Pacific Gas and Electric Company $200,000,000 Aggregate Principal Amount 5.625% Senior Notes due November 30, 2017 and $400,000,000 Aggregate Principal Amount of 6.35% Senior Notes Due February 15, 2038 Underwriting Agreement
Exhibit 1.1
Execution Copy
Pacific Gas and Electric Company
$200,000,000 Aggregate Principal Amount
5.625% Senior Notes due November 30, 2017
and
$400,000,000 Aggregate Principal Amount
of 6.35% Senior Notes Due February 15, 2038
5.625% Senior Notes due November 30, 2017
and
$400,000,000 Aggregate Principal Amount
of 6.35% Senior Notes Due February 15, 2038
| To | the Representatives named in Schedules I-A and I-B hereto of the several Underwriters named in Schedule II hereto |
Ladies and Gentlemen:
Pacific Gas and Electric Company, a corporation organized under the laws of California (the
“Company”), proposes to sell to the several underwriters named in Schedule II hereto (the
“Underwriters”), for whom you (the “Representatives”) are acting as representatives, $200,000,000
aggregate principal amount of 5.625% Senior Notes due November 30, 2017 (the “2017 Senior Notes”)
having the terms set forth in Schedule I-A hereto, and $400,000,000 aggregate principal amount of
6.35% senior notes due February 15, 2038 (the “2038 Senior Notes” and together with the 2017 Senior
Notes, the “Securities”) having the terms set forth in Schedule I-B hereto, to be issued under an
indenture, amended and restated as of April 22, 2005 (the “Base Indenture”) and, with respect to
the 2017 Senior Notes, supplemented by a supplemental indenture, dated as of December 4, 2007 (the
“Second Supplemental Indenture”) and, with respect to the 2038 Senior Notes, supplemented by a
supplemental indenture, to be dated as of March 3, 2008 (the “Third Supplemental Indenture” and
together with the Second Supplemental Indenture and the Base Indenture, the “Indenture”), between
the Company and The Bank of New York Trust Company, N.A., as trustee (the “Trustee”). To the
extent there are no additional Underwriters listed on Schedules I-A and I-B other than you, the
term Representatives as used herein shall mean you, as Underwriters, and the terms Representatives
and Underwriters shall mean either the singular or plural as the context requires. Any reference
herein to the Registration Statement, the Base Prospectus, any Preliminary Prospectus or the Final
Prospectus shall be deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Exchange Act on or before the Effective
Date of the Registration Statement or the issue date of the Base Prospectus, any Preliminary
Prospectus or the Final Prospectus, as the case may be, and any reference herein to the terms
“amend,” “amendment” or “supplement” with respect to the Registration Statement, the Base
Prospectus, any Preliminary Prospectus or the Final Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the Effective Date of the
Registration Statement or the issue date of the Base Prospectus, any Preliminary Prospectus or
the Final Prospectus, as the case may be, deemed to be incorporated therein by reference. Certain
terms used herein are defined in Section 20 hereof.
1. Representations and Warranties. The Company represents and warrants to, and agrees
with, each Underwriter as set forth below in this Section 1.
(a) The Company meets the requirements for use of Form S-3 under the Act and has
prepared and filed with the Commission an automatic shelf registration statement, as defined
in Rule 405 (the file number of which is set forth in Schedules I-A and I-B hereto) on Form
S-3, including a related Base Prospectus, for registration under the Act of the offering and
sale of the Securities. Such Registration Statement, including any amendments thereto filed
prior to the Execution Time, became effective upon filing. The Company may have filed with
the Commission, as part of an amendment to the Registration Statement or pursuant to Rule
424(b), one or more preliminary prospectus supplements relating to the Securities, each of
which has previously been furnished to you. The Company will file with the Commission a
final prospectus supplement relating to the Securities in accordance with Rule 424(b). As
filed, such final prospectus supplement shall contain all information required by the Act
and the rules thereunder, and, except to the extent the Representatives shall agree in
writing to a modification, shall be in all substantive respects in the form furnished to you
prior to the Execution Time or, to the extent not completed at the Execution Time, shall
contain only such specific additional information and other changes (beyond that contained
in the Base Prospectus and any Preliminary Prospectus) as the Company has advised you, prior
to the Execution Time, will be included or made therein. The Registration Statement, at the
Execution Time, meets the requirements set forth in Rule 415(a)(1)(x). The Company agrees to
pay the fees required by the Commission relating to the Securities within the time required
by Rule 456(b)(1) without regard to the proviso therein and otherwise in accordance with
Rules 456(b) and 457(r).
(b) On each Effective Date, the Registration Statement did, and when the Final
Prospectus is first filed in accordance with Rule 424(b) and on the Closing Date (as defined
herein), the Final Prospectus (and any supplement thereto) will, comply in all material
respects with the applicable requirements of the Act, the Exchange Act and the Trust
Indenture Act and the respective rules thereunder; on each Effective Date and at the
Execution Time, the Registration Statement did not and will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading; on the Effective Date and
on the Closing Date the Indenture did or will comply in all material respects with the
applicable requirements of the Trust Indenture Act and the rules thereunder; and on the date
of any filing pursuant to Rule 424(b) and on the Closing Date, the Final Prospectus
(together with any supplement thereto) will not include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to (i) that part
of the Registration Statement which shall constitute the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the Trustee or (ii) the
information contained in or omitted from the Registration Statement or the Final
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Prospectus
(or any supplement thereto) in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion in the Registration Statement or the Final Prospectus (or any
supplement thereto), it being understood and agreed that the only such information furnished
by or on behalf of any Underwriter consists of the information described as such in Section
8 hereof.
(c) As of the Execution Time and the Closing Date, (i) the Disclosure Package and (ii)
each electronic road show, if any, when taken together as a whole with the Disclosure
Package, did not and will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The preceding sentence does
not apply to statements in or omissions from the Disclosure Package based upon and in
conformity with written information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed that the only
such information furnished by or on behalf of any Underwriter consists of the information
described as such in Section 8 hereof.
(d) (i) At the time of filing the Registration Statement, (ii) at the time of the most
recent amendment thereto for the purposes of complying with Section 10(a)(3) of the Act
(whether such amendment was by post-effective amendment, incorporated report filed pursuant
to Sections 13 or 15(d) of the Exchange Act or form of prospectus), (iii) at the time the
Company or any person acting on its behalf (within the meaning, for this clause only, of
Rule 163(c)) made any offer relating to the Securities in reliance on the exemption in Rule
163, and (iv) at the Execution Time (with such date being used as the determination date for
purposes of this clause (iv)), the Company was or is (as the case may be) a “well-known
seasoned issuer” as defined in Rule 405.
(e) (i) At the earliest time after the filing of the Registration Statement that the
Company or another offering participant made a bona fide offer (within the meaning of Rule
164(h)(2)) of the Securities and (ii) as of the Execution Time (with such date being used as
the determination date for purposes of this clause (ii)), the Company was not and is not an
Ineligible Issuer (as defined in Rule 405), without taking account of any determination by
the Commission pursuant to Rule 405 that it is not necessary that the Company be considered
an Ineligible Issuer.
(f) Each Issuer Free Writing Prospectus and the final term sheets prepared and filed
pursuant to Section 5(b) hereto did not, as of its issue date, and does not include any
information that conflicts with the information contained in the Registration Statement,
including any document incorporated therein by reference and any prospectus supplement
deemed to be a part thereof that has not been superseded or modified. The foregoing
sentence does not apply to statements in or omissions from any Issuer Free Writing
Prospectus based upon and in conformity with written information furnished to the Company by
any Underwriter through the Representatives specifically for use therein,
it being understood and agreed that the only such information furnished by or on behalf
of any Underwriter consists of the information described as such in Section 8 hereof.
