaseback Transactions" in the accompanying Prospectus), whether or not
in connection with a change in control of the Company. However, any change in
control transaction that involves the incurrence of long-term indebtedness by
the Company in such a transaction would require approval of state utility
regulatory authorities and, possibly, of federal utility regulatory
authorities.
SECURITY
Upon the issuance of any of the Notes prior to the Substitution Date, the
Company will simultaneously deliver to the Senior Note Trustee, as security
for such Notes, First Mortgage Bonds, Pledged Series A, issued under the
Electric Utility Mortgage (the "Pledged Electric Bonds"). The Pledged Electric
Bonds will have the same interest rate, interest payment dates, stated
maturity date and redemption provisions, and will be in the same aggregate
principal amount, as the Notes then issued.
As provided in the Senior Note Indenture and the Supplemental Indenture to
the Electric Utility Mortgage which sets forth the terms of the Pledged
Electric Bonds, the Company's obligations to make payments with respect to the
principal of, premium or interest on the Pledged Electric Bonds shall be fully
or partially, as the case may be, satisfied and discharged to the extent that,
at the time that any such payment shall be due, the then due principal of,
premium or interest on the Notes issued simultaneously with such Pledged
Electric Bonds shall have been fully or partially paid or there shall have
been deposited with the Senior Note Trustee pursuant to the
S-3
<PAGE>
Senior Note Indenture sufficient available funds to fully or partially pay the
then due principal of, premium, if any or interest on such Notes.
Reference is made to "Description of Senior Notes--Security; Substitution
Date" in the accompanying Prospectus for a description of the circumstances
under which all or part of the Pledged Electric Bonds will cease to be held by
the Senior Note Trustee as security for the Notes. As explained in the
Prospectus, the Notes will cease to be secured by the Pledged Electric Bonds
on the Substitution Date and, at the option of the Company either (i) will
become unsecured general obligations of the Company or (ii) will be secured by
first mortgage bonds issued under a mortgage indenture other than the Electric
Utility Mortgage or the Gas Utility Mortgage (the "Substituted Mortgage
Bonds"). If the Company does not elect to have the Notes become unsecured on
the Substitution Date, upon the issuance of any of the Notes on or after the
Substitution Date, the Company will simultaneously issue and deliver to the
Senior Note Trustee, as security for such Notes, Substituted Mortgage Bonds.
The Substituted Mortgage Bonds will have the same interest rate, interest
payment dates, stated maturity date and redemption provisions, and will be in
the same aggregate principal amount, as the Notes then issued.
In the event the Company elects to have the Notes become unsecured on the
Substitution Date, the Company's ability to create, assume or incur certain
liens or to enter into certain financing transactions will be restricted as
described in "Description of Senior Notes--Limitations on Liens" and "--
Limitations on Sale-Leaseback Transactions" in the accompanying Prospectus.
SUPPLEMENTAL PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis by the Company to or
through the Agents. The Agents, individually or in a syndicate, may purchase
Notes, as principal, from the Company from time to time for resale to
investors and other purchasers at varying prices relating to prevailing market
prices at the time of resale as determined by the applicable Agent or, if so
specified in the applicable Pricing Supplement, for resale at a fixed offering
price. If agreed to by the Company and an Agent, such Agent will utilize its
reasonable efforts to solicit offers to purchase the Notes. The Company will
pay each Agent a commission of .125% to .750% of the principal amount of each
Note sold through such Agent, depending upon the maturity of the Note.
Commissions with respect to Notes with stated maturities in excess of 30 years
that are sold through such Agent will be negotiated between the Company and
such Agent at the time of such sale. The Company has agreed to reimburse the
agents for certain expenses in connection with the offering of the Notes.
The Company will have the sole right to accept offers to purchase Notes and
may reject any proposed purchase of Notes in whole or in part. The Agents will
have the right, in their discretion reasonably exercised, to reject in whole
or in part any offer to purchase Notes received by them, if it solicits the
offer on an agency basis. The Company reserves the right to withdraw, cancel
or modify the offer without notice.
The Company may authorize the Agents to solicit offers by certain
institutions to purchase the Notes from the Company at the public offering
price set forth in the applicable Pricing Supplement pursuant to Delayed
Delivery Contracts ("Contracts") providing for payment and delivery on the
date or dates stated in such Pricing Supplement. Each Contract will be for an
amount not less than, and the aggregate principal amount of the Notes sold
pursuant to the Contracts shall be not less nor more than, the respective
amounts stated in such Pricing Supplement. Institutions with whom the
Contracts, when authorized, may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions, and other institutions, but will in all cases be
subject to the approval of the Company. The Contracts will not be subject to
any conditions except the purchase by an institution of the Notes covered by
its Contract shall not at the time of delivery be prohibited under the laws of
any jurisdiction in the United States to which such institution is subject.
Payment of the purchase price of the Notes will be required to be made in
immediately available funds in New York, New York on the date of settlement.
S-4
<PAGE>
Upon issuance, the Notes will not have an established trading market. The
Notes will not be listed on any securities exchange. The Agent may from time
to time purchase and sell Notes in the secondary market, but the Agents are
not obligated to do so, and there can be no assurance that there will be a
secondary market for the Notes or that there will be liquidity in the
secondary market if one develops. From time to time, the Agents may make a
market in the Notes, but the Agents are not obligated to do so and may
discontinue any market-making activity at any time.
In connection with an offering of Notes purchased by one or more Agents as
principal on a fixed offering price basis, such Agent(s) will be permitted to
engage in certain transactions that stabilize the price of Notes. Such
transactions may consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of Notes. If the Agent creates or the Agents
create, as the case may be, a short position in Notes, i.e., if it sells or
they sell Notes in an aggregate principal amount exceeding that set forth in
the applicable Pricing Supplement, such Agent(s) may reduce that short
position by purchasing Notes in the open market. In general, purchases of
Notes for the purpose of stabilization or to reduce a short position could
cause the price of Notes to be higher than it might be in the absence of such
purchases.
Neither the Company nor any of the Agents makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described in the immediately preceding paragraph may have on the
price of Notes. In addition, neither the Company nor any of the Agents makes
any representation that the Agents will engage in any such transactions or
that such transactions, once commenced, will not be discontinued without
notice.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
agreed to indemnify the Agents against certain civil liabilities, including
liabilities under the Securities Act, or to contribute to payments the Agents
may be required to make in respect thereof.
The Agents and affiliates thereof engage in transactions with and perform
services for the Company in the ordinary course of business.
From time to time, the Company may sell other Senior Notes described in the
accompanying Prospectus, and the amount of Notes offered hereby is subject to
reduction as a result of such sales.
S-5
<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 DECEMBER 15, 1997
PROSPECTUS
PUGET SOUND ENERGY, INC.
$500,000,000
SENIOR NOTES
----------------
Puget Sound Energy, Inc. (the "Company") may offer from time to time up to
$500,000,000 aggregate principal amount of senior notes (the "Senior Notes").
Prior to the Substitution Date (as defined below), the Senior Notes will be
secured by the delivery to the Senior Note Trustee (as defined below) in trust
for the benefit of the holders of the Senior Notes of (i) first mortgage bonds
issued under the Company's electric mortgage indenture or (ii) first mortgage
bonds issued under the Company's gas mortgage indenture. The Senior Notes may
be offered in one or more series at prices and on terms to be determined at the
time of offering. The aggregate principal amount, maturity, interest rate (or
method of calculating the interest rate), any redemption provisions, any
sinking fund provisions, offering price, proceeds to the Company and other
terms of the offering of any series of the Senior Notes will be set forth in a
Prospectus Supplement to be delivered at the time of any offering.
The Senior Notes will be represented either by Global Notes registered in the
name of The Depository Trust Company ("DTC"), as depository ("Depository"), or
its nominee, or by securities in certificated form issued to the registered
owners thereof, as set forth in the applicable Prospectus Supplement. Interests
in Global Notes will be shown on, and transfers thereof will be effected only
through, records maintained by the Depository and its participants. Global
Notes will not be issuable as certificated securities except in circumstances
described herein or in the applicable Prospectus Supplement.
----------------
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.
----------------
The Senior Notes, or any series thereof if there shall be more than one
series, may be sold directly to a limited number of purchasers, through agents
designated from time to time, or through underwriters or dealers. See "Plan of
Distribution." If any agents of the Company or any underwriters are involved in
the sale of the Senior Notes, or any series thereof, in respect of which this
Prospectus is being delivered, the names of such agents or underwriters and any
applicable discounts or commissions with respect to the Senior Notes offered
hereby will be set forth in the Prospectus Supplement. See "Plan of
Distribution" for possible indemnification arrangements for underwriters,
dealers, agents and purchasers.
The date of this Prospectus is December 16, 1997.
<PAGE>
No person has been authorized to give any information or to make any
representation not contained in this Prospectus or the Prospectus Supplement
and, if given or made, such information or representation must not be relied
upon as having been authorized. This Prospectus and the Prospectus Supplement
do 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 or jurisdiction in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state or jurisdiction.
Neither the deliver of the Prospectus Supplement nor any sale made thereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date thereof.
AVAILABLE INFORMATION
The Company 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 may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices
at 7 World Trade Center, 13th Floor, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material may also be obtained by mail from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Such information may also be accessed electronically by
means of the Commission's home page on the Internet (http://www.sec.gov). In
addition, such reports, proxy statements and other information concerning the
Company may be inspected at the offices of the New York Stock Exchange, Inc.,
20 Broad Street, New York, New York 10005, on which certain securities of the
Company are listed.
This Prospectus constitutes a part of a registration statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
does not contain all the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and
regulations of the Commission, and reference is hereby made to the
Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Senior Notes. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and, in each instance, reference is made to the copy of such
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission. Each such statement is qualified in its entirety by such
reference.
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed with the Commission are hereby
incorporated by reference in this Prospectus:
(a) The Company's Annual Report on Form 10-K for the year ended December
31, 1996 (File No. 1-4393).
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1997 (File No. 1-4393).
(c) The Company's amendments on Form 10-Q/A, each filed with the
Commission on November 14, 1997, to its Quarterly Reports on Form 10-Q for
the quarters ended March 31 and June 30, 1997, and the Company's amendment
on Form 10-Q/A, filed with the Commission on December 4, 1997, to its
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997.
(d) The Company's Current Reports on Form 8-K filed with the Commission
on February 13, February 26, October 24 and December 4, 1997 (File No. 1-
4393).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering or offerings of the Senior Notes shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof
from the respective dates of filing of such documents. Any statement contained
in this Prospectus or in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that another statement contained in this
Prospectus or in any other subsequently filed document which 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.
The Company hereby undertakes to provide without charge to each person 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 of the documents referred to
above which have been or may be incorporated by reference in this Prospectus,
other than exhibits to such documents. Requests for such copies should be
directed to Investor Relations, Puget Sound Energy, Inc., 411-108th Avenue
N.E., Bellevue, Washington 98004-5515, (425) 454-6363.
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THE COMPANY
Puget Sound Energy, Inc., formerly Puget Sound Power & Light Company (the
"Company"), is an investor-owned public utility incorporated in the state of
Washington furnishing electric and, since February 10, 1997, gas service in a
territory covering approximately 6,000 square miles, principally in the Puget
Sound region of Washington state. On February 10, 1997, the Company completed
a merger (the "Merger") with the Washington Energy Company ("WECo") and its
principal subsidiary, Washington Natural Gas Company ("WNG"). Seattle-based
WNG provided natural gas distribution service in an area east of Puget Sound
that includes Seattle, Tacoma, Everett, Bellevue and Olympia. The Company
changed its name to Puget Sound Energy, Inc. effective with the Merger. The
Company's executive office is located at 411-108th Avenue N.E., Bellevue,
Washington 98004-5515, and its telephone number is (425) 454-6363.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the Company's ratios of earnings to fixed
charges for the respective periods indicated:
<TABLE>
<CAPTION>
TWELVE MONTHS TWELVE MONTHS
ENDED ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, SEPTEMBER 30, ------------------------
1997(1) 1996 1996 1995 1994 1993 1992
------------- ------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges(2)(3)............ 2.6x 3.1x 3.1x 2.6x 2.3x 3.0x 2.6x
</TABLE>
- --------
(1) The ratio for the twelve months ended September 30, 1997 includes charges
incurred in connection with the Merger. Had such charges been excluded
from earnings, the ratio of earnings to fixed charges for such period
would have been 3.1x.
(2) As a result of the Merger, each of the Company's ratios reflects the
combined operations of the Company and WECo. Because WECo's fiscal year
ended September 30, the combined ratios for the five years ended December
31, 1996 reflect the fiscal years ended December 31 for the Company and
September 30 for WECo. September 30 ratios are comprised of the results of
the Company and WECo for the twelve months ended September 30.
(3) For purposes of computing the ratios of earnings to fixed charges,
earnings represent income from continuing operations before extraordinary
items and cumulative effect of changes in accounting principles plus
applicable income taxes and fixed charges. Fixed charges include all
interest expense and the proportion deemed representative of the interest
factor of rent expense.
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USE OF PROCEEDS
Except as otherwise set forth in any Prospectus Supplement, the net proceeds
to be received by the Company from the issuance and sale of the Senior Notes
will initially become part of the general funds of the Company and will be
used for the repayment of all or a portion of the Company's outstanding short-
term borrowings incurred for the Company's construction program or for the
payment at maturity or upon redemption of certain securities and for other
corporate purposes.
SECURITIES
The Senior Notes may be issued in one or more series (i) secured by the
Company's first mortgage bonds issued under either or both of the Company's
current mortgage indentures or (ii) following the Substitution Date (as
defined below), as either unsecured senior notes or as senior notes secured by
the Company's first mortgage bonds issued under a mortgage indenture other
than the Company's current mortgage indentures. On the Substitution Date, any
outstanding Senior Notes secured by the Company's first mortgage bonds when
issued will cease to be secured by first mortgage bonds issued under either of
the Company's current mortgage indentures and, at the Company's option, either
(a) will become unsecured general obligations of the Company or (b) will be
secured by first mortgage bonds issued under a mortgage indenture other than
the Company's current mortgage indentures.
Senior Notes will be issued under an indenture (the "Senior Note
Indenture"), the form of which is an exhibit to the Registration Statement,
between the Company and State Street Bank and Trust Company, as trustee (the
"Senior Note Trustee"), and are described below under the caption "Description
of Senior Notes." Prior to the Substitution Date, first mortgage bonds
securing the Senior Notes (the "Pledged Bonds") will be issued under either
(a) the Fortieth Supplemental Indenture, dated September 1, 1954, as
heretofore supplemented and amended by supplemental trust indentures and a new
supplemental trust indenture for each such series of Pledged Bonds issued
thereunder (such Fortieth Supplemental Indenture, as supplemented and as to be
supplemented, is herein referred to as the "Electric Utility Mortgage"), all
from the Company to State Street Bank and Trust Company, as successor trustee
(the "Electric Utility Mortgage Trustee") or (b) the Indenture of First
Mortgage, dated April 1, 1957, as heretofore supplemented and amended by
supplemental trust indentures and a new supplemental trust indenture for each
such series of Pledged Bonds issued thereunder (such Indenture of First
Mortgage, as supplemented and as to be supplemented is herein referred to as
the "Gas Utility Mortgage"), all from the Company, as successor to Washington
Natural Gas Company, to Harris Trust and Savings Bank, Chicago, Illinois, as
trustee (the "Gas Utility Mortgage Trustee"). The Pledged Bonds to be issued
under the Electric Utility Mortgage (the "Pledged Electric Bonds") are
described below under the caption "Pledged Electric Bonds and Electric Utility
Mortgage." The Pledged Bonds to be issued under the Gas Utility Mortgage (the
"Pledged Gas Bonds") are described below under the caption "Pledged Gas Bonds
and Gas Utility Mortgage."
There is no requirement, under either the Senior Note Indenture, the
Electric Utility Mortgage or the Gas Utility Mortgage (collectively, the
"Indentures"), that future issues of debt securities of the Company be issued
under the Indentures, and, subject to certain restrictions following the
Substitution Date which are described in "Description of Senior Notes--
Limitations on Liens" and "--Limitations on Sale-Leaseback Transactions," the
Company will be free to employ other indentures or documentation, containing
provisions different from those included in the Indentures or applicable to
one or more issues of Senior Notes, in connection with future issues of such
other debt securities.
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<PAGE>
DESCRIPTION OF SENIOR NOTES
GENERAL
The following summaries of certain provisions of the Senior Note Indenture
do not purport to be complete and are subject to, and qualified in their
entirety by, all of the provisions of the Senior Note Indenture which is
incorporated herein by this reference and the form of which is an exhibit to
the Registration Statement of which this Prospectus is a part. References to
Section numbers under this caption are references to the Section numbers of
the Senior Note Indenture.
Until the Substitution Date (as defined below), the Senior Notes will be
secured by one or more series of Pledged Bonds issued under either the
Electric Utility Mortgage or the Gas Utility Mortgage and delivered by the
Company to the Senior Note Trustee. See "--Security; Substitution Date." ON
THE SUBSTITUTION DATE (AS DEFINED BELOW), THE SENIOR NOTES WILL CEASE TO BE
SECURED BY THE PLEDGED BONDS AND, AT THE COMPANY'S OPTION, EITHER (I) WILL
BECOME UNSECURED GENERAL OBLIGATIONS OF THE COMPANY OR (II) WILL BE SECURED BY
FIRST MORTGAGE BONDS (THE "SUBSTITUTED PLEDGED BONDS") ISSUED UNDER A MORTGAGE
INDENTURE OTHER THAN THE ELECTRIC UTILITY MORTGAGE OR THE GAS UTILITY MORTGAGE
(A "SUBSTITUTED MORTGAGE"). The Senior Note Indenture provides that, in
addition to the Senior Notes offered hereby, additional Senior Notes may be
issued thereunder, without limitation as to aggregate principal amount,
provided that, prior to the Substitution Date, the amount of Senior Notes that
may be issued cannot exceed the aggregate principal amount of first mortgage
bonds that the Company is able to issue under its Electric Utility Mortgage
and its Gas Utility Mortgage. See "Pledged Electric Bonds and Electric Utility
Mortgage--Issuance of Pledged Electric Bonds and Withdrawal of Cash Deposited
Against Such Issuance" and "Pledged Gas Bonds and Gas Utility Mortgage--
Issuance of Pledged Gas Bonds and Withdrawal of Cash Deposited Against Such
Issuance."
The Senior Note Indenture provides that the Senior Notes will be issued in
one or more series, may be issued at various times, may have differing
maturity dates and may bear interest at differing rates. The Prospectus
Supplement applicable to each series of Senior Notes will set forth any
variation in the terms and provisions of such Senior Notes and the related
series of Pledged Bonds from those described in this Prospectus. Unless
otherwise indicated in the applicable Prospectus Supplement, the Senior Notes
will be denominated in United States currency in minimum denominations of
$1,000 and integral multiples thereof.
