Exhibit 10.1

Execution Copy

 

 

 

TERM LOAN AGREEMENT

by and between

PACIFIC GAS AND ELECTRIC COMPANY,

as Borrower,

and

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,

as the Initial Lender

Dated as of March 2, 2016

 

 

 

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Table of Contents

 

          Page   SECTION 1.   

DEFINITIONS

     1   

1.1

   Defined Terms      1   

1.2

   Other Definitional Provisions and Interpretative Provisions      14   
SECTION 2.   

AMOUNT AND TERMS OF THE LOAN

     15   

2.1

   Term Loan      15   

2.2

   [Reserved]      15   

2.3

   Repayment of Loan; Evidence of Debt      15   

2.4

   Optional Prepayments      16   

2.5

   Conversion and Continuation Options      16   

2.6

   Limitations on Eurodollar Tranches      16   

2.7

   Interest Rates; Payment Dates and Payments      17   

2.8

   Computation of Interest and Fees      17   

2.9

   Inability to Determine Interest Rate      18   

2.10

   Notes      18   

2.11

   Change of Law      18   

2.12

   Taxes      19   

2.13

   Indemnity      23   

2.14

   Change of Lending Office      23    SECTION 3.   

REPRESENTATIONS AND WARRANTIES

     23   

3.1

   Financial Condition      23   

3.2

   No Change      24   

3.3

   Existence; Compliance with Law      24   

3.4

   Power; Authorization; Enforceable Obligations      24   

3.5

   No Legal Bar      24   

3.6

   Litigation      25   

3.7

   No Default      25   

3.8

   Taxes      25   

3.9

   Federal Regulations      25   

3.10

   ERISA      25   

3.11

   Investment Company Act; Other Regulations      26   

3.12

   Use of Proceeds      26   

3.13

   Environmental Matters      26   

3.14

   Regulatory Matters      26   

3.15

   Sanctions      26    SECTION 4.   

CONDITIONS TO THE CLOSING DATE

     27    SECTION 5.       

AFFIRMATIVE COVENANTS

     28   

5.1

   Financial Statements      28   

5.2

   Certificates; Other Information      28   

5.3

   Payment of Taxes      29   

 

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Table of Contents

 

          Page  

5.4

   Maintenance of Existence; Compliance      29   

5.5

   Maintenance of Property; Insurance      29   

5.6

   Inspection of Property; Books and Records; Discussions      29   

5.7

   Notices      30   

5.8

   Maintenance of Licenses, etc      30    SECTION 6.   

NEGATIVE COVENANTS

     30   

6.1

   Consolidated Capitalization Ratio      31   

6.2

   Liens      31   

6.3

   Fundamental Changes      31    SECTION 7.   

EVENTS OF DEFAULT

     31    SECTION 8.       

MISCELLANEOUS

     33   

8.1

   Amendments and Waivers      33   

8.2

   Notices      34   

8.3

   No Waiver; Cumulative Remedies      35   

8.4

   Survival of Representations and Warranties      35   

8.5

   Payment of Expenses      35   

8.6

   Successors and Assigns; Participations and Assignments      36   

8.7

   Adjustments; Set off      39   

8.8

   Counterparts      40   

8.9

   Severability      40   

8.10

   Integration      40   

8.11

   GOVERNING LAW      40   

8.12

   Submission To Jurisdiction; Waivers      40   

8.13

   Acknowledgments      41   

8.14

   Confidentiality      41   

8.15

   WAIVER OF JURY TRIAL      42   

8.16

   USA Patriot Act      42   

8.17

   Judicial Reference      42   

8.18

   No Advisory or Fiduciary Responsibility      42   

 

EXHIBITS:    A    Form of Compliance Certificate B    Form of Closing
Certificate C    Form of Assignment and Assumption D    Form of Legal Opinion of
Orrick, Herrington & Sutcliffe LLP E    Forms of U.S. Tax Compliance
Certificates F    Form of Note

 

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TERM LOAN AGREEMENT

This TERM LOAN AGREEMENT (this “Agreement”), dated as of March 2, 2016, by and
between PACIFIC GAS AND ELECTRIC COMPANY, a California corporation (the
“Borrower”) and THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as the initial lender
(the “Initial Lender”).

W I T N E S S E T H:

WHEREAS, the Borrower has requested the Initial Lender make available to the
Borrower a single-draw loan in the principal amount of $250,000,000 to be used
for general corporate purposes; and

WHEREAS, the Initial Lender is willing to make available to the Borrower such
loan upon the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises
contained herein and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Borrower and the Initial Lender hereby
agree as follows:

SECTION 1. DEFINITIONS

1.1 Defined Terms. As used in this Agreement, the terms listed in this
Section 1.1 shall have the respective meanings set forth in this Section 1.1.

“ABR” means, for any day, a rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the greatest of (a) the Base Rate in effect on
such day, (b) the Federal Funds Effective Rate in effect on such day plus  1⁄2
of 1% and (c) the Eurodollar Base Rate for Eurodollar Loans with a one-month
Interest Period commencing on such day plus the Applicable Margin for Eurodollar
Loans. For purposes hereof, “Base Rate” shall mean the rate of interest per
annum publicly announced from time to time by the Initial Lender as its base
rate in effect at its principal office in New York City (the Base Rate not being
intended to be the lowest rate of interest charged by the Initial Lender in
connection with extensions of credit to debtors). Any change in the ABR due to a
change in the Base Rate, the Federal Funds Effective Rate or the Eurodollar Base
Rate shall be effective as of the opening of business on the effective day of
such change in the Base Rate, the Federal Funds Effective Rate or the Eurodollar
Base Rate, respectively.

“ABR Loans” means Loans the rate of interest applicable to which is based upon
the ABR.

“Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.

“Agreement” means this Term Loan Agreement, as the same may from time to time be
amended, supplemented or modified.

 

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“Applicable Margin” means, for any day, (a) with respect to any ABR Loans, the
greater of (1) zero and (2) 1.00 percent per annum less than the Applicable
Margin for Eurodollar Loans at such time and (b) with respect to any Eurodollar
Loans, 0.65 percent per annum.

“Assignee” has the meaning set forth in Section 8.6(b)(i).

“Assignment and Assumption”: an Assignment and Assumption, substantially in the
form of Exhibit C.

“Beneficial Owner”: has the meaning assigned to that term in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular “person” (as that term is used in Sections 13(d) and
14(d) of the Exchange Act), such “person” will be deemed to have beneficial
ownership of all securities that such “person” has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms “Beneficially Owns” and “Beneficially Owned” have
correlative meanings.

“Board” means the Board of Governors of the Federal Reserve System of the United
States (or any successor).

“Borrower” has the meaning assigned to that term in the introductory paragraph
of this Agreement.

“Business Day” means any day other than a Saturday, Sunday or a day on which
commercial banks are authorized by law to close in New York, New York, San
Francisco, California or, if different, the city in which the office of the
Lender is located; provided, that with respect to notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans,
such day is also a day for trading by and between banks in Dollar deposits in
the London interbank eurodollar market.

“Capital Stock” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing.

“Change of Control” means PCG and its Subsidiaries shall at any time not be the
Beneficial Owner, directly or indirectly, of at least 80% of the common stock or
70% of the voting Capital Stock of the Borrower; provided that any such event
shall not constitute a Change of Control if, after giving effect to such event,
the Borrower’s senior, unsecured, non credit-enhanced debt ratings shall be at
least the higher of (1) Baa3 from Moody’s and BBB- from S&P and (2) the ratings
by such rating agencies of such debt in effect immediately before the earlier of
the occurrence or the public announcement of such event.

“Change of Law” means the occurrence, after the Closing Date, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation,
statute, treaty, policy, guideline or directive by any Governmental Authority,
(b) any change in any law, rule, regulation, statute, treaty, policy, guideline
or directive or in the application, interpretation, promulgation,

 

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implementation, administration or enforcement thereof by any Governmental
Authority or (c) the making or issuance of any request, rule, guideline or
directive (whether or not having the force of law) by any Governmental
Authority; provided that notwithstanding anything herein to the contrary, (x)
the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines or directives thereunder or issued in connection therewith and
(y) all requests, rules, guidelines or directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking Supervision (or any
successor or similar authority) or the United States or foreign regulatory
authorities, in each case pursuant to Basel III, shall in each case be deemed to
be a “Change of Law”, regardless of the date enacted, adopted or issued.

“Closing Date” means the date on which the conditions precedent set forth in
Section 4 shall have been satisfied or waived by the Lender.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Commonly Controlled Entity” means an entity, whether or not incorporated, that
is under common control with the Borrower within the meaning of Section 4001 of
ERISA or is part of a group that includes the Borrower and that is treated as a
single employer under Section 414 of the Code.

“Compliance Certificate” means a certificate duly executed by a Responsible
Officer substantially in the form of Exhibit A.

“Connection Income Taxes” means Other Connection Taxes that are imposed on or
measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.

“Consolidated Capitalization” means on any date of determination, the sum of (a)
Consolidated Total Debt on such date, plus without duplication, (b) (i) the
amounts set forth opposite the captions “common shareholders’ equity” (or any
similar caption) and “preferred stock” (or any similar caption) on the
consolidated balance sheet, prepared in accordance with GAAP, of the Borrower
and its Subsidiaries as of such date, and (ii) the outstanding principal amount
of any junior subordinated deferrable interest debentures or other similar
securities issued by the Borrower or any of its Subsidiaries after the Closing
Date.

“Consolidated Capitalization Ratio” means, on any date of determination, the
ratio of (a) Consolidated Total Debt to (b) Consolidated Capitalization.

“Consolidated Total Debt” means, at any date, the aggregate principal amount of
all obligations of the Borrower and its Significant Subsidiaries at such date
that in accordance with GAAP would be classified as debt on a consolidated
balance sheet of the Borrower, and without duplication all Guarantee Obligations
of the Borrower and its Significant Subsidiaries at such date in respect of
obligations of any other Person that in accordance with GAAP would be classified
as debt on a consolidated balance sheet of such Person; provided that, the
determination of “Consolidated Total Debt” shall exclude, without duplication,
(a) the Securitized Bonds, (b) Indebtedness of the Borrower and its Significant
Subsidiaries in an amount equal to the amount of cash held as cash collateral
for any fully cash collateralized letter

 

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of credit issued for the account of the Borrower or any Significant Subsidiary,
(c) imputed Indebtedness of the Borrower or any Significant Subsidiary incurred
in connection with power purchase and fuel agreements, (d) any junior
subordinated deferrable interest debentures or other similar securities issued
by the Borrower or any of its Subsidiaries after the Closing Date and (e) as of
a date of determination, the amount of any securities included within the
caption “preferred stock” (or any similar caption) on the consolidated balance
sheet, prepared in accordance with GAAP, of the Borrower and its Subsidiaries as
of such date.

“Contractual Obligation” means as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its property is bound.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

“CPUC” means the California Public Utilities Commission or its successor.

“Default” means any of the events specified in Section 7, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

“Disposition” means, with respect to any property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof. The
terms “Dispose” and “Disposed of” shall have correlative meanings.