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(g) The Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the State of California, with full corporate power and
authority to own or lease, as the case may be, and to operate its properties and conduct its
business as described in the Disclosure Package and the Final Prospectus, and is duly
qualified to do business as a foreign corporation and is in good standing under the laws of
each jurisdiction which requires such qualification, except where the failure to be so
qualified or be in good standing would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise), earnings, business or
properties of the Company and its subsidiaries, taken as a whole (a “Material Adverse
Effect”).
(h) This Agreement has been duly authorized, executed and delivered by the Company.
(i) The Indenture has been duly authorized by the Company; and the Base Indenture has
been, and at the Closing Date the Supplemental Indenture will have been, duly executed and
delivered by the Company; and the Base Indenture constitutes and, at the Closing Date,
assuming due authorization, execution and delivery by the Trustee, the Supplemental
Indenture will constitute, a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as enforcement thereof may be
limited by laws and principles of equity affecting the enforcement of creditors’ rights,
including, without limitation, bankruptcy, reorganization, insolvency arrangement,
fraudulent conveyance, moratorium, receivership, assignment for the benefit of creditors
laws; and the Base Indenture has been duly qualified under the Trust Indenture Act.
(j) The issuance and sale by the Company of the Securities pursuant to this Agreement
have been duly authorized by all necessary corporate action; and, when issued, authenticated
and delivered to the Underwriters pursuant to this Agreement against payment of the
consideration therefor specified herein, the Securities will be valid and binding
obligations of the Company, enforceable against the Company in accordance with their terms,
except as enforcement thereof may be limited by laws or principles of equity affecting
creditors’ rights, including, without limitation, bankruptcy, reorganization, insolvency,
arrangement, fraudulent conveyance, moratorium, receivership, assignment for the benefit of
creditors laws, and will be entitled to the benefits of the Indenture.
(k) The Company is not and, after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described in the Disclosure
Package and the Final Prospectus, will not be an “investment company” as defined in the
Investment Company Act of 1940, as amended (the “1940 Act”) or a company “controlled” by an
“investment company” within the meaning of the 1940 Act.
(l) No consent, approval, authorization, filing with or order of any court or
governmental agency or body is required in connection with the transactions contemplated
herein, except such as have been obtained from the California Public Utilities Commission
(the “CPUC”), under the Act, under the Trust Indenture Act or
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otherwise and such as may be
required under the blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters in the manner contemplated herein and in
the Disclosure Package and the Final Prospectus.
(m) Neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any licenses, certificates,
permits and other authorizations which, individually or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have a Material Adverse Effect, whether or
not arising from transactions in the ordinary course of business, except as set forth in or
contemplated in the Registration Statement, Disclosure Package and the Final Prospectus
(exclusive of any supplement thereto).
(n) None of the issue and sale of the Securities, the consummation of any other of the
transactions herein contemplated or the performance by the Company of any of its obligations
set forth herein will conflict with or result in, a breach or violation of: (i) the charter,
bylaws or comparable constituent documents of the Company or any of its subsidiaries, (ii)
the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or instrument to which the
Company or any of its subsidiaries is a party or bound or to which its or their property is
subject, or (iii) any statute, law, rule, regulation, judgment, order or decree applicable
to the Company or any of its subsidiaries of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having jurisdiction over the
Company or any of its subsidiaries or any of its or their properties, except, in the case of
clauses (ii) and (iii) above, for such conflicts, breaches or violations which could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(o) The consolidated historical financial statements and schedules of the Company and
its consolidated subsidiaries included in the Preliminary Prospectus, the Final Prospectus
and the Registration Statement present fairly in all material respects the financial
condition, results of operations and cash flows of the Company and its consolidated
subsidiaries as of the dates and for the periods indicated, comply as to form with the
applicable accounting requirements of the Act and have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis throughout the
periods involved (except as otherwise noted therein).
(p) No action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its subsidiaries or its
or their property is pending or, to the best knowledge of the Company, threatened that (i)
would reasonably be expected to have a material adverse effect on the performance of this
Agreement or the consummation of any of the transactions contemplated hereby or (ii) would
reasonably be expected to have a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, except
as set forth in or contemplated in the Disclosure Package and the Final Prospectus
(exclusive of any supplement thereto).
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(q) Deloitte & Touche LLP, who have certified certain financial statements of the
Company and its consolidated subsidiaries and delivered their report with respect to the
audited consolidated financial statements and schedules included in the Registration
Statement, the Disclosure Package and the Final Prospectus, is an independent registered
public accounting firm with respect to the Company within the meaning of the Act and the
applicable published rules and regulations thereunder and of the Public Company Accounting
Oversight Board.
(r) Except as set forth or contemplated in the Registration Statement, Disclosure
Package and the Final Prospectus (exclusive of any supplement thereto), neither the Company
nor any of its subsidiaries is (i) in violation of any statute, any rule, regulation,
decision or order of any governmental agency or body or any court, domestic or foreign,
relating to the use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or toxic
substances (collectively, “Environmental Laws”), (ii) owns or operates any real property
contaminated with any substance that is subject to any Environmental Laws, (iii) is liable
for any off-site disposal or contamination pursuant to any Environmental Laws, or (iv) is
subject to any claim relating to any Environmental Laws, which violation, contamination,
liability or claim could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and there is no investigation pending or, to the Company’s
knowledge, threatened against it or its subsidiaries, that could reasonably be expected to
lead to the making of such a claim.
(s) The Company does not have any significant subsidiaries as defined by Rule 1-02 of
Regulation S-X.
(t) The CPUC has authorized the issuance and sale by the Company of the Securities, and
such authorization is in full force and effect and sufficient for the issuance and sale of
the Securities to the Underwriters.
Any certificate signed by any officer of the Company and delivered to the Representatives or
counsel for the Underwriters pursuant to this Agreement shall be deemed a representation and
warranty by the Company, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to sell to each Underwriter,
and each Underwriter agrees, severally and not jointly, to purchase from the Company, at the
purchase price set forth in Schedules I-A and I-B, as applicable, hereto the principal amount of
the Securities set forth opposite such Underwriter’s name in Schedule II hereto.
3. Delivery and Payment. Delivery of and payment for the Securities shall be made on
the date and at the time specified in Schedules I-A and I-B hereto or at such time on such later
date not more than three Business Days after the foregoing date as the Representatives
shall designate, which date and time may be postponed by agreement between the Representatives
and the Company or as provided in Section 9 hereof (such date and time of delivery and payment for
the Securities being herein called the “Closing Date”). Delivery of the
6
Securities shall be made
to the Representatives for the respective accounts of the several Underwriters against payment by
the several Underwriters through the Representatives of the purchase price thereof to or upon the
order of the Company by wire transfer payable in same-day funds to an account specified by the
Company. Delivery of the Securities shall be made through the facilities of The Depository Trust
Company unless the Representatives shall otherwise instruct.
4. Offering by Underwriters. It is understood that the several Underwriters propose
to offer the Securities for sale to the public as set forth in the Final Prospectus.