Unless otherwise indicated in the applicable Prospectus Supplement, there
are no provisions in the Senior Note Indenture or the Senior Notes that
require the Company to redeem, or permit the holders to cause a redemption of,
the Senior Notes or that otherwise protect the holders in the event that the
Company incurs substantial additional indebtedness (except for certain
restrictions on the Company's ability to create, assume or incur certain liens
or to enter into certain financing transactions after the Substitution Date,
as described in "--Limitations on Liens" and "--Limitations on Sale-Leaseback
Transactions"), whether or not in connection with a change in control of the
Company. However, any change in control transaction that involves the
incurrence of additional long-term indebtedness (as notes, first mortgage
bonds or otherwise) by the Company in such a transaction would require
approval of state utility regulatory authorities and, possibly, of federal
utility regulatory authorities.
REGISTRATION, TRANSFER AND EXCHANGE
Senior Notes of any series will be exchangeable for other Senior Notes of
the same series of any authorized denominations and of a like aggregate
principal amount and tenor. (Section 2.06).
Unless otherwise indicated in the applicable Prospectus Supplement, Senior
Notes may be presented for registration of transfer (duly endorsed or
accompanied by a duly executed written instrument of transfer), at the office
of the Senior Note Trustee maintained for such purpose with respect to any
series of Senior Notes and referred to in the applicable Prospectus
Supplement, without service charge and upon payment of any taxes and other
governmental charges as described in the Senior Note Indenture. Such transfer
or exchange will be effected upon being satisfied with the documents of title
and indemnity of the person making the request. (Sections 2.06 and 2.07).
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<PAGE>
In the event of any redemption of Senior Notes of any series, the Senior
Note Trustee will not be required to exchange or register a transfer of any
Senior Notes of such series selected, called or being called for redemption
except, in the case of any Senior Note to be redeemed in part, the portion
thereof not to be so redeemed. (Section 2.06). See "Book-Entry System."
PAYMENT AND PAYING AGENTS
Principal of and interest and premium, if any, on Senior Notes issued in the
form of Global Notes will be paid in the manner described below under the
caption "Book-Entry System." Unless otherwise indicated in the applicable
Prospectus Supplement, interest on Senior Notes that are in the form of
certificated securities will be paid by wire transfer of clearinghouse funds
or by check mailed to the person entitled thereto at such person's address as
it appears in the register for the Senior Notes maintained by the Senior Note
Trustee; however, a holder of Senior Notes of one or more series under the
Senior Note Indenture in the aggregate principal amount of $10,000,000 or more
having the same interest payment dates will be entitled to receive payments of
interest on such series by wire transfer of immediately available funds to a
bank if appropriate wire transfer instructions have been received by the
Senior Note Trustee on or prior to the applicable regular record date.
(Section 2.12). Unless otherwise indicated in the applicable Prospectus
Supplement, the principal of, and interest at maturity and premium, if any, on
Senior Notes in the form of certificated securities will be payable in
immediately available funds at the office of the Senior Note Trustee. (Section
2.12).
All moneys paid by the Company to a paying agent for the payment of
principal of, interest or premium, if any, on any Senior Note which remain
unclaimed at the end of one year after such principal, interest or premium
shall have become due and payable will be repaid to the Company and the holder
of such Senior Note will thereafter look only to the Company for payment
thereof. (Section 5.04).
SECURITY; SUBSTITUTION DATE
Until the Substitution Date (as defined below), the Senior Notes will be
secured by one or more series of the Pledged Electric Bonds and/or by one or
more series of the Pledged Gas Bonds issued and delivered by the Company to
the Senior Note Trustee. See "Pledged Electric Bonds and Electric Utility
Mortgage" and "Pledged Gas Bonds and Gas Utility Mortgage." Upon the issuance
of Senior Notes prior to the Substitution Date, the Company will
simultaneously issue and deliver to the Senior Note Trustee, as security for
such Senior Notes, Pledged Electric Bonds or Pledged Gas Bonds. (Sections 4.01
and 4.08). Such Pledged Bonds will have the same stated rate or rates of
interest (or interest calculated in the same manner), interest payment dates,
stated maturity date and redemption provisions, and will be in the same
aggregate principal amount as the Senior Notes being issued. (Section 4.09).
The Company's obligations to make payments with respect to the principal of,
premium or interest on the Pledged Bonds will be fully or partially, as the
case may be, satisfied and discharged to the extent that, at the time that any
such payment shall be due, the then due principal of, premium or interest on
the related issue of Senior Notes shall have been fully or partially paid or
there shall have been deposited with the Senior Note Trustee pursuant to the
Senior Note Indenture sufficient available funds to fully or partially pay the
then due principal of, premium or interest on such Senior Notes. (Section
2.12).
THE "SUBSTITUTION DATE" WILL BE THE DATE THAT ALL FIRST MORTGAGE BONDS OF
THE COMPANY ISSUED AND OUTSTANDING UNDER THE ELECTRIC UTILITY MORTGAGE
("ELECTRIC BONDS"), OTHER THAN PLEDGED ELECTRIC BONDS, AND, IF ANY PLEDGED GAS
BONDS ARE THEN HELD BY THE SENIOR NOTE TRUSTEE, ALL FIRST MORTGAGE BONDS OF
THE COMPANY ISSUED AND OUTSTANDING UNDER THE GAS UTILITY MORTGAGE ("GAS BONDS"
AND, TOGETHER WITH THE ELECTRIC BONDS, THE "FIRST MORTGAGE BONDS"), OTHER THAN
PLEDGED GAS BONDS, HAVE BEEN RETIRED (AT, BEFORE OR AFTER THE MATURITY
THEREOF) THROUGH PAYMENT, REDEMPTION OR OTHERWISE (INCLUDING THOSE ELECTRIC
BONDS DEEMED TO BE PAID WITHIN THE MEANING OF THE ELECTRIC UTILITY MORTGAGE
AND THOSE GAS BONDS DEEMED TO BE PAID WITHIN THE MEANING OF THE GAS UTILITY
MORTGAGE). ON THE SUBSTITUTION DATE, THE SENIOR NOTE TRUSTEE WILL DELIVER TO
THE COMPANY FOR CANCELLATION ALL PLEDGED BONDS, AND THE COMPANY WILL CAUSE THE
SENIOR NOTE TRUSTEE TO PROVIDE NOTICE TO ALL HOLDERS OF SENIOR NOTES OF THE
OCCURRENCE OF THE SUBSTITUTION DATE. AS A RESULT, ON THE SUBSTITUTION DATE,
THE PLEDGED BONDS WILL CEASE TO SECURE THE SENIOR NOTES, AND, AT THE
7
<PAGE>
OPTION OF THE COMPANY, THE SENIOR NOTES EITHER (I) WILL BECOME UNSECURED
GENERAL OBLIGATIONS OF THE COMPANY OR (II) WILL BE SECURED BY SUBSTITUTED
PLEDGED BONDS. (Section 4.11). Each issue of Pledged Bonds will be an issue of
Electric Bonds or Gas Bonds of the Company, all of which are secured by a lien
on certain property owned by the Company. In certain circumstances prior to
the Substitution Date, the Company is permitted to reduce the aggregate
principal amount of an issue of Pledged Bonds held by the Senior Note Trustee,
but in no event to an amount lower than the aggregate outstanding principal
amount of the Senior Notes initially issued contemporaneously with such
Pledged Bonds. (Section 4.07). Following the Substitution Date, the Company
will cause the Electric Utility Mortgage and the Gas Utility Mortgage to be
closed, and the Company will not issue any additional bonds under either such
Indenture. (Section 4.10).
LIMITATIONS ON LIENS
Under the terms of the Senior Note Indenture, the Company may not issue any
First Mortgage Bonds other than Pledged Bonds, and the Company will be
precluded after the Substitution Date from issuing additional Electric Bonds
or Gas Bonds. In addition, except as described below and unless Substituted
Pledged Bonds are issued to secure the Senior Notes, after the Substitution
Date the Company may not create, assume or incur any mortgage, pledge, lien or
security interest (collectively referred to in this section and under "--
Limitations on Sale-Leaseback Transactions" as "mortgages") upon any real
property interest or other depreciable asset which is used in the Company's
electric or gas utility business, whether owned at the Substitution Date or
thereafter acquired, to secure any indebtedness for money borrowed other than
indebtedness with maturities of twelve months or less ("Debt"), without
effectively securing all Senior Notes (other than such Senior Notes, if any,
which shall by their terms be expressly excluded from such provision) equally
and ratably with such Debt; provided, however, that this restriction will not
apply to:
(a) mortgages on any property existing at the time of the property's
acquisition (but excluding any extension of or addition to such property
unless the terms of the mortgage as of the date of acquisition of such
property provide that such mortgage shall be secured by such extensions or
additions);
(b) mortgages to secure the payment of all or part of the purchase price
of property or to secure any Debt incurred prior to, at the time of or
within 180 days after the acquisition of such property for the purpose of
financing all or part of the purchase price of such property;
(c) mortgages secured by property used in the generation of electricity;
(d) mortgages existing as of the date of the Senior Note Indenture;
(e) certain permitted encumbrances similar to the permitted encumbrances
under the Electric Utility Mortgage;
(f) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any mortgage referred to
in clauses (a) through (e); provided, however, that the principal amount of
Debt secured thereby may not exceed the principal amount of Debt (plus any
premium or fee payable in connection with such extension, renewal or
replacement) so secured at the time of such extension, renewal or
replacement; and provided, further, that such mortgage must be limited to
all or such part of the property which was subject to the mortgage so
extended, renewed or replaced (plus improvements on such property);
(g) mortgages in favor of the United States, any State thereof, any other
country or any political subdivision of any of the foregoing, to secure
partial, progress, advance or other payments under any contract or statute;
or
(h) mortgages securing industrial development, pollution control or
similar revenue bonds.
Notwithstanding the foregoing restriction, the Company may create, assume or
incur any mortgage not excepted above without equally and ratably securing the
Senior Notes if the aggregate amount of all Debt then outstanding and secured
by such mortgage or any other mortgage not excepted above, together with all
net sale
8
<PAGE>
proceeds from Sale-Leaseback Transactions (as defined below) which are not
described in clause (i) or (ii) under "--Limitations on Sale-Leaseback
Transactions" below, does not exceed 15% of the Company's total consolidated
capitalization as shown on its latest audited consolidated balance sheet.
(Section 6.07).
LIMITATIONS ON SALE-LEASEBACK TRANSACTIONS
Except as described below and unless Substituted Pledged Bonds are issued to
secure the Senior Notes, from and after the Substitution Date the Company may
not sell or transfer any real property interest or other depreciable asset,
with the Company taking back a lease of such property (any such transaction, a
"Sale-Leaseback Transaction"), unless (i) such Sale-Leaseback Transaction
occurs within 180 days after the later of the date of acquisition of such
property or the date of the completion of construction or commencement of full
operations on such property or (ii) within 120 days after such Sale-Leaseback
Transaction, the Company applies or causes to be applied to the retirement of
Debt of the Company (other than Debt which is subordinate in right of payment
to the Senior Notes) an amount not less than the net proceeds of the sale of
such property. (Section 6.07)
Notwithstanding the foregoing restriction, the Company may effect any Sale-
Leaseback Transaction not excepted above if the net sale proceeds from such
Sale-Leaseback Transaction, together with the net sale proceeds from all other
Sale-Leaseback Transactions not excepted above and all Debt then outstanding
and secured by mortgages not described in any of clauses (a) through (h) under
"--Limitations on Liens," does not exceed 15% of the Company's total
consolidated capitalization as shown on its latest audited consolidated
balance sheet. The Company may also effect any Sale-Leaseback Transaction
involving a lease for a period, including renewals, of not more than 36
months. (Section 6.07).
EVENTS OF DEFAULT
The following constitute events of default under the Senior Note Indenture:
(a) default in the payment of principal or premium, if any, on any Senior Note
when due and payable and continuance of such default for five days; (b)
default in the payment of interest on any Senior Note when due which continues
for 30 days; (c) default in the performance or breach of any other covenant or
warranty of the Company in the Senior Note Indenture and the continuation
thereof for 90 days after written notice to the Company as provided in the
Senior Note Indenture; (d) prior to the Substitution Date, the occurrence of a
default under the Electric Utility Mortgage, of which default the Electric
Utility Mortgage Trustee or the holders of a majority in aggregate principal
amount of the outstanding Senior Notes have given written notice to the Senior
Note Trustee; (e) prior to the Substitution Date, the occurrence of a default
under the Gas Utility Mortgage, of which default the Gas Utility Mortgage
Trustee or the holders of a majority in aggregate principal amount of the
outstanding Senior Notes have given written notice to the Senior Note Trustee;
(f) if any Substituted Pledged Bonds are outstanding, the occurrence of a
default under the Substituted Mortgage, of which default the trustee under
such Substituted Mortgage or the holders of a majority in aggregate principal
amount of the outstanding Senior Notes have given written notice to the Senior
Note Trustee; and (g) certain events of bankruptcy, insolvency or
reorganization of the Company. (Section 8.01).
If an event of default occurs and is continuing, either the Senior Note
Trustee or the holders of a majority in principal amount of the outstanding
Senior Notes may declare the principal amount of all Senior Notes to be due
and payable immediately. Upon such acceleration of the Senior Notes, the
Senior Note Trustee is empowered to cause the mandatory redemption of the
Pledged Bonds or Substituted Pledged Bonds under the terms of the Electric
Utility Mortgage, Gas Utility Mortgage or the Substituted Mortgage, as the
case may be. At any time after an acceleration of the Senior Notes has been
declared, but before a judgment or decree for the immediate payment of the
principal amount of the Senior Notes has been obtained, and so long as all
first mortgage bonds have not been accelerated, if the Company pays or
deposits with the Senior Note Trustee a sum sufficient to pay all matured
installments of interest, the principal and any premium which has become due
otherwise than by acceleration and any other amounts due the Senior Note
Trustee, and all defaults shall have been cured or waived, then such payment
or deposit will cause an automatic rescission and annulment of the
acceleration of the Senior Notes. (Section 8.01).
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<PAGE>
The Senior Note Indenture provides that the Senior Note Trustee generally
will be under no obligation to exercise any of its rights or powers under the
Senior Note Indenture at the request or direction of any of the holders unless
such holders have offered to the Senior Note Trustee reasonable security or
indemnity against the liabilities and costs which may be incurred by such
exercise. (Section 9.02). The holders of a majority in principal amount of the
outstanding Senior Notes generally will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Senior Note Trustee, or of exercising any trust or power conferred on the
Senior Note Trustee, with respect to the Senior Notes. (Section 8.07). Each
holder of any Senior Note has the right to institute a proceeding with respect
to the Senior Note Indenture, but such right is subject to certain conditions
precedent specified in the Senior Note Indenture. (Section 8.04). The Senior
Note Indenture provides that the Senior Note Trustee, within 90 days after the
occurrence of a default with respect to the Senior Notes, is required to give
the holders of the Senior Notes notice of such default, unless cured or
waived, but, except in the case of default in the payment of principal of, or
premium, if any, or interest on any Senior Notes, the Senior Note Trustee may
withhold such notice if it determines in good faith that it is in the interest
of such holders to do so. (Section 8.08). The Company is required to deliver
to the Senior Note Trustee each year a certificate as to whether or not, to
the knowledge of the officers signing such certificate, the Company is in
compliance with the conditions and covenants under the Senior Note Indenture.
(Section 6.06).
MODIFICATION
Modification and amendment of the Senior Note Indenture may be effected by
the Company and the Senior Note Trustee with the consent of the holders of a
majority in principal amount of the outstanding Senior Notes affected thereby,
provided that no such modification or amendment may, without the consent of
the holder of each outstanding Senior Note affected thereby, (a) change the
maturity date of any Senior Note; (b) reduce the rate or extend the time of
payment of interest on any Senior Note; (c) reduce the principal amount of, or
premium payable on, any Senior Note; (d) change the coin or currency of any
payment of principal of, or any premium or interest on, any Senior Note; (e)
change the date on which any Senior Note may be redeemed or adversely affect
the rights of a holder to institute suit for the enforcement of any payment on
or with respect to any Senior Note; (f) impair the interest of the Senior Note
Trustee in the Pledged Bonds or Substituted Pledged Bonds held by it or, prior
to the Substitution Date, reduce the principal amount of any issue of Pledged
Bonds or Substituted Pledged Bonds securing the Senior Notes to an amount less
than the principal amount of the related issue of Senior Notes or alter the
payment provisions of such Pledged Bonds or Substituted Pledged Bonds in a
manner adverse to the holders of the Senior Notes; or (g) modify the foregoing
requirements or reduce the percentage of outstanding Senior Notes necessary to
modify or amend the Senior Note Indenture or to waive any past default to less
than a majority. Modification and amendment of the Senior Note Indenture may
be effected by the Company and the Senior Note Trustee without the consent of
the holders (a) to add to the covenants of the Company for the benefit of the
holders or to surrender a right conferred on the Company in the Senior Note
Indenture; (b) to add further security for the Senior Notes; (c) to make
certain other modifications, generally of a ministerial or immaterial nature;
or (d) to make certain other modifications which are not prejudicial to the
interests of the holders of the Senior Notes. (Sections 13.01 and 13.02).
DEFEASANCE AND DISCHARGE
The Senior Note Indenture provides that the Company will be discharged from
any and all obligations in respect to the Senior Notes and the Senior Note
Indenture (except for certain obligations such as obligations to register the
transfer or exchange of Senior Notes, replace stolen, lost or mutilated Senior
Notes and maintain paying agencies) if, among other things, the Company
irrevocably deposits with the Senior Note Trustee, in trust for the benefit of
holders of Senior Notes, money or certain United States government
obligations, or any combination thereof, which through the payment of interest
thereon and principal thereof in accordance with their terms will provide
money in an amount sufficient, without reinvestment, to make all payments of
principal of, and any premium and interest on, the Senior Notes on the dates
such payments are due in accordance with the terms of the Senior Note
Indenture and the Senior Notes provided that, unless all of the Senior Notes
are to be due within 90 days of such deposit by redemption or otherwise, the
Company shall also have delivered to the
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Senior Note Trustee an opinion of counsel to the effect that the holders of
the Senior Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such defeasance or discharge of the Senior Note
Indenture. Thereafter, the holders of Senior Notes must look only to such
deposit for payment of the principal of, and interest and any premium on, the
Senior Notes. (Section 5.01).
CONSOLIDATION, MERGER AND SALE OR DISPOSITION OF ASSETS
The Company will not consolidate with or merge into any other corporation or
sell, transfer or otherwise dispose of all or substantially all its assets
unless the successor or transferee corporation assumes by supplemental
indenture the due and punctual payment of the principal of and premium and
interest on all the Senior Notes and the performance of every covenant of the
Senior Note Indenture to be performed or observed by the Company and (i) if
such transaction occurs prior to the Substitution Date, unless the successor
or transferee corporation assumes the Company's obligations under the Electric
Utility Mortgage and the Gas Utility Mortgage with respect to the Pledged
Bonds, or (ii) if such transaction occurs on or after the Substitution Date
and Substituted Pledged Bonds are outstanding, unless the successor or
transferee corporation assumes the Company's obligations under the Substituted
Mortgage with respect to the Substituted Pledged Bonds. Upon any such
consolidation, merger, sale, transfer or other disposition of all or
substantially all of the assets of the Company, the successor corporation
formed by such consolidation or into which the Company is merged or to which
such transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Senior Note Indenture
with the same effect as if such successor corporation had been named as the
Company therein and the Company will be released from all obligations under
the Senior Note Indenture. The Senior Note Indenture defines "all or
substantially all" of the assets of the Company as being 50% or more of the
total assets of the Company as shown on the balance sheet of the Company as of
the end of the prior year and specifically permits any such sale, transfer or
other disposition during a calendar year of less than 50% of total assets
without the consent of the holders of the Senior Notes and without the
assumption by the transferee of the Company's obligations on the Senior Notes
and covenants contained in the Senior Note Indenture. (Sections 12.01 and
12.02).
