<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1998
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
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>
<S> <C>
WASHINGTON 91-0374630
(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)
----------------
RICHARD L. HAWLEY
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 LLP 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>
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Senior Notes.................... $500,000,000 100% $500,000,000 $147,500
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</TABLE>
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(1) Estimated solely for the purpose of computing the registration fee.
----------------
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>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY +
+NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN +
+OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE +
+SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED SEPTEMBER 30, 1998
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.
------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR 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 , 1998.
<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 delivery 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 Room maintained by the Commission at 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.
Information on the operation of the Commission's Public Reference Room may be
obtained by calling 1-800-SEC-0330. 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.
2
<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, 1997 (File No. 1-4393).
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 1998 (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.
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.
3
<PAGE>
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
ENDED JUNE 30, YEARS ENDED DECEMBER 31,
---------------- ------------------------------
1998 1997(1) 1997(1) 1996(1) 1995 1994 1993
------- -------- ------- ------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges(2)(3)................. 2.8x 2.7x 2.5x 3.1x 2.6x 2.3x 3.0x
</TABLE>
- --------
(1) The ratios for the twelve months ended June 30, 1997 and the years ended
December 31, 1997 and 1996 include charges incurred in connection with
the Merger. Had such charges been excluded from earnings, the ratios of
earnings to fixed charges for such periods would have been 3.1x, 2.9x and
3.2x, respectively.
(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 four years ended December
31, 1996 reflect the fiscal years ended December 31 for the Company and
September 30 for WECo. The December 31, 1997 and the June 30, 1997 ratios
are comprised of the results of the Company and WECo for the twelve
months ended December 31, 1997 and June 30, 1997, respectively.
(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.
4
<PAGE>
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"), 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.
5
<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 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
6
<PAGE>
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).
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
7
<PAGE>
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 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.
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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 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
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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).
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
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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 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).
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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, 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.
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.
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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 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).
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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 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
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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.
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
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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;
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).
16
<PAGE>
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).
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
17
<PAGE>
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.
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.
18
<PAGE>
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 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.
19
<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.
20
<PAGE>
LEGAL MATTERS
The validity of the Senior Notes to be offered will be passed upon for the
Company by Perkins Coie LLP, 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, 1997 and 1996, and for each of the three years in
the period ended December 31, 1997, incorporated by reference in this
Prospectus and the Registration Statement, have been incorporated herein in
reliance on the report, which includes an emphasis paragraph related to the
Company's merger with Washington Energy Company, of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of that firm as experts
in accounting and auditing.
21
<PAGE>
PUGET SOUND ENERGY, INC.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
<TABLE>
<S> <C>
Securities and Exchange Commission Fees.......................... $147,500
Printing fees.................................................... 25,000
Trustee fees (including counsel fees)............................ 10,000
Legal fees and expenses.......................................... 250,000
Blue Sky fees and expenses....................................... 15,000
Rating agency fees............................................... 75,000
Independent accountant fees...................................... 70,000
Miscellaneous.................................................... 7,500
--------
Total.......................................................... $600,000
========
</TABLE>
- --------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 23B.08.500 through 23B.08.600 of the Washington Business
Corporation Act (the "WBCA") authorize a court to award, or a corporation's
board of directors to grant, indemnification to directors and officers on
terms sufficiently broad to permit indemnification under certain circumstances
for liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act"). Section 6 of the Company's Bylaws (the "Bylaws"), provides
for indemnification of the Company's directors and officers to the maximum
extent permitted by Washington law.
Section 23B.08.320 of the WBCA authorizes a corporation to eliminate or
limit a director's personal liability to the corporation or its shareholders
for monetary damages for conduct as a director, except in certain
circumstances involving acts or omissions, intentional misconduct by a
director or knowing violations of law by a director or distributions illegal
under Washington law, or any transaction from which the director will
personally receive a benefit in money, property or services to which the
director is not legally entitled. Article X of the Company's Restated Articles
of Incorporation, as amended (the "Articles of Incorporation"), contains
provisions implementing, to the fullest extent permitted by Washington law,
such limitations on a director's liability to the Company and its
shareholders.