5. Agreements. The Company agrees with the several Underwriters that:
(a) Prior to the termination of the offering of the Securities, the Company will not
file any amendment of the Registration Statement or supplement (including the Final
Prospectus or any Preliminary Prospectus) to the Base Prospectus unless the Company has
furnished you a copy for your review prior to filing and will not file any such proposed
amendment or supplement to which you reasonably object. The Company will cause the Final
Prospectus, properly completed, and any supplement thereto to be filed in a form approved by
the Representatives with the Commission pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence satisfactory to the
Representatives of such timely filing. The Company will promptly advise the Representatives
(i) when the Final Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b), (ii) when, prior to termination of
the offering of the Securities, any amendment to the Registration Statement shall have been
filed or become effective, (iii) of any request by the Commission or its staff for any
amendment of the Registration Statement, or for any supplement to the Final Prospectus or
for any additional information, (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any notice objecting to its
use, any order preventing or suspending the use of any preliminary prospectus, any Issuer
Free Writing Prospectus or the Final Prospectus, or the institution or threatening of any
proceeding for the purpose of suspending the effectiveness of the Registration Statement or
preventing or suspending the use of any preliminary prospectus, any Issuer Free Writing
Prospectus or the Final Prospectus, and (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Securities for sale
in any jurisdiction or the institution or threatening of any proceeding for such purpose.
The Company will use its reasonable best efforts to prevent (i) the issuance of such stop
order or other order referred to in the preceding sentence, or (ii) the occurrence of (A)
any suspension of the effectiveness, or objection to the use, of the Registration Statement
or (B) any prevention or suspension of the use of the preliminary prospectus, any Issuer
Free Writing Prospectus or the Final Prospectus and, upon such issuance, occurrence or
notice of objection, to obtain as soon as possible the withdrawal of such stop order or
relief from such occurrence or objection, including, if necessary, by filing an amendment to
the Registration Statement or a new registration statement and using its best efforts to
have such amendment or new registration statement declared effective as soon as practicable.
7
(b) The Company shall prepare final term sheets, containing solely a description of
final terms of the Securities and the offering thereof, in the form approved by you and
attached as Schedules IV-A and IV-B hereto and to file such term sheets pursuant to Rule
433(d) within the time required by such Rule.
(c) If, at any time prior to the filing of the Final Prospectus pursuant to Rule
424(b), any event occurs as a result of which the Disclosure Package would include any
untrue statement of a material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were made or the
circumstances then prevailing not misleading, the Company will (i) notify promptly the
Representatives so that any use of the Disclosure Package may cease until it is amended or
supplemented; (ii) amend or supplement the Disclosure Package to correct such statement or
omission; and (iii) supply any amendment or supplement to you in such quantities as you may
reasonably request.
(d) If, at any time when a prospectus relating to the Securities is required to be
delivered under the Act (including in circumstances where such requirement may be satisfied
pursuant to Rule 172), any event occurs as a result of which the Final Prospectus as then
supplemented would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of the circumstances
under which they were made at such time not misleading, or if it shall be necessary to amend
the Registration Statement, file a new registration statement or supplement the Final
Prospectus to comply with the Act or the Exchange Act or the respective rules thereunder,
including in connection with use or delivery of the Final Prospectus, the Company promptly
will (i) notify the Representatives of any such event, (ii) prepare and file with the
Commission, subject to the second sentence of paragraph (a) of this Section 5, an amendment
or supplement or new registration statement which will correct such statement or omission or
effect such compliance, (iii) use its best efforts to have any amendment to the Registration
Statement or new registration statement declared effective as soon as practicable in order
to avoid any disruption in use of the Final Prospectus and (iv) supply any supplemented
Final Prospectus to you in such quantities as you may reasonably request.
(e) As soon as practicable, the Company will make generally available to its security
holders and to the Representatives an earnings statement or statements of the Company and
its subsidiaries which will satisfy the provisions of Section 11(a) of the Act and Rule 158.
(f) The Company will furnish to the Representatives and counsel for the Underwriters,
without charge, signed copies of the Registration Statement (including exhibits thereto) and
to each other Underwriter a copy of the Registration Statement (without exhibits thereto)
and, so long as delivery of a prospectus by an Underwriter or dealer may be required by the
Act (including in circumstances where such requirement may be satisfied pursuant to Rule
172), as many copies of each Preliminary Prospectus, the Final Prospectus and each Issuer Free Writing Prospectus and any supplement thereto
as the Representatives may reasonably request. The Company will pay the expenses of
printing or other production of all documents relating to the offering.
8
(g) The Company will arrange, if necessary, for the qualification of the Securities for
sale under the laws of such jurisdictions as the Representatives may designate and will
maintain such qualifications in effect so long as required for the distribution of the
Securities; provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take any action that
would subject it to service of process in suits, other than those arising out of the
offering or sale of the Securities, in any jurisdiction where it is not now so subject.
(a) The Company agrees that, unless it has or shall have obtained the prior written
consent of the Representatives, and each Underwriter, severally and not jointly, agrees with
the Company that, unless it has or shall have obtained, as the case may be, the prior
written consent of the Company, it has not made and will not make any offer relating to the
Securities that would constitute an Issuer Free Writing Prospectus or that would otherwise
constitute a “free writing prospectus” (as defined in Rule 405) required to be filed by the
Company with the Commission or retained by the Company under Rule 433, other than a free
writing prospectus containing the information contained in the final term sheets prepared
and filed pursuant to Section 5(b) hereto, or one or more free writing prospectuses through
customary Bloomberg distribution that do not contain substantive changes from or additions
to the information contained in the final term sheets prepared and filed pursuant to Section
5(b) hereto; provided that the prior written consent of the parties hereto shall be deemed
to have been given in respect of the Free Writing Prospectuses included in Schedule III
hereto or a term sheet, substantially in the form of Schedules IV-A and IV-B hereto and any
electronic road show. Any such free writing prospectus consented to by the Representatives
or the Company is hereinafter referred to as a “Permitted Free Writing Prospectus.” The
Company agrees that (x) it has treated and will treat, as the case may be, each Permitted
Free Writing Prospectus as an Issuer Free Writing Prospectus and (y) it has complied and
will comply, as the case may be, with the requirements of Rules 164 and 433 applicable to
any Permitted Free Writing Prospectus, including in respect of timely filing with the
Commission, legending and record keeping and that it will not take any action that would
result in any Underwriter or the Company being required to file with the Commission pursuant
to Rule 433(d) a Free Writing Prospectus prepared by or on behalf of such Underwriter that
such Underwriter would not otherwise have been required to so file.
(h) The Company will not, without the prior written consent of the Representatives,
offer, sell, contract to sell, pledge, or otherwise dispose of (or enter into any
transaction which is designed to, or might reasonably be expected to, result in the
disposition (whether by actual disposition or effective economic disposition due to cash
settlement or otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company), directly or indirectly, including
the filing (or participation in the filing) of a registration statement with the Commission
in respect of, or establish or increase a put equivalent position or liquidate or decrease a
call equivalent position within the meaning of Section 16 of the Exchange Act,
any debt securities issued or guaranteed by the Company (other than the Securities) or
publicly announce an intention to effect any such transaction, until the Business Day set
forth on Schedules I-A and I-B hereto.