“Dollars” and “$” means dollars in lawful currency of the United States.

“Eligible Assignee” means (a) any commercial bank or other financial institution
having a senior unsecured debt rating by Moody’s of A3 or better and by S&P of
A- or better, which is domiciled in a country which is a member of the OECD or
(b) with respect to any Person referred to in the preceding clause (a), any
other Person that is engaged in making, purchasing, holding or investing in bank
loans and similar extensions of credit in the ordinary course of business all of
the Capital Stock of which is owned, directly or indirectly, by such Person;
provided that in the case of clause (b), the Borrower and Lender shall have
consented to the designation of such Person as an Eligible Assignee (such
consent of the Borrower not to be unreasonably withheld or delayed).

“Environmental Laws” means any and all foreign, federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

 

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“Eurocurrency Liabilities” has the meaning set forth in Regulation D of the
Board.

“Eurocurrency Reserve Requirements” of the Lender for any Interest Period as
applied to a Eurodollar Loan means the reserve percentage applicable during such
Interest Period (or if more than one such percentage shall be so applicable, the
daily average of such percentages for those days in such Interest Period during
which any such percentage shall be so applicable) under any regulations of the
Board or other Governmental Authority having jurisdiction with respect to
determining the maximum reserve requirement (including basic, supplemental and
emergency reserves) for the Lender with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities having a term equal to such
Interest Period.

“Eurodollar Base Rate” means, with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Reuters
Screen LIBOR01 Page (or on any successor or substitute page of such service, or
any successor to or substitute for such service, providing rate quotations
comparable to those currently provided on such page of such service, as
determined by the Lender from time to time for purposes of providing quotations
of interest rates applicable to Dollar deposits in the London interbank market,
in each case the “LIBO Screen Rate”) at or about 11:00 A.M., London time, two
Business Days prior to the beginning of such Interest Period; provided that if
the LIBO Screen Rate shall be less than zero, such rate shall be deemed to be
zero for the purposes of this Agreement. In the event that LIBO Screen Rate is
unavailable, the “Eurodollar Base Rate” shall be determined by reference to such
other comparable publicly available service for displaying eurodollar rates as
may be selected by the Lender or, in the absence of such availability, by
reference to the rate at which the Lender is offered Dollar deposits at or about
11:00 A.M., New York City time, two Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where its eurodollar and
foreign currency and exchange operations are then being conducted for delivery
on the first day of such Interest Period for the number of days comprised
therein; provided that if any Eurodollar Base Rate so determined shall be less
than zero, such Eurodollar Base Rate shall be deemed to be zero for purposes of
this Agreement.

“Eurodollar Loans” means Loans the rate of interest applicable to which is based
upon the Eurodollar Rate.

“Eurodollar Rate” means, with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th of
1%):

 

                        Eurodollar Base Rate                         1.00 -
Eurocurrency Reserve Requirements

“Event of Default” means any of the events specified in Section 7; provided that
any requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

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“Excluded Taxes” means any of the following Taxes imposed on or with respect to
the Lender or required to be withheld or deducted from a payment to the Lender:
(a) Taxes imposed on or measured by net income (however denominated), franchise
Taxes, and branch profits Taxes, in each case, (i) imposed as a result of the
Lender being organized under the laws of, or having its principal office or its
lending office located in, the jurisdiction imposing such Tax (or any political
subdivision thereof) or (ii) that are Other Connection Taxes, (b) U.S. federal
withholding Taxes imposed on amounts payable to or for the account of the Lender
with respect the Loan pursuant to a law in effect on the date on which (i) the
Lender acquires such interest in the Loan or (ii) the Lender changes its lending
office, except in each case to the extent that, pursuant to Section 2.14,
amounts with respect to such Taxes were payable either to the Lender’s assignor
immediately before the Lender became a party hereto or to the Lender immediately
before it changed its lending office, (c) Taxes attributable to the Lender’s
failure to comply with Section 2.12 and (d) any U.S. federal withholding Taxes
imposed pursuant to FATCA.

“FATCA” means Sections 1471 through 1474 of the Code, as of the Closing Date (or
any amended or successor version that is substantively comparable and not
materially more onerous to comply with), any current or future regulations or
official interpretations thereof and any agreements entered into pursuant to
Section 1471(b)(1) of the Code.

“Federal Funds Effective Rate” means for any day, the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by the Lender from three
federal funds brokers of recognized standing selected by it.

“Foreign Lender” means a Lender that is not a U.S. Person.

“FPA” means the Federal Power Act, as amended from time to time, and the rules
and regulations promulgated thereunder.

“GAAP” means generally accepted accounting principles in the United States as in
effect from time to time, except as noted below. In the event that any “Change
in Accounting Principles” (as defined below) shall occur and such change results
in a change in the method of calculation of financial covenants, standards or
terms in this Agreement, then, upon the request of the Borrower or the Lender,
the Borrower and the Lender agree to enter into negotiations in order to amend
such provisions of this Agreement so as to reflect equitably such Change in
Accounting Principles with the desired result that the criteria for evaluating
the Borrower’s financial condition shall be the same after such Change in
Accounting Principles as if such Change in Accounting Principles had not been
made. Until such time as such an amendment shall have been executed and
delivered by the Borrower and the Lender, all financial covenants, standards and
terms in this Agreement shall continue to be calculated or construed as if such
Change in Accounting Principles had not occurred. “Change in Accounting
Principles” refers to changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants or any successor thereto, the SEC or, if applicable, the Public
Company Accounting Oversight Board.

 

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“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners and
supra-national bodies such as the European Union or the European Central Bank).

“Guarantee Obligation” means as to any Person (the “guaranteeing person”), any
obligation, including a reimbursement, counterindemnity or similar obligation,
of the guaranteeing person that guarantees any Indebtedness, leases, dividends
or other obligations (the “primary obligations”) of any other third Person (the
“primary obligor”) in any manner, whether directly or indirectly, including any
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase
or payment of any such primary obligation or (2) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation, (iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof or (v) to reimburse or
indemnify an issuer of a letter of credit, surety bond or guarantee issued by
such issuer in respect of primary obligations of a primary obligor other than
the Borrower or any Significant Subsidiary; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum amount
for which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary obligation
and the maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person’s reasonably anticipated liability in respect
thereof as determined by the Borrower in good faith.

“Indebtedness” means, of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than trade
payables, including under energy procurement and transportation contracts,
incurred in the ordinary course of such Person’s business), (c) all obligations
of such Person evidenced by notes, bonds, debentures or other similar
instruments, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (e) all obligations of such Person as lessee which are capitalized in
accordance with GAAP, (f) all obligations of such Person, contingent or

 

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otherwise, as an account party or applicant under or in respect of acceptances,
letters of credit, surety bonds or similar arrangements (other than
reimbursement obligations, which are not due and payable on such date, in
respect of documentary letters of credit issued to provide for the payment of
goods and services in the ordinary course of business), (g) the liquidation
value of all mandatorily redeemable preferred Capital Stock of such Person,
(h) all Guarantee Obligations of such Person in respect of obligations of the
kind referred to in clauses (a) through (g) above, (i) all obligations of the
kind referred to in clauses (a) through (h) above secured by (or for which the
holder of such obligation has an existing right, contingent or otherwise, to be
secured by) any Lien on property (including accounts and contract rights) owned
by such Person, whether or not such Person has assumed or become liable for the
payment of such obligation (provided, that if such Person is not liable for such
obligation, the amount of such Person’s Indebtedness with respect thereto shall
be deemed to be the lesser of the stated amount of such obligation and the value
of the property subject to such Lien), and (j) for the purposes of Section 8(e)
only, all obligations of such Person in respect of Swap Agreements, provided
that Indebtedness as used in this Agreement shall exclude any Non-Recourse Debt.
The Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general partner) to
the extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness expressly provide that such Person is not liable
therefor.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or
with respect to any payment made by or on account of any obligation of the
Borrower under any Loan Document and (b) to the extent not otherwise described
in (a), Other Taxes.

“Indenture” means the Indenture, dated as of April 22, 2005 (which supplemented,
amended and restated the Indenture of Mortgage, dated as of March 11, 2004,
between the Borrower and the Indenture Trustee, as supplemented by the First
Supplemental Indenture, dated as of March 23, 2004, the Second Supplemental
Indenture, dated as of April 12, 2004), as supplemented by the First
Supplemental Indenture, dated as of March 13, 2007, as further supplemented by
the Second Supplemental Indenture, dated as of December 4, 2007, as further
supplemented by the Third Supplemental Indenture, dated as of March 3, 2008, as
further supplemented by the Fourth Supplemental Indenture, dated as of
October 15, 2008, as further supplemented by the Fifth Supplemental Indenture,
dated as of November 18, 2008, as further supplemented by the Sixth Supplemental
Indenture, dated as of March 6, 2009, as further supplemented by the Seventh
Supplemental Indenture, dated as of June 11, 2009, as further supplemented by
the Eighth Supplemental Indenture, dated as of November 18, 2009, as further
supplemented by the Ninth Supplemental Indenture, dated as of April 1, 2010, as
further supplemented by the Tenth Supplemental Indenture, dated as of
September 15, 2010, as further as supplemented by the Eleventh Supplemental
Indenture, dated as of October 12, 2010, as further supplemented by the Twelfth
Supplemental Indenture, dated as of November 18, 2010, as further supplemented
by the Thirteenth Supplemental Indenture, dated as of May 13, 2011, as further
supplemented by the Fourteenth Supplemental Indenture, dated as of September 12,
2011, as further supplemented by the Fifteenth Supplemental Indenture, dated as
of November 22, 2011, as further supplemented by the Sixteenth Supplemental
Indenture, dated as of December 1, 2011, as further supplemented by the
Seventeenth Supplemental Indenture, dated as of April 16, 2012, as further
supplemented by the Eighteenth Supplemental Indenture, dated as

 

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of August 16, 2012, as further supplemented by the Nineteenth Supplemental
Indenture, dated as of June 14, 2013, as further supplemented by the Twentieth
Supplemental Indenture, dated as of November 12, 2013, as further supplemented
by the Twenty First Supplemental Indenture, dated as of February 21, 2014, as
further supplemented by the Twenty Second Supplemental Indenture, dated as of
May 12, 2014, as further supplemented by the Twenty Third Supplemental
Indenture, dated as of August 18, 2014, as further supplemented by the Twenty
Fourth Supplemental Indenture, dated as of November 6, 2014, as further
supplemented by the Twenty Fifth Supplemental Indenture, dated as of June 12,
2015, as further supplemented by the Twenty Sixth Supplemental Indenture, dated
as of November 5, 2015, as further supplemented by the Twenty Seventh
Supplemental Indenture, dated as of March 1, 2016 and as further supplemented or
amended from time to time.

“Indenture Trustee” means The Bank of New York Mellon Trust Company, N.A., as
successor by merger to The Bank of New York Trust Company, N.A., as successor to
BNY Western Trust Company, and any successor thereto as trustee under the
Indenture.

“Initial Lender” has the meaning assigned to that term in the introductory
paragraph of this Agreement.

“Insolvency” means with respect to any Multiemployer Plan, the condition that
such Plan is insolvent within the meaning of Section 4245 of ERISA.