Officers and directors of the Company are covered by insurance (with certain
exceptions and certain limitations) that indemnifies them against losses and
liabilities arising from certain alleged "wrongful acts," including alleged
errors or misstatements, or certain other alleged wrongful acts or omissions
constituting neglect or breach of duty.
The above discussion of the WBCA and the Bylaws and Articles of
Incorporation is not intended to be exhaustive and is qualified in its
entirety by reference to such statute, the Bylaws and the Articles of
Incorporation.
II-1
<PAGE>
ITEM 16. LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.1 Indenture defining the rights of the holders of the Company's Senior
Notes. (incorporated herein by reference to Exhibit 4-a to Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998, Commission
File No. 1-4393)
4.2 First Supplemental Indenture defining the rights of the holders of the
Company's Senior Notes. (incorporated herein by reference to Exhibit
4-b to Quarterly Report on Form 10-Q for the quarter ended June 30,
1998, Commission File No. 1-4393)
4.3 Fortieth through Seventy-fifth Supplemental Indentures defining the
rights of the holders of the Company's First Mortgage Bonds.
(incorporated herein by reference to 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)
4.4 Seventy-sixth Supplemental Indenture defining the rights of the holder
of the Company's First Mortgage Bonds. (incorporated herein by
reference to Exhibit 4-c to Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998, Commission File No. 1-4393)
4.5 Rights Agreement, dated as of January 15, 1991, between the Company
and The Chase Manhattan Bank, N.A., as Rights Agent. (incorporated
herein by reference to Exhibit 2.1 to Registration Statement on Form
8-A filed on January 17, 1991, Commission File No. 1-4393)
4.6 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. (incorporated herein by reference to Exhibit 2.1 to
Registration Statement on Form 8 filed on August 30, 1991)
4.7 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. (incorporated herein by reference to Exhibit 1 to Registration
Statement on Form 8-A/A filed on October 27, 1995)
4.8 Pledge Agreement dated August 1, 1991, between the Company and The
First National Bank of Chicago, as Trustee. (incorporated herein by
reference to Exhibit (4)-j to Registration No. 33-45916)
4.9 Loan Agreement dated August 1, 1991, between the City of Forsyth,
Rosebud County, Montana and the Company. (incorporated herein by
reference to Exhibit (4)-k to Registration No. 33-45916)
4.10 Statement of Relative Rights and Preferences for the Adjustable Rate
Cumulative Preferred Stock, Series B ($25 Par Value). (incorporated
herein by reference to Exhibit 1.1 to Registration Statement on Form
8-A filed February 14, 1994, Commission File No. 1-4393)
4.11 Statement of Relative Rights and Preferences for the Preference Stock,
Series R, $50 Par Value. (incorporated herein by reference to Exhibit
1.5 to Registration Statement on Form 8-A filed February 14, 1994,
Commission File No. 1-4393)
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.12 Statement of Relative Rights and Preferences for the 7 3/4% Series
Preferred Stock Cumulative, $100 Par Value. (incorporated herein by
reference to Exhibit 1.6 to Registration Statement on Form 8-A filed
February 14, 1994, Commission File No. 1-4393)
4.13 Pledge Agreement, dated as of March 1, 1992, by and between the
Company and Chemical Bank relating to a series of first mortgage
bonds. (incorporated herein by reference to Exhibit 4.15 to Annual
Report on Form 10-K for the fiscal year ended December 31, 1993,
Commission File No. 1-4393)
4.14 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. (incorporated herein by reference to Exhibit
4.16 to Annual Report on Form 10-K for the fiscal year ended December
31, 1993, Commission File No. 1-4393)
4.15 Form of Statement of Relative Rights and Preferences for the Series II
Cumulative Preferred Stock, $25 Par Value (incorporated herein by
reference to Annex F to the Joint Proxy Statement/Prospectus filed
February 1, 1996)
4.16 Form of Statement of Relative Rights and Preferences for the Series
III Cumulative Preferred Stock, $25 Par Value (incorporated herein by
reference to Annex F to the Joint Proxy Statement/Prospectus filed
February 1, 1996)
4.17 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)
4.18 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)
4.19 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)
4.20 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)
4.21 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)
4.22 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)
4.23 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)
4.24 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)
4.25 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)
4.26 Form of Second Supplemental Indenture defining the rights of the
holders of the Company's Senior Notes (1)
4.27 Form of Seventy-seventh Supplemental Indenture defining the rights of
the holders of the Company's First Mortgage Bonds (1)
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
5.1 Opinion of Perkins Coie LLP
12.1 Statement setting forth computations of ratios of earnings to fixed
charges (incorporated herein by reference to Exhibits 12-a and 12-b to
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998)
23.1 Consent of Perkins Coie LLP (contained in opinion referenced as
Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Arthur Andersen LLP
24.1 Power of attorney (contained on signature page of Registration
Statement on page II-6)
25.1 Statement of Eligibility of Senior Note Trustee on Form T-1
(incorporated herein by reference to Exhibit 25.1 to Registration No.