9
(i) The Company will not take, directly or indirectly, any action designed to or that
would constitute or that might reasonably be expected to cause or result in, under the
Exchange Act or otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
(j) The Company agrees to pay the costs and expenses relating to the following matters:
(i) the preparation, printing or reproduction and filing with the Commission of the
Registration Statement (including financial statements and exhibits thereto), each
Preliminary Prospectus, the Final Prospectus and each Issuer Free Writing Prospectus, and
each amendment or supplement to any of them; (ii) the printing (or reproduction) and
delivery (including postage, air freight charges and charges for counting and packaging) of
such copies of the Registration Statement, each Preliminary Prospectus, the Final Prospectus
and each Issuer Free Writing Prospectus, and all amendments or supplements to any of them,
as may, in each case, be reasonably requested for use in connection with the offering and
sale of the Securities; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Securities, including any stamp or transfer taxes in
connection with the original issuance and sale of the Securities; (iv) the printing (or
reproduction) and delivery of this Agreement, any blue sky memorandum and all other
agreements or documents printed (or reproduced) and delivered in connection with the
offering of the Securities; (v) any registration or qualification of the Securities for
offer and sale under the securities or blue sky laws of the several states (including filing
fees and the reasonable fees and expenses of counsel for the Underwriters relating to such
registration and qualification); (vi) any filings required to be made with the Financial
Industry Regulatory Authority, Inc. (including filing fees and the reasonable fees and
expenses of counsel for the Underwriters relating to such filings); (vii) the transportation
and other expenses incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Securities; (viii) the fees and expenses of
the Company’s accountants and the fees and expenses of counsel (including local and special
counsel) for the Company; and (ix) all other costs and expenses incident to the performance
by the Company of its obligations hereunder.
6. Conditions to the Obligations of the Underwriters. The obligations of the
Underwriters to purchase the Securities shall be subject to the accuracy of the representations and
warranties on the part of the Company contained herein as of the Execution Time and the Closing
Date, to the accuracy of the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations hereunder and to the
following additional conditions:
(a) The Final Prospectus, and any supplement thereto, shall have been filed in the
manner and within the time period required by Rule 424(b); the final term sheets
contemplated by Section 5(b) hereto, and any other material required to be filed by the
Company pursuant to Rule 433(d) under the Act, shall have been filed with the
Commission within the applicable time periods prescribed for such filings by Rule 433;
and no stop order suspending the effectiveness of the Registration Statement or any notice
objecting to its use shall have been issued and no proceedings for that purpose shall have
been instituted or threatened.
10
(b) The Company shall have requested and caused ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP,
counsel for the Company, to have furnished to the Representatives their opinion, dated the
Closing Date and addressed to the Representatives, substantially in the form set forth in
Schedule V hereto.
(c) The Representatives shall have received from Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP, counsel for the Underwriters, such opinion or opinions, dated the Closing Date and
addressed to the Representatives, with respect to the issuance and sale of the Securities,
the Indenture, the Registration Statement, the Disclosure Package, the Final Prospectus
(together with any supplement thereto) and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such matters.
(d) The Company shall have furnished to the Representatives a certificate of the
Company, signed by the Chairman of the Board, the Chief Executive Officer, the President or
any Senior Vice President and by the Chief Financial Officer of the Company, dated the
Closing Date, to the effect that the signers of such certificate have carefully examined the
Registration Statement, the Disclosure Package, the Final Prospectus and any supplements or
amendments thereto, as well as each electronic road show used in connection with the
offering of the Securities, and this Agreement and that:
(i) the representations and warranties of the Company in this Agreement are
true and correct on and as of the Closing Date with the same effect as if made on
the Closing Date and the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or prior to the
Closing Date;
(ii) no stop order suspending the effectiveness of the Registration Statement
or any notice objecting to its use has been issued and no proceedings for that
purpose have been instituted or, to the Company’s knowledge, threatened; and
(iii) since the date of the most recent financial statements included in the
Disclosure Package and the Final Prospectus (exclusive of any supplement thereto),
there has been no Material Adverse Effect, except as set forth in or contemplated in
the Disclosure Package and the Final Prospectus (exclusive of any supplement
thereto).
(e) The Company shall have requested and caused Deloitte & Touche LLP to have furnished
to the Representatives, at the Execution Time and at the Closing Date, letters (which may
refer to letters previously delivered to one or more of the
Representatives), dated respectively as of the Execution Time and as of the Closing
Date, in form and substance satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Act and the Exchange Act and the
respective applicable rules and regulations adopted by the Commission thereunder and stating
in effect that:
11
(i) in their opinion the audited financial statements and financial statement
schedules included or incorporated by reference in the Registration Statement, the
Preliminary Prospectus and the Final Prospectus and reported on by them comply as to
form with the applicable accounting requirements of the Act and the Exchange Act and
the related rules and regulations adopted by the Commission;
(ii) carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set forth in such
letter; and inquiries of certain officials of the Company who have responsibility
for financial and accounting matters of the Company and its subsidiaries as to
transactions and events subsequent to December 31, 2007, nothing came to their
attention which caused them to believe that, with respect to the period subsequent
to December 31, 2007, there were any changes, at a specified date not more than five
days prior to the date of the letter, in the long-term debt or short-term borrowings
of the Company and its subsidiaries or the capital stock of the Company or decreases
in current assets or the shareholders’ equity of the Company, as compared with the
amounts shown on the December 31, 2007 consolidated balance sheet included or
incorporated by reference in the Registration Statement, the Preliminary Prospectus
and the Final Prospectus, or for the period from January 1, 2008 to such specified
date there were any decreases, as compared with the corresponding period in the
preceding year in operating revenues, net revenues, income before income taxes or
net income of the Company and its subsidiaries, except in all instances for changes
or decreases set forth in such letter, in which case the letter shall be accompanied
by an explanation by the Company as to the significance thereof unless said
explanation is not deemed necessary by the Representatives; and
(iii) they have performed certain other specified procedures as a result of
which they determined that certain information of an accounting, financial or
statistical nature (which is limited to accounting, financial or statistical
information derived from the general accounting records of the Company and its
subsidiaries) set forth in the Registration Statement, the Preliminary Prospectus
and the Final Prospectus and in Exhibit 12 to the Registration Statement, including
the information set forth under the captions “Ratio of Earnings to Fixed Charges”
and “Capitalization” in the Preliminary Prospectus and the Final Prospectus, and the
information included or incorporated by reference in Items 1, 1A, 6, 7 and 7A of the
Company’s Annual Report on Form 10-K, incorporated by reference in the Registration
Statement, the Preliminary Prospectus and the Final
Prospectus, agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation.
References to the Final Prospectus in this paragraph (e) include any supplement thereto
at the date of the letter.
12
(f) Subsequent to the Execution Time or, if earlier, the dates as of which information
is given in the Registration Statement (exclusive of any amendment thereof) and the Final
Prospectus (exclusive of any amendment or supplement thereto), there shall not have been (i)
any material change or decrease specified in the letter or letters referred to in paragraph
(e) of this Section 6 or (ii) any change in or affecting the condition (financial or
otherwise), earnings, business or properties of the Company and its subsidiaries taken as a
whole, whether or not arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Disclosure Package and the Final Prospectus
(exclusive of any amendment or supplement thereto) the effect of which, in any case referred
to in clause (i) or (ii) above, is, in the judgment of the Representatives, so material and
adverse as to make it impractical or inadvisable to proceed with the offering or delivery of
the Securities as contemplated by the Registration Statement (exclusive of any amendment
thereof), the Disclosure Package and the Final Prospectus (exclusive of any amendment or
supplement thereto).
(g) Subsequent to the Execution Time, there shall not have been any decrease in the
rating of any of PG&E Corporation’s or the Company’s debt securities by any “nationally
recognized statistical rating organization” (as defined for purposes of Rule 436(g) under
the Act) or any notice given of any intended or potential decrease in any such rating or of
a possible change in any such rating.
(h) Prior to the Closing Date, the Company shall have furnished to the Representatives
such further information, certificates and documents as the Representatives may reasonably
request.