“Insolvent” means pertaining to a condition of Insolvency.

“Interest Payment Date” means (a) as to any ABR Loan, the last day of each
March, June, September and December to occur while such Loan is outstanding and
the final maturity date of such Loan, (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of such Interest Period,
(c) as to any Eurodollar Loan having an Interest Period longer than three
months, each day that is three months, or a whole multiple thereof, after the
first day of such Interest Period and the last day of such Interest Period, and
(d) as to any Eurodollar Loan, the date of any repayment or prepayment made in
respect thereof.

“Interest Period” means, as to any Eurodollar Loan, (a) initially, the period
commencing on the borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three or six or (if available to
the Lender) nine months thereafter, as selected by the Borrower in its notice of
borrowing or notice of conversion, as the case may be, given with respect
thereto; and (b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Loan and ending one,
two, three or six or (if available to the Lender) nine months thereafter, as
selected by the Borrower by irrevocable notice to the Lender not later than
12:00 Noon, New York City time, on the date that is three Business Days prior to
the last day of the then current Interest Period with respect thereto; provided
that, all of the foregoing provisions relating to Interest Periods are subject
to the following:

(i) if any Interest Period would otherwise end on a day that is not a Business
Day, such Interest Period shall be extended to the next succeeding Business Day
unless

 

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the result of such extension would be to carry such Interest Period into another
calendar month in which event such Interest Period shall end on the immediately
preceding Business Day;

(ii) the Borrower may not select an Interest Period that would extend beyond the
Maturity Date;

(iii) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month; and

(iv) the Borrower shall select Interest Periods so as not to require a payment
or prepayment of any Eurodollar Loan during an Interest Period for such Loan.

“IRS” means the United States Internal Revenue Service.

“knowledge of the Borrower” means the actual knowledge of any Responsible
Officer of the Borrower.

“Lender” means the Initial Lender and any subsequent Assignee.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).

“Loan” has the meaning set forth in Section 2.1.

“Loan Documents” means this Agreement, the Notes and, in each case, any
amendment, waiver, supplement or other modification to any of the foregoing.

“Material Adverse Effect” means (a) a change in the business, property,
operations or financial condition of the Borrower and its Subsidiaries taken as
a whole that could reasonably be expected to materially and adversely affect the
Borrower’s ability to perform its obligations under the Loan Documents or (b) a
material adverse effect on the validity or enforceability of this Agreement or
any of the other Loan Documents.

“Materials of Environmental Concern” means any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products or any hazardous or
toxic substances, materials or wastes, defined or regulated as such in or under
any Environmental Law, including asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.

“Maturity Date” means February 2, 2017.

“Moody’s” means Moody’s Investors Service, Inc.

 

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“Multiemployer Plan” means a Plan that is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

“Multi Lender Event” has the meaning specified in Section 1.2(d).

“Non-Recourse Debt” means Indebtedness of the Borrower or any of its Significant
Subsidiaries that is incurred in connection with the acquisition, construction,
sale, transfer or other disposition of specific assets, to the extent recourse,
whether contractual or as a matter of law, for non-payment of such Indebtedness
is limited (a) to such assets, or (b) if such assets are (or are to be) held by
a Subsidiary formed solely for such purpose, to such Subsidiary or the Capital
Stock of such Subsidiary.

“Notes” has the meaning set forth in Section 2.10.

“Obligations” means the unpaid principal of and interest on (including, without
limitation, interest accruing after the maturity of the Loans and interest
accruing after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) the Loans and all other obligations and liabilities of the
Borrower to the Lender, whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, this Agreement, any other Loan Document or any
other document made, delivered or given in connection herewith or therewith,
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses (including, without limitation, all fees, charges
and disbursements of counsel to the Lender that are required to be paid by the
Borrower pursuant hereto) or otherwise.

“OECD” means the countries constituting the “Contracting Parties” to the
Convention on the Organisation for Economic Co-operation and Development, as
such term is defined in Article 4 of such Convention.

“Other Connection Taxes” means, with respect to the Lender, Taxes imposed as a
result of a present or former connection between the Lender and the jurisdiction
imposing such Tax (other than connections arising from the Lender having
executed, delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest under,
engaged in any other transaction pursuant to or enforced any Loan Document, or
sold or assigned an interest in the Loan or Loan Document).

“Other Taxes” means all present or future stamp, court or documentary,
intangible, recording, filing or similar Taxes that arise from any payment made
under, from the execution, delivery, performance, enforcement or registration
of, from the receipt or perfection of a security interest under, or otherwise
with respect to, any Loan Document, except any such Taxes that are Other
Connection Taxes imposed with respect to an assignment.

“Participant” has the meaning assigned to that term in Section 8.6(c)(i).

“Participant Register” has the meaning assigned to that term in Section
8.6(c)(iii).

 

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“PBGC” means the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA (or any successor).

“PCG” means PG&E Corporation, a California corporation and the holder of all of
the issued and outstanding common stock of the Borrower.

“Person” means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.

“Plan” means at a particular time, any employee benefit plan that is covered by
ERISA and in respect of which the Borrower or a Commonly Controlled Entity is
(or, if such plan were terminated at such time, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Rating” means each rating announced by S&P and Moody’s in respect of the
Borrower’s senior unsecured, non credit-enhanced debt.

“Register”: as defined in Section 8.6(b)(iv).

“Regulation U” means Regulation U of the Board as in effect from time to time.

“Reorganization” means with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than those events as to which the thirty-day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. §
4043.

“Required Lenders” means, at any time, the holders of more than 50% of the
aggregate principal amount of the Loan.

“Requirement of Law” means, as to any Person, the articles of incorporation and
bylaws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer or assistant treasurer of the Borrower, but in any
event, with respect to financial matters, the chief financial officer, treasurer
or assistant treasurer of the Borrower.

“S&P” means Standard & Poor’s Ratings Services.

“SEC” means the Securities and Exchange Commission, any successor thereto and
any analogous Governmental Authority.

 

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“Securitized Bonds” means any securitized bonds or similar asset-backed
securities that are non-recourse to the Borrower, are issued by a special
purpose subsidiary of the Borrower and are payable from a specific or dedicated
rate component.

“Significant Subsidiary” has the meaning assigned to that term in Article 1,
Rule 1-02(w) of Regulation S-X of the Exchange Act as of the Closing Date,
provided that notwithstanding the foregoing, PG&E Energy Recovery Funding LLC
and any other special purpose finance subsidiary shall not constitute a
Significant Subsidiary. Unless otherwise qualified, all references to a
“Significant Subsidiary” or to “Significant Subsidiaries” in this Agreement
shall refer to a Significant Subsidiary or Significant Subsidiaries of the
Borrower.

“Single Employer Plan” means any Plan that is covered by Title IV of ERISA, but
that is not a Multiemployer Plan.

“Specified Exchange Act Filings” means the Borrower’s Form 10-K annual report
for the year ended December 31, 2015 and each and all of the Form 10-Ks, Form
10-Qs and Form 8-Ks (and to the extent applicable proxy statements) filed by the
Borrower or PCG with the SEC after December 31, 2015 and prior to the date that
is one Business Day before the date of this Agreement.

“Subsidiary” means as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.

“Swap Agreement” means any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement involving, or settled
by reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or any of
its Subsidiaries shall be a “Swap Agreement”.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

“Transferee” means any Assignee or Participant.

“Type” means, as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.

 

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“United States” means the United States of America.

“U.S. Person” means any Person that is a “United States Person” as defined in
Section 7701(a)(30) of the Code.

1.2 Other Definitional Provisions and Interpretative Provisions.

(a) Other Definitional Provisions. Unless otherwise specified therein, all terms
defined in this Agreement shall have the defined meanings when used in the other
Loan Documents or any certificate or other document made or delivered pursuant
hereto or thereto. The words “hereof”, “herein” and “hereunder” and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

(b) Interpretation. As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
except as otherwise provided therein, (i) accounting terms relating to the
Borrower and its Significant Subsidiaries defined in Section 1.1 and accounting
terms partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP, (ii) the words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”, (iii) the word “incur” shall be construed to mean incur, create,
issue, assume or become liable in respect of (and the words “incurred” and
“incurrence” shall have correlative meanings), (iv) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
Capital Stock, securities, revenues, accounts, leasehold interests and contract
rights, and (v) references to agreements or other Contractual Obligations shall,
unless otherwise specified, be deemed to refer to such agreements or Contractual
Obligations as amended, supplemented, restated or otherwise modified from time
to time.

(c) Significant Subsidiaries. The Borrower shall not be required to perform, nor
shall it be required to guarantee the performance of, any of the affirmative
covenants set forth in Section 5 that apply to any of its Significant
Subsidiaries nor shall any of the Borrower’s Significant Subsidiaries be
required to perform, nor shall any of such Significant Subsidiaries be required
to guarantee the performance of, any of the Borrower’s affirmative covenants set
forth in Section 5 or any of the affirmative covenants set forth in Section 5
that apply to any other Significant Subsidiary; provided, that nothing in this
Section 1.2(c) shall prevent the occurrence of a Default or an Event of Default
arising out of the Borrower’s failure to cause any Significant Subsidiary to
comply with the provisions of this Agreement applicable to such Significant
Subsidiary.

(d) References to Loans and Lender. In the event the Initial Lender assigns all
or a portion of the Loan to an Assignee or Assignees in accordance with the
terms of this Agreement, (i) references herein to the “Lender” shall mean the
Initial Lender (if it retains any portion of the Loan) and all such Assignees;
and (ii) if the Borrower is required or permitted to give notice to

 

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“the Lender” hereunder or if any determination is required to be made by “the
Lender”, such notice shall be given to the Initial Lender or determination made
by the Initial Lender, whether or not the Initial Lender still owns all or a
portion of the Loan. References herein to “the Loan” shall mean the Loan and all
portions thereof, whether such portions comprise ABR Loans and/or Eurodollar
Loans. If the Borrower delivers notice to the Initial Lender and the Initial
Lender has assigned all or a portion of the Loan to any Assignee, the Initial
Lender shall promptly forward a copy of each such notice to all Assignees. In
the event there is, at any time, more than one Lender party to this Agreement (a
“Multi Lender Event”), (i) each payment (including each prepayment) by the
Borrower on account of principal of and interest on the Loan shall be made pro
rata according to the respective outstanding principal amount of the Loan then
held by the Lenders; and (ii) and an action (including approvals and consents)
is required of those Lenders, then, to the extent that comparable provisions of
this Agreement are also included in the Second Amended and Restated Credit,
dated as of April 27, 2015, among the Borrower, the lenders named therein,
Citibank, N.A., as administrative agent, JPMorgan Chase Bank, N.A. and Bank of
America, N.A., as co-syndication agents (as the same may be amended, modified
and supplemented from time to time, the “Revolving Credit Agreement”) in
substantially the same form (the “Revolving Credit Agreement Provision”), the
lender action standard set forth in applicable Revolving Credit Agreement
Provision (i.e., any Lender (as defined in the Revolving Credit Agreement), all
Lenders (as defined in the Revolving Credit Agreement), or Required Lenders (as
defined in the Revolving Credit Agreement)) shall apply to the comparable
provision of this Agreement.