VOTING OF PLEDGED BONDS HELD BY SENIOR NOTE TRUSTEE
The Senior Note Trustee, as a holder of Pledged Electric Bonds and/or
Pledged Gas Bonds, will attend any meeting of bondholders under the Electric
Utility Mortgage or the Gas Utility Mortgage, as the case may be, as to which
it receives due notice, or, at its option, will deliver its proxy in
connection therewith. Either at such meeting, or otherwise where the consent
of holders of Electric Bonds or Gas Bonds is sought without a meeting, the
Senior Note Trustee will vote all of the Pledged Electric Bonds or Pledged Gas
Bonds held by it, or will consent with respect thereto, as directed by the
holders of a majority in aggregate principal amount of the outstanding Senior
Notes; provided, however, that the Senior Note Trustee shall not be required
to vote the Pledged Bonds of any particular issue in favor of, or give consent
to, any action except upon notification by the Senior Note Trustee to the
holders of the related issue of Senior Notes of such proposal and consent
thereto of the holders of a majority in principal amount of the outstanding
Senior Notes of such issue. (Section 4.03).
RESIGNATION OR REMOVAL OF SENIOR NOTE TRUSTEE
The Senior Note Trustee may resign at any time upon written notice to the
Company specifying the day upon which the resignation is to take effect and
such resignation will take effect immediately upon the later of the
appointment of a successor Senior Note Trustee and such specified day.
(Section 9.10).
The Senior Note Trustee may be removed at any time by an instrument or
concurrent instruments in writing filed with the Senior Note Trustee and
signed by the holders, or their attorneys-in-fact, of at least a majority in
principal amount of the then outstanding Senior Notes. In addition, so long as
no event of default or event which,
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with the giving of notice or lapse of time or both, would become an event of
default has occurred and is continuing, the Company may remove the Senior Note
Trustee upon notice to the holder of each Senior Note outstanding and the
Senior Note Trustee, and appointment of a successor Senior Note Trustee.
(Section 9.10).
CONCERNING THE SENIOR NOTE TRUSTEE
State Street Bank and Trust Company is the Senior Note Trustee under the
Senior Note Indenture. The Senior Note Trustee also acts as trustee for the
Company's Electric Bonds. Though the Company does not currently maintain any
other banking relationships with the Senior Note Trustee in the ordinary
course of business, it may choose to do so in the future.
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PLEDGED ELECTRIC BONDS AND ELECTRIC UTILITY MORTGAGE
GENERAL
The Pledged Electric Bonds issued as security for Senior Notes will be
series of Electric Bonds issued under the Electric Utility Mortgage and a new
supplemental trust indenture for each such series of Pledged Electric Bonds,
all from the Company to the Electric Utility Mortgage Trustee. Copies of the
Electric Utility Mortgage and the form of supplemental indenture for the
Pledged Electric Bonds are filed as exhibits to the Registration Statement of
which this Prospectus is a part. The following summaries of certain provisions
of the Electric Utility Mortgage do not purport to be complete and are subject
to, and qualified in their entirety by, the detailed provisions of the
Electric Utility Mortgage which are incorporated herein by this reference.
References to Article and Section numbers under this caption are references to
Article and Section numbers of the Electric Utility Mortgage unless otherwise
indicated. Unless the context indicates otherwise, words or phrases defined in
the Electric Utility Mortgage are capitalized and used with the same meanings
under this caption.
TERMS OF PLEDGED ELECTRIC BONDS
Pledged Electric Bonds will be issued to the Senior Note Trustee. Each issue
of Pledged Electric Bonds to the Senior Note Trustee will be in a principal
amount equal to the principal amount of the Senior Notes issued
contemporaneously with such Pledged Electric Bonds. The Company's obligations
to make payments with respect to the principal of, premium or interest on the
Pledged Electric Bonds will be fully or partially, as the case may be,
satisfied and discharged to the extent that, at the time that any such payment
shall be due, the then due principal of, premium or interest on the related
issue of Senior Notes shall have been fully or partially paid or there shall
have been deposited with the Senior Note Trustee pursuant to the Senior Note
Indenture sufficient available funds to fully or partially pay the then due
principal of, premium or interest on such Senior Notes. The Pledged Electric
Bonds will be exchangeable for a like aggregate principal amount of Pledged
Electric Bonds of the same series of other authorized denominations at the
office of the Electric Utility Mortgage Trustee in Boston, Massachusetts,
without payment of any charge other than for any stamp tax or other
governmental charge incidental thereto.
The Electric Utility Mortgage does not contain any covenants or other
provisions that are specifically intended to afford holders of the Pledged
Electric Bonds special protection in the event of a highly leveraged
transaction.
The Prospectus Supplement applicable to each series of Senior Notes will set
forth any variation in the terms and provisions of the related series of
Pledged Electric Bonds, if any, from those described in this Prospectus. Each
issue of Pledged Electric Bonds will have the same stated rate or rates of
interest (or interest calculated in the same manner), interest payment dates,
stated maturity date and redemption provisions, and will be in the same
aggregate principal amount, as the related issue of Senior Notes.
DEPRECIATION FUND
The Company will pay cash or deliver Electric Bonds of any series to the
Electric Utility Mortgage Trustee by May 31 of each year in an amount equal to
the minimum provision for depreciation for the preceding year (i.e., an amount
by which 15% of gross utility operating revenues of the Company, after
deducting cost of electricity purchased and rental and lease payments, exceeds
maintenance, repairs and renewals). Cash held in the depreciation fund may be
applied to the retirement of the Electric Bonds of certain of the Secured
Medium-Term Notes, Series A, certain of the Secured Medium-Term Notes, Series
B, the 7.05% Series due 2021, the 7.25% Series due 2021 and the 6.80% Series
due 2022 (the last three series were issued as collateral for City of Forsyth,
Rosebud County, Montana, Pollution Control Revenue Refunding Bonds) at a price
not exceeding the applicable Regular Redemption Price thereof, or other
Electric Bonds at a price not exceeding the applicable Special Redemption
Price thereof. In lieu of paying cash or delivering Electric Bonds, the
Company will have the option of satisfying this obligation through the use of
unfunded property additions or unfunded Electric Bond
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credits, or both. Cash and Electric Bonds held in such fund may also be
withdrawn by using either of the aforesaid credits. (Section Four, Article II,
Part I). For information on the proposed modification of the depreciation fund
requirements, see "--Consent by Holders of the Pledged Electric Bonds to
Modification of Mortgage."
TITLES AND KIND AND PRIORITY OF LIEN
The Pledged Electric Bonds are to be secured equally and ratably with all
other Electric Bonds heretofore or hereafter issued under the Electric Utility
Mortgage by a valid and direct first mortgage of the Company's electric
utility property, and on its electric franchises and permits, except as stated
below and subject only to permitted encumbrances. (Granting Clauses).
The Electric Utility Mortgage permits the Company to acquire utility
property subject to certain prior liens. The Electric Utility Mortgage
requires that there shall be subjected to the lien thereof (subject to certain
liabilities in cases of mergers and consolidations) all utility property
(other than excepted property) which the Company may hereafter acquire.
(Granting Clauses of the Electric Utility Mortgage and Sections 9.06, 9.10 and
14.04). The lien of the Electric Utility Mortgage is subject to the lien of
the Gas Utility Mortgage with respect to the gas utility property of WNG
acquired in connection with the Merger, as well as all substitutions,
replacements, additions, betterments, developments, extensions and
enlargements to, of or upon such gas utility property. (Sections 9.07, 9.10
and 14.05 of the Electric Utility Mortgage and Section 14.03 of the Gas
Utility Mortgage). See "Pledged Gas Bonds and Gas Utility Mortgage--Titles and
Kind and Priority of Lien."
There are excepted from the lien of the Electric Utility Mortgage: cash,
securities, notes, accounts receivable and similar instruments; conditional
sales, appliance rental or lease agreements; materials and supplies;
merchandise held for the purpose of sale, lease or distribution; fuel
(including fissionable material) and personal property consumable in
operations; oil, gas and other minerals and timber under or upon lands of the
Company; office furniture and equipment, automobiles and similar
transportation equipment; nonutility property and certain property of a
successor corporation in a merger or consolidation. (Section 20.01).
DIVIDEND RESTRICTION
So long as any of the Electric Bonds are outstanding, the Company shall not
(i) declare or pay any dividends (other than dividends payable in the
Company's common stock) or make any other distribution on any shares of its
common stock or (ii) purchase, redeem or otherwise retire for consideration
any shares of stock except out of net income available for dividends on its
common stock (as defined), accumulated after December 31, 1957, plus the sum
of $7,500,000. (Section 1.05 of the Forty-fourth Supplemental Indenture to the
Electric Utility Mortgage).
ISSUANCE OF ELECTRIC BONDS AND WITHDRAWAL OF CASH DEPOSITED AGAINST SUCH
ISSUANCE
The principal amount of Electric Bonds which may be issued under the
Electric Utility Mortgage is not limited, provided that the issuance tests in
the Electric Utility Mortgage are satisfied. (Section 3.01). Electric Bonds
may be issued from time to time against (i) 60% of unfunded net additions
(Section 5.03), (ii) deposit of cash (Section 5.04) and/or (iii) 100% of
unfunded Electric Bond credits (Section 5.05). The issuance of Electric Bonds
against unfunded net additions, and the issuance of Electric Bonds for other
purposes, with certain exceptions, is subject to net earnings available for
interest being at least two times the annual interest requirement on all
Electric Bonds and prior lien debt to be outstanding. (Section 1.42). Cash
deposited is withdrawable against 60% of unfunded net additions and 100% of
unfunded Electric Bond credits (Sections 8.02 and 8.03).
MODIFICATION OF MORTGAGE
The rights of the bondholders under the Electric Utility Mortgage may be
modified with the consent of the holders of 66 2/3% of the Electric Bonds,
including the consent of the holders of 66 2/3% of the Electric Bonds of each
series affected by the proposed modification. In general, no adverse
modification of the terms of payment
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and no modification permitting additional prior or parity liens, or reducing
the percentage of Electric Bonds required for modification, is effective
against any bondholder without the consent of such holder. (Section 18.02).
THE ELECTRIC UTILITY MORTGAGE TRUSTEE
The holders of a majority in principal amount of the Electric Bonds have the
right to require the Electric Utility Mortgage Trustee to enforce the Electric
Utility Mortgage, but the Electric Utility Mortgage Trustee is entitled to
receive reasonable indemnity and under certain circumstances is not required
to act (Section 12.20).
DEFAULTS AND NOTICES
A default under the Electric Utility Mortgage is defined as (i) failure to
pay the principal and premium when due or interest for 30 days after becoming
due, (ii) failure to satisfy any sinking, improvement or depreciation fund
obligation for 60 days after becoming due, (iii) failure for 90 days after
notice to observe other covenants or conditions, (iv) entry of an order for
reorganization or appointment of a trustee or receiver and continuance of such
order or appointment unstayed for 90 days, (v) certain adjudications,
petitions or consents in bankruptcy, insolvency or reorganization proceedings
and (vi) rendering of a judgment in excess of $100,000 and its continuance
unsatisfied for 90 days. (Section 12.01).
The Electric Utility Mortgage does not require the filing with the Trustee
of any periodic evidence as to the absence of default or as to compliance with
the terms of the Electric Utility Mortgage.
CONSENT BY HOLDERS OF THE PLEDGED ELECTRIC BONDS TO MODIFICATION OF FIRST
MORTGAGE INDENTURE
The Company anticipates that its fuel costs may increase in future years as
it utilizes its combustion turbines and other thermal resources. The
offsetting increases in revenues may escalate the minimum provision for
depreciation (15% of operating revenues less certain deductions) out of
proportion to reasonable maintenance and replacement needs. This distortion
would adversely affect the calculation of unfunded net property additions
available for certain purposes under the Electric Utility Mortgage, including
issuance of Pledged Electric Bonds.
In such event, the Company would propose to modify the Electric Utility
Mortgage by reducing the amount of operating revenues used in determining the
minimum provision for depreciation by the amount of fuel costs.
Each supplemental indenture for a new series of Pledged Electric Bonds will
provide that each holder of the Pledged Electric Bonds, by his acceptance
thereof, consents to such modification. This modification has been similarly
consented to by the holders of the Electric Bonds of the Secured Medium-Term
Notes, Series A and the Secured Medium Term Notes, Series B. The Sixty-seventh
Supplemental Indenture to the Electric Utility Mortgage provides that the
trustee holding the Electric Bonds issued under said Supplemental Indenture as
collateral for the Puget Energy, Inc. Guaranteed Collateralized Bonds consents
to such modification on behalf of the holders of such Guaranteed
Collateralized Bonds. The Seventy-second and Seventy-third Supplemental
Indentures to the Electric Utility Mortgage provide that the trustees holding
Electric Bonds issued under said Supplemental Indentures as collateral for
City of Forsyth, Rosebud County, Montana, Pollution Control Revenue Refunding
Bonds consent to such modification on behalf of the holders of such Pollution
Control Revenue Refunding Bonds. The modification will become effective when
consents have been obtained from the holders of 66 2/3% in principal amount of
each other series of Electric Bonds at the time outstanding.
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PLEDGED GAS BONDS AND GAS UTILITY MORTGAGE
GENERAL
The Pledged Gas Bonds issued as security for Senior Notes will be series of
Gas Bonds issued under the Gas Utility Mortgage and a new supplemental trust
indenture for each such series of Pledged Gas Bonds, all from the Company to
the Gas Utility Mortgage Trustee. A copy of the Gas Utility Mortgage is filed
as an exhibit to the Registration Statement of which this Prospectus is a
part. The following summaries of certain provisions of the Gas Utility
Mortgage do not purport to be complete and are subject to, and qualified in
their entirety by, the detailed provisions of the Gas Utility Mortgage which
are incorporated herein by this reference. References to Article and Section
numbers under this caption are references to Article and Section numbers of
the Gas Utility Mortgage unless otherwise indicated. Unless the context
indicates otherwise, words or phrases defined in the Gas Utility Mortgage are
capitalized and used with the same meanings under this caption.
TERMS OF PLEDGED GAS BONDS
Pledged Gas Bonds will be issued to the Senior Note Trustee. Each issue of
Pledged Gas Bonds to the Senior Note Trustee will be in a principal amount
equal to the principal amount of the Senior Notes issued contemporaneously
with such Pledged Gas Bonds. The Company's obligations to make payments with
respect to the principal of, premium or interest on the Pledged Gas Bonds will
be fully or partially, as the case may be, satisfied and discharged to the
extent that, at the time that any such payment shall be due, the then due
principal of, premium or interest on the related issue of Senior Notes shall
have been fully or partially paid or there shall have been deposited with the
Senior Note Trustee pursuant to the Senior Note Indenture sufficient available
funds to fully or partially pay the then due principal of, premium or interest
on such Senior Notes. The Pledged Gas Bonds will be exchangeable for a like
aggregate principal amount of Pledged Gas Bonds of the same series of other
authorized denominations at the office of the Gas Utility Mortgage Trustee in
Chicago, Illinois, without payment of any charge other than for any stamp tax
or other governmental charge incidental thereto.
The Gas Utility Mortgage does not contain any covenants or other provisions
that are specifically intended to afford holders of the Pledged Gas Bonds
special protection in the event of a highly leveraged transaction.
The Prospectus Supplement applicable to each series of Senior Notes will set
forth any variation in the terms and provisions of the related series of
Pledged Gas Bonds, if any, from those described in this Prospectus. Each issue
of Pledged Gas Bonds will have the same stated rate or rates of interest (or
interest calculated in the same manner), interest payment dates, maturity date
and redemption provisions, and will be in the same aggregate principal amount,
as the related issue of Senior Notes.
RENEWAL FUND
The Company will pay cash and/or deliver Gas Bonds (taken at the principal
amount thereof) to the Gas Utility Mortgage Trustee for deposit into a renewal
fund on or before May 1 of each year in an amount equal to the greater of
(a) the aggregate amount of the minimum provision for depreciation (i.e.,
an amount computed at the rate of 2% per annum, or such other rate as may
be permitted or required by the Washington Utilities and Transportation
Commission, of the book value of depreciable gas utility property subject
to the lien of the Gas Utility Mortgage and not to prior liens) from March
1, 1957 to the end of the next preceding calendar year; or
(b) the aggregate amount of retirements for the same period;
in excess of the greater of
(i) the aggregate amounts for the minimum provision for depreciation or
retirements, whichever is greater, shown in the next preceding renewal fund
certificate filed with the Gas Utility Mortgage Trustee pursuant to the
requirements of Section 4.04 of the Gas Utility Mortgage; or
(ii) the aggregate amounts for the minimum provision for depreciation or
retirements, whichever is greater, shown in the latest certificate of
available net additions delivered to the Gas Utility Mortgage Trustee
pursuant to Section 2.01 of the Gas Utility Mortgage;
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less the aggregate amount of Gas Bonds retired by sinking fund operations, not
theretofore used as a credit on account of the renewal fund in previous
renewal fund certificates. The renewal fund obligation may be satisfied in
whole or in part by credits consisting of unfunded property additions and/or
unfunded Gas Bond credits. (Section 4.04).
Any cash deposited in the renewal fund, if and to the extent that the
Company at the time does not have property additions available for use as a
credit to satisfy such renewal fund obligation, may, upon the written order of
the Company, be applied by the Gas Utility Mortgage Trustee to the redemption
of certain Gas Bonds or, if not so applied pursuant to the provisions of the
Gas Utility Mortgage, to the retirement of Gas Bonds. (Section 4.04).
TITLES AND KIND AND PRIORITY OF LIEN
The Pledged Gas Bonds are to be secured equally and ratably with all other
Gas Bonds heretofore issued under the Gas Utility Mortgage by a valid and
direct first mortgage of the Company's gas utility property (except as stated
below) and on its gas utility franchises and permits and gas purchase
contracts (Section 9.14 and Article Two of the Seventh Supplemental Indenture
to the Gas Utility Mortgage), subject only to permitted encumbrances (Granting
Clause VI and Section 1.39) and certain minor exceptions (Granting Clause IX).
Notwithstanding the foregoing, there is excepted from the lien of the Gas
Utility Mortgage, among other things, all property owned by Puget Sound Power
& Light Company immediately prior to the effective time of the Merger, as well
as any property acquired by the Company after the Merger (except
substitutions, replacements, additions, betterments, developments, extensions
and enlargements to, of or upon the gas utility property owned by WNG at the
time of the Merger). (Section 1.03 of the Thirty-first Supplemental Indenture
to the Gas Utility Mortgage).
The Gas Utility Mortgage permits the Company to acquire gas utility property
subject to prior liens, but such property shall not be deemed to be "property
additions" under the Gas Utility Mortgage unless and until such prior lien is
paid. At such time as title to such property shall vest in the Company free
and clear of such prior lien, then such property shall be subject to the lien
of the Gas Utility Mortgage, subject only to the permitted encumbrances and
exceptions referred to herein (Sections 1.28, 9.07 and 9.10).