If any of the conditions specified in this Section 6 shall not have been fulfilled when and as
provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere
in this Agreement shall not be reasonably satisfactory in form and substance to the Representatives
and counsel for the Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the Representatives. Notice of
such cancellation shall be given to the Company in writing or by telephone or facsimile confirmed
in writing.
The documents required to be delivered by this Section 6 shall be delivered at the office of
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the Underwriters, at Four Times Square, New
York, New York, on the Closing Date.
7. Reimbursement of Underwriters’ Expenses. If the sale of the Securities provided
for herein is not consummated because any condition to the obligations of the Underwriters set
forth in Section 6 hereof is not satisfied, because of any termination pursuant to Section 10
hereof or because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters severally through
▇▇▇▇▇▇ Brothers Inc. on demand for all expenses (including reasonable fees and disbursements of
counsel) that shall have been incurred by them in connection with the proposed purchase and sale of
the Securities.
13
8. Indemnification and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter, the directors, officers, employees and agents of each
Underwriter and each person who controls any Underwriter within the meaning of either the
Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or in any subsequent amendment thereof, or in the Base
Prospectus, any Preliminary Prospectus or any other preliminary prospectus supplement
relating to the Securities, the Final Prospectus, any Issuer Free Writing Prospectus or the
information contained in the final term sheets required to be prepared and filed pursuant to
Section 5(b) hereto, or in any amendment thereof or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion therein. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within the meaning of either the Act or
the Exchange Act, to the same extent as the foregoing indemnity from the Company to each
Underwriter, but only with reference to written information relating to such Underwriter
furnished to the Company by or on behalf of such Underwriter through the Representatives
specifically for inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any Underwriter may otherwise
have. The Company acknowledges that the statements set forth (i) in the last paragraph of
the cover page regarding delivery of the Securities, (ii) under the heading “Underwriting”,
(A) the sentences related to concessions and reallowances and (B) the paragraph related to
stabilization, syndicate covering transactions and penalty bids in any Preliminary
Prospectus and the Final Prospectus constitute the only information furnished in writing by
or on behalf of the several
Underwriters for inclusion in any Preliminary Prospectus, the Final Prospectus or any
Issuer Free Writing Prospectus.
(c) Promptly after receipt by an indemnified party under this Section 8 of notice of
the commencement of any action, such indemnified party will, if a claim in respect thereof
is to be made against the indemnifying party under this Section 8, notify the indemnifying
party in writing of the commencement thereof; but the failure so to
14
notify the indemnifying
party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to
the extent it did not otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not,
in any event, relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying party’s choice
at the indemnifying party’s expense to represent the indemnified party in any action for
which indemnification is sought (in which case the indemnifying party shall not thereafter
be responsible for the fees and expenses of any separate counsel retained by the indemnified
party or parties except as set forth below); provided, however, that such
counsel shall be satisfactory to the indemnified party. Notwithstanding the indemnifying
party’s election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably concluded that
there may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. It is understood that the
indemnifying party shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one separate counsel
(in addition to one local counsel) for all such indemnified parties. An
indemnifying party will not, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding. No indemnifying party will be liable for any
settlement of any such action effected without its prior written consent (which consent
shall not be unreasonably withheld), but if settled with the consent of the indemnifying
party or if there be a final judgment of the plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless any indemnified party from and against any loss
or liability by reason of such settlement or judgment.
(d) In the event that the indemnity provided in paragraph (a), (b) or (c) of this
Section 8 is unavailable to or insufficient to hold harmless an indemnified party for any
reason, the Company and the Underwriters severally agree to contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending the same) (collectively “Losses”) to
which the Company and one or more of the Underwriters may be subject in such
15
proportion as
is appropriate to reflect the relative benefits received by the Company on the one hand and
by the Underwriters on the other from the offering of the Securities; provided,
however, that in no case shall any Underwriter (except as may be provided in any
agreement among underwriters relating to the offering of the Securities) be responsible for
any amount in excess of the underwriting discount or commission applicable to the Securities
purchased by such Underwriter hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the Underwriters severally
shall contribute in such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand and of the Underwriters
on the other in connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by the Company shall
be deemed to be equal to the total net proceeds from the offering (before deducting
expenses) received by it, and benefits received by the Underwriters shall be deemed to be
equal to the total underwriting discounts and commissions, in each case as set forth on the
cover page of the Final Prospectus. Relative fault shall be determined by reference to,
among other things, whether any untrue or any alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to information provided by
the Company on the one hand or the Underwriters on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriters agree that it would not be
just and equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable considerations referred to
above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and agent of an
Underwriter shall have the same rights to contribution as such Underwriter, and each person
who controls the Company within the meaning of either the Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company, subject in each case
to the applicable terms and conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters shall fail to purchase
and pay for any of the Securities agreed to be purchased by such Underwriter or Underwriters
hereunder and such failure to purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the remaining Underwriters shall be obligated severally to
take up and pay for (in the respective proportions which the principal amount of Securities set
forth opposite their names in Schedule II hereto bears to the aggregate principal
amount of Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase;
provided, however, that in the event that the aggregate principal amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase shall
exceed 10% of the aggregate principal amount of Securities set forth in Schedule II hereto, the
remaining Underwriters shall have the right to purchase all, but shall not be under any obligation
to
16
purchase any, of the Securities, and if such nondefaulting Underwriters do not purchase all
the Securities, this Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding five Business Days, as the
Representatives shall determine in order that the required changes in the Registration Statement
and the Final Prospectus or in any other documents or arrangements may be effected. Nothing
contained in this Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company and any nondefaulting Underwriter for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the absolute
discretion of the Representatives, by notice given to the Company prior to delivery of and payment
for the Securities, if at any time prior to such delivery and payment: (a) (i) trading in the
common stock of PG&E Corporation shall have been suspended by the Commission or the New York Stock
Exchange, (ii) trading in any series of the preferred stock of the Company shall have been
suspended by the Commission or the American Stock Exchange, (iii) (A) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange shall have been suspended
or limited, (B) minimum prices shall have been established on either of such exchanges, or (C)
there shall have been a material disruption in the clearance or settlement of securities generally
on either of such exchanges which makes it, in the sole judgment of the Representatives,
impractical or inadvisable to proceed with the offering or delivery of the Securities as
contemplated by this Agreement, the Disclosure Package or the Final Prospectus (exclusive of any
amendment or supplement thereto), (b) a banking moratorium shall have been declared either by
Federal, California or New York State authorities, (c) there shall have occurred any outbreak or
escalation of hostilities, declaration by the United States of a national emergency or war, or
other calamity or crisis which makes it, in the sole judgment of the Representatives, impractical
or inadvisable to proceed with the offering or delivery of the Securities as contemplated by this
Agreement, the Disclosure Package or the Final Prospectus (exclusive of any amendment or supplement
thereto), or (d) there shall have been such a material adverse change in general economic,
political or financial conditions or the financial markets in the United States which makes it, in
the sole judgment of the Representatives, impractical or inadvisable to proceed with the offering
or delivery of the Securities as contemplated by this Agreement, the Disclosure Package or the
Final Prospectus (exclusive of any amendment or supplement thereto).
11. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company or its officers and of
the Underwriters set forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter or the Company or
any of the officers, directors, employees, agents or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the Securities. The provisions of Sections 7
and 8 hereof shall survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and effective only on
receipt, and, if sent to the Representatives, will be mailed, delivered or telefaxed to (i)
▇▇▇▇▇▇ Brothers Inc., Attention: Debt Capital Markets, Global Power Group (fax number (▇▇▇)
▇▇▇-▇▇▇▇) and confirmed to ▇▇▇▇▇▇ Brothers Inc., Attention: Debt Capital Markets, Global Power
Group — at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, with a copy to the General
17
Counsel at the
same address, (ii) ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., Attention: Registration Department (fax no.: ((▇▇▇)
▇▇▇-▇▇▇▇) and confirmed to ▇▇▇▇▇▇▇, Sachs & Co., at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Registration Department — 20th floor, and (iii) UBS Securities LLC,
Attention: Fixed Income Syndicate (fax no.: (▇▇▇) ▇▇▇-▇▇▇▇ and confirmed to UBS Securities LLC,
Attention: Fixed Income Syndicate at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; or, if sent to
the Company, will be mailed, delivered or telefaxed to the Company’s General Counsel (fax no.:
(▇▇▇) ▇▇▇-▇▇▇▇) and confirmed to the Company’s General Counsel, PG&E Corporation, at ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel.
13. Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and the officers, directors, employees, agents and
controlling persons referred to in Section 8 hereof, and no other person will have any right or
obligation hereunder.
14. No Fiduciary Duty. The Company hereby acknowledges that (a) the purchase and sale
of the Securities pursuant to this Agreement is an arm’s-length commercial transaction between the
Company, on the one hand, and the Underwriters and any affiliate through which it may be acting, on
the other, (b) the Underwriters are acting as principal and not as an agent or fiduciary of the
Company and (c) the Company’s engagement of the Underwriters in connection with the offering and
the process leading up to the offering is as independent contractors and not in any other capacity.
Furthermore, the Company agrees that it is solely responsible for making its own judgments in
connection with the offering (irrespective of whether any of the Underwriters has advised or is
currently advising the Company on related or other matters). The Company agrees that it will not
claim that the Underwriters have rendered advisory services of any nature or respect, or owe an
agency, fiduciary or similar duty to the Company, in connection with such transaction or the
process leading thereto.
15. Research Analyst Independence. The Company acknowledges that the Underwriters’
research analysts and research departments are required to be independent from their respective
investment banking divisions and are subject to certain regulations and internal policies, and that
such Underwriters’ research analysts may hold views and make statements or investment
recommendations and/or publish research reports with respect to the Company and/or the offering of
the Securities that differ from the views of their respective investment banking divisions. The
Company hereby waives and releases, to the fullest extent permitted by law, any claims that the
Company may have against the Underwriters with respect to any conflict of interest that may arise
from the fact that the views expressed by their independent research analysts and research
departments may be different from or inconsistent with the views or advice communicated to the
Company by such Underwriters’ investment banking divisions. The Company acknowledges that each of
the Underwriters is a full service securities firm and as such from time to time, subject to
applicable securities laws, may effect transactions for its own account or the account of its
customers and hold long or short positions in debt or equity securities of the companies that may
be the subject of the transactions contemplated by this Agreement.
18
16. Integration. This Agreement supersedes all prior agreements and understandings
(whether written or oral) between the Company and the Underwriters, or any of them, with respect to
the subject matter hereof.
17. Applicable Law. This Agreement will be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be performed within the
State of New York.
18. Waiver of Jury Trial. The Company hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated hereby.
19. Counterparts. This Agreement may be signed in one or more counterparts, each of
which shall constitute an original and all of which together shall constitute one and the same
agreement.
20. Headings. The section headings used herein are for convenience only and shall not
affect the construction hereof.
21. Definitions. The terms that follow, when used in this Agreement, shall have the
meanings indicated.
“Act” shall mean the Securities Act of 1933, as amended and the rules and regulations
of the Commission promulgated thereunder.
“Base Prospectus” shall mean the base prospectus referred to in paragraph 1(a) above
contained in the Registration Statement at the Execution Time.
“Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday or
a day on which banking institutions or trust companies are authorized or obligated by law to
close in New York City.
“Closing Date” shall mean March 3, 2008.
“Commission” shall mean the Securities and Exchange Commission.
“Disclosure Package” shall mean (i) the Base Prospectus, (ii) the Preliminary
Prospectus used most recently prior to the Execution Time, (iii) the Issuer Free Writing
Prospectuses, if any, identified in Schedule III hereto, (iv) the final term sheets prepared
and filed pursuant to Section 5(b) hereto, if any, and (v) any other Free Writing Prospectus
that the parties hereto shall hereafter expressly agree in writing to treat as part of the
Disclosure Package.
“Effective Date” shall mean each date and time that the Registration Statement, any
post-effective amendment or amendments thereto became or becomes effective.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.
19
“Execution Time” shall mean 5:30 p.m. Eastern time on the date of this Agreement, which
is the time of the first contract of sale of the Securities.
“Final Prospectus” shall mean the prospectus supplement relating to the Securities that
was first filed pursuant to Rule 424(b) after the Execution Time, together with the Base
Prospectus.
“Free Writing Prospectus” shall mean a free writing prospectus, as defined in Rule 405.
“Issuer Free Writing Prospectus” shall mean an issuer free writing prospectus, as
defined in Rule 433.
“Preliminary Prospectus” shall mean any preliminary prospectus supplement to the Base
Prospectus referred to in paragraph 1(a) above which is used prior to the filing of the
Final Prospectus, together with the Base Prospectus.
“Registration Statement” shall mean the registration statement referred to in paragraph
1(a) above, including exhibits and financial statements and any prospectus supplement
relating to the Securities that is filed with the Commission pursuant to Rule 424(b) and
deemed part of such registration statement pursuant to Rule 430B, as amended on each
Effective Date and, in the event any post-effective amendment thereto becomes effective
prior to the Closing Date, shall also mean such registration statement as so amended.
“Rule 158”, “Rule 163”, “Rule 164”, “Rule 172”, “Rule 405”, “Rule 415”, “Rule 424”,
“Rule 430B” and “Rule 433” refer to such rules under the Act.
“Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended and the
rules and regulations of the Commission promulgated thereunder.
“Well-Known Seasoned Issuer” shall mean a well-known seasoned issuer, as defined in
Rule 405.
20
If the foregoing is in accordance with your understanding of our agreement, please sign and
return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall
represent a binding agreement among the Company and the several Underwriters.
| Very truly yours, Pacific Gas and Electric Company |
||||
| By: | /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||
| Title: | Assistant Treasurer | |||
The foregoing Agreement is hereby confirmed and
accepted as of the date specified in Schedules I-A and I-B hereto.
accepted as of the date specified in Schedules I-A and I-B hereto.
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇, Sachs & Co.
UBS Securities LLC
▇▇▇▇▇▇▇, Sachs & Co.
UBS Securities LLC
By:
|
▇▇▇▇▇▇ Brothers Inc. | |||
By:
|
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ | |||
| Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||||
| Title: Managing Director | ||||
By:
|
▇▇▇▇▇▇▇, Sachs & Co. | |||
By:
|
/s/ ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. | |||
| (▇▇▇▇▇▇▇, Sachs & Co.) | ||||
By:
|
UBS Securities LLC | |||
By:
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇ | |||
| Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||||
| Title: Executive Director | ||||
By:
|
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |||
| Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | ||||
| Title: Managing Director |
For
themselves and the other several Underwriters, if any, named in Schedule II to the foregoing Agreement.
21
SCHEDULE I-A
Underwriting Agreement dated February 26, 2008
Registration Statement No. 333-149361
Representative(s):
|
▇▇▇▇▇▇ Brothers Inc. | |
| ▇▇▇▇▇▇▇, Sachs & Co. | ||
| UBS Securities LLC |
Title, Purchase Price and Description of Securities:
Title:
5.625% Senior Notes Due November 30, 2017
Principal amount: $200,000,000
Purchase price (include accrued interest or amortization, if any): 100.900%
Sinking fund provisions: Not applicable.