SECTION 2. AMOUNT AND TERMS OF THE LOAN

2.1 Term Loan. Subject to the terms and conditions hereof, the Initial Lender
agrees to make, on the Closing Date, a single loan to the Borrower in an amount
equal to $250,000,000 (the “Loan”). As long as the Initial Lender has received a
notice of borrowing specifying the initial Interest Period, executed by an
authorized officer of the Borrower, not later than 12:00 Noon, New York City
time, three Business Days prior to the Closing Date, the Loan shall initially be
made as a Eurodollar Loan. If the Initial Lender has not received a notice of
borrowing specifying the initial Interest Period, executed by an authorized
officer of the Borrower, by 12:00 Noon, New York City time, three Business Days
prior to the Closing Date, the Loan shall initially be made as an ABR Loan.
Subject to the terms and conditions of this Agreement, the Borrower may elect to
convert all or a portion of an ABR Loan to a Eurodollar Loan and vice versa.
Once repaid, the Loan may not be reborrowed.

2.2 [Reserved].

2.3 Repayment of Loan; Evidence of Debt.

(a) The Borrower hereby unconditionally promises to pay to the Lender the then
unpaid principal amount of the Loan on the Maturity Date.

(b) The Lender shall maintain accounts in which it shall record (i) the amount
of the Loan made hereunder, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to the Lender hereunder,
and (iii) the amount of any sum received by the Lender hereunder for the account
of the Lender.

 

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(c) The entries made in the accounts maintained pursuant to paragraph (b) of
this Section shall be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of the Lender to
maintain such accounts or any error therein shall not in any manner affect the
obligation of the Borrower to repay the Loan in accordance with the terms of
this Agreement.

2.4 Optional Prepayments. The Borrower may at any time and from time to time
prepay the Loan, in whole or in part, without premium or penalty, upon
irrevocable notice delivered to the Lender no later than 12:00 Noon, New York
City time, three Business Days prior thereto, in the case of Eurodollar Loans,
and no later than 12:00 Noon, New York City time, one Business Day prior
thereto, in the case of ABR Loans, which notice shall specify the date and
amount of prepayment and whether the prepayment is of Eurodollar Loans or ABR
Loans; provided, that if a Eurodollar Loan is prepaid on any day other than the
last day of the Interest Period applicable thereto, the Borrower shall also pay
any amounts owing pursuant to Section 2.13.

2.5 Conversion and Continuation Options.

(a) The Borrower may elect from time to time to convert Eurodollar Loans to ABR
Loans by giving the Lender prior irrevocable notice of such election no later
than 12:00 Noon, New York City time, on the Business Day preceding the proposed
conversion date, provided that any such conversion of Eurodollar Loans may only
be made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert ABR Loans to Eurodollar Loans by giving
the Lender prior irrevocable notice of such election no later than 12:00 Noon,
New York City time, on the third Business Day preceding the proposed conversion
date (which notice shall specify the length of the initial Interest Period
therefor), provided that no ABR Loan may be converted into a Eurodollar Loan
when any Event of Default has occurred and is continuing and the Lender has
determined in its sole discretion not to permit such conversions.

(b) Any Eurodollar Loan may be continued as such upon the expiration of the then
current Interest Period with respect thereto by the Borrower giving irrevocable
notice to the Lender, in accordance with the applicable provisions of the term
“Interest Period” set forth in Section 1.1, of the length of the next Interest
Period to be applicable to such Loans, provided that no Eurodollar Loan may be
continued as such when any Event of Default has occurred and is continuing and
the Lender has determined in its sole discretion not to permit such
continuations, and provided, further, that if the Borrower shall fail to give
any required notice as described above in this paragraph or if such continuation
is not permitted pursuant to the preceding proviso such Loans shall be
automatically converted to ABR Loans on the last day of such then expiring
Interest Period.

2.6 Limitations on Eurodollar Tranches. Notwithstanding anything to the contrary
in this Agreement, conversions and continuations of Eurodollar Loans and all
selections of Interest

 

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Periods shall be in such amounts and be made pursuant to such elections so that
(a) after giving effect thereto, the aggregate principal amount of the
Eurodollar Loans comprising each Eurodollar Tranche shall be equal to $1,000,000
or a whole multiple of $500,000 in excess thereof and (b) no more than 5
Eurodollar Tranches shall be outstanding at any one time.

2.7 Interest Rates; Payment Dates and Payments.

(a) Each Eurodollar Loan shall bear interest for each day during each Interest
Period with respect thereto at a rate per annum equal to the Eurodollar Rate
determined for such day plus the Applicable Margin.

(b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR plus
the Applicable Margin.

(c) (i) If all or a portion of the principal amount of the Loan shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a default rate per annum equal to
(x) in the case of the Loan, the rate that would otherwise be applicable thereto
pursuant to the foregoing provisions of this Section plus 2%, and (ii) if all or
a portion of any interest payable on the Loan or any facility fee or any other
fee payable (excluding any expenses or other indemnity) hereunder shall not be
paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a default rate per annum equal to the
rate then applicable to ABR Loans plus 2%, in each case, with respect to
clauses (i) and (ii) above, from the date of such non-payment until such amount
is paid in full (as well after as before judgment).

(d) Interest shall be payable in arrears on each Interest Payment Date, provided
that interest accruing pursuant to paragraph (c) of this Section shall be
payable from time to time on demand.

(e) Notwithstanding anything to the contrary herein, all payments (including
prepayments) to be made by the Borrower hereunder, whether on account of
principal, interest, fees or otherwise, shall be made without setoff or
counterclaim and shall be made prior to 4:00 P.M., New York City time, on the
due date thereof to the Lender at the Funding Office, in Dollars and in
immediately available funds. If any payment hereunder (other than payments on
the Eurodollar Loans) becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day. If any
payment on a Eurodollar Loan becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day unless the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Business Day. In the case of any extension of any payment
of principal pursuant to the preceding two sentences, interest thereon shall be
payable at the then applicable rate during such extension.

2.8 Computation of Interest and Fees.

(a) Interest and fees payable pursuant hereto shall be calculated on the basis
of a 360-day year for the actual days elapsed, except that, with respect to ABR
Loans the rate of interest

 

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on which is calculated on the basis of the Base Rate, the interest thereon shall
be calculated on the basis of a 365- (or 366-, as the case may be) day year for
the actual days elapsed. The Lender shall as soon as practicable notify the
Borrower of each determination of a Eurodollar Rate. Any change in the interest
rate on a Loan resulting from a change in the ABR or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Lender shall as soon as practicable
notify the Borrower of the effective date and the amount of each such change in
interest rate.

(b) Each determination of an interest rate by the Lender pursuant to any
provision of this Agreement shall constitute prima facie evidence of such
amounts. The Lender shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Lender in determining
any interest rate pursuant to Section 2.7(a).

2.9 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period the Lender shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, the Lender shall give
telecopy or telephonic notice thereof to the Borrower as soon as practicable
thereafter. If such notice is given (x) any Eurodollar Loans requested to be
made on the first day of such Interest Period shall be made as ABR Loans,
(y) any Loans that were to have been converted on the first day of such Interest
Period to Eurodollar Loans shall be continued as ABR Loans and (z) any
outstanding Eurodollar Loans shall be converted, on the last day of the
then-current Interest Period, to ABR Loans. Until such notice has been withdrawn
by the Lender, no further Eurodollar Loans shall be made or continued as such,
nor shall the Borrower have the right to convert Loans to Eurodollar Loans.

2.10 Notes. The Borrower agrees that, upon the request by the Lender, the
Borrower will promptly execute and deliver to Lender a promissory note (a
“Note”) of the Borrower evidencing the Loan (or any portion thereof),
substantially in the form of Exhibit F, with appropriate insertions as to date
and principal amount; provided, that delivery of Notes shall not be a condition
precedent to the occurrence of the Closing Date or the making of the Loan on the
Closing Date.

2.11 Change of Law.

(a) If a Change of Law shall:

(i) subject the Lender to any Taxes (other than (A) Indemnified Taxes, (B) Taxes
described in clauses (b) through (d) of the definition of Excluded Taxes and (C)
Connection Income Taxes) on the Loan, or other obligations, or its deposits,
reserves, other liabilities or capital attributable thereto;

(ii) impose, modify or hold applicable any reserve, special deposit, compulsory
loan, Federal Deposit Insurance Corporation insurance charge or other similar
insurance charge or similar requirement against assets held by, deposits or
other liabilities in or for the account of, advances, loans by, or any other
acquisition of funds by, the Lender, which requirements are generally applicable
to advances, loans made by the Lender; or

 

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(iii) impose on the Lender any other condition that is generally applicable to
loans made by the Lender or participations therein;

and the result of any of the foregoing is to increase the cost to the Lender by
an amount that the Lender deems to be material, of making, or maintaining the
Loan, or to reduce any amount receivable hereunder in respect thereof, then, in
any such case, the Borrower shall promptly pay the Lender, within ten Business
Days after its demand, any additional amounts necessary to compensate the Lender
for such increased cost or reduced amount receivable. If the Lender becomes
entitled to claim any additional amounts pursuant to this paragraph, it shall
promptly notify the Borrower of the event by reason of which it has become so
entitled; provided, however, that the Lender shall not be entitled to demand
such compensation more than 90 days following the repayment of the Loan in
respect of which such demand is made.

(b) If the Lender shall have determined that a Change of Law regarding capital
or liquidity requirements shall have the effect of reducing the rate of return
on the Lender’s capital or the capital of any corporation Controlling the Lender
as a consequence of its obligations hereunder to a level below that which the
Lender or such corporation could have achieved but for such Change of Law
(taking into consideration the Lender’s or such corporation’s policies with
respect to capital adequacy) by an amount deemed by the Lender to be material,
then from time to time, after submission by the Lender to the Borrower of a
written request therefor, the Borrower shall pay to the Lender such additional
amount or amounts as will compensate the Lender or such corporation for such
reduction.

(c) A certificate as to any additional amounts payable pursuant to this Section
submitted by the Lender to the Borrower shall constitute prima facie evidence of
such costs or amounts. Notwithstanding anything to the contrary in this Section,
the Borrower shall not be required to compensate the Lender pursuant to this
Section for any amounts incurred more than six months prior to the date that the
Lender notifies the Borrower of the Lender’s intention to claim compensation
therefor; provided that, if the circumstances giving rise to such claim have a
retroactive effect, then such six-month period shall be extended to include the
period of such retroactive effect not to exceed twelve months. The obligations
of the Borrower pursuant to this Section shall survive for 90 days after the
termination of this Agreement and the payment of the Loan and all other amounts
then due and payable hereunder.