There are excepted from the lien of the Gas Utility Mortgage: cash,
securities, notes, accounts receivable and similar instruments; conditional
sales, appliance rental or lease agreements; materials and supplies;
merchandise held for the purpose of sale, lease or distribution; gas or liquid
hydrocarbons in pipe lines and in storage; fuel and personal property
consumable in operations; oil, gas and other minerals and timber under or upon
lands of the Company; office furniture and equipment, automobiles and similar
transportation equipment; nonutility property and certain property of a
successor corporation in a merger or consolidation. (Granting Clause IX).
DIVIDEND RESTRICTION
So long as any of the Company's Secured Medium Term Notes, Series C, issued
under the Gas Utility Mortgage, are outstanding, the Company shall not (i)
declare or pay any dividends (other than dividends payable in the Company's
common stock) or make any other distribution on any shares of its common stock
or (ii) purchase, redeem or otherwise retire for consideration any shares of
stock (other than in exchange for, or from the net cash proceeds of, other new
shares of capital stock of the Company and other than any shares of any class
of stock ranking as to dividends or assets prior to the Company's common stock
required to be purchased, redeemed or otherwise retired for any sinking fund
or purchase fund for such class of stock), if the aggregate amount of all such
dividends, distributions and expenditures made since September 30, 1994 would
exceed the aggregate amount of the net income of the Company accumulated after
September 30, 1994 plus the sum of $20,000,000. (Section 1.04 of the Thirtieth
Supplemental Indenture to the Gas Utility Mortgage).
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ISSUANCE OF GAS BONDS AND WITHDRAWAL OF CASH DEPOSITED AGAINST SUCH ISSUANCE
The principal amount of Gas Bonds issuable under the Gas Utility Mortgage is
not limited, provided that the issuance tests in the Gas Utility Mortgage are
satisfied. (Section 3.01). Gas Bonds may be issued from time to time against
(i) 60% of unfunded net additions (Section 5.03); (ii) deposit of cash
(Section 5.04); and/or (iii) 100% of unfunded Gas Bond credits (Section 5.05).
With certain exceptions, the issuance of Gas Bonds is subject to net earnings
available for interest being at least (a) two times the annual interest
requirements on all Gas Bonds and prior lien debt to be outstanding (Section
1.41) and (b) 1.75 times the annual interest charges on all indebtedness of
the Company to be outstanding immediately after such issuance. (Section 1.05
of the Thirtieth Supplemental Indenture to the Gas Utility Mortgage). Cash
deposited is withdrawable against 60% of unfunded net additions in the case of
moneys on deposit with the Gas Utility Mortgage Trustee for the purpose
described in clause (ii) of this paragraph, 100% of the amount of unfunded net
additions in the case of any other trust moneys and 100% of unfunded Gas Bond
credits. (Section 8.02 and 8.03).
MODIFICATION OF MORTGAGE
The rights of the bondholders under the Gas Utility Mortgage may be modified
with the consent of the holders of 66 2/3% of the Gas Bonds, including the
consent of the holders of 66 2/3% of the Gas Bonds of each series affected by
the proposed modification. In general, no adverse modification of the terms of
payment and no modification permitting additional prior or parity liens, or
reducing the percentage of Gas Bonds required for modification, is effective
against any bondholder without the consent of such holder. (Section 18.02).
THE GAS UTILITY MORTGAGE TRUSTEE
The holders of a majority in principal amount of the Gas Bonds have the
right to require the Gas Utility Mortgage Trustee to enforce the Gas Utility
Mortgage, but the Gas Utility Mortgage Trustee is entitled to receive
reasonable indemnity and under certain circumstances is not required to act.
(Section 12.20).
DEFAULTS AND NOTICES
An event of default under the Gas Utility Mortgage is defined as (i) failure
to pay the principal and premium when due, (ii) failure to pay interest for 10
days after becoming due, (iii) failure to satisfy any sinking, renewal,
improvement, maintenance or depreciation fund obligation for 30 days after
becoming due, (iv) failure for 30 days after notice to observe other covenants
or conditions, (v) entry of an order for reorganization or appointment of a
trustee or receiver or for the liquidation of the Company or the attachment of
the Company's property and continuance of such order, appointment or
attachment unstayed for 60 days, (vi) certain adjudications, petitions or
consents in bankruptcy, insolvency or reorganization proceedings, (vii)
failure to pay any part of the principal of, premium, if any, or interest on,
or any other payment of money due under any indebtedness (other than the Gas
Bonds) in an aggregate outstanding amount of $500,000 or more, or the failure
by the Company to perform or observe any other agreement, term or condition
contained in any document evidencing or securing such indebtedness, if the
effect of such failure is to cause, or to permit the holders of such
indebtedness to cause, or permit any other party to such indebtedness to
cause, any payment in respect of such indebtedness to become due prior to its
due date, and (viii) rendering of a judgment in excess of $100,000 and its
continuance unsatisfied for 90 days. (Section 12.01 and Article IV of the
Twenty-second Supplemental Indenture).
The Gas Utility Mortgage does not require the filing with the Gas Utility
Mortgage Trustee of any periodic evidence as to the absence of default or as
to compliance with the terms of the Gas Utility Mortgage.
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BOOK-ENTRY SYSTEM
Each series of Senior Notes may be issued in the form of one or more Global
Notes representing all or part of such series of Senior Notes and which will
be deposited with or on behalf of the Depository and registered in the name of
the Depository or a nominee of the Depository.
The following is based solely on information furnished by DTC:
Unless otherwise specified in the Prospectus Supplement, DTC will act as
Depository for those Senior Notes issued as Global Notes. The Global Notes
will be issued as fully-registered securities registered in the name of Cede &
Co. (DTC's partnership nominee). 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 Securities Exchange Act of 1934. 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. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., 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
a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of the Senior Notes under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Senior Notes
on DTC's records. The ownership interest of each actual purchaser of each
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 purchase, but Beneficial Owners are expected to
receive written confirmation providing details of the transaction, as well as
periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Senior Notes 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
the Senior Notes, except in the event that use of the book-entry system for
the Senior Notes is discontinued.
To facilitate subsequent transfers, all securities deposited by Participants
with DTC are registered in the name of DTC's partnership nominee, Cede & Co.
The deposit of the Senior Notes with DTC and their registration in the name of
Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of
the actual Beneficial Owners of the Senior Notes; DTC's records reflect only
the identity of the Direct Participants to whose accounts such Senior Notes
are credited, which may or may not be the Beneficial Owners. The Participants
will remain responsible for keeping account of the holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
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.
If the Global Notes are redeemable, redemption notices shall be sent to Cede
& Co. If less than all of the Global Notes are being redeemed, DTC's practice
is to determine by lot the amount of the interest of each Direct Participant
in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the Senior
Notes. Under its usual procedures, DTC mails an Omnibus Proxy to the Company
as soon as possible after the record date. The
19
<PAGE>
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Senior Notes are credited on the record
date (identified in a listing attached to the Omnibus Proxy).
Principal, interest and any premium payments on the Senior Notes will be
made to DTC. DTC's practice is to credit Direct Participant's accounts on
payable date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payment on
payable date. Payments by Participants to Beneficial Owners will be governed
by standing instructions and customary practices, as in the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Participant and not of
DTC, the applicable Trustee or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal, interest and any premium to DTC is the responsibility of the
Company or the applicable Trustee, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to a series of Senior Notes at any time by giving reasonable notice to
the Company or the Senior Note Trustee. Under such circumstances, if a
successor securities depository is not obtained, certificates for such series
of Senior Notes are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository) for any series of
Senior Notes. In that event, certificates for such series of Senior Notes will
be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from DTC, and the Company and any underwriters, dealers or
agents take no responsibility for the accuracy thereof.
The underwriters, dealers or agents of any Senior Notes may be Direct
Participants of DTC.
NONE OF THE COMPANY, THE SENIOR NOTE TRUSTEE, THE ELECTRIC UTILITY MORTGAGE
TRUSTEE, THE GAS UTILITY MORTGAGE TRUSTEE OR ANY AGENT FOR PAYMENT ON OR
REGISTRATION OF TRANSFER OR EXCHANGE OF THE GLOBAL NOTE WILL HAVE ANY
RESPONSIBILITY OR LIABILITY FOR ANY ASPECT OF THE RECORDS RELATING TO OR
PAYMENTS MADE ON ACCOUNT OF BENEFICIAL INTERESTS IN SUCH GLOBAL NOTE OR FOR
MAINTAINING, SUPERVISING OR REVIEWING ANY RECORDS RELATING TO SUCH BENEFICIAL
INTERESTS.
20
<PAGE>
PLAN OF DISTRIBUTION
The Company may offer the Senior Notes (i) through underwriters or dealers,
(ii) directly to a limited number of purchasers or to a single purchaser or
(iii) through agents. A Prospectus Supplement with respect to each series of
Senior Notes will set forth the terms of the offering and sale of such Senior
Notes, including the proceeds to the Company from such sale, the name or names
of any underwriters, the purchase price of such Senior Notes, any underwriting
discounts and other items constituting underwriter compensation, any initial
public offering price, any discounts or concessions allowed or reallowed or
paid to dealers and any securities exchanges on which such Senior Notes may be
listed. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
If underwriters are utilized, the Senior Notes being sold to them will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of
sale. The Senior Notes may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more underwriters. The underwriter or underwriters with
respect to the Senior Notes being offered will be named in a Prospectus
Supplement relating to such offering and, if an underwriting syndicate is
used, the managing underwriter or underwriters will be set forth on the cover
page of such Prospectus Supplement. Unless otherwise provided in the
Prospectus Supplement, the obligations of the underwriters will be subject to
certain conditions precedent, and the underwriters will be obligated to
purchase all of such Senior Notes if any are purchased.
The Senior Notes may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer
or sale of any Senior Notes in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Company to such agent will
be set forth, in a Prospectus Supplement. Unless otherwise provided in the
Prospectus Supplement, any such agent will be acting on a best efforts basis
for the period of its appointment.
If so indicated in a Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain institutions to
purchase the Senior Notes from the Company at the public offering price set
forth in such Prospectus Supplement pursuant to Delayed Delivery Contracts
("Contracts") providing for payment and delivery on the date or dates stated
in such Prospectus Supplement. Each Contract will be for an amount not less
than, and the aggregate principal amount of the Senior Notes sold pursuant to
the Contracts shall be not less nor more than, the respective amounts stated
in such Prospectus Supplement. Institutions with whom the Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions, but will in all cases be subject to the
approval of the Company. The Contracts will not be subject to any conditions
except (i) the purchase by an institution of the Senior Notes covered by its
Contract shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject, and
(ii) if the Senior Notes are being sold to underwriters, the Company shall
have sold to such underwriters the total principal amount of the Senior Notes
less the principal amount thereof covered by the Contracts. The underwriters
will not have any responsibility in respect of the validity or performance of
the Contracts.
Any underwriters, dealers or agents participating in the distribution of the
Senior Notes may be deemed to be underwriters, and any discounts or
commissions received by them on the sale or resale of the Senior Notes may be
deemed to be underwriting discounts and commissions under the Securities Act.
Agents and underwriters may be entitled, under agreements entered into with
the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act, and to
contribution with respect to payments which the agents or underwriters may be
required to make in respect thereof. Agents and underwriters may engage in
transactions with or perform services for the Company in the ordinary course
of business.
21
<PAGE>
LEGAL MATTERS
The validity of the Senior Notes to be offered will be passed upon for the
Company by Perkins Coie, Seattle, Washington and for any underwriters, dealers
or agents by Skadden, Arps, Slate, Meagher & Flom, LLP, New York, New York,
which shall rely upon the opinion of Perkins Coie with respect to matters
pertaining to the laws of the State of Washington. All matters pertaining to
the laws of the State of Washington will be passed upon by Perkins Coie.
EXPERTS
The consolidated financial statements and financial statement schedule of
the Company at December 31, 1996 and 1995, and for each of the three years in
the period ended December 31, 1996, incorporated by reference in this
Prospectus and the Registration Statement, have been incorporated herein in
reliance on the reports of Coopers & Lybrand L.L.P., given on the authority of
that firm as experts in accounting and auditing. In its report included in the
Company's Current Report on Form 8-K filed on October 24, 1997, Coopers &
Lybrand, L.L.P. states that, with respect to Washington Energy Company and
Washington Natural Gas Company as of September 30, 1996 and 1995, and for each
of the fiscal years ended September 30, 1996, 1995 and 1994, its opinion is
based on the report of other independent accountants, namely Arthur Anderson
LLP.
22
<PAGE>
===============================================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE
PRICING SUPPLEMENT OR THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS
PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE AGENTS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT OR
THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF. THIS PROSPECTUS
SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
The Company................................................................ S-2
Description of Senior Medium-Term Notes, Series A.......................... S-2
Supplemental Plan of Distribution.......................................... S-4
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents By Reference............................ 3
The Company................................................................ 4
Ratios of Earnings to Fixed Charges........................................ 4
Use of Proceeds............................................................ 5
Securities................................................................. 5
Description of Senior Notes................................................ 6
Pledged Electric Bonds and Electric Utility Mortgage....................... 13
Pledged Gas Bonds and Gas Utility Mortgage................................. 16
Book-Entry System.......................................................... 19
Plan of Distribution....................................................... 21
Legal Matters.............................................................. 22
Experts.................................................................... 22
</TABLE>
===============================================================================
===============================================================================
$500,000,000
[LOGO OF PSE]
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE
FROM DATE OF ISSUE
----------------
PROSPECTUS SUPPLEMENT
----------------
MERRILL LYNCH & CO.
NATIONSBANC MONTGOMERY
SECURITIES, INC.
SALOMON SMITH BARNEY
DECEMBER 16, 1997
===============================================================================
<PAGE>
PUGET SOUND ENERGY, INC.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Distribution Agreement.(1)
4.1 Form of Indenture related to Senior Notes.(1)
4.2 Fortieth through Seventy-fifth Supplemental Indentures defining the
rights of the holders of the Company's First Mortgage Bonds. (Exhibit
2-d to Registration No. 2-60200; Exhibit 4-c to Registration No. 2-
13347; Exhibits 2-e through and including 2-k to Registration No. 2-
60200; Exhibit 4-h to Registration No. 2-17465; Exhibits 2-1, 2-m and
2-n to Registration No. 2-60200; Exhibits 2-m to Registration No. 2-
37645; Exhibit 2-o through and including 2-s to Registration No. 2-
60200; Exhibit 5-b to Registration No. 2-62883; Exhibit 2-h to
Registration No. 2-65831; Exhibit (4)-j-1 to Registration No. 2-72061;
Exhibit (4)-a to Registration No. 2-91516; Exhibit (4)-b to Annual
Report on Form 10-K for the fiscal year ended December 31, 1985,
Commission File No. 1-4393; Exhibits (4)(a) and (4)(b) to Company's
Current Report on Form 8-K, dated April 22, 1986; Exhibit (4)a to
Company's Current Report on Form 8-K, dated September 5, 1986; Exhibit
(4)-b to Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1986, Commission File No. 1-4393; Exhibit (4)-c to
Registration No. 33-18506; Exhibit (4)-b to Annual Report on Form 10-K
for the fiscal year ended December 31, 1989, Commission
File No. 1-4393; Exhibit (4)-b to Annual Report on Form 10-K for the
fiscal year ended December 31, 1990, Commission File No. 1-4393;
Exhibits (4)-b and (4)-c to Registration No. 33-45916; Exhibit (4)-c
to Registration No. 33-50788; Exhibit (4)-a to Registration No. 33-
53056; and Exhibit 4.3 to Registration No. 33-63278.
4.3 Rights Agreement, dated as of January 15, 1991, between the Company
and The Chase Manhattan Bank, N.A., as Rights Agent. (Exhibit 2.1 to
Registration Statement on Form 8-A filed on January 17, 1991,
Commission File No. 1-4393)
4.4 Amendment No. 1 dated as of August 30, 1991, to the Rights Agreement
dated as of January 15, 1991, between the Registrant and the Bank of
New York (as successor to The Chase Manhattan Bank, N.A.), as Rights
Agent. (Exhibit 2.1 to Registration Statement on Form 8 filed on
August 30, 1991)
4.5 Amendment No. 2 dated as of October 18, 1995, to the Rights Agreement
dated as of January 15, 1991, between the Registrant and The Bank of
New York (as successor to The Chase Manhattan Bank, N.A.), as Rights
Agent. (Exhibit 1 to Registration Statement on Form 8-A/A filed on
October 27, 1995)
4.6 Pledge Agreement dated August 1, 1991, between the Company and The
First National Bank of Chicago, as Trustee. (Exhibit (4)-j to
Registration No. 33-45916)
4.7 Loan Agreement dated August 1, 1991, between the City of Forsyth,
Rosebud County, Montana and the Company. (Exhibit (4)-k to
Registration No. 33-45916)
4.8 Statement of Relative Rights and Preferences for the Adjustable Rate
Cumulative Preferred Stock, Series B ($25 Par Value). (Exhibit 1.1 to
Registration Statement on Form 8-A filed February 14, 1994, Commission
File No. 1-4393)
4.9 Statement of Relative Rights and Preferences for the Preference Stock,
Series R, $50 Par Value. (Exhibit 1.5 to Registration Statement on
Form 8-A filed February 14, 1994, Commission File No. 1-4393)
4.10 Statement of Relative Rights and Preferences for the 7 3/4% Series
Preferred Stock Cumulative, $100 Par Value. (Exhibit 1.6 to
Registration Statement on Form 8-A filed February 14, 1994, Commission
File No. 1-4393)
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.11 Pledge Agreement, dated as of March 1, 1992, by and between the
Company and Chemical Bank relating to a series of first mortgage
bonds. (Exhibit 4.15 to Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, Commission File No. 1-4393)
4.12 Pledge Agreement, dated as of April 1, 1993, by and between the
Company and The First National Bank of Chicago, relating to a series
of first mortgage bonds. (Exhibit 4.16 to Annual Report on Form 10-K
for the fiscal year ended December 31, 1993, Commission File No. 1-
4393)
4.13 Form of Statement of Relative Rights and Preferences for the Series II
Cumulative Preferred Stock, $25 Par Value (included as Annex F to the
Joint Proxy Statement/Prospectus filed February 1, 1996).
4.14 Form of Statement of Relative Rights and Preferences for the Series
III Cumulative Preferred Stock, $25 Par Value (included as Annex F to
the Joint Proxy Statement/Prospectus filed February 1, 1996).
4.15 Indenture of First Mortgage dated as of April 1, 1957 (incorporated
herein by reference to Washington Natural Gas Company Exhibit 4-B,
Registration No. 2-14307).
4.16 Sixth Supplemental Indenture dated as of August 1, 1966 (incorporated
herein by reference to Washington Natural Gas Company Exhibit to Form
8-K for month of August 1966, File No. 0-951).
4.17 Twelfth Supplemental Indenture dated as of November 1, 1972
(incorporated herein by reference to Washington Natural Gas Company
Exhibit to Form 8-K for November 1972, File No. 0-951).