333-41181)
</TABLE>
- --------
(1) To be filed by amendment or incorporated by reference in connection with
the offering of securities.
II-4
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, unless the information required to be included in
such post-effective amendment is contained in a periodic report filed by
the registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 and incorporated by reference in this registration
statement.
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement, unless such information required to be included in
such post-effective amendment is contained in a periodic report filed by
the registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 and incorporated herein by reference. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high and of the estimate
maximum offering range may be reflected in the form of a prospectus filed
with the Commissions pursuant to Rule 424(b) if, in the aggregate, the
changes in the volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration, by means of a post-effective amendment, any
of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for the purpose of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions described under Item 15 above,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-5
<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 Registration
Statement to be signed on its behalf by the undersigned, thereunder duly
authorized, in the City of Bellevue, State of Washington, on September 30 ,
1998.
/s/ William S. Weaver
By: _________________________________
William S. Weaver
President and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes and
appoints Richard L. Hawley, 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
Registration Statement has been signed by the following persons in the
capacities indicated below on the 30th day of September, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
Chairman of the Board of Directors
____________________________________
Richard R. Sonstelie
/s/ William S. Weaver President, Chief Executive Officer
____________________________________ and Director
William S. Weaver (Principal Executive Officer)
/s/ Richard L. Hawley Vice President and Chief Financial Officer
____________________________________ (Principal Financial Officer)
Richard L. Hawley
/s/ James W. Eldredge Corporate Secretary and Controller
____________________________________ (Principal Accounting Officer)
James W. Eldredge
</TABLE>
II-6
<PAGE>
<TABLE>
<S> <C>
Director
____________________________________
Douglas P. Beighle
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
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
</TABLE>
II-7
<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>
4.1 Indenture defining the rights of the holders of the Company's Senior
Notes. (incorporated herein by reference to Exhibit 4-a to Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998, Commission
File No. 1-4393)
4.2 First Supplemental Indenture defining the rights of the holders of the
Company's Senior Notes. (incorporated herein by reference to Exhibit
4-b to Quarterly Report on Form 10-Q for the quarter ended June 30,
1998, Commission File No. 1-4393)
4.3 Fortieth through Seventy-fifth Supplemental Indentures defining the
rights of the holders of the Company's First Mortgage Bonds.