2.12 Taxes.

(a) Any and all payments by or on account of any obligation of the Borrower
under any Loan Document shall be made without deduction or withholding for any
Taxes, except as required by applicable laws. If any applicable laws (as
determined in the good faith discretion of the Borrower) require the deduction
or withholding of any Tax from any such payment by the Borrower, then (A) the
Borrower shall withhold or make such deductions as are determined by the
Borrower to be required, (B) the Borrower shall timely pay the full amount
withheld or deducted to the relevant Governmental Authority in accordance with
such laws, and (C) to the

 

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extent that the withholding or deduction is made on account of Indemnified
Taxes, the sum payable by the Borrower shall be increased as necessary so that
after any required withholding or the making of all required deductions
(including deductions applicable to additional sums payable under this Section
2.12) the Lender receives an amount equal to the sum it would have received had
no such withholding or deduction been made.

(b) Without limiting the provisions of subsection (a) above, the Borrower shall
timely pay to the relevant Governmental Authority in accordance with applicable
law, or at the option of the Lender timely reimburse it for the payment of, any
Other Taxes.

(c) The Borrower shall, and does hereby, indemnify the Lender, and shall make
payment in respect thereof within 10 days after demand therefor, for the full
amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted
on or attributable to amounts payable under this Section 2.12) payable or paid
by the Lender or required to be withheld or deducted from a payment to the
Lender, and any reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by the Lender shall be
conclusive absent manifest error.

(d) (i) If the Lender is entitled to an exemption from or reduction of
withholding Tax with respect to payments made under this Agreement, the Lender
shall deliver to the Borrower, at the time or times reasonably requested by the
Borrower, such properly completed and executed documentation reasonably
requested by the Borrower as will permit such payments to be made without
withholding or at a reduced rate of withholding. In addition, if reasonably
requested by the Borrower, the Lender shall deliver such other documentation
prescribed by applicable law or reasonably requested by the Borrower as will
enable the Borrower to determine whether or not the Lender is subject to backup
withholding or information reporting requirements. Notwithstanding anything to
the contrary in the preceding two sentences, the completion, execution and
submission of such documentation (other than such documentation set forth in
Sections 2.12(d)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in
the Lender’s reasonable judgment such completion, execution or submission would
subject the Lender to any material unreimbursed cost or expense or would
materially prejudice the legal or commercial position of the Lender.

(ii) Without limiting the generality of the foregoing,

(A) from time to time upon the reasonable request of the Borrower, the Lender,
if a U.S. Person, will deliver to the Borrower, executed originals of IRS Form
W-9 certifying that the Lender is exempt from U.S. federal backup withholding
tax;

(B) any Foreign Lender, to the extent it is legally entitled to do so, will
deliver to the Borrower (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the reasonable
request of the Borrower), whichever of the following is applicable:

 

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(I) in the case of a Foreign Lender claiming the benefits of an income tax
treaty to which the United States is a party (x) with respect to payments of
interest under any Loan Document, executed originals of IRS Form W-8BEN or
W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S.
federal withholding Tax pursuant to the “interest” article of such tax treaty
and (y) with respect to any other applicable payments under any Loan Document,
IRS Form W-8BEN or W-8BEN-E, as applicable, establishing an exemption from, or
reduction of, U.S. federal withholding Tax pursuant to the “business profits” or
“other income” article of such tax treaty;

(II) executed originals of IRS Form W-8ECI;

(III) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit G-1 to the effect that such Foreign Lender
is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10
percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B)
of the Code, or a “controlled foreign corporation” described in Section
881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed
originals of IRS Form W-8BEN or W-8BEN-E, as applicable,;

(IV) to the extent a Foreign Lender is not the beneficial owner, executed
originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or
W-8BEN-E, as applicable, a U.S. Tax Compliance Certificate substantially in the
form of Exhibit G-2 or Exhibit G-3, IRS Form W-9, and/or other certification
documents from each beneficial owner, as applicable; provided that if the
Foreign Lender is a partnership and one or more direct or indirect partners of
such Foreign Lender are claiming the portfolio interest exemption, such Foreign
Lender may provide a U.S. Tax Compliance Certificate substantially in the form
of Exhibit G-4 on behalf of each such direct and indirect partner; or

(V) notwithstanding anything to the contrary set forth in this Section 2.12(d),
each Foreign Lender shall deliver to the Borrower, on or prior to the date on
which such Foreign Lender becomes a Lender under this Agreement, forms described
in Sections 2.12(d)(ii)(B)(I), (II), (III) or (IV), as applicable, establishing
a complete exemption from U.S. federal withholding Tax with respect to amounts
payable to such Foreign Lender under this Agreement; provided, however, that a
Foreign Lender shall not be required to deliver forms establishing a complete
exemption from U.S. federal withholding Tax with respect to amounts payable to
such Foreign Lender under this Agreement pursuant to this Section
2.12(d)(ii)(B)(V) to the extent that, due to a Change of Law, such Foreign
Lender is unable to do so.

 

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(C) any Foreign Lender shall, to the extent it is legally entitled to do so,
deliver to the Borrower (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the reasonable
request of the Borrower), executed originals of any other form prescribed by
applicable law as a basis for claiming exemption from or a reduction in U.S.
federal withholding Tax, duly completed, together with such supplementary
documentation as may be prescribed by applicable law to permit the Borrower or
to determine the withholding or deduction required to be made; and

(D) if a payment made to the Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if the Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), the Lender
shall deliver to the Borrower at the time or times prescribed by law and at such
time or times reasonably requested by the Borrower such documentation prescribed
by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the
Code) and such additional documentation reasonably requested by the Borrower as
may be necessary for the Borrower to comply with its obligations under FATCA and
to determine that the Lender has complied with the Lender’s obligations under
FATCA or to determine the amount to deduct and withhold from such payment.
Solely for purposes of this clause (D), “FATCA” shall include any amendments
made to FATCA after the Closing Date.

(iii) The Lender agrees that if any form or certification it previously
delivered pursuant to this Section 2.12 expires or becomes obsolete or
inaccurate in any respect, it shall update such form or certification or
promptly notify the Borrower in writing of its legal inability to do so.

(e) If the Lender determines, in its sole discretion, that it has received a
refund of, or credit with respect to, any Taxes as to which it has been
indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.12 (any such refund or credit, a
“Tax Benefit”), it shall pay to the Borrower an amount equal to such Tax Benefit
(but only to the extent of indemnity payments made, or additional amounts paid,
by the Borrower under this Section 2.12 with respect to the Taxes giving rise to
such Tax Benefit), net of all out-of-pocket expenses (including Taxes) incurred
by the Lender, and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such Tax Benefit), provided that
the Borrower, upon the request of the Lender, agrees to repay the amount paid
over to the Borrower (plus any penalties, interest or other charges imposed by
the relevant Governmental Authority) to the Lender in the event the Lender is
required to repay such Tax Benefit to such Governmental
Authority. Notwithstanding anything to the contrary in this subsection, in no
event will the Lender be required to pay any amount to the Borrower pursuant to
this subsection the payment of which would place the Lender in a less favorable
net after-Tax position than the Lender would have been in if the Tax subject to
indemnification and giving rise to such Tax Benefit had not been deducted,
withheld or otherwise imposed and the

 

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indemnification payments or additional amounts with respect to such Tax had
never been paid. This subsection shall not be construed to require the Lender to
make available its tax returns (or any other information relating to its taxes
that it deems confidential) to the Borrower or any other Person.

(f) The agreements in this Section 2.12 shall survive for one year after the
termination of this Agreement and the payment of the Loan and all other amounts
payable hereunder.

2.13 Indemnity. The Borrower agrees to indemnify the Lender for, and to hold the
Lender harmless from, any loss (other than the loss of Applicable Margin) or
expense that the Lender may sustain or incur as a consequence of (a) default by
the Borrower in making a conversion into or continuation of Eurodollar Loans
after the Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment of or conversion from Eurodollar Loans after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of Eurodollar Loans on a day that is not the last day of
an Interest Period with respect thereto. A certificate as to any amounts payable
pursuant to this Section submitted to the Borrower by the Lender shall be
conclusive in the absence of manifest error. This covenant shall survive for
90 days after the termination of this Agreement and the payment of the Loan and
all other amounts payable hereunder.

2.14 Change of Lending Office. The Lender agrees that, upon the occurrence of
any event giving rise to the operation of Section 2.11 or 2.12 with respect to
the Lender, it will, if requested by the Borrower, use reasonable efforts
(subject to overall policy considerations of the Lender) to designate another
lending office for the Loan affected by such event with the object of avoiding
the consequences of such event; provided, that such designation is made on terms
that, in the sole but reasonable judgment of the Lender, cause the Lender and
its lending office to suffer no unreimbursed economic disadvantage or any legal
or regulatory disadvantage, and provided, further, that nothing in this Section
shall affect or postpone any of the obligations of the Borrower or the rights of
the Lender pursuant to Section 2.11 or 2.12.

SECTION 3. REPRESENTATIONS AND WARRANTIES

To induce the Lender to enter into this Agreement and to make the Loan, the
Borrower hereby represents and warrants to the Lender, on the Closing Date that:

3.1 Financial Condition. The audited consolidated balance sheet of the Borrower
and its consolidated Subsidiaries as of December 31, 2015, and the related
consolidated statements of operations and cash flows for the fiscal year ended
on such date, reported on by Deloitte & Touche LLP, present fairly in all
material respects the consolidated financial condition of the Borrower and its
consolidated Subsidiaries as of such date, and the consolidated results of its
operations and its consolidated cash flows for the fiscal year then ended. All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved.

 

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3.2 No Change. Since December 31, 2015, there has been no development or event
that has had or could reasonably be expected to have a Material Adverse Effect,
except as disclosed in the Specified Exchange Act Filings.

3.3 Existence; Compliance with Law. Each of the Borrower and its Significant
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, (b) has the corporate power and
corporate authority to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged,
(c) is duly qualified as a foreign corporation or other organization and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
except to the extent that the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect and (d) is in compliance with all
Requirements of Law except for any Requirements of Law being contested in good
faith by appropriate proceedings and except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.

3.4 Power; Authorization; Enforceable Obligations. The Borrower has the
corporate power and corporate authority to make, deliver and perform the Loan
Documents and to obtain extensions of credit hereunder. The Borrower has taken
all necessary corporate action to authorize the execution, delivery and
performance of the Loan Documents and to authorize the extensions of credit on
the terms and conditions of this Agreement. No consent or authorization of,
filing with, notice to or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the extensions of
credit hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents (other than the
Indenture), except (i) consents, authorizations, filings and notices which have
been obtained or made and are in full force and effect, (ii) any consent,
authorization or filing that may be required in the future the failure of which
to make or obtain could not reasonably be expected to have a Material Adverse
Effect and (iii) applicable regulatory requirements (including the approval of
the CPUC) prior to foreclosure under the Indenture (to the extent that there is
any pledge of property under or pursuant to the Indenture). This Agreement has
been, and each other Loan Document upon execution and delivery will be, duly
executed and delivered. This Agreement constitutes, and each other Loan Document
upon execution will constitute, a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms, except
as enforceability may be limited by (x) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally, laws of general application related to the
enforceability of securities secured by real estate and by general equitable
principles (whether enforcement is sought by proceedings in equity or at law)
and (y) applicable regulatory requirements (including the approval of the CPUC)
prior to foreclosure under the Indenture (to the extent that there is any pledge
of property under or pursuant to the Indenture).

3.5 No Legal Bar. The execution, delivery and performance of this Agreement and
the other Loan Documents, the borrowing of the Loan hereunder and the use of the
proceeds thereof will not violate in any material respect any Requirement of Law
or any Contractual Obligation of the Borrower or any of its Significant
Subsidiaries and will not result in, or require,

 

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the creation or imposition of any Lien on any of their respective properties or
revenues pursuant to any Requirement of Law or any such Contractual Obligation
(other than any Lien created hereunder).

3.6 Litigation.

(a) No litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened in writing by or against the Borrower or any of its Significant
Subsidiaries or against any of their respective material properties or revenues
with respect to any of the Loan Documents.

(b) No litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened in writing by or against the Borrower or any of its Significant
Subsidiaries or against any of their material respective properties or revenues,
except as disclosed in the Specified Exchange Act Filings, that could reasonably
be expected to have a Material Adverse Effect.

3.7 No Default. No Default or Event of Default has occurred and is continuing.

3.8 Taxes. The Borrower and each of its Significant Subsidiaries has filed or
caused to be filed all federal and state returns of income and franchise taxes
imposed in lieu of net income taxes and all other material tax returns that are
required to be filed and has paid all taxes shown to be due and payable on said
returns or with respect to any claims or assessments for taxes made against it
or any of its property by any Governmental Authority (other than (i) any amounts
the validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of the Borrower or any of its Significant Subsidiaries, as
applicable, and (ii) claims which could not reasonably be expected to have a
Material Adverse Effect). No material tax Liens have been filed against the
Borrower or any of its Significant Subsidiaries other than (A) Liens for taxes
which are not delinquent or (B) Liens for taxes which are being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the Borrower or any of
its Significant Subsidiaries, as applicable.

3.9 Federal Regulations. No part of the proceeds of the Loan will be used for
“buying” or “carrying” any “margin stock” within the respective meanings of each
of the quoted terms under Regulation U as now and from time to time hereafter in
effect or for any purpose that violates the provisions of the Regulations of the
Board.

3.10 ERISA. No Reportable Event has occurred during the five year period prior
to the date on which this representation is made or deemed made with respect to
any Plan, and each Plan has complied with the applicable provisions of ERISA and
the Code, except, in each case, to the extent that any such Reportable Event or
failure to comply with the applicable provisions of ERISA or the Code could not
reasonably be expected to result in a Material Adverse Effect. During the five
year period prior to the date on which this representation is made or deemed
made, there has been no (i) failure to make a required contribution to any Plan
that would result

 

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in the imposition of a lien or other encumbrance or the provision of security
under Section 430 of the Code or Section 303 or 4068 of ERISA, or the arising of
such a lien or encumbrance; or (ii) “unpaid minimum required contribution” or
“accumulated funding deficiency” (as defined or otherwise set forth in Section
4971 of the Code or Part 3 of Subtitle B of Title I of ERISA), whether or not
waived, except, in each case, to the extent that such event could not reasonably
be expected to result in a Material Adverse Effect. No termination of a Single
Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan has
arisen, during such five-year period. The present value of all accrued benefits
under each Single Employer Plan (based on those assumptions used to fund such
Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the assets of
such Plan allocable to such accrued benefits, except as could not reasonably be
expected to result in a Material Adverse Effect. Neither the Borrower nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan during the five year period prior to the date on which this
representation is made or deemed made that has resulted or could reasonably be
expected to result in a material liability under ERISA, and neither the Borrower
nor any Commonly Controlled Entity would become subject to any liability under
ERISA if the Borrower or any such Commonly Controlled Entity were to withdraw
completely from all Multiemployer Plans as of the valuation date most closely
preceding the date on which this representation is made or deemed made, except
as could not reasonably be expected to result in a Material Adverse Effect. No
such Multiemployer Plan is in Reorganization or Insolvent.

3.11 Investment Company Act; Other Regulations. The Borrower is not an
“investment company”, or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended. On the
date hereof, the Borrower is not subject to regulation under any Requirement of
Law (other than (a) Regulation X of the Board and (b) Sections 701, 817-830, and
851 of the California Public Utilities Code) that limits its ability to incur
Indebtedness under this Agreement.

3.12 Use of Proceeds. The proceeds of the Loan shall be used for general
corporate purposes, including repaying commercial paper.

3.13 Environmental Matters. Except as disclosed in the Specified Exchange Act
Filings, the Borrower and its Significant Subsidiaries do not have liabilities
under Environmental Laws or relating to Materials of Environmental Concern that
would reasonably be expected to have a Material Adverse Effect, and, to the
knowledge of the Borrower, there are no facts, circumstances or conditions that
could reasonably be expected to give rise to such liabilities.

3.14 Regulatory Matters. Solely by virtue of the execution, delivery and
performance of, or the consummation of the transactions contemplated by this
Agreement, the Lender shall not be or become subject to regulation (a) under the
FPA or (b) as a “public utility” or “public service corporation” or the
equivalent under any Requirement of Law.

3.15 Sanctions. To the Borrower’s knowledge, none of the Borrower, any of its
Subsidiaries, or any director, officer, agent, Affiliate or employee of the
Borrower or any of its Subsidiaries is currently the subject of any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Borrower will not use the

 

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proceeds of the Loan, or knowingly lend, contribute or otherwise make available
such proceeds to any Subsidiary, Affiliate, joint venture partner or other
person or entity, to fund the activities of any person currently the subject of
any U.S. sanctions administered by OFAC.

SECTION 4. CONDITIONS TO THE CLOSING DATE

The effectiveness of this Agreement, and the obligation of the Lender to make
the Loan hereunder on the Closing Date, shall not become effective until the
date on which each of the following conditions is satisfied (or waived in
accordance with Section 8.1):

(a) Loan Documents. The Lender shall have received (A) this Agreement, executed
and delivered by the Borrower and (B) an executed original or certified copy of
each of the other Loan Documents, as applicable.

(b) Consents and Approvals. All governmental and third party consents and
approvals necessary in connection with this Agreement and the other Loan
Documents and the transactions contemplated hereby shall have been obtained and
be in full force and effect; and the Lender shall have received a certificate of
a Responsible Officer to the foregoing effect.

(c) Fees. The Lender shall have received all fees required to be paid, and all
expenses for which invoices have been presented (including the reasonable fees
and expenses of legal counsel), on or before the Closing Date.

(d) Closing Certificate; Certified Articles of Incorporation; Good Standing
Certificates. The Lender shall have received (i) a certificate of the Borrower,
dated the Closing Date, substantially in the form of Exhibit B, with appropriate
insertions and attachments, including the articles of incorporation of the
Borrower certified by the Secretary of State of the State of California, and
containing a confirmation by the Borrower that the conditions precedent set
forth in this Section 4 have been satisfied and (ii) a good standing certificate
for the Borrower from the Secretary of State of the State of California.

(e) Legal Opinion. The Lender shall have received the legal opinion of Orrick,
Herrington & Sutcliffe LLP, counsel to the Borrower, substantially in the form
of Exhibit D.

(f) Representations and Warranties. Each of the representations and warranties
made by the Borrower in this Agreement that does not contain a materiality
qualification shall be true and correct in all material respects on and as of
the Closing Date, and each of the representations and warranties made by the
Borrower in this Agreement that contains a materiality qualification shall be
true and correct on and as of the Closing Date (or, to the extent such
representations and warranties specifically relate to an earlier date, that such
representations and warranties were true and correct in all material respects,
or true and correct, as the case may be, as of such earlier date).

(g) No Default. No Default or Event of Default shall have occurred and be
continuing or would result from the funding of the Loan.

 

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SECTION 5. AFFIRMATIVE COVENANTS

The Borrower hereby agrees that, so long as the Loan, any interest on the Loan
or any fee payable to the Lender hereunder remains outstanding, or any other
amount then due and payable is owing to the Lender, the Borrower shall and, with
respect to Sections 5.3 and 5.6(b), shall cause its Significant Subsidiaries to:

5.1 Financial Statements. Furnish to the Lender:

(a) as soon as available, but in any event within 120 days after the end of each
fiscal year of the Borrower, a copy of the audited consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at the end of such year and
the related audited consolidated statements of operations and cash flows for
such year, setting forth in each case in comparative form the figures for the
previous year, reported on without a “going concern” or like qualification or
exception, or qualification arising out of the scope of the audit, by Deloitte &
Touche LLP or other independent certified public accountants of nationally
recognized standing; and

(b) as soon as available, but in any event not later than 60 days after the end
of each of the first three quarterly periods of each fiscal year of the
Borrower, the unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of operations and cash flows for such quarter
and the portion of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures for the previous year,
certified by a Responsible Officer as being fairly stated in all material
respects (subject to normal year-end audit adjustments).

All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied (except as approved by such accountants or officer, as the case may be,
and disclosed in reasonable detail therein) consistently throughout the periods
reflected therein and with prior periods. The Borrower shall be deemed to have
delivered the financial statements required to be delivered pursuant to this
Section 5.1 upon the filing of such financial statements by the Borrower through
the SEC’s EDGAR system (or any successor electronic gathering system that is
publicly available free of charge) or the publication by the Borrower of such
financial statements on its website.

5.2 Certificates; Other Information. Furnish to the Lender:

(a) within two days after the delivery of any financial statements pursuant to
Section 5.1, (i) a certificate of a Responsible Officer stating that such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate and (ii) in the case of quarterly or
annual financial statements, a Compliance Certificate, substantially in the form
of Exhibit A, containing all information and calculations reasonably necessary
for determining compliance by the Borrower with the provisions of this Agreement
referred to therein as of the last day of the fiscal quarter or fiscal year of
the Borrower, as the case may be;

 

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(b) within five days after the same are sent, copies of all financial statements
and reports that the Borrower sends to the holders of any class of its debt
securities or public equity securities, provided that, such financial statements
and reports shall be deemed to have delivered upon the filing of such financial
statements and reports by the Borrower through the SEC’s EDGAR system (or any
successor electronic gathering system that is publicly available free of charge)
or publication by the Borrower of such financial statements and reports on its
website; and

(c) promptly, such additional financial and other information as the Lender may
from time to time reasonably request.

5.3 Payment of Taxes. Pay all taxes due and payable or any other tax assessments
made against the Borrower or any of its Significant Subsidiaries or any of their
respective property by any Governmental Authority (other than (i) any amounts
the validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of the Borrower or any of its Significant Subsidiaries, as
applicable, or (ii) where the failure to effect such payment could not
reasonably be expected to have a Material Adverse Effect).

5.4 Maintenance of Existence; Compliance. (a)(i) Preserve, renew and keep in
full force and effect its organizational existence; provided that the foregoing
shall not prohibit any merger, consolidation or amalgamation permitted under
Section 6.3 and (ii) take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business, except, in each case, as otherwise permitted by Section 6.3 and
except, in the case of clause (ii) above, to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect; (b) comply
with all Contractual Obligations except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect and (c) comply with all Requirements of Law except for any
Requirements of Law being contested in good faith by appropriate proceedings and
except to the extent that failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.