4.18 Seventeenth Supplemental Indenture dated as of August 9, 1978
(incorporated herein by reference to Washington Energy Company Exhibit
5-K.18, Registration No. 2-64428).
4.19 Twenty-sixth Supplemental Indenture dated as of September 1, 1990
(incorporated herein by reference to Washington Natural Gas Company
Exhibit 4-B.19, Form 10-K for the year ended September 30, 1990, File
No. 0-951).
4.20 Twenty-seventh Supplemental Indenture dated as of September 1, 1990
(incorporated herein by reference to Washington Natural Gas Company
Exhibit 4-B.20, Form 10-K for the year ended September 30, 1988, File
No. 0-951).
4.21 Twenty-eighth Supplemental Indenture dated as of July 31, 1991
(incorporated herein by reference to Washington Natural Gas Company
exhibit 4-A, Form 10-Q for the quarter ended March 31, 1993, File No.
0-951).
4.22 Twenty-ninth Supplemental Indenture dated as of June 1, 1993
(incorporated herein by reference to Exhibit 4-A of Washington Natural
Gas Company's S-3 Registration Statement, Registration No. 33-49599).
4.23 Thirtieth Supplemental Indenture dated as of August 15, 1995
(incorporated herein by reference to Exhibit 4-A of Washington Natural
Gas Company's S-3 Registration Statement, Registration No. 33-61859).
4.24 Form of Supplemental Indenture related to Senior Notes.
4.25 Form of Supplemental Indenture related to Pledged Electric Bonds.
5.1 Opinion of Perkins Coie.(1)
12.1 Statement setting forth computations of ratios of earnings to fixed
charges (incorporated herein by reference to Exhibit 12-a to Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997).
23.1 Consent of Perkins Coie (contained in opinion referenced as Exhibit
5.1).
23.2 Consent of Coopers & Lybrand L.L.P. (included on page II-5).
23.3 Consent of Arthur Andersen LLP (included on page II-6).
24.1 Power of attorney (contained on signature page of Registration
Statement on page II-3).
25.1 Statement of Eligibility of Senior Note Trustee on Form T-1.(1)
</TABLE>
- --------
(1) Previously filed.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1
to its Registration Statement to be signed on its behalf by the undersigned,
thereunder duly authorized, in the City of Bellevue, State of Washington, on
December 15, 1997.
PUGET SOUND ENERGY, INC.
By /s/ Richard R. Sonstelie
___________________________________
Richard R. Sonstelie
Chairman and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes and
appoints James P. Torgerson, Donald E. Gaines and Tommy G. Leong, and each of
them, with full power of substitution and resubstitution and full power to act
without the other, as his or her true and lawful attorney-in-fact and agent to
act in his or her name, place and stead and to execute in the name and on
behalf of each person, individually and in each capacity stated below, and to
file, any and all amendments to this Registration Statement, including any and
all post-effective amendments, or any Registration Statements to be filed in
connection with this Registration Statement pursuant to Rule 462 under the
Securities Act of 1933, as amended, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and
thing, ratifying and confirming all that said attorneys-in-fact and agents or
any of them or their or his substitute or substitutes, may lawfully do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the registrant's Registration Statement has been signed by
the following persons in the capacities indicated below on the 15th day of
December, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ Richard R. Sonstelie Chairman, Chief Executive Officer and Director
___________________________________________ (Principal Executive Officer)
Richard R. Sonstelie
/s/ William S. Weaver* President and Director
___________________________________________
William S. Weaver
/s/ James P. Torgerson* Vice President and Chief Financial Officer
___________________________________________ (Principal Financial Officer)
James P. Torgerson
/s/ James W. Eldredge* Corporate Secretary and Controller
___________________________________________ (Principal Accounting Officer)
James W. Eldredge
/s/ Douglas P. Beighle* Director
___________________________________________
Douglas P. Beighle
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ Charles W. Bingham* Director
___________________________________________
Charles W. Bingham
/s/ Phyllis J. Campbell* Director
___________________________________________
Phyllis J. Campbell
/s/ Donald J. Covey* Director
___________________________________________
Donald J. Covey
/s/ Robert L. Dryden* Director
___________________________________________
Robert L. Dryden
/s/ John D. Durbin* Director
___________________________________________
John D. Durbin
/s/ John W. Ellis* Director
___________________________________________
John W. Ellis
/s/ Daniel J. Evans* Director
___________________________________________
Daniel J. Evans
/s/ Tomio Moriguchi* Director
___________________________________________
Tomio Moriguchi
/s/ Sally G. Narodick* Director
___________________________________________
Sally G. Narodick
/s/ R. Kirk Wilson* Director
___________________________________________
</TABLE> R. Kirk Wilson
*By:
/s/ Donald E. Gaines
__________________________________
Donald E. Gaines
Attorney-in-fact
II-4
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Puget Sound Energy, Inc. (formerly Puget Sound Power & Light Company) on
Form S-3 (File No. 333-41181) of our reports dated February 12, 1997, on our
audits of the consolidated financial statements and financial statement
schedule of Puget Sound Energy, Inc. as of December 31, 1996 and 1995, and for
the years ended December 31, 1996, 1995 and 1994, which reports are included
in the Company's Current Report on Form 8-K, filed on October 24, 1997 and in
the Company's Annual Report on Form 10-K for the year ended December 31, 1996.
We also consent to the reference to our Firm under the caption "Experts."
COOPERS & LYBRAND, L.L.P.
Seattle, Washington
December 12, 1997
II-5
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement, as it relates to Washington Energy
Company and Washington Natural Gas Company (the Companies), of our reports
dated October 31, 1996 included in Puget Sound Energy, Inc.'s Form 8-K dated
October 24, 1997 and to all references to our Firm included in this
registration statement. It should be noted that we have not audited any
financial statements of the Companies subsequent to September 30, 1996 or
performed any audit procedures subsequent to the date of our report.
ARTHUR ANDERSEN LLP
Seattle, Washington
December 12, 1997
II-6
<PAGE>
EXHIBIT INDEX
Certain of the following exhibits are filed herewith. Certain other of the
following exhibits have been filed heretofore with the Commission and are
incorporated herein by reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Distribution Agreement.(1)
4.1 Form of Indenture related to Senior Notes.(1)
4.2 Fortieth through Seventy-fifth Supplemental Indentures defining the
rights of the holders of the Company's First Mortgage Bonds. (Exhibit
2-d to Registration No. 2-60200; Exhibit 4-c to Registration No. 2-
13347; Exhibits 2-e through and including 2-k to Registration No. 2-
60200; Exhibit 4-h to Registration No. 2-17465; Exhibits 2-1, 2-m and
2-n to Registration No. 2-60200; Exhibits 2-m to Registration No. 2-
37645; Exhibit 2-o through and including 2-s to Registration No. 2-
60200; Exhibit 5-b to Registration No. 2-62883; Exhibit 2-h to
Registration No. 2-65831; Exhibit (4)-j-1 to Registration No. 2-72061;
Exhibit (4)-a to Registration No. 2-91516; Exhibit (4)-b to Annual
Report on Form 10-K for the fiscal year ended December 31, 1985,
Commission File No. 1-4393; Exhibits (4)(a) and (4)(b) to Company's
Current Report on Form 8-K, dated April 22, 1986; Exhibit (4)a to
Company's Current Report on Form 8-K, dated September 5, 1986; Exhibit
(4)-b to Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1986, Commission File No. 1-4393; Exhibit (4)-c to
Registration No. 33-18506; Exhibit (4)-b to Annual Report on Form 10-K
for the fiscal year ended December 31, 1989, Commission
File No. 1-4393; Exhibit (4)-b to Annual Report on Form 10-K for the
fiscal year ended December 31, 1990, Commission File No. 1-4393;
Exhibits (4)-b and (4)-c to Registration No. 33-45916; Exhibit (4)-c
to Registration No. 33-50788; Exhibit (4)-a to Registration No. 33-
53056; and Exhibit 4.3 to Registration No. 33-63278.
4.3 Rights Agreement, dated as of January 15, 1991, between the Company
and The Chase Manhattan Bank, N.A., as Rights Agent. (Exhibit 2.1 to
Registration Statement on Form 8-A filed on January 17, 1991,
Commission File No. 1-4393)
4.4 Amendment No. 1 dated as of August 30, 1991, to the Rights Agreement
dated as of January 15, 1991, between the Registrant and the Bank of
New York (as successor to The Chase Manhattan Bank, N.A.), as Rights
Agent. (Exhibit 2.1 to Registration Statement on Form 8 filed on
August 30, 1991)
4.5 Amendment No. 2 dated as of October 18, 1995, to the Rights Agreement
dated as of January 15, 1991, between the Registrant and The Bank of
New York (as successor to The Chase Manhattan Bank, N.A.), as Rights
Agent. (Exhibit 1 to Registration Statement on Form 8-A/A filed on
October 27, 1995)
4.6 Pledge Agreement dated August 1, 1991, between the Company and The
First National Bank of Chicago, as Trustee. (Exhibit (4)-j to
Registration No. 33-45916)
4.7 Loan Agreement dated August 1, 1991, between the City of Forsyth,
Rosebud County, Montana and the Company. (Exhibit (4)-k to
Registration No. 33-45916)
4.8 Statement of Relative Rights and Preferences for the Adjustable Rate
Cumulative Preferred Stock, Series B ($25 Par Value). (Exhibit 1.1 to
Registration Statement on Form 8-A filed February 14, 1994, Commission
File No. 1-4393)
4.9 Statement of Relative Rights and Preferences for the Preference Stock,
Series R, $50 Par Value. (Exhibit 1.5 to Registration Statement on
Form 8-A filed February 14, 1994, Commission File No. 1-4393)
4.10 Statement of Relative Rights and Preferences for the 7 3/4% Series
Preferred Stock Cumulative, $100 Par Value. (Exhibit 1.6 to
Registration Statement on Form 8-A filed February 14, 1994, Commission
File No. 1-4393)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.11 Pledge Agreement, dated as of March 1, 1992, by and between the
Company and Chemical Bank relating to a series of first mortgage
bonds. (Exhibit 4.15 to Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, Commission File No. 1-4393)
4.12 Pledge Agreement, dated as of April 1, 1993, by and between the
Company and The First National Bank of Chicago, relating to a series
of first mortgage bonds. (Exhibit 4.16 to Annual Report on Form 10-K
for the fiscal year ended December 31, 1993, Commission File No. 1-
4393)
4.13 Form of Statement of Relative Rights and Preferences for the Series II
Cumulative Preferred Stock, $25 Par Value (included as Annex F to the
Joint Proxy Statement/Prospectus filed February 1, 1996).
4.14 Form of Statement of Relative Rights and Preferences for the Series
III Cumulative Preferred Stock, $25 Par Value (included as Annex F to
the Joint Proxy Statement/Prospectus filed February 1, 1996).
4.15 Indenture of First Mortgage dated as of April 1, 1957 (incorporated
herein by reference to Washington Natural Gas Company Exhibit 4-B,
Registration No. 2-14307).
4.16 Sixth Supplemental Indenture dated as of August 1, 1966 (incorporated
herein by reference to Washington Natural Gas Company Exhibit to Form
8-K for month of August 1966, File No. 0-951).
4.17 Twelfth Supplemental Indenture dated as of November 1, 1972
(incorporated herein by reference to Washington Natural Gas Company
Exhibit to Form 8-K for November 1972, File No. 0-951).
4.18 Seventeenth Supplemental Indenture dated as of August 9, 1978
(incorporated herein by reference to Washington Energy Company Exhibit
5-K.18, Registration No. 2-64428).
4.19 Twenty-sixth Supplemental Indenture dated as of September 1, 1990
(incorporated herein by reference to Washington Natural Gas Company
Exhibit 4-B.19, Form 10-K for the year ended September 30, 1990, File
No. 0-951).
4.20 Twenty-seventh Supplemental Indenture dated as of September 1, 1990
(incorporated herein by reference to Washington Natural Gas Company
Exhibit 4-B.20, Form 10-K for the year ended September 30, 1988, File
No. 0-951).
4.21 Twenty-eighth Supplemental Indenture dated as of July 31, 1991
(incorporated herein by reference to Washington Natural Gas Company
exhibit 4-A, Form 10-Q for the quarter ended March 31, 1993, File No.
0-951).
4.22 Twenty-ninth Supplemental Indenture dated as of June 1, 1993
(incorporated herein by reference to Exhibit 4-A of Washington Natural
Gas Company's S-3 Registration Statement, Registration No. 33-49599).
4.23 Thirtieth Supplemental Indenture dated as of August 15, 1995
(incorporated herein by reference to Exhibit 4-A of Washington Natural
Gas Company's S-3 Registration Statement, Registration No. 33-61859).
4.24 Form of Supplemental Indenture related to Senior Notes.
4.25 Form of Supplemental Indenture related to Pledged Electric Bonds.
5.1 Opinion of Perkins Coie.(1)
12.1 Statement setting forth computations of ratios of earnings to fixed
charges (incorporated herein by reference to Exhibit 12-a to Quarterly
Report on Form 10-Q for the quarter ended September 30, 1997).
23.1 Consent of Perkins Coie (contained in opinion referenced as Exhibit
5.1).
23.2 Consent of Coopers & Lybrand L.L.P. (included on page II-5).
23.3 Consent of Arthur Andersen LLP (included on page II-6).
24.1 Power of attorney (contained on signature page of Registration
Statement on page II-3).
25.1 Statement of Eligibility of Senior Note Trustee on Form T-1.(1)
</TABLE>
- --------
(1) Previously filed.
<PAGE>
EXHIBIT 4.24
================================================================================
FIRST SUPPLEMENTAL INDENTURE
FROM
PUGET SOUND ENERGY, INC.
TO
STATE STREET BANK AND TRUST COMPANY
TRUSTEE
______________
DATED AS OF DECEMBER 1, 1997
SUPPLEMENTAL TO INDENTURE
DATED AS OF DECEMBER 1, 1997
<PAGE>
This FIRST SUPPLEMENTAL INDENTURE is made as of the 1st day of December, by
and PUGET SOUND ENERGY, INC., a corporation duly organized and existing under
the laws of the State of Washington (the "Company"), and STATE STREET BANK AND
TRUST COMPANY, a bank and trust company organized and existing under the laws of
the Commonwealth of Massachusetts, as trustee (the "Trustee").
WITNESSETH: that
WHEREAS, the Company has heretofore executed and delivered its Indenture
(hereinafter referred to as the "Indenture"), made as of December 1, 1997; and
WHEREAS, Section 2.05 of the Indenture provides that Notes shall be issued
in series and that a Company Order shall specify the terms of each issue of
Notes; and
WHEREAS, the Company desires to establish a series of Notes to be
designated "Senior Medium-Term Notes, Series A" (hereinafter sometimes referred
to as the "Series A Notes"); and
WHEREAS, Section 13.01 of the Indenture provides that the Company and the
Trustee may enter into indentures supplemental thereto for the purposes, among
others, of establishing the form of Notes or establishing or reflecting any
terms of any Note and adding to the covenants of the Company; and
WHEREAS, the execution and delivery of this First Supplemental Indenture
(herein, this "Supplemental Indenture") have been duly authorized by a
resolution adopted by the Board of Directors of the Company;
NOW, THEREFORE, this Supplemental Indenture
WITNESSETH, that, in order to set forth the terms and conditions upon which
the Series A Notes are, and are to be, authenticated, issued and delivered, and
in consideration of the sum of one dollar duly paid to it by the Trustee at the
execution of this Supplemental Indenture, the receipt whereof is hereby
acknowledged, the Company covenants and agrees with the Trustee for the equal
and proportionate benefit of the respective Holders from time to time of the
Series A Notes as follows:
-1-
<PAGE>
ARTICLE ONE
RELATION TO INDENTURE; DEFINITIONS
SECTION 1.1
This Supplemental Indenture constitutes an integral part of the Indenture.
SECTION 1.2
For all purposes of this Supplemental Indenture:
(a) Capitalized terms used but not otherwise defined herein shall have the
respective meanings assigned to such terms in the Indenture;
(b) All references herein to Articles and Sections, unless otherwise
specified, refer to the corresponding Articles and Sections of this Supplemental
Indenture; and
(c) The terms "hereof," "herein," "hereby," "hereto," "hereunder," and
"herewith" refer to this Supplemental Indenture.
ARTICLE TWO
SENIOR MEDIUM-TERM NOTES, SERIES A
There shall be hereby established a series of Notes, known as and entitled
"Senior Medium-Term Notes, Series A." The aggregate principal amount of the
Series A Notes shall be limited to Five Hundred Million Dollars ($500,000,000)
to be initially authenticated and delivered from time to time upon delivery to
the Trustee of the documents required by Section 2.05 of the Indenture,
including, among other things, a Company Order specifying the following with
respect to each issue of the Series A Notes: (i) any limitations (in addition
to the limitation with respect to the aggregate principal amount of all Series A
Notes) on the aggregate principal amount of such issue of Series A Notes, (ii)
the Original Issue Date or Dates for such issue of Series A Notes, (iii) the
stated maturity of such issue of Series A Notes (provided that no Senior Note
shall mature on a date less than nine months from its Original Issue Date), (iv)
the interest rate or rates, or method of calculation of such rate or rates, for
such issue of Series A Notes, (v) the terms, if any, regarding the optional or
mandatory redemption of such issue of Series A Notes, including the redemption
date or dates, if any, and the price or prices applicable to such redemption
(including any premium), (vi) whether or not such issue of Series A Notes shall
be entitled to the benefit of any sinking fund, and the terms, if any, of such
sinking fund, (vii) whether or not such issue of Series A Notes shall be issued
in whole or in part in the form of a
-2-
<PAGE>
Global Note and, if so, the Depository for such Global Note, (viii) the
designation of such issue of Series A Notes, (ix) if the form of such issue of
Series A Notes is not as described in Exhibit A, Exhibit B, Exhibit C or Exhibit
D to the Indenture, the form of such Series A Notes, (x) the maximum annual
interest rate, if any, of the Series A Notes permitted for such issue, (xi) any
other information necessary to complete the Series A Notes of such issue, (xii)
if prior to the Substitution Date, the designation of the related issue of
Pledged First Mortgage Bonds being delivered to the Trustee in connection with
the issuance of such Series A Notes, (xiii) if on or after the Substitution
Date, the designation of the related issue of Pledged Substituted Mortgage
Bonds, if any, (xiv) the establishment of any office or agency pursuant to
Section 6.02 of the Indenture and (xv) any other terms of such series not
inconsistent with the Indenture or this Supplemental Indenture.
ARTICLE THREE
MISCELLANEOUS
SECTION 3.1
The Trustee has accepted the amendment of the Indenture effected by this
Supplemental Indenture and agrees to execute the trust created by the Indenture
as hereby amended, but only upon the terms and conditions set forth in the
Indenture, including the terms and provisions defining and limiting the
liabilities and responsibilities of the Trustee, and without limiting the
generality of the foregoing, the Trustee shall not be responsible in any manner
whatsoever for or with respect of any of the recitals or statements contained
herein, all of which recitals or statements are made solely by the Company, or
for or with respect to (a) the validity or sufficiency of this Supplemental
Indenture or any of the terms or provisions hereof, (b) the proper authorization
hereof by the Company by corporate action or otherwise, and (c) the due
execution hereof by the Company.
SECTION 3.2
This Supplemental Indenture shall be construed in connection with and as a
part of the Indenture.
SECTION 3.3
(a) If any provision of this Supplemental Indenture conflicts with another
provision of the Indenture required to be included in indentures qualified under
the Trust Indenture Act of 1939 (as enacted prior to the date of this
Supplemental Indenture) by any of the provisions of Section 310 to 317,
inclusive, of said act, such required provision shall control.
-3-
<PAGE>
(b) In case any one or more of the provisions contained in this
Supplemental Indenture or in the Series A Notes issued hereunder should be
invalid, illegal, or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected, impaired, prejudiced or disturbed thereby.
SECTION 3.4
Whenever in this Supplemental Indenture either of the parties hereto is
named or referred to, this shall be deemed to include the successors or assigns
of such party, and all the covenants and agreements contained in this
Supplemental Indenture by or on behalf of the Company or by or on behalf of the
Trustee shall bind and inure to the benefit of the respective successors and
assigns of such parties, whether so expressed or not.
SECTION 3.5
(a) This Supplemental Indenture may be simultaneously executed in several
counterparts, and all such counterparts executed and delivered, each as an
original, shall constitute but one and the same instrument.
(b) The descriptive headings of the several Articles of this Supplemental
Indenture were formulated, used and inserted in this Supplemental Indenture for
convenience only and shall not be deemed to affect the meaning or construction
of any of the provisions hereof.
[The remainder of this page intentionally left blank]
-4-
<PAGE>
IN WITNESS WHEREOF, PUGET SOUND ENERGY, INC. has caused this Supplemental
Indenture to be signed by its President, a Vice President or its Treasurer or
Assistant Treasurer, and attested by its Secretary or an Assistant Secretary and
STATE STREET BANK AND TRUST COMPANY, has caused this Supplemental Indenture to
be signed by its President or a Vice President, and attested by a Vice
President, as of December 1, 1997.
PUGET SOUND ENERGY, INC.
By:
-----------------------------------
Name:
---------------------------------
Its:
---------------------------------
ATTEST:
- -----------------------
Secretary
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:
-----------------------------------
Name:
---------------------------------
Its:
---------------------------------
ATTEST:
- -----------------------
Authorized Officer
-5-
<PAGE>
EXHIBIT 4.25
================================================================================
(REAL ESTATE MORTGAGE)
PUGET SOUND ENERGY, INC.
TO
STATE STREET BANK AND
TRUST COMPANY,
TRUSTEE
_______________
SEVENTY-SIXTH SUPPLEMENTAL INDENTURE
DATED AS OF DECEMBER 1, 1997
_______________
RELATING TO FIRST MORTGAGE BONDS,
PLEDGED SERIES A DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
_______________
SUPPLEMENTAL TO INDENTURE DATED AS OF
JUNE 2, 1924, AS SUPPLEMENTED AND MODIFIED
_______________
================================================================================
(NOT PART OF INDENTURE)
<PAGE>
THIS SEVENTY-SIXTH SUPPLEMENTAL INDENTURE, made as of the 1st day of
December, 1997, by and between Puget Sound Energy, Inc., formerly Puget Sound
Power & Light Company, a corporation duly organized and existing under and by
virtue of the laws of the State of Washington (hereinafter sometimes called the
"Company"), party of the first part, and State Street Bank and Trust Company, a
Massachusetts bank and trust company with its principal corporate trust office
at Two International Place, in the city of Boston and Commonwealth of
Massachusetts 02110 (successor to Old Colony Trust Company) (hereinafter
sometimes called the "Trustee"), as Trustee under the First Mortgage
(originally, and before modification thereof by certain supplemental
indentures, called "First and Refunding Mortgage") from Puget Sound Power &
Light Company, a Massachusetts corporation (hereinafter sometimes called the
"Predecessor Company"), dated as of June 2, 1924 (said Mortgage being
hereinafter sometimes called the "Original Mortgage"), as supplemented and
modified by all indentures supplemental thereto heretofore executed and
delivered, party of the second part;
WITNESSETH: that
WHEREAS, the Predecessor Company did by the Original Mortgage, filed for
record in the offices of the Auditors of the Counties of Chelan, Clallam,
Cowlitz, Douglas, Grant, Grays Harbor, Island, Jefferson, King, Kitsap,
Kittitas, Lewis, Mason, Pacific, Pierce, Skagit, Snohomish, Thurston and
Whatcom, all in the State of Washington, and left on file as a chattel mortgage
in each of said counties, convey and pledge certain property therein described
to Old Colony Trust Company, as Trustee, to be held upon the trusts expressed
in the Original Mortgage to equally secure an unlimited authorized amount of
mortgage bonds (therein and herein called the "Bonds") issued or to be issued
in one or more series, all as more fully provided in the Original Mortgage; and
WHEREAS, the Predecessor Company, prior to September 1, 1954, had executed
and delivered to the Trustee thirty-nine supplemental indentures, supplementing
and in certain respects modifying the Original Mortgage and providing for the
execution, certification and delivery of Bonds of various series from time to
time pursuant thereto (which Original Mortgage, as so supplemented and
modified, is therein and herein sometimes called the "First Mortgage"); and
PAGE 1
<PAGE>
WHEREAS, the Predecessor Company executed and delivered to the Trustee a
Fortieth Supplemental Indenture, dated as of September 1, 1954, which
Supplemental Indenture is divided into two parts, designated as Part I and Part
II, and Part I thereof provided for the establishment and the execution,
certification and delivery initially of Twenty-Five Million Dollars
($25,000,000) principal amount of a series of Bonds, designated as First
Mortgage Bonds, 3-1/2% Series due 1984, and contained certain covenants,
restrictions, conditions and provisions affecting, and provided for certain
modifications of, the First Mortgage (the First Mortgage, as so supplemented
and modified by said Part I, being sometimes in said Fortieth Supplemental
Indenture and herein called the "Revised First Mortgage") and Part II thereof
provided for modifications of the Revised First Mortgage as therein set forth,
which modifications became effective on October 20, 1955 (the Revised First
Mortgage as so modified by Part II of the Fortieth Supplemental Indenture as
heretofore, hereby, and hereafter supplemented and modified being sometimes in
said Part II and herein called the "Indenture" and references herein to
Sections, Articles or other provisions of the Indenture being to the revised or
modified provisions thereof as set forth in Part II of the Fortieth
Supplemental Indenture); and
WHEREAS, the Predecessor Company has heretofore executed and delivered to
the Trustee a Forty-First Supplemental Indenture dated as of December 1, 1954,
a Forty-Second Supplemental Indenture dated as of July 1, 1957, a Forty-Third
Supplemental Indenture dated as of May 1, 1958, a Forty-Fourth Supplementa
Indenture dated as of November l, 1959, and a Forty-Fifth Supplemental
Indenture dated as of April 1, 1960, all of which mortgaged, pledged, assigned,
conveyed and transferred to the Trustee and subjected to the lien of the
Indenture additional property acquired or constructed, and betterments,
improvements and additions made to the mortgaged property, since the execution
and delivery of the Fortieth Supplemental Indenture; and
WHEREAS, the Company has executed and delivered to the Trustee a Forty-
Sixth Supplemental Indenture dated as of November 10, 1960, whereby the Company
has succeeded to the Predecessor Company with the same effect as if the Company
had been named in the Indenture as the mortgagor company and in the Bonds and
coupons as the obligor thereon or maker thereof, and the Predecessor Company
merged into the Company on November 16, 1960, whereupon the Company acquired
all the property, real, personal or mixed, including all rights,
PAGE 2
<PAGE>
privileges, easements, licenses and franchises, described in the Indenture and
thereby conveyed and mortgaged or intended so to be, including also all such
property acquired by the Predecessor Company since the execution and delivery
of the Original Mortgage, which by the terms of the Indenture is subjected or
intended to be subjected to the lien thereof; and
WHEREAS, the Company has executed and delivered to the Trustee the
supplemental indentures set forth herein:
<TABLE>
<CAPTION>
Supplemental Indenture Dated as of
------------------------------------------ ---------------------
<S> <C>
Forty-Seventh Supplemental Indenture February 1, 1961
Forty-Eighth Supplemental Indenture November 1, 1963
Forty-Ninth Supplemental Indenture May 1, 1964
Fiftieth Supplemental Indenture January 1, 1966
Fifty-First Supplemental Indenture June 1, 1967
Fifty-Second Supplemental Indenture February 1, 1969
Fifty-Third Supplemental Indenture July 1, 1970
Fifty-Fourth Supplemental Indenture October 1, 1972
Fifty-Fifth Supplemental Indenture March 1, 1974
Fifty-Sixth Supplemental Indenture November 1, 1974
Fifty-Seventh Supplemental Indenture August 1, 1975
Fifty-Eighth Supplemental Indenture October 1, 1976
Fifty-Ninth Supplemental Indenture July 1, 1978
Sixtieth Supplemental Indenture December 1, 1979
Sixty-First Supplemental Indenture December 1, 1981
Sixty-Second Supplemental Indenture July 1, 1984
Sixty-Third Supplemental Indenture January 1, 1986
Sixty-Fourth Supplemental Indenture April 1, 1986
Sixty-Fifth Supplemental Indenture April 1, 1986
Sixty-Sixth Supplemental Indenture August 1, 1986
Sixty-Seventh Supplemental Indenture November 1, 1986
Sixty-Eighth Supplemental Indenture September 1, 1987
Sixty-Ninth Supplemental Indenture February 1, 1990
Seventieth Supplemental Indenture October 1, 1990
Seventy-First Supplemental Indenture May 1, 1991
</TABLE>
PAGE 3
<PAGE>
<TABLE>
<S> <C>
Seventy-Second Supplemental Indenture August 1, 1991
Seventy-Third Supplemental Indenture March 1, 1992
Seventy-Fourth Supplemental Indenture October 1, 1992
Seventy-Fifth Supplemental Indenture April 1, 1993
</TABLE>
all of which mortgaged, pledged, assigned, conveyed and transferred to the
Trustee and subjected to the lien of the Indenture additional property acquired
or constructed, and betterments, improvements and additions made to the
mortgaged property since the execution and delivery of the Fortieth
Supplemental Indenture; and
WHEREAS, all Bonds of any series heretofore executed, authenticated and
delivered pursuant to the Original Mortgage, as from time to time supplemented
and modified, have been retired and canceled or payment duly and irrevocably
provided for, except for the series set forth herein:
<TABLE>
<CAPTION>
Principal Amount of Bonds Series
------------------------- ------
<S> <C>
Thirty Million Dollars Secured Medium-Term Notes,
($30,000,000) Series A due June 21, 2001
Twenty-Five Million Dollars Secured Medium-Term Notes,
($25,000,000) Series A due July 27, 1998
Twenty-Seven Million 7.05% Series due August 1, 2021
Five Hundred Thousand Dollars
($27,500,000)
Twenty-Three Million 7.25% Series due August 1, 2021
Four-Hundred Thousand Dollars
($23,400,000)
Twenty-Five Million Dollars Secured Medium-Term Notes,
($25,000,000) Series A due November 30, 2006
</TABLE>
PAGE 4
<PAGE>
<TABLE>
<CAPTION>
Principal Amount of Bonds Series
------------------------- ------
<S> <C>
One Hundred Million Dollars Secured Medium-Term Notes,
($100,000,000) Series A due February 1, 2007
Eighty-Seven Million 6.80% Series due March 1, 2022
Five Hundred Thousand Dollars
($87,500,000)
Five Million Dollars Secured Medium-Term Notes,
($5,000,000) Series A due April 9, 2012
Ten Million Dollars Secured Medium-Term Notes,
($10,000,000) Series A due May 7, 2007
Thirty Million Dollars Secured Medium-Term Notes,
($30,000,000) Series A due May 29, 2002
Forty-Six Million Dollars Secured Medium-Term Notes,
($46,000,000) Series A due June 19, 2006
Twenty-Seven Million Dollars Secured Medium-Term Notes,
($27,000,000) Series A due August 28, 2002
Five Million Dollars Secured Medium-Term Notes,
($5,000,000) Series A due September 11, 2002
Ten Million Dollars Secured Medium-Term Notes,
($10,000,000) Series A due September 15, 1999
Sixteen Million Secured Medium-Term Notes,
Five Hundred Thousand Dollars Series A due September 14, 1999
($16,500,000)
</TABLE>
PAGE 5
<PAGE>
<TABLE>
<CAPTION>
Principal Amount of Bonds Series
------------------------- ------
<S> <C>
Twenty Million Secured Medium-Term Notes,
Five Hundred Thousand Dollars Series A due September 16, 1999
($20,500,000)
Fifty Million Dollars Secured Medium-Term Notes,
($50,000,000) Series B due December 10, 1999
Twenty-Five Million Dollars Secured Medium-Term Notes,
($25,000,000) Series B due December 10, 2002
Fifty Million Dollars Secured Medium-Term Notes,
($50,000,000) Series B due December 10, 2004
Thirty Million Dollars Secured Medium-Term Notes,
($30,000,000) Series B due December 21, 2012
Ten Million Dollars Secured Medium-Term Notes,
($10,000,000) Series B due February 9, 1998
Ten Million Dollars Secured Medium-Term Notes,
($10,000,000) Series B due February 9, 2000
Thirty Million Dollars Secured Medium-Term Notes,
($30,000,000) Series B due February 10, 2003
Five Million Dollars Secured Medium-Term Notes,
($5,000,000) Series B due March 5, 1998
</TABLE>
PAGE 6
<PAGE>
<TABLE>
<CAPTION>
Principal Amount of Bonds Series
------------------------- ------
<S> <C>
Three Million Dollars Secured Medium-Term Notes,
($3,000,000) Series B due December 1, 2003
Eleven Million Dollars Secured Medium-Term Notes,
($11,000,000) Series B due December 2, 2003
Thirty Million Dollars Secured Medium-Term Notes,
($30,000,000) Series B due May 27, 2004
Twenty-Three Million Four 5.875% Series due March 1, 2020
Hundred Sixty Thousand Dollars
($23,460,000)
Fifty-Five Million Dollars Secured Medium-Term Notes,
($55,000,000) Series B due February 1, 2024
</TABLE>
which Bonds are now outstanding and constitute the only Bonds of the Company
outstanding under the Indenture; and
WHEREAS, effective as of the opening of business on January 4, 1971, The
First National Bank of Boston succeeded Old Colony Trust Company as Trustee
under the Indenture by reason of the merger of Old Colony Trust Company into
The First National Bank of Boston; and
WHEREAS, effective as of October 2, 1995, State Street Bank and Trust
Company succeeded The First National Bank of Boston as Trustee under the
Indenture; and
WHEREAS, the Company has entered into an Indenture (the "Debenture
Indenture") dated as of December 1, 1997 with State Street Bank and Trust
Company as trustee (in such capacity, the "Debenture Indenture Trustee")
pursuant to which the Company proposes to issue from time to time its Senior
Notes (the "Senior Notes") and the Company has agreed to make certain payments
to the
PAGE 7
<PAGE>
Debenture Indenture Trustee in respect of the principal of, premium, if any,
and interest on such Senior Notes; and
WHEREAS, in order to secure the payment and performance of its obligations
under such Debenture Indenture, the Company has agreed to create new Bonds from
time to time with substantially the same terms as the Senior Notes; to issue
and deliver such Bonds to the Debenture Indenture Trustee in trust for the
benefit of the owners from time to time of the Senior Notes; and
WHEREAS, the Board of Directors of the Company has established a new
series of Bonds to be designated as "First Mortgage Bonds, Pledged Series A,"
due Nine Months or More From Date of Issue (hereinafter sometimes called "Bonds
of the New Series"), and has authorized an issue of Five Hundred Million
Dollars ($500,000,000) principal amount thereof, and the Company has complied
or will comply with all provisions required to issue additional Bonds provided
for in the Indenture; and
WHEREAS, the Company desires to execute and deliver this Seventy-Sixth
Supplemental Indenture, in accordance with the provisions of the Indenture, for
the purpose of providing for the creation of the Bonds of the New Series,
designating such series to be created and specifying the form and provisions of
the Bonds of the New Series; and
WHEREAS, all things necessary have been done to authorize the execution,
delivery and recording of these presents validly to secure the payment of the
principal of and interest on the issue of Five Hundred Million Dollars
($500,000,000) principal amount of Bonds of the New Series, and to make such
Bonds, when executed by the Company, authenticated and delivered by the Trustee
and duly issued, the valid and binding legal obligations of the Company, and to
constitute the Indenture a valid and binding mortgage for the security of all
the Bonds in accordance with its and their terms;
NOW, THEREFORE, this Seventy-Sixth Supplemental Indenture
WITNESSETH, that, pursuant to and in execution of the powers, authorities
and obligations conferred, imposed and reserved in the Indenture, and pursuant
to and in execution of every other power, authority and obligation thereto
appertaining
PAGE 8
<PAGE>
and/or enabling, in order to secure the payment of the principal of, and the
premium, if any, and interest on, the Bonds of the New Series issued and to be
issued under this Seventy-Sixth Supplemental Indenture, and secured thereby and
hereby at any time outstanding according to their tenor and effect, and the
performance of all the covenants and conditions therein and herein and in said
Bonds of the New Series contained, and for the purpose of confirming the lien
of the Indenture, said Puget Sound Energy, Inc., organized and existing under
the laws of the State of Washington, in consideration of the premises and of
One Dollar ($1.00) and other good and valuable consideration to it duly paid by
the Trustee, at or before the execution and delivery of these presents, the
receipt whereof is hereby acknowledged, has granted, bargained, sold, conveyed,
transferred, assigned, remised, released, mortgaged, set over and confirmed and
by these presents does grant, bargain, sell, convey, transfer, assign, remise,
release, mortgage, set over and confirm unto State Street Bank and Trust
Company, as Trustee, and to its successor or successors in the trust created by
the Indenture, and to said Trustee and its assigns, for the uses and purposes
created by the Indenture, all property, real, personal or mixed, including all
rights, privileges, easements, licenses and franchises, described in the
Indenture (including all property described in the documents attached to the
Company's financing statement filed on June 3, 1997, pursuant to the Uniform
Commercial Code of the State of Washington, file number 97-154-0077) and
thereby conveyed and mortgaged or intended so to be, including also all such
property acquired by the Company since the execution and delivery of the
Original Mortgage, which by the terms of the Indenture is subjected or intended
to be subjected to the lien thereof, and including also all such property as
the Company may hereafter acquire which by the terms of the Indenture is
subjected or intended to be subjected to the lien thereof, excepting from the
foregoing, however, all property included within the foregoing general
description, whether now owned or hereafter acquired, which by the provisions
of the Indenture is excepted or to be excepted from the conveyance and lien of
the Indenture, or which has heretofore been released from the lien of the
Indenture or otherwise disposed of by the Company free from the lien of the
Indenture in accordance with the provisions thereof;
TO HAVE AND TO HOLD all and singular the said property, and also all other
property and interest of any kind and of every nature that, by virtue of any
provision hereof or of the Indenture or otherwise, has or shall hereafter
become subject to the Indenture, to the Trustee, its successor or successors
and assigns;
PAGE 9
<PAGE>
BUT IN TRUST NEVERTHELESS, for the equal and proportionate benefit and
security (except as otherwise expressly provided) of all present and future
holders of the Bonds of the New Series issued and to be issued under and
secured by this Seventy-Sixth Supplemental Indenture, and to secure the payment
of such Bonds of the New Series and the interest thereon, prior to the
Substitution Date (as defined herein), in accordance with the provisions of
said Bonds of the New Series and of this Seventy-Sixth Supplemental Indenture,
without priority or distinction as to lien or otherwise of any Bonds of the New
Series over any other Bonds of the New Series so that, except as otherwise
expressly provided, the principal of, and the premium, if any, and interest on,
every such Bond shall be equally and proportionately secured by this Seventy-
Sixth Supplemental Indenture, and to secure the performance of and compliance
with the covenants and conditions of this Seventy-Sixth Supplemental Indenture,
pursuant to and under and subject to the provisions and conditions and for the
uses hereinafter and in this Seventy-Sixth Supplemental Indenture set forth;
provided, however, that on the Substitution Date, the Bonds of the New Series
will cease to secure the Senior Notes, and, at the option of the Company, the
Senior Notes either (i) will become unsecured general obligations of the
Company or (ii) will be secured by first mortgage bonds issued under another
mortgage indenture; it being hereby agreed as follows, to wit:
ARTICLE ONE
BONDS OF THE NEW SERIES AND CERTAIN
PROVISIONS RELATING THERETO
SECTION 1.01
A. TERMS OF BONDS OF THE NEW SERIES
There shall be hereby established a series of bonds, known as and entitled
"First Mortgage Bonds, Pledged Series A" (herein referred to as the "Bonds of
the New Series"). The aggregate principal amount of the Bonds of the New
Series shall be limited to Five Hundred Million Dollars ($500,000,000) to be
initially authenticated and delivered from time to time upon delivery to the
Trustee of the documents required by the Indenture, including a resolution of
the Board of Directors, or the Securities Pricing Committee of such Board of
Directors, of the Company specifying the following with respect to each issue
of the Bonds of the New Series:
PAGE 10
<PAGE>
(i) any limitations (in addition to the limitation with respect to the
aggregate principal amount of all Bonds of the New Series) on the aggregate
principal amount of such issue of Bonds of the New Series, (ii) the Original
Issue Date (as defined below) or Dates for such issue of Bonds of the New
Series, (iii) the stated maturity of such issue of Bonds of the New Series
(provided that no Bond of the New Series shall mature on a date less than nine
months from its Original Issue Date), (iv) the interest rate or rates, or
method of calculation of such rate or rates, for such issue of Bonds of the New
Series, (v) the terms, if any, regarding the optional or mandatory redemption
of such issue of Bonds of the New Series, including the redemption date or
dates, if any, and the price or prices applicable to such redemption (including
any premium), (vi) whether or not such issue of Bonds of the New Series shall
be entitled to the benefit of any sinking fund, and the terms, if any, of such
sinking fund, (vii) the designation of such issue of Bonds of the New Series,
(viii) if the form of such Bonds of the New Series is not as described herein,
the form of such Bonds of the New Series, (ix) the maximum annual interest
rate, if any, of the Bonds of the New Series permitted for such issue, (x) any
other information necessary to complete the Bonds of the New Series of such
issue and (xi) any other terms of such issue not inconsistent with the
Indenture or this Seventy-Sixth Supplemental Indenture.