(incorporated herein by reference to 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)
4.4 Seventy-sixth Supplemental Indenture defining the rights of the holder
of the Company's First Mortgage Bonds. (incorporated herein by
reference to Exhibit 4-c to Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998, Commission File No. 1-4393)
4.5 Rights Agreement, dated as of January 15, 1991, between the Company
and The Chase Manhattan Bank, N.A., as Rights Agent. (incorporated
herein by reference to Exhibit 2.1 to Registration Statement on Form
8-A filed on January 17, 1991, Commission File No. 1-4393)
4.6 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. (incorporated herein by reference to Exhibit 2.1 to
Registration Statement on Form 8 filed on August 30, 1991)
4.7 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. (incorporated herein by reference to Exhibit 1 to Registration
Statement on Form 8-A/A filed on October 27, 1995)
4.8 Pledge Agreement dated August 1, 1991, between the Company and The
First National Bank of Chicago, as Trustee. (incorporated herein by
reference to Exhibit (4)-j to Registration No. 33-45916)
4.9 Loan Agreement dated August 1, 1991, between the City of Forsyth,
Rosebud County, Montana and the Company. (incorporated herein by
reference to Exhibit (4)-k to Registration No. 33-45916)
4.10 Statement of Relative Rights and Preferences for the Adjustable Rate
Cumulative Preferred Stock, Series B ($25 Par Value). (incorporated
herein by reference to Exhibit 1.1 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 Statement of Relative Rights and Preferences for the Preference Stock,
Series R, $50 Par Value. (incorporated herein by reference to Exhibit
1.5 to Registration Statement on Form 8-A filed February 14, 1994,
Commission File No. 1-4393)
4.12 Statement of Relative Rights and Preferences for the 7 3/4% Series
Preferred Stock Cumulative, $100 Par Value. (incorporated herein by
reference to Exhibit 1.6 to Registration Statement on Form 8-A filed
February 14, 1994, Commission File No. 1-4393)
4.13 Pledge Agreement, dated as of March 1, 1992, by and between the
Company and Chemical Bank relating to a series of first mortgage
bonds. (incorporated herein by reference to Exhibit 4.15 to Annual
Report on Form 10-K for the fiscal year ended December 31, 1993,
Commission File No. 1-4393)
4.14 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. (incorporated herein by reference to Exhibit
4.16 to Annual Report on Form 10-K for the fiscal year ended December
31, 1993, Commission File No. 1-4393)
4.15 Form of Statement of Relative Rights and Preferences for the Series II
Cumulative Preferred Stock, $25 Par Value (incorporated herein by
reference to Annex F to the Joint Proxy Statement/Prospectus filed
February 1, 1996)
4.16 Form of Statement of Relative Rights and Preferences for the Series
III Cumulative Preferred Stock, $25 Par Value (incorporated herein by
reference to Annex F to the Joint Proxy Statement/Prospectus filed
February 1, 1996)
4.17 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)
4.18 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)
4.19 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)
4.20 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)
4.21 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)
4.22 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)
4.23 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)
4.24 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)
4.25 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)
4.26 Form of Second Supplemental Indenture defining the rights of the
holders of the Company's Senior Notes (1)
4.27 Form of Seventy-seventh Supplemental Indenture defining the rights of
the holders of the Company's First Mortgage Bonds (1)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
5.1 Opinion of Perkins Coie LLP
12.1 Statement setting forth computations of ratios of earnings to fixed
charges (incorporated herein by reference to Exhibits 12-a and 12-b to
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998)
23.1 Consent of Perkins Coie LLP (contained in opinion referenced as
Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Arthur Andersen LLP
24.1 Power of attorney (contained on signature page of Registration
Statement on page II-6)
25.1 Statement of Eligibility of Senior Note Trustee on Form T-1
(incorporated herein by reference to Exhibit 25.1 to Registration No.
333-41181)
</TABLE>
- --------
(1) To be filed by amendment or incorporated by reference in connection with
the offering of securities.
<PAGE>
EXHIBIT 5.1
[Perkins Coie LLP letterhead]
September 30, 1998
Puget Sound Energy, Inc.
411 - 108th Avenue N.E.
Bellevue, WA 98004-5515
Ladies and Gentlemen:
This opinion is furnished in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of $500,000,000 aggregate
principal amount of Senior Notes (the "Notes") of Puget Sound Energy, Inc. (the
"Company") pursuant to the Company's Registration Statement on Form S-3 filed
with the Securities and Exchange Commission on the date hereof (the
"Registration Statement").