Redemption provisions: At the Company’s option, the 5.625% Senior Notes Due November 30,
2017 (in this Schedule, the “Securities”) may be redeemed in whole or in part at any time at
a redemption price equal to the greater of: (1)100% of the principal amount of the
Securities to be redeemed, plus accrued interest on those Securities to the redemption date,
or (2) as determined by the Quotation Agent (as defined in the Preliminary Prospectus), the
sum of the present values of the remaining scheduled payments of principal and interest on
the Securities to be redeemed (not including any portion of payments of interest accrued as
of the redemption date) discounted to the redemption date on a semi-annual basis at the
Adjusted Treasury Rate (as defined in the Preliminary Prospectus) plus 30 basis points, plus
accrued interest, in either case, on those Securities to the redemption date. The
redemption price will be calculated assuming a 360-day year consisting of twelve 30-day
months.
Other provisions: Not applicable.
Closing Date, Time and Location: March 3, 2008 at 10:00 a.m. at Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP, Four Times Square, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Date referred to in Section 5(i) after which the Company may offer or sell debt securities issued
or guaranteed by the Company without the consent of the Representative(s): 7 days
Modification of items to be covered by the letter from Deloitte & Touche LLP delivered pursuant to
Section 6(e) at the Execution Time: None
SCHEDULE I-B
Underwriting Agreement dated February 26, 2008
Registration Statement No. 333-149361
Representative(s):
|
▇▇▇▇▇▇ Brothers Inc. | |
| ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. | ||
| UBS Securities LLC |
Title, Purchase Price and Description of Securities:
Title:
6.35% Senior Notes Due February 15, 2038
Principal
amount: $400,000,000
Purchase price (include accrued interest or amortization, if any): 98.983%
Sinking fund provisions: Not applicable.
Redemption provisions: At the Company’s option, the 6.35% Senior Notes Due February 15, 2038
(in this Schedule, the “Securities”) may be redeemed in whole or in part at any time at a
redemption price equal to the greater of: (1)100% of the principal amount of the Securities
to be redeemed, plus accrued interest on those Securities to the redemption date, or (2) as
determined by the Quotation Agent (as defined in the Preliminary Prospectus), the sum of the
present values of the remaining scheduled payments of principal and interest on the
Securities to be redeemed (not including any portion of payments of interest accrued as of
the redemption date) discounted to the redemption date on a semi-annual basis at the
Adjusted Treasury Rate (as defined in the Preliminary Prospectus) plus 30 basis points, plus
accrued interest, in either case, on those Securities to the redemption date. The
redemption price will be calculated assuming a 360-day year consisting of twelve 30-day
months.
Other provisions: Not applicable.
Closing Date, Time and Location: March 3, 2008 at 10:00 a.m. at Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇ LLP, Four Times Square, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Date referred to in Section 5(i) after which the Company may offer or sell debt securities issued
or guaranteed by the Company without the consent of the Representative(s): 7 days
Modification of items to be covered by the letter from Deloitte & Touche LLP delivered pursuant to
Section 6(e) at the Execution Time: None
SCHEDULE II
| Principal Amount | Principal Amount | |||||||
| of 5.625% Senior | of 6.35% Senior | |||||||
| Notes due November | Notes Due February | |||||||
| 30, 2017 to | 15, 2038 to | |||||||
| Underwriters | be Purchased | be Purchased | ||||||
▇▇▇▇▇▇▇, Sachs & Co. |
$ | 58,000,000 | $ | 116,000,000 | ||||
▇▇▇▇▇▇ Brothers Inc. |
$ | 58,000,000 | $ | 116,000,000 | ||||
UBS Securities LLC |
$ | 58,000,000 | $ | 116,000,000 | ||||
Mizuho Securities USA Inc. |
$ | 15,000,000 | $ | 30,000,000 | ||||
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Van, LLC |
$ | 5,500,000 | $ | 11,000,000 | ||||
CastleOak Securities L.P. |
$ | 5,500,000 | $ | 11,000,000 | ||||
Total |
$ | 200,000,000 | $ | 400,000,000 | ||||
SCHEDULE III
Schedule of Free Writing Prospectuses included in the Disclosure Package
| 1. | Free Writing Prospectus, dated February 26, 2008, relating to the 5.625% Senior Notes due November 30, 2017. |
| 2. | Free Writing Prospectus, dated February 26, 2008, relating to the 6.35% Senior Notes due February 15, 2038. |
SCHEDULE IV-A
Filed Pursuant to Rule 433
Registration No. 333-149361
February 26, 2008
Registration No. 333-149361
February 26, 2008
PRICING TERM SHEET
5.625% Senior Notes Due November 30, 2017
Issuer: |
Pacific Gas and Electric Company | |
Security: |
5.625% Senior Notes Due November 30, 2017 (the | |
| “2017 Notes”) | ||
Size: |
$200,000,000 | |
| The 2017 Notes will be part of the same series of | ||
| notes as $500,000,000 principal amount of 5.625% | ||
| Senior Notes due November 30, 2017 offered and | ||
| sold by our prospectus supplement dated November | ||
| 28, 2007 and the accompanying prospectus. | ||
Maturity Date: |
November 30, 2017 | |
Coupon: |
5.625% | |
Interest Payment Dates: |
May 30 and November 30, commencing May 30, 2008 | |
Price to Public: |
101.550% | |
| The above issue price does not include accrued | ||
| interest from December 4, 2007 to Settlement Date | ||
| totaling $2,781,250 in the aggregate for the 2017 | ||
| Notes. | ||
Benchmark Treasury: |
3.50% due February 15, 2018 | |
Benchmark Treasury Yield: |
3.867% | |
Spread to Benchmark Treasury: |
+155 basis points | |
Yield: |
5.417% | |
Optional Redemption: |
Make-Whole Call at Treasuries plus 30 basis points | |
Expected Settlement Date: |
March 3, 2008 | |
CUSIP: |
694308 GL5 | |
Anticipated Ratings: |
A3 by ▇▇▇▇▇’▇ Investors Service, Inc. | |
| BBB+ by Standard & Poor’s Ratings Services | ||
Joint Book-Running Managers: |
▇▇▇▇▇▇▇, Sachs & Co. | |
| ▇▇▇▇▇▇ Brothers Inc. | ||
| UBS Securities LLC | ||
Co-Managers: |
Mizuho Securities USA Inc. | |
| ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Van, LLC | ||
| CastleOak Securities L.P. |
Note: A securities rating is not a recommendation to buy, sell or hold securities and may be
subject to revision or withdrawal at any time.
The issuer has filed a registration statement (including a prospectus) with the SEC for the
offering to which this communication relates. Before you invest, you should read the prospectus in
that registration statement and other documents the issuer has filed with the SEC for more complete
information about the issuer and this offering.
You may get these documents for free by visiting ▇▇▇▇▇ on the SEC Web site at ▇▇▇.▇▇▇.▇▇▇.
Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange
to send you the prospectus if you request it by calling ▇▇▇▇▇▇ Brothers Inc. toll free at
▇▇▇-▇▇▇-▇▇▇▇; ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. toll free at ▇-▇▇▇-▇▇▇-▇▇▇▇; or UBS Securities LLC toll free at
877-827-6444 ext. 561-3884.