The definitive Bonds of the New Series shall be issuable in registered
form without coupons in denominations of $1,000 and integral multiples thereof
or such other amount or amounts as may be authorized by a resolution of the
Board of Directors or the Securities Pricing Committee of the Board of
Directors.
Both principal of and interest on the Bonds of the New Series (and
premium, if any) are to be paid in any coin or currency of the United States of
America which at the time of payment is legal tender for the payment of public
and private debts at the principal corporate trust office, in the City of
Boston, Massachusetts, of the Trustee.
The definitive Bonds of the New Series may, at the option of the Company,
be fully engraved or printed or lithographed on steel engraved borders.
Notwithstanding any provision in the Indenture to the contrary, each Bond
of the New Series shall be dated and issued as of the date of its
authentication by the Trustee (the "Original Issue Date"). Each Bond of the New
Series shall bear interest from the later of its Original Issue Date or the
most recent date to which interest has been paid or duly provided for with
respect to such Bond of the New Series until the
PAGE 11
<PAGE>
principal of such Bond of the New Series is paid or made available for payment,
and interest on each Bond of the New Series shall be payable on each interest
payment date after the Original Issue Date.
Notwithstanding any provision in the Indenture to the contrary, the person
in whose name any Bond of the New Series is registered at the close of business
on any record date (as determined by the Board of Directors or the Securities
Pricing Committee of the Board of Directors) with respect to any interest
payment date for such Bond at the New Series shall be entitled to receive the
interest payable on such interest payment date notwithstanding the cancellation
of such Bond of the New Series upon any registration of transfer, exchange or
substitution thereof subsequent to such record date and prior to such interest
payment date, except that, if and to the extent that the Company shall default
in the payment of the interest due on such interest payment date, then the
registered holders of Bonds of the New Series on such record date shall have no
further right to or claim in respect of such defaulted interest as such
registered holders on such record date, and the persons entitled to receive
payment of any defaulted interest thereafter payable or paid on any Bonds of
the New Series shall be the registered holders of such Bonds of the New Series
on the record date for payment of such defaulted interest. Unless otherwise
determined by the Board of Directors or the Securities Pricing Committee of the
Board of Directors, the term "record date" as used in this Section 1.01, and in
the form of the Bonds of the New Series, with respect to any interest payment
date applicable to any Bond of the New Series, shall mean the last day of the
calendar month next preceding such interest payment date unless such interest
payment date is the date of maturity of such Bond of the New Series, in which
event the record date shall be the date of maturity of such Bond of the New
Series.
In case of failure by the Company to pay any interest when due, the claim
for such interest shall be deemed to have been transferred by transfer of any
Bond of the New Series registered on the books of the Company, and the Company,
by not less than 10 days' written notice to the bondholders, may fix a
subsequent record date, not more than 15 days or less than 10 days prior to the
date fixed for the payment of such interest, for determination of the holders
entitled to payment of such interest. Such provision for establishment of a
subsequent record date, however, shall in no way affect the rights of the
bondholders or of the Trustee consequent on any default.
PAGE 12
<PAGE>
The Trustee hereunder shall, by virtue of its office as such Trustee, be
the registrar and transfer agent of the Company for the purpose of registering
and transferring Bonds of the New Series; however, the Company may also act as
the registrar and transfer agent in lieu of the Trustee. Notwithstanding any
provision in the Indenture to the contrary, neither the Company nor the Trustee
shall be required to make transfers or exchanges of Bonds of the New Series for
a period of 15 days next preceding any designation of Bonds of the New Series
to be redeemed, and neither the Company nor the Trustee shall be required to
make transfers or exchanges of any Bonds designated in whole for redemption or
that part of any Bond designated in part for redemption.
Notwithstanding any other provision of the Indenture to the contrary, the
Company shall receive a credit against its obligations to make any payment in
respect of the principal of, or premium, if any, or interest on, any Bond of
the New Series (whether at maturity, upon redemption or otherwise), and such
obligations shall be fully or partially, as the case may be, satisfied and
discharged to the extent that, at the time that any such payment shall be due,
the then due principal of, or premium, if any, or interest on, the Senior Notes
initially issued contemporaneously with such Bond of the New Series shall have
been fully or partially paid or there shall have been deposited with the
Debenture Indenture Trustee pursuant to the Debenture Indenture sufficient
available funds to fully or partially pay the then due principal of, or
premium, if any, or interest on, such Senior Notes. The obligations of the
Company hereunder to make such payment of principal of, premium, if any, or
interest on, such Bond of the New Series shall be deemed to have been reduced
by the amount of such credit.
The Debenture Indenture requires that if any Senior Note in respect of
which this Bond was delivered to the Debenture Indenture Trustee pursuant to
the Debenture Indenture is deemed paid and discharged pursuant to Section 5.01
of the Debenture Indenture, the obligation of the Company to make payment with
respect to the principal of and premium, if any, and interest on this Bond
shall be satisfied and discharged and this Bond shall cease to secure such
Senior Note in any manner and, the Debenture Indenture Trustee shall surrender
this Bond, subject to the limitations of the Debenture Indenture, to the
Company for cancellation.
PAGE 13
<PAGE>
The Bonds of the New Series shall be issued and delivered pursuant to the
Debenture Indenture to, registered in the name of and held by the Debenture
Indenture Trustee in trust for the benefit of the owners from time to time of
the Senior Notes. The Debenture Indenture Trustee shall not sell, assign or
transfer any of the Bonds of the New Series except to a successor trustee under
the Debenture Indenture. The Company may take such actions as it shall deem
desirable to effect compliance with such restrictions on transfer, including
the placing of an appropriate legend on the Bonds of the New Series.
B. FORM OF BONDS OF THE NEW SERIES
The Bonds of the New Series, and the Trustee's authentication certificate
to be executed on the Bonds of the New Series, shall be in substantially the
following forms respectively:
[FORM OF FACE OF BOND OF THE NEW SERIES]
REGISTERED
$___________
No.________________
PUGET SOUND ENERGY, INC.
FIRST MORTGAGE BOND, PLEDGED SERIES A
<TABLE>
<CAPTION>
Original Issue Date: Interest Rate: Maturity Date:
______________________ _________________% _________________
<S> <C> <C>
Initial Redemption Initial Redemption Annual Redemption
Date: Percentage: Percentage
Reduction:
______________________ ___________________ _________________
</TABLE>
PUGET SOUND ENERGY, INC., a corporation of the state of Washington (the
"Company"), for value received hereby promises to pay to
PAGE 14
<PAGE>
DOLLARS
or registered assigns, the principal sum of
on the Maturity Date set forth above, and to pay interest thereon from the
Original Issue Date set forth above or from the most recent date to which
interest has been paid or duly provided for, semiannually in arrears on
__________ and __________ in each year (each, an "Interest Payment Date"),
commencing on the first such Interest Payment Date succeeding the Original
Issue Date set forth above, at the per annum Interest Rate set forth above,
until the principal hereof is paid or made available for payment. No interest
shall accrue on the Maturity Date, so long as the principal amount of this Note
is paid in full on the Maturity Date. The interest so payable and punctually
paid or duly provided for on any such Interest Payment Date will be paid to the
person in whose name this Bond is registered (the "Holder") at the close of
business on the Regular Record Date for such interest, which shall be the
___________ or ___________, as the case may be, next preceding such Interest
Payment Date; provided that the first Interest Payment Date for any Bond, the
Original Issue Date of which is after a Regular Record Date but prior to the
applicable Interest Payment Date, shall be the Interest Payment Date following
the next succeeding Regular Record Date; and provided, further, that interest
payable on the Maturity Date set forth above or, if applicable, upon redemption
or acceleration, shall be payable to the person to whom principal shall be
payable. Any such interest not so punctually paid or duly provided for will
forthwith cease to be payable to the Holder on such Regular Record Date and
shall be paid to the person in whose name this Bond is registered at the close
of business on a Special Record Date for the payment of such defaulted interest
to be fixed by the Trustee, notice whereof shall be given to the Holder not
more than 15 days nor fewer than 10 days prior to such Special Record Date.
Both principal of and interest on this Bond (and premium, if any) are to
be paid in any coin or currency of the United States of America which at the
time of payment is legal tender for the payment of public and private debts at
the principal corporate trust office, in the City of Boston, Massachusetts, of
the Trustee.
If any Interest Payment Date or the date on which the principal of this
Bond is required to paid is not a Business Day, then payment of principal,
premium or interest need not be made on such date but may be made on the next
succeeding Business Day
PAGE 15
<PAGE>
with the same force and effect as if made on such Interest Payment Date or the
date on which the principal of this Bond is required to be paid, and, in the
case of timely payment thereof, no interest shall accrue for the period from
and after such Interest Payment Date or the date on which the principal of this
Bond is required to be paid.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions or trust companies in the
Borough of Manhattan, The City of New York, or in the city where the corporate
trust office of the Debenture Indenture Trustee (as defined on the reverse
hereof) is located, are obligated or authorized by law or executive order to
close.
This Bond shall not become obligatory for any purpose or be entitled to
any security or benefit under said Indenture until the authentication
certificate hereon shall have been signed by the Trustee.
The provisions of this Bond are continued on the reverse hereof and such
continued provisions shall for all purposes have the same effect as though
fully set forth at this place.
IN WITNESS WHEREOF, PUGET SOUND ENERGY, INC. has caused these presents to
be executed in its corporate name and behalf by the facsimile of the signature
of its President or one of its Vice Presidents and by the facsimile of the
signature of its Treasurer or an Assistant Treasurer or its Secretary,
thereunto duly authorized, and its corporate seal or a facsimile thereof to be
hereto affixed.
PUGET SOUND ENERGY, INC.
Dated:_____________________
By __________________________
Its __________________________
And by _______________________
Its __________________________
PAGE 16
<PAGE>
[FORM OF REVERSE OF BOND OF THE NEW SERIES]
PUGET SOUND ENERGY, INC.
First Mortgage Bond, Pledged Series A
This Bond is one of the Bonds of the above-designated series, of an
unlimited authorized amount of Bonds of the Company known as First Mortgage
Bonds, all issued or to be issued in one or more series under and secured by a
First Mortgage dated as of June 2, 1924, executed and delivered by the Company
to Old Colony Trust Company (State Street Bank and Trust Company, successor) as
Trustee, as supplemented and/or modified by indentures supplemental thereto,
including particularly the Fortieth Supplemental Indenture, dated as of
September 1, 1954, in Part II of which are set forth the revised provisions of
said First Mortgage as theretofore and then supplemented and modified, and the
Seventy-Sixth Supplemental Indenture dated as of December 1, 1997, relating,
among other things, to the Bonds of the above-designated series, and by all
other instruments supplemental thereto (herein sometimes called the
"Indenture"), reference to each and all of which is hereby made for a
description of the property mortgaged and pledged as security for said Bonds,
the rights and remedies of the Holder of this Bond in regard thereto, and the
terms and conditions upon which Bonds may be issued.
The Bonds of this series shall be issuable in registered form without
coupons in denominations of $1,000 and integral multiples thereof or such other
amount or amounts as may be authorized by a resolution of the Board of
Directors or the Securities Pricing Committee of the Board of Directors.
This Bond is issued to secure the payment and performance of the Company's
obligations under the Indenture, dated as of December 1, 1997 (the "Debenture
Indenture"), with State Street Bank and Trust Company, as Trustee (the
"Debenture Indenture Trustee") to make payments in respect of the principal of,
premium, if any, and interest on Senior Notes of the Company (the "Senior
Notes") initially issued contemporaneously with this Bond.
Notwithstanding any other provision of the Indenture to the contrary, the
Company shall receive a credit against its obligations to
make any payment in respect of the principal of, or premium, if any, or
interest on, this Bond (whether at
PAGE 17
<PAGE>
maturity, upon redemption or otherwise), and such obligations shall be fully or
partially, as the case may be, satisfied and discharged to the extent that, at
the time that any such payment shall be due, the then due principal of, or
premium, if any, or interest on, the Senior Notes of the Company initially
issued contemporaneously with this Bond shall have been fully or partially paid
or there shall have been deposited with the Debenture Indenture Trustee
pursuant to the Debenture Indenture sufficient available funds to fully or
partially pay the then due principal of, or premium, if any, or interest on,
such Senior Notes. The obligations of the Company to make such payment of
principal of, premium, if any, or interest on, this Bond shall be deemed to
have been reduced by the amount of such credit.
This Bond is not transferable except as required to effect transfer to any
successor trustee under the Debenture Indenture.
As provided in the Seventy-Sixth Supplemental Indenture, the Holder of
this Bond, by his acceptance hereof, hereby consents, and all other holders of
the Bonds of the above designated series, by their acceptance thereof, shall
thereby consent, for the purpose and within the meaning of Section 18.02 of the
Indenture, to a modification of the Indenture to redefine the term "minimum
provision for depreciation" by deducting from operating revenues the cost of
fuel used in the generation of electricity. This modification shall become
effective without any further approval or consent of the holder of this Bond
when a further supplemental indenture has been executed with the requisite
consents of the holders of the Bonds of each other series then outstanding or
when Bonds of all series issued prior to the First Mortgage Bonds, 12-5/8%
Series due 1999 have ceased to be outstanding.
This Bond is subject to redemption at the option of the Company on any
date on and after the Initial Redemption Date, if any, specified on the face
hereof (any date fixed for redemption shall hereafter be referred to as a
"Redemption Date"). If no Initial Redemption Date is set forth on the face
hereof, this Bond may not be redeemed at the option of the Company prior to the
Maturity Date specified on the face hereof. On and after the Initial
Redemption Date, if any, this Bond may be
redeemed at any time in whole or from time to time in part at the option of the
Company at the applicable Redemption Price (as defined below) together with
interest thereon payable to the Redemption Date, on notice given not less than
30 days nor more than 60 days prior to the Redemption Date. In the event of
redemption of this
PAGE 18
<PAGE>
Bond in part only, a new Bond of like tenor and series for the unredeemed
portion hereof shall be issued in the name of the Holder hereof upon the
surrender hereof.
If this Bond is redeemable in the foregoing manner at the option of the
Company, the "Redemption Price" shall initially be the Initial Redemption
Percentage, specified on the face hereof, of the principal amount of this Bond
to be redeemed and shall decline at each anniversary of the Initial Redemption
Date by the Annual Redemption Percentage Reduction, if any, specified on the
face hereof, of the principal amount to be redeemed until the Redemption Price
is 100% of such principal amount.
If this Bond or any portion hereof ($1,000 or any multiple thereof) is
duly designated for redemption, if payment of the principal hereof or of such
portion, together with accrued interest and premium, if any, is irrevocably
provided for, and if notice of such redemption shall have been duly given, this
Bond shall cease to be entitled to the lien of the Indenture from and after the
date such payment is irrevocably so provided for and shall cease to bear
interest from and after the date fixed for redemption.
The Indenture provides that (1) the Company and the Trustee, with the
consent of the holders of not less than 66-2/3% in principal amount of the
Bonds at the time outstanding (determined as provided in the Indenture)
including, if more than one series of Bonds shall be at the time outstanding,
not less than 66-2/3% in principal amount of the Bonds at the time outstanding
of each series affected, may effect, by an indenture supplemental to the
Indenture, further modifications or alterations of the Indenture and of the
rights and obligations of the Company and of the holders of the Bonds;
provided, however, that no such modification or alteration shall be made
without the consent of the registered owner hereof which will (a) extend the
maturity of this Bond or reduce the rate or extend the time of payment of
interest hereon or reduce the amount of the principal hereof or reduce any
premium payable on the redemption hereof, or (b) permit the creation of any
lien, not otherwise permitted, prior to or on a parity with the lien of the
Indenture, or alter the equal and proportionate security afforded by the lien
of the Indenture for the Bonds issued thereunder, or (c) reduce the number or
percentage of the principal amount of the Bonds upon the consent of the holders
of which modifications or alterations may be made as aforesaid or defaults may
be waived; and (2) the holders of like percentages
PAGE 19
<PAGE>
of the principal amount of the Bonds outstanding and of each such series
thereof may waive certain uncured past defaults and the consequences thereof.