We have examined the Registration Statement and such other documents and
records of the Company, certificates of public officials, and other documents as
we have deemed necessary or appropriate for the purposes of this opinion.
Capitalized terms used but not otherwise defined herein have the respective
meanings assigned to such terms in the Registration Statement.
Based upon the foregoing, we are of the opinion that, when the following
events have occurred:
(a) the Board of Directors of the Company has duly authorized (i) the
issuance and sale of the Notes, (ii) the execution and delivery of an Indenture
(the "Indenture") between the Company and State Street Bank & Trust Company (the
"Note Trustee") and an indenture supplemental thereto pursuant to which the
Company will issue a series of Notes, (iii) the issuance and delivery of Pledged
Bonds to the Note Trustee to secure the Company's obligations under the Notes
and (iv) the execution and delivery of an indenture supplemental to the Electric
Utility Mortgage or the Gas Utility Mortgage, as the case may be, pursuant to
which the Company will issue a series of Pledged Bonds (the "Pledged Bond
Supplemental Indenture");
<PAGE>
September 30, 1998
Page 2
(b) the Washington Utilities and Transportation Commission has issued the
appropriate orders authorizing the issuance and sale of the Notes and the
issuance of the Pledged Bonds;
(c) the Registration Statement and any amendments or supplements thereto
have been filed, and the Registration Statement has become effective;
(d) the terms of the Notes and their issue and sale have been duly
established in conformity with the Indenture so as not to violate any applicable
law, agreement or instrument then binding upon the Company;
(e) the terms of the Pledged Bonds and their issue have been duly
established in conformity with the Electric Utility Mortgage or Gas Utility
Mortgage, as the case may be, so as not to violate any applicable law, agreement
or instrument then binding upon the Company;
(f) the Company having complied with the terms and conditions of the
Indenture with respect to the creation, authentication and delivery of a
supplemental indenture thereto;
(g) the due execution by the Company and authentication and delivery by
the Note Trustee of the Notes, and the issuance and sale thereof by the Company
as contemplated by the Registration Statement and in accordance with the above-
mentioned corporate and governmental authorizations;
(h) the Company having complied with the terms and conditions of the
Electric Utility Mortgage or the Gas Utility Mortgage, as the case may be, with
respect to the creation, authentication and delivery of a supplemental indenture
thereto;
(i) the due execution by the Company and authentication and delivery by
the Electric Utility Mortgage Trustee or the Gas Utility Mortgage Trustee, as
the case may be, of the Pledged Bonds, and the issuance thereof by the Company
as contemplated by the Registration Statement and in accordance with the above-
mentioned corporate and governmental authorizations; and
(j) the Pledged Bond Supplemental Indenture has been duly filed and
recorded in the appropriate recording offices of all jurisdictions in which the
<PAGE>
September 30, 1998
Page 3
properties subject to the Electric Utility Mortgage or the Gas Utility Mortgage,
as the case may be, are located, and all appropriate Uniform Commercial Code
filings have been duly filed and recorded;
the Notes will constitute in the hands of the respective holders thereof valid
and binding obligations of the Company, subject to applicable bankruptcy and
insolvency laws and the application of general principles of equity.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Legal
Matters" in the related Prospectus. In giving such consent, we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act.
Very truly yours,
PERKINS COIE LLP
<PAGE>
EXHIBIT 23.2
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 of our report, which includes an emphasis paragraph related to the
Company's merger with Washington Energy Company, dated February 19, 1998, on
our audits of the consolidated financial statements and financial statement
schedule of Puget Sound Energy, Inc. as of December 31, 1997 and 1996, and for
the years ended December 31, 1997, 1996 and 1995, which report is included in
the Company's Annual Report on Form 10-K. We also consent to the reference to
our Firm under the caption "Experts."
PricewaterhouseCoopers LLP
Seattle, Washington
September 30, 1998
<PAGE>
EXHIBIT 23.3
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 10-K for
the year ended December 31, 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
September 30, 1998