SCHEDULE IV-B
Filed Pursuant to Rule 433
Registration No. 333-149361
February 26, 2008
Registration No. 333-149361
February 26, 2008
PRICING TERM SHEET
6.35% Senior Notes due February 15, 2038
Issuer: |
Pacific Gas and Electric Company | |
Security: |
6.35% Senior Notes due February 15, 2038 | |
Size: |
$400,000,000 | |
Maturity Date: |
February 15, 2038 | |
Coupon: |
6.35% | |
Interest Payment Dates: |
February 15 and August 15, commencing August 15, 2008 | |
Price to Public: |
99.858% | |
Benchmark Treasury: |
5.00% due May 15, 2037 | |
Benchmark Treasury Yield: |
4.661% | |
Spread to Benchmark Treasury: |
+170 basis points | |
Yield: |
6.361% | |
Optional Redemption: |
Make-Whole Call at Treasuries plus 30 basis points | |
Expected Settlement Date: |
March 3, 2008 | |
CUSIP: |
694308 GM3 | |
Anticipated Ratings: |
A3 by ▇▇▇▇▇’▇ Investors Service, Inc. | |
| BBB+ by Standard & Poor’s Ratings Services | ||
Joint Book-Running Managers: |
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. | |
| ▇▇▇▇▇▇ Brothers Inc. | ||
| UBS Securities LLC | ||
Co-Managers: |
Mizuho Securities USA Inc. | |
| ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Van, LLC | ||
| CastleOak Securities L.P. |
Note: A securities rating is not a recommendation to buy, sell or hold securities and may be
subject to revision or withdrawal at any time.
The issuer has filed a registration statement (including a prospectus) with the SEC for the
offering to which this communication relates. Before you invest, you should read the prospectus in
that registration statement and other documents the issuer has filed with the SEC for more complete
information about the issuer and this offering.
You may get these documents for free by visiting ▇▇▇▇▇ on the SEC Web site at ▇▇▇.▇▇▇.▇▇▇.
Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange
to send you the prospectus if you request it by calling ▇▇▇▇▇▇ Brothers Inc. toll free at
▇▇▇-▇▇▇-▇▇▇▇; ▇▇▇▇▇▇▇, Sachs & Co. toll free at ▇-▇▇▇-▇▇▇-▇▇▇▇; or UBS Securities LLC toll free at
877-827-6444 ext. 561-3884.
SCHEDULE V
Form of Opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
(i) the Registration Statement has become effective under the Act; to the
knowledge of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have been
threatened or instituted by, or are pending before, the Commission, and the
Registration Statement and the Final Prospectus (other than the financial statements
and other financial and statistical information contained therein, as to which such
counsel need express no opinion) comply as to form in all material respects with the
applicable requirements of the Act, the Exchange Act and the Trust Indenture Act and
the respective rules thereunder; the final term sheet has been filed pursuant to,
and within the time frame contemplated by Rule 433;
(ii) the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of California, with the
corporate power and authority to own or lease, as the case may be, and to operate
its properties and conduct its business as described in the Registration Statement,
the Disclosure Package and the Final Prospectus;
(iii) the Indenture has been duly authorized, executed and delivered by the
Company, has been duly qualified under the Trust Indenture Act and, assuming due
authorization, execution and delivery thereof by the Trustee constitutes a valid and
binding obligation of the Company enforceable against the Company in accordance with
its terms (subject, to the effect of any bankruptcy, reorganization, insolvency,
arrangement, fraudulent conveyance, moratorium, receivership, assignment for the
benefit of creditors or other laws affecting creditors’ rights generally from time
to time in effect and to general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair dealing,
regardless of whether considered in a proceeding in equity or at law); and the
Securities have been duly authorized and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid for by the
Underwriters pursuant to this Agreement, will have been validly issued and
delivered, will be entitled to the benefits of the Indenture and will constitute
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms;
(iv) to the knowledge of such counsel, there is no pending or threatened
action, suit or proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Company or any of its subsidiaries or its or
their property, of a character required to be disclosed in the Registration
Statement other than those disclosed in any Preliminary Prospectus and the Final
Prospectus (in rendering such opinion, such counsel may note that it has not
conducted searches of the dockets of any court or administrative agency whatsoever);
(v) this Agreement has been duly authorized, executed and delivered by the
Company;
(vi) the Company is not and, after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as described in the
Disclosure Package and the Final Prospectus, will not be an “investment company” as
defined in the 1940 Act or a company “controlled” by an “investment company” within
the meaning of the 1940 Act;
(vii) none of the issue or sale of the Securities, the consummation of the
transactions contemplated by this Agreement or the performance by the Company of its
obligations hereunder will (A) conflict with or result in any violation of (1) the
Articles of Incorporation or Bylaws of the Company, or (2) any Federal, California
or, as to this Agreement, New York, statute or any rule or regulation issued
pursuant to any Federal, California or, as to this Agreement, New York statute,
including, without limitation, the California Public Utilities Code and California
usury laws (“Applicable Laws”), or any order known to such counsel to have been
issued pursuant to any Applicable Law by any Federal, California or, as to this
Agreement, New York, court or governmental agency or body that such counsel has in
the exercise of customary professional diligence recognized as having jurisdiction
over the Company or any of its properties (“Applicable Governmental Authority”) or
(B) result in a breach or violation of, or constitute a default under, any
agreement, indenture or other instrument to which the Company or any of its
subsidiaries is a party that has been filed pursuant to Section 601(b)(4) or
Section 601(b)(10) of Regulation S-K as exhibits to the Company’s Annual Report on
Form 10-K for the year ended December 31, 2007, or to any report on Form 8-K filed
by the Company between January 1, 2008 and the Closing Date; and
(viii) no consent, approval, authorization, filing with or order of or with any
Applicable Governmental Authority (a “Governmental Action”) is required for the
valid authorization, execution, issuance, sale and delivery of the Securities by the
Company except for any Governmental Actions that have been obtained, and such as may
be required under the blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Securities by the Underwriters in the manner
contemplated in this Agreement, the Disclosure Package and the Final Prospectus.
The letter from such counsel shall include a separate paragraph to the effect
that in the course of its engagement as counsel to the Company in connection with
the offering of the Securities, it has participated in conferences with the
Underwriters and their representatives and representatives of the Company and its
accountants concerning the Registration Statement, the Disclosure Package and the
Final Prospectus and considered the matters required to be stated therein and the
statements contained therein, and, although they were
not engaged to and did not independently verify the accuracy, completeness or
fairness of such statements, and based upon and subject to the foregoing, such
counsel will advise the Underwriters, as a matter of fact and not opinion, that
nothing came to such counsel’s attention to cause them to believe that (A) the
Registration Statement, as of each Effective Date contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (B) the Final Prospectus,
as of its date and as of the Closing Date contained or contains an untrue statement
of a material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which they
were made, not misleading, or (C) the Disclosure Package, as of the Execution Time,
contained an untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that it is understood
that such counsel is not requested to and will not express any belief in this
paragraph with respect to the financial statements, schedules and other financial
data contained in or incorporated by reference in the Registration Statement, the
Disclosure Package, the Final Prospectus or the Statement of Eligibility and
Qualification of the Trustee.
In rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws of any jurisdiction other than the State of California, New York or the
Federal laws of the United States, to the extent they deem proper and specified in such
opinion, upon the opinion of other counsel of good standing whom they believe to be reliable
and who are satisfactory to counsel for the Underwriters and (B) as to matters of fact, to
the extent they deem proper, on certificates of responsible officers of the Company and
public officials. References to the Final Prospectus in this paragraph (b) shall also
include any supplements thereto at the Closing Date.