5.5 Maintenance of Property; Insurance. (a) Keep all property useful and
necessary in its business in good working order and condition, ordinary wear and
tear excepted, except to the extent that failure to do so could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect, and
(b) maintain with financially sound and reputable insurance companies insurance
on all its material property in at least such amounts and against at least such
risks as are usually insured against in the same general area by companies
engaged in the same or a similar business of comparable size and financial
strength and owning similar properties in the same general areas in which the
Borrower operates, which may include self-insurance, if determined by the
Borrower to be reasonably prudent.

5.6 Inspection of Property; Books and Records; Discussions. (a) Keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities and (b) unless a
Default or Event of Default has occurred and is continuing, not more

 

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than once a year and after at least five Business Days’ notice, (i) permit
representatives of the Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time to discuss the business, operations, properties and financial and other
condition of the Borrower and its Significant Subsidiaries with officers and
employees of the Borrower and its Significant Subsidiaries and (ii) use
commercially reasonable efforts to provide for the Lender (in the presence of
representatives of the Borrower) to meet with the independent certified public
accountants of the Borrower and its Subsidiaries; provided, that any such visits
or inspections shall be subject to such conditions as the Borrower and each of
its Significant Subsidiaries shall deem necessary based on reasonable
considerations of safety and security; and provided, further, that neither the
Borrower nor any Significant Subsidiary shall be required to disclose to the
Lender or its agents or representatives any information which is subject to the
attorney-client privilege or attorney work-product privilege properly asserted
by the applicable Person to prevent the loss of such privilege in connection
with such information or which is prevented from disclosure pursuant to a
confidentiality agreement with third parties.

5.7 Notices. Promptly give notice to the Lender of:

(a) when known to a Responsible Officer, the occurrence of any Default or Event
of Default;

(b) any change in the Rating issued by either S&P or Moody’s; and

(c) the following events, as soon as possible and in any event within 30 days
after the Borrower knows thereof: (i) the occurrence of any Reportable Event
with respect to any Plan which has not been waived, a failure to make any
required minimum contribution to a Plan under Section 412 or 430 of the Code,
the creation of any Lien in favor of the PBGC with respect to a Plan or any
withdrawal by the Borrower or any Commonly Controlled Entity from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other material action by the
PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the termination, Reorganization or
Insolvency of, any Plan.

5.8 Maintenance of Licenses, etc. Maintain in full force and effect any
authorization, consent, license or approval of any Governmental Authority
necessary for the conduct of the Borrower’s business as now conducted by it or
necessary in connection with this Agreement, except to the extent the failure to
do so could not reasonably be expected to have a Material Adverse Effect.

SECTION 6. NEGATIVE COVENANTS

The Borrower hereby agrees that, so long as the Loan, or any interest on the
Loan or any fee payable to the Lender hereunder remains outstanding, or any
other amount then due and payable is owing to the Lender hereunder, the Borrower
shall not and, with respect to Section 6.2, shall not permit its Significant
Subsidiaries to:

 

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6.1 Consolidated Capitalization Ratio. Permit the Consolidated Capitalization
Ratio on the last day of any fiscal quarter, from and after the last day of the
first fiscal quarter ending after the Closing Date, to exceed 0.65 to 1.00.

6.2 Liens. Create, incur, assume or suffer to exist any Lien upon any assets of
the Borrower or any Significant Subsidiary, whether now owned or hereafter
acquired, except for (a) Liens securing the Borrower’s obligations to the Lender
under this Agreement and the other Loan Documents and (b) Liens permitted by the
Indenture.

6.3 Fundamental Changes. Enter into any merger, consolidation or amalgamation,
or liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or Dispose of all or substantially all of its property or
business, except that the Borrower may be merged, consolidated or amalgamated
with another Person or Dispose of all or substantially all of its property or
business so long as, after giving effect to such transaction, (a) no Default or
Event of Default shall have occurred and be continuing, (b) either (i) the
Borrower is the continuing or surviving corporation of such merger,
consolidation or amalgamation or (ii) the continuing or surviving corporation of
such merger, consolidation or amalgamation, if not the Borrower or the
purchaser, as the case may be, shall have assumed all obligations of the
Borrower under the Loan Documents pursuant to arrangements reasonably
satisfactory to the Lender and (c) the ratings by Moody’s and S&P of the
continuing or surviving corporation’s or purchaser’s, as the case may be,
senior, unsecured, non credit-enhanced debt shall be at least the higher of
(1) Baa3 from Moody’s and BBB- from S&P and (2) the ratings by such rating
agencies of the Borrower’s senior, unsecured, non credit-enhanced debt in effect
before the earlier of the occurrence or the public announcement of such event.

SECTION 7. EVENTS OF DEFAULT

If any of the following events shall occur and be continuing on or after the
Closing Date:

(a) the Borrower shall fail to pay any principal of the Loan when due in
accordance with the terms hereof; or the Borrower shall fail to pay any interest
on any Loan, or any other amount payable hereunder or under any other Loan
Document, within five Business Days after any such interest or other amount
becomes due in accordance with the terms hereof; or

(b) any representation or warranty made or deemed made by the Borrower herein or
in any other Loan Document or that is contained in any certificate, document or
financial or other statement furnished by it at any time under or in connection
with this Agreement or any such other Loan Document shall prove to have been
inaccurate in any material respect on or as of the date made or deemed made,
unless, as of any date of determination, the facts or circumstances to which
such representation or warranty relates have changed with the result that such
representation or warranty is true and correct in all material respects on such
date; or

(c) the Borrower shall default in the observance or performance of any agreement
contained in Section 6.1 or Section 6.3 of this Agreement; or

(d) the Borrower shall default in the observance or performance of any other
agreement contained in this Agreement or any other Loan Document (other than as
provided in paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days after notice to the Borrower from
the Lender; or

 

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(e) the Borrower or any of its Significant Subsidiaries shall (i) default in
making any payment of any principal of any Indebtedness (including any Guarantee
Obligation, but excluding the Loan) on the due date with respect thereto (after
giving effect to any period of grace, if any, provided in the instrument or
agreement under which such Indebtedness was created); or (ii) default in making
any payment of any interest on any such Indebtedness beyond the period of grace,
if any, provided in the instrument or agreement under which such Indebtedness
was created; or (iii) default in the observance or performance of any other
agreement or condition relating to any such Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or (in the case of all Indebtedness other than
Indebtedness under any Swap Agreement) to permit the holder or beneficiary of
such Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such Indebtedness
to become due prior to its stated maturity or (in the case of any such
Indebtedness constituting a Guarantee Obligation) to become payable; provided,
that a default, event or condition described in clause (i), (ii) or (iii) of
this paragraph (e) shall not at any time constitute an Event of Default unless,
at such time, one or more defaults, events or conditions of the type described
in clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and be
continuing with respect to Indebtedness the outstanding principal amount of
which exceeds in the aggregate $200,000,000; provided further, that unless
payment of the Loan hereunder has already been accelerated, if such default
shall be cured by the Borrower or such Significant Subsidiary or waived by the
holders of such Indebtedness and any acceleration of maturity having resulted
from such default shall be rescinded or annulled, in each case, in accordance
with the terms of such agreement or instrument, without any modification of the
terms of such Indebtedness requiring the Borrower or such Significant Subsidiary
to furnish security or additional security therefor, reducing the average life
to maturity thereof or increasing the principal amount thereof, or any agreement
by the Borrower or such Significant Subsidiary to furnish security or additional
security therefor or to issue in lieu thereof Indebtedness secured by additional
or other collateral or with a shorter average life to maturity or in a greater
principal amount, then any Default hereunder by reason thereof shall be deemed
likewise to have been thereupon cured or waived; or

(f) (i) the Borrower or any of its Significant Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or
(B) seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or the
Borrower or any of its Significant Subsidiaries shall make a general assignment
for the benefit of its creditors; or (ii) there shall be commenced against the
Borrower or any of its Significant Subsidiaries any case, proceeding or other
action of a nature referred to in clause (i) above that (A) results in the entry
of an order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or

 

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(iii) there shall be commenced against the Borrower or any of its Significant
Subsidiaries any case, proceeding or other action seeking issuance of a warrant
of attachment, execution, distraint or similar process against all or any
substantial part of its assets that results in the entry of an order for any
such relief that shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) the Borrower or
any of its Significant Subsidiaries shall generally not, or shall be unable to,
or shall admit in writing its inability to, pay its debts as they become due; or

(g) a trustee shall be appointed to administer any Plan under Section 4042 of
ERISA, or the PBGC shall institute proceedings to terminate, or to have a
trustee appointed to administer any Plan and such proceedings shall continue
undismissed or unstayed and in effect for a period of 60 days, but only if any
such event could reasonably be expected to result in a Material Adverse Effect;
or

(h) one or more judgments or decrees shall be entered against the Borrower or
any of its Significant Subsidiaries by a court of competent jurisdiction
involving in the aggregate a liability (not paid or, subject to customary
deductibles, fully covered by insurance as to which the relevant insurance
company has not denied coverage) of $200,000,000 or more, and all such judgments
or decrees shall not have been vacated, discharged, stayed or bonded pending
appeal within 45 days from the entry thereof unless, in the case of a discharge,
such judgment or decree is due at a later date in one or more payments and the
Borrower or such Subsidiary satisfies the obligation to make such payment or
payments on or prior to the date such payment or payments become due in
accordance with such judgment or decree; or

(i) there shall have occurred a Change of Control;

then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, the
Loan (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents shall immediately become due and payable,
and (B) if such event is any other Event of Default, the Lender may, by notice
to the Borrower, declare the Loan (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents to be due and
payable forthwith, whereupon the same shall immediately become due and
payable. Except as expressly provided above in this Section, presentment,
demand, protest and all other notices of any kind are hereby expressly waived by
the Borrower.

SECTION 8. MISCELLANEOUS

8.1 Amendments and Waivers. (a) So long as no Multi Lender Event has occurred
and is continuing: Neither this Agreement, any other Loan Document, nor any
terms hereof or thereof may be amended, supplemented or modified except in a
writing executed by the Borrower and the Lender. No term of this Agreement may
be waived unless such waiver is in a writing executed by the waiving party. Any
such waiver and any such amendment, supplement or modification shall be binding
upon the Borrower, the Lender and all future holders of the Loan. In the case of
any waiver, the Borrower and the Lender shall be restored to their former
position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.

 

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(b) If a Multi Lender Event has occurred and is continuing: Neither this
Agreement nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 8.1(b). The
Required Lenders and the Borrower may, from time to time, (i) enter into written
amendments, supplements or modifications hereto for the purpose of adding any
provisions to this Agreement or changing in any manner the rights of the Lenders
or of the Borrower hereunder or (ii) waive, on such terms and conditions as the
Required Lenders may specify in such instrument, any of the requirements of this
Agreement or any Default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall:

(A) forgive the principal amount or extend the final scheduled date of maturity
of the Loan (or any portion thereof), reduce the stated rate of any interest
payable hereunder (except in connection with the waiver of applicability of any
post-default increase in interest rates (which waiver shall be effective with
the consent of the Required Lenders)) or extend the scheduled date of any
payment thereof, in each case without the written consent of each Lender
directly affected thereby;

(B) eliminate or reduce the voting rights of any Lender under this
Section 8.1(b) without the written consent of such Lender;

(C) reduce any percentage specified in the definition of Required Lenders
without the written consent of all Lenders; or

(D) amend, modify or waive any provision of Section 1(d) related to pro rata
treatment without the consent of each Lender directly affected thereby.

Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Borrower, the
Lenders and all future holders of the Loan. In the case of any waiver, the
Borrower and the Lenders shall be restored to their former position and rights
hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.

8.2 Notices. All notices, requests and demands to or upon the parties hereto to
be effective shall be in writing (including by telecopy), and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered during the recipient’s normal business hours, or three Business Days
after being deposited in the mail, postage prepaid, or, in the case of telecopy
notice, when received during the recipient’s normal business hours, addressed as
follows, or to such other address as may be hereafter notified by the parties
hereto:

 

    Borrower:   

Pacific Gas and Electric Company

c/o PG&E Corporation

77 Beale Street

 

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   P.O. Box 770000
San Francisco, California 94177
Attention: Treasurer
Telecopy:    (415) 973-9771
Telephone:  (415) 973-8968 with a copy to:   

Pacific Gas and Electric Company
c/o PG&E Corporation

77 Beale Street
P.O. Box 770000
San Francisco, California 94177
Attention:    General Counsel
Telecopy:    (415) 973-4377

Telephone:  (415) 973-5520

Initial Lender:    As set forth on Schedule 8.2;

provided that any notice, request or demand to or upon the Lender shall not be
effective until received.

The Lender or the Borrower may, in its discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

8.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Lender, any right, remedy, power or privilege
hereunder or under the other Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

8.4 Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loan.

8.5 Payment of Expenses. The Borrower agrees to pay or reimburse the Lender (a)
for all reasonable out-of-pocket costs and expenses incurred in connection with
the development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the other Loan Documents and any other
documents prepared in connection herewith or therewith, and the consummation of
the transactions contemplated hereby and thereby, including the reasonable fees
and disbursements of only one counsel and special California regulatory counsel
to the Lender and filing and recording fees and expenses, with statements with
respect to the foregoing to be submitted to the Borrower prior to the Closing

 

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Date (in the case of amounts to be paid on the Closing Date) and from time to
time thereafter on a quarterly basis or such other periodic basis as the Lender
shall deem appropriate, (b) for all its costs and expenses incurred in
connection with the enforcement or preservation of its rights under this
Agreement, the other Loan Documents and any such other documents, including the
fees and disbursements of only one counsel to the Lender, and (c) to pay,
indemnify, and hold the Lender and its officers, directors, employees, agents
and Affiliates (each, an “Indemnitee”) harmless from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever,
whether brought by the Borrower or any other Person (i) with respect to the
execution, delivery, enforcement and performance of this Agreement, the other
Loan Documents and any such other documents, including any of the foregoing
relating to the use of proceeds of the Loan or (ii) with respect to the
violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of the Borrower and its Significant Subsidiaries or
any of the facilities and properties owned, leased or operated by the Borrower
and its Significant Subsidiaries and the reasonable fees and expenses of one
legal counsel in connection with claims, actions or proceedings by any
Indemnitee against the Borrower under any Loan Document (all the foregoing,
collectively, the “Indemnified Liabilities”), provided, that the Borrower shall
have no obligation hereunder to any Indemnitee with respect to Indemnified
Liabilities to the extent such Indemnified Liabilities resulted from the gross
negligence or willful misconduct of such Indemnitee as determined in a final
judgment by a court of competent jurisdiction. Without limiting the foregoing,
and to the extent permitted by applicable law, the Borrower agrees not to assert
and to cause its Significant Subsidiaries not to assert, and hereby waives and
agrees to cause its Significant Subsidiaries to waive, all rights for
contribution or any other rights of recovery with respect to all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature, under or related to Environmental Laws, that any of
them might have by statute or otherwise against any Indemnitee. All amounts due
under this Section shall be payable not later than 30 days after written demand
therefor, subject to the Borrower’s receipt of reasonably detailed invoices
relating thereto. Statements payable by the Borrower pursuant to this Section
shall be submitted to Treasurer (Telephone No. 415- 817-8199/415 267-7000)
(Telecopy No. 415-267-7265/7268), at the address of the Borrower set forth in
Section 8.2 with a copy to Chief Counsel, Corporate (Telephone No.
415- 817-8200) (Telecopy No. 415- 817-8225) at the address of the Borrower set
forth in Section 8.2, or to such other Person or address as may be hereafter
designated by the Borrower in a written notice to the Lender. The agreements in
this Section 8.5 and all amounts due under this Section 8.5 shall survive for
two years after the termination of this Agreement and repayment of the Loan and
all other amounts payable hereunder. This Section 8.5 shall not apply with
respect to Taxes, other than Taxes that represent claims, damages, losses,
liabilities, costs or expenses arising from non-Tax claims.

8.6 Successors and Assigns; Participations and Assignments.

(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of the Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) the Lender may not assign
or otherwise transfer its rights or obligations hereunder except in accordance
with this Section 8.6.

 

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(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, the
Lender may assign to one or more assignees (each, an “Assignee”) other than any
natural person, the Borrower or any of the Borrower’s Affiliates or
Subsidiaries, all or a portion of its rights and obligations under this
Agreement (including all or a portion of the Loan at the time owing to it) with
the prior written consent (such consent not to be unreasonably withheld or
delayed) of the Borrower, provided that no consent of the Borrower shall be
required for an assignment to an Eligible Assignee that is an Affiliate of the
Lender or, if an Event of Default has occurred and is continuing, any other
Person, and provided further, that the Borrower shall be deemed to have
consented to any such assignment unless it shall object thereto by written
notice to the Lender within fifteen (15) Business Days after having received
notice thereof from the assigning Lender;

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to an Eligible Assignee that is an
Affiliate of the Initial Lender or an assignment of the entire remaining amount
of the assigning Lender’s Loan, the amount of the Loan of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment) shall not be less than $10,000,000
(or, if such assignee is an Eligible Assignee that is an Affiliate of the
Lender, $5,000,000) unless the Borrower otherwise consents, provided that (1) no
such consent of the Borrower shall be required if an Event of Default has
occurred and is continuing and (2) with respect to the Initial Lender, such
amounts shall be aggregated in respect of the Initial Lender and any Affiliate
of the Initial Lender that is an Eligible Assignee; and

(B) the parties to each assignment shall execute and deliver to the Lender an
Assignment and Assumption.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv)
below, from and after the effective date specified in each Assignment and
Assumption the Assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Assumption, shall have the rights
and obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, the Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 2.11,
2.12, 2.13 and 8.5 but shall be subject to the limitations set forth therein).
Any assignment or transfer by the Lender of rights or obligations under this
Agreement that does not comply with this Section 8.6 shall be treated for
purposes of this Agreement as a sale by the Lender of a participation in such
rights and obligations in accordance with paragraph (c) of this Section.

 

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(iv) The Initial Lender, acting for this purpose as an agent of the Borrower
(and such agency being solely for tax purposes), shall maintain at one of its
offices a copy of each Assignment and Assumption delivered to it and a register
for the recordation of the names and addresses of the Initial Lender, each
Assignee and the principal amount of the Loan owing to, the Initial Lender and
each Assignee pursuant to the terms hereof from time to time (the “Register”).
The entries in the Register shall be conclusive, in the absence of manifest
error, and the Borrower and the Initial Lender shall treat each Person whose
name is recorded in the Register pursuant to the terms hereof as the Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the Borrower, the
Initial Lender and any Assignee, at any reasonable time and from time to time
upon reasonable prior notice.

(v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an Assignee and any written consent to such assignment
required by paragraph (b) of this Section, the Initial Lender shall accept such
Assignment and Assumption and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this paragraph.

(c) (i) The Lender may, without the consent of the Borrower, sell participations
to one or more banks or other entities (other than the Borrower or any of the
Borrower’s Affiliates or Subsidiaries) (a “Participant”) in all or a portion of
the Lender’s rights and obligations under this Agreement (including all or a
portion of the Loan owing to it); provided that (A) the Lender’s obligations
under this Agreement shall remain unchanged, (B) the Lender shall remain solely
responsible to the Borrower for the performance of such obligations and (C) the
Borrower shall continue to deal solely and directly with the Lender in
connection with the Lender’s rights and obligations under this Agreement. Any
agreement pursuant to which the Lender sells such a participation shall provide
that the Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement may provide that the Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver that (1) forgives the principal amount or extends the final scheduled
date of maturity of the Loan, reduces the stated rate of any interest or fee
payable hereunder (except in connection with the waiver of applicability of any
post-default increase in interest rates) and (2) directly affects such
Participant. Subject to paragraph (c)(ii) of this Section, the Borrower agrees
that each Participant shall be entitled to the benefits of Sections 2.11, 2.12
and 2.13 to the same extent as if it were a Lender and had acquired its interest
by assignment pursuant to paragraph (b) of this Section.

(ii) Notwithstanding anything to the contrary herein, a Participant shall not be
entitled to receive any greater payment under Section 2.11 or 2.12 than the
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent to such greater
payments. Any Participant that is a Foreign Lender shall not be entitled to the
benefits of Section 2.12 unless such Participant complies with Section 2.12(d).

 

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(iii) If the Lender sells any participation it shall, acting solely for this
purpose as a non-fiduciary agent of the Borrower, maintain a register on which
it enters the name and address of each Participant and the principal amounts
(and stated interest) of each Participant’s interest in the Loan and other
Obligations under the Loan Documents (the “Participant Register”); provided that
the Lender shall have no obligation to disclose all or any portion of the
Participant Register (including the identity of any Participant or any
information relating to a Participant’s interest in the Loan and other
Obligations under any Loan Document) to any Person except to the extent that
such disclosure is necessary to establish that such Loan or other Obligation is
in registered form under Section 5f.103-1(c) of the United States Treasury
Regulations. The entries in the Participant Register shall be conclusive absent
manifest error, and the Lender shall treat each Person whose name is recorded in
the Participant Register as the owner of such participation for all purposes of
this Agreement notwithstanding any notice to the contrary.

(d) The Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of the
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank or other central bank having jurisdiction over the Lender, and this
Section shall not apply to any such pledge or assignment of a security interest;
provided that no such pledge or assignment of a security interest shall release
the Lender from any of its obligations hereunder or substitute any such pledgee
or Assignee for the Lender as a party hereto.

(e) The Borrower, upon receipt of written notice from the Lender, agrees to
issue a promissory note or promissory notes to the Lender to facilitate
transactions of the type described in paragraph (d) above.

8.7 Adjustments; Set off.

(a) Except to the extent that this Agreement expressly provides for payments to
be allocated to the Initial Lender or a particular Assignee, if the Initial
Lender or any Assignee (a “Benefitted Lender”) shall receive any payment of all
or part of the Obligations owing to it hereunder, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by set off, pursuant to
events or proceedings of the nature referred to in Section 7(f), or otherwise),
in a greater proportion than any such payment to or collateral received by the
Initial Lender or any other Assignee (a “Non-Benefitted