In certain events of default, the principal of this Bond may be declared
due and payable before maturity as provided in said Indenture.
The registered owner of this Bond is the Debenture Indenture Trustee. The
Debenture Indenture requires that if any Senior Note in respect of which this
Bond was delivered to the Debenture Indenture Trustee pursuant to the Debenture
Indenture is deemed paid and discharged pursuant to Section 5.01 of the
Debenture Indenture, the obligation of the Company to make payment with respect
to the principal of and premium, if any, and interest on this Bond shall be
satisfied and discharged and this Bond shall cease to secure such Senior Note
in any manner, and the Debenture Indenture Trustee shall surrender this Bond,
subject to the limitations of the Debenture Indenture, to the Company for
cancellation.
The Seventy-Sixth Supplemental Indenture provides that in the event of any
default of the interest due on any interest payment date, such interest shall
not be payable to the holder of the Bond on the original record date but shall
be paid to the registered holder of such Bond on the subsequent record date
established for payment of such defaulted interest.
It is part of the contract herein contained that each holder hereof waives
all right of recourse to any personal, statutory or other liability of any
promoter, shareholder, officer or director, past, present or future, of the
Company or of any predecessor or successor corporation for the collection of
any indebtedness hereunder as more fully provided in said Indenture.
[FORM OF TRUSTEE'S AUTHENTICATION CERTIFICATE]
This is one of the Bonds, of the series designated herein, described in the
within-mentioned Indenture.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By ________________________
Authorized Officer
PAGE 20
<PAGE>
SECTION 1.02 REDEMPTION PROVISIONS
As designated by resolution of the Board of Directors or the Securities Pricing
Committee of such Board of Directors, the Bonds of the New Series may be
subject to redemption prior to maturity, as a whole at any time or in part from
time to time, at the option of the Company, upon payment of the Redemption
Price designated by the Board of Directors or the Securities Pricing Committee
of the Board of Directors, together with interest accrued thereon to the date
fixed for redemption, upon not less than 30 days' nor more than 60 days' notice
given by first class mail, postage prepaid, to the holder of record at the date
of such notice of each Bond of the New Series affected, at his address as shown
on the Bond register. Such notice shall be sufficiently given if deposited in
the United States mail within such period. Neither the failure to mail such
notice, nor any defect in any notice so mailed to any holder, shall affect the
sufficiency of such notice. The foregoing provision with respect to notice
shall be subject to all other conditions and provisions of the Indenture not
inconsistent herewith.
SECTION 1.03 DEPRECIATION FUND
Notwithstanding the provisions of Section Six of Article II Part I of the
Fortieth Supplemental Indenture, the Company hereby covenants that, so long as
any of the Bonds of the New Series shall remain outstanding, (a) the covenants
made by the Company in Section Four of Article II of Part I of the Fortieth
Supplemental Indenture shall continue in full force and effect and (b) Bonds
delivered, redeemed or purchased pursuant to said Section Four and any amount
of unfunded Bond credits used as a credit in Item 7 of any depreciation fund
certificate shall be deemed to be funded, unless and until the same shall have
been reinstated as provided in said Section Four or in Section 2.03 of the
Indenture. Cash deposited in the depreciation fund may not be applied to the
redemption of the Bonds of the New Series.
SECTION 1.04 DURATION OF EFFECTIVENESS OF ARTICLE ONE
This Article shall be in force and effect only so long as any of the Bonds
of the New Series are outstanding.
PAGE 21
<PAGE>
SECTION 1.05 MINIMUM PROVISION FOR DEPRECIATION
The Company hereby covenants that the term "minimum provision for
depreciation" shall have the meaning specified in Section 1.32 of the Indenture
until the modification set forth in Article Four hereof shall have become
effective, whereupon the term "minimum provision for depreciation" shall have
the meaning specified in Section 4.01 hereof.
SECTION 1.06 EXECUTION AND DELIVERY
Bonds of the New Series in the aggregate principal amount of Five Hundred
Million Dollars ($500,000,000) may forthwith, upon execution and delivery of
the Seventy-Sixth Supplemental Indenture, or from time to time thereafter, and
upon compliance by the Company with the provisions of Article Five of the
Indenture, be executed by the Company and delivered to the Trustee and shall
thereupon be authenticated and delivered by the Trustee to or upon the written
order of the Company.
SECTION 1.07 SUBSTITUTION
On the Substitution Date (as defined below), the Trustee will deliver to
the Company for cancellation all Bonds of the New Series. The Company will
cause the Trustee to provide notice to all holders of Bonds of the New Series
prior to the occurrence of the Substitution Date. "Substitution Date" shall
mean the date that all Bonds issued and outstanding under the Indenture
("Electric Bonds"), other than the Bonds of the New Series or any other Bonds
issued to secure the Company's obligations on its Senior Notes, and all first
mortgage bonds of the Company issued and outstanding under the Indenture of
First Mortgage, dated as of April 1, 1957 (the "Gas Utility Mortgage"), from
the Company, as successor to Washington Natural Gas Company, to Harris Trust
and Savings Bank, as trustee, as supplemented and amended ("Gas Bonds" and,
together with the Electric Bonds, the "First Mortgage Bonds"), other than Gas
Bonds issued to secure the Company's obligations on its Senior Notes, have been
retired (at, before or after the maturity thereof) through payment, redemption
or otherwise (including those Electric Bonds deemed to be paid within the
meaning of the Indenture and those Gas Bonds deemed to be paid within the
meaning of the Gas Utility Mortgage).
PAGE 22
<PAGE>
SECTION 1.08 DEFINITIONS
All other terms used but not otherwise defined in this Seventy-Sixth
Supplemental Indenture shall be taken to have the same meaning as in the
Indenture, except in cases where the context herein clearly indicates
otherwise.
ARTICLE TWO
PRINCIPAL AMOUNT PRESENTLY TO BE OUTSTANDING
SECTION 2.01
The total aggregate principal amount of Bonds of the Company issued and
outstanding and presently to be issued and outstanding under the provisions of
and secured by the Indenture will be Eight Hundred Twenty Million Eight Hundred
Sixty Thousand Dollars ($820,860,000); namely, the series of Bonds set forth
herein:
<TABLE>
<CAPTION>
Principal Amount of Bonds Series
------------------------- ------
<S> <C>
Thirty Million Dollars Secured Medium-Term
($30,000,000) Notes, Series A due June 21, 2001
Twenty-Five Million Dollars Secured Medium-Term
($25,000,000) Notes, Series A due July 27, 1998
Twenty-Seven Million 7.05% Series due August 1, 2021
Five Hundred Thousand Dollars
($27,500,000)
Twenty-Three Million 7.25% Series due August 1, 2021
Four-Hundred Thousand Dollars
($23,400,000)
</TABLE>
PAGE 23
<PAGE>
<TABLE>
<CAPTION>
Principal Amount of Bonds Series
------------------------- ------
<S> <C>
Twenty-Five Million Dollars Secured Medium-Term
($25,000,000) Notes, Series A due November 30, 2006
One Hundred Million Dollars Secured Medium-Term
($100,000,000) Notes, Series A due February 1, 2007
Eighty-Seven Million 6.80% Series due March 1, 2022
Five Hundred Thousand Dollars
($87,500,000)
Five Million Dollars Secured Medium-Term
($5,000,000) Notes, Series A due April 9, 2012
Ten Million Dollars Secured Medium-Term
($10,000,000) Notes, Series A due May 7, 2007
Thirty Million Dollars Secured Medium-Term
($30,000,000) Notes, Series A due May 29, 2002
Forty-Six Million Dollars Secured Medium-Term
($46,000,000) Notes, Series A due June 19, 2006
Twenty-Seven Million Dollars Secured Medium-Term Notes,
($27,000,000) Notes, Series A due August 28, 2002
Five Million Dollars Secured Medium-Term
($5,000,000) Notes, Series A due September 11, 2002
</TABLE>
PAGE 24
<PAGE>
<TABLE>
<CAPTION>
Principal Amount of Bonds Series
------------------------- ------
<S> <C>
Ten Million Dollars Secured Medium-Term
($10,000,000) Notes, Series A due
September 15, 1999
Sixteen Million Secured Medium-Term
Five Hundred Thousand Dollars Notes, Series A due
($16,500,000) September 14, 1999
Twenty Million Secured Medium-Term
Five Hundred Thousand Dollars Notes, Series A due
($20,500,000) September 16, 1999
Fifty Million Dollars Secured Medium-Term
($50,000,000) Notes, Series B due
December 10, 1999
Twenty-Five Million Dollars Secured Medium-Term
($25,000,000) Notes, Series B due
December 10, 2002
Fifty Million Dollars Secured Medium-Term
($50,000,000) Notes, Series B due
December 10, 2004
Thirty Million Dollars Secured Medium-Term
($30,000,000) Notes, Series B due
December 21, 2012
Ten Million Dollars Secured Medium-Term
($10,000,000) Notes, Series B due
February 9, 1998
Ten Million Dollars Secured Medium-Term
($10,000,000) Notes, Series B due
February 9, 2000
</TABLE>
PAGE 25
<PAGE>
<TABLE>
<CAPTION>
Principal Amount of Bonds Series
------------------------- ------
<S> <C>
Thirty Million Dollars Secured Medium-Term
($30,000,000) Notes, Series B due
February 10, 2003
Five Million Dollars Secured Medium-Term
($5,000,000) Notes, Series B due
March 5, 1998
Three Million Dollars Secured Medium-Term
($3,000,000) Notes, Series B due
December 1, 2003
Eleven Million Dollars Secured Medium-Term
($11,000,000) Notes, Series B due
December 2, 2003
Thirty Million Dollars Secured Medium-Term
($30,000,000) Notes, Series B due
May 27, 2004
Twenty-Three Million Four Hundred 5.875% Series due
Sixty Thousand Dollars March 1, 2020
($23,460,000)
Fifty-Five Million Dollars Secured Medium-Term
($55,000,000) Notes, Series B due
February 1, 2024
</TABLE>
now issued and outstanding, and Five Hundred Million Dollars ($500,000,000)
aggregate principal amount of the Bonds of the New Series to be authenticated
and delivered pursuant to Section 2.02 of this Seventy-Sixth Supplemental
Indenture. Additional Bonds of the New Series and of any other series
established after the execution and delivery of this Seventy-Sixth Supplemental
Indenture may from time to time be authenticated, delivered and issued pursuant
to the terms of the Indenture and indentures supplemental thereto.
PAGE 26
<PAGE>
SECTION 2.02
Bonds of the New Series in the aggregate principal amount of Five Hundred
Million Dollars ($500,000,000) may forthwith, upon execution and delivery of
this Seventy-Sixth Supplemental Indenture, or from time to time thereafter, and
upon compliance by the Company with the provisions of Article Five of the
Indenture, be executed by the Company and delivered to the Trustee and shall
thereupon be authenticated and delivered by the Trustee to or upon the written
order of the Company.
ARTICLE THREE
MISCELLANEOUS
SECTION 3.01
This Seventy-Sixth Supplemental Indenture is executed and shall be
construed as an indenture supplemental to the Indenture, and shall form a part
thereof, and the Indenture, as hereby supplemented and modified, is hereby
confirmed. Except to the extent inconsistent with the express terms hereof,
all the provisions, terms, covenants, and conditions of the Indenture shall be
applicable to the Bonds of the New Series to the same extent as if specifically
set forth herein.
SECTION 3.02
The Trustee has accepted the amendment of the Indenture effected by this
Seventy-Sixth Supplemental Indenture and agrees to execute the trust created by
the Indenture as hereby amended, but only upon the terms and conditions set
forth in the Indenture, including the terms and provisions defining and
limiting the liabilities and responsibilities of the Trustee, and without
limiting the generality of the foregoing, the Trustee shall not be responsible
in any manner whatsoever for or with respect of any of the recitals or
statements contained herein, all of which recitals or statements are made
solely by the Company, or for or with respect to (a) the validity or
sufficiency of this Seventy-Sixth Supplemental Indenture or any of the terms or
provisions hereof, (b) the proper authorization hereof by the Company by
corporate action or otherwise, and (c) the due execution hereof by the Company.
PAGE 27
<PAGE>
SECTION 3.03
The Company covenants that it is lawfully seized and possessed of all the
trust estate at the date of the execution of the Seventy-Sixth Supplemental
Indenture except as in the Indenture otherwise stated or permitted; that on
said date the trust estate is free and clear from all liens and encumbrances
other than permitted encumbrances, except as in the Indenture otherwise stated
or permitted; that the Company will warrant and forever defend the trust estate
and the title thereto to the Trustee against the claims of all persons
whomsoever except as in the Indenture otherwise stated or permitted; that it
will maintain and preserve the lien of the Indenture, as a first mortgage lien,
except as in the Indenture otherwise stated or permitted so long as any of the
Bonds issued under the Indenture are outstanding; and that it has good right
and lawful authority to subject said property to the lien of the Indenture, as
provided in and by the Indenture.
SECTION 3.04
This Seventy-Sixth Supplemental Indenture may be executed in several
counterparts, and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts, or as many of them as the Company
and the Trustee shall preserve undestroyed, shall together constitute but one
and the same instrument.
SECTION 3.05
Although this Seventh-Sixth Supplemental Indenture is dated for
convenience and for the purpose of reference as of December 1, 1997, the actual
date or dates of execution by the Company and by the Trustee are as indicated
by their respective acknowledgments hereto annexed.
ARTICLE FOUR
MODIFICATION OF THE INDENTURE
SECTION 4.01
Each holder of any of the Bonds of the New Series, by his or its
acceptance thereof, shall thereby consent, for the purpose and within the
meaning and intent of
PAGE 28
<PAGE>
Section 18.02 of the Indenture, that Section 1.32 of the Indenture shall be
modified (effective at the time provided in Section 4.02 hereof) to read as
follows:
"So long as there are outstanding any Bonds of the 1984 Series or any Bonds
of any other series subsequently authenticated and delivered hereunder as
to which it is so provided in the supplemental indenture establishing said
Bonds or modifying this Indenture, the term "minimum provision for
depreciation" for each calendar year (or monthly fractions thereof) in the
period being computed shall mean an amount by which 15% of the gross
operating revenues of the Company derived from the operation of its utility
property subject to the lien of the Indenture (after deducting from such
operating revenues (a) an amount equal to the cost of electricity
purchased, including any standby or service charges or similar charges for
electricity and net cost of electricity interchanged, (b) all rentals and
lease payments, and (c) the cost of fuel used in the generation of
electricity during such period to the extent such cost is included or
reflected in operating expense accounts of the Company) exceeds the charges
for maintenance, repairs and renewals of such mortgaged utility property
included or which should be included in operating expense pursuant to sound
accounting practice."
SECTION 4.02
The modification of the Indenture set forth in Section 4.01 hereof shall
become effective without any further approval or consent of the holders of any
Bonds of the New Series (a) when a further supplemental indenture making it
effective shall have been executed with the consent of the holders of not less
than 66-2/3% in principal amount of the Bonds of each other series at the time
outstanding or (b) when all Bonds of all series issued prior to the First
Mortgage Bonds, 12-5/8% Series due 1999 have ceased to be outstanding.
[The remainder of this page intentionally left blank]
PAGE 29
<PAGE>
IN WITNESS WHEREOF, Puget Sound Energy, Inc. has caused this Seventy-Sixth
Supplemental Indenture to be signed in its corporate name and behalf by its
President or one of its Vice Presidents or its Treasurer or Assistant Treasurer
and its corporate seal to be hereunto affixed and attested by its Secretary or
one of its Assistant Secretaries, and State Street Bank and Trust Company in
token of its acceptance of the trust hereby created has caused this Seventy-
Sixth Supplemental Indenture to be signed in its corporate name and behalf by
its President or one of its Authorized Officers, and its corporate seal to be
hereunto affixed and attested by one of its Authorized Officers, its Secretary
or one of its Assistant Secretaries, all on December __, 1997, but as of the
day and year first above written.
PUGET SOUND ENERGY, INC.
By ________________________________
Donald E. Gaines, Treasurer
Attest:
_____________________________
James W. Eldredge, Secretary
Corporate Seal
STATE STREET BANK AND TRUST
COMPANY
By ________________________________
Authorized Officer
Attest:
_____________________________
Corporate Seal
PAGE 30
<PAGE>
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
Donald E. Gaines and James W. Eldredge being duly sworn each for himself
on oath deposes and says that he, the said Donald E. Gaines, is and at the time
of the execution of the foregoing Supplemental Indenture was the Treasurer of
PUGET SOUND ENERGY, INC., a corporation and the mortgagor herein named, and the
same person who as Treasurer executed said Supplemental Indenture on behalf of
said corporation, and that he, the said James W. Eldredge, is and at the time
of the execution of said Supplemental Indenture was Secretary of said
corporation, the said mortgagor, and the same person who as such Secretary
attested such Supplemental Indenture on behalf of said corporation; and that
the said Supplemental Indenture is made in good faith and without any design to
hinder or delay or defraud creditors or any creditor of said corporation.
SUBSCRIBED AND SWORN to before me this ___ day of December, 1997.
-------------------------------------------
(Signature of Notary)
-------------------------------------------
(Print or stamp name of Notary)
NOTARY PUBLIC in and for the State
of Washington, residing at _______________.
My Appointment Expires: __________________.
PAGE 31
<PAGE>
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this ___ day of December, 1997, before me, a Notary Public in and for
the State of Washington, duly commissioned and sworn, personally appeared
Donald E. Gaines and James W. Eldredge, to me known to be the Treasurer and the
Secretary, respectively, of PUGET SOUND ENERGY, INC., one of the corporations
that executed the within and foregoing instrument, and acknowledged the said
instrument to be the free and voluntary act and deed of said corporation for
the uses and purposes therein mentioned, and on oath stated that they were
authorized to execute and attest said instrument, and that the seal affixed is
the corporate seal of said corporation.
IN WITNESS WHEREOF I have hereunto set my hand and affixed my official
seal the day and year first above written.
___________________________________________
(Signature of Notary)
___________________________________________
(Print or stamp name of Notary)
NOTARY PUBLIC in and for the State
of Washington, residing at _______________.
My Appointment Expires: __________________.
PAGE 32
<PAGE>
COMMONWEALTH OF MASSACHUSETTS )
) ss.
COUNTY OF SUFFOLK )
On this ____ day of December, 1997, before me personally appeared
___________________________ and ___________________________, to me known to be
an Authorized Officer and an Assistant Cashier, respectively, of STATE STREET
BANK AND TRUST COMPANY, one of the corporations that executed the within and
foregoing instrument, and acknowledged the said instrument to be the free and
voluntary act and deed of said corporation for the uses and purposes therein
mentioned, and on oath stated that they were authorized to and did in the name
and on behalf of said corporation execute and attest said instrument, and that
the seal affixed is the corporate seal of said corporation.
IN WITNESS WHEREOF I have hereunto set my hand and affixed my official
seal the day and year first above written.
----------------------------------------------
(Signature of Notary)
----------------------------------------------
(Print or stamp name of Notary)
NOTARY PUBLIC in and for the
Commonwealth of Massachusetts,
residing at _________________________________.
My Appointment Expires: _____________________.
PAGE 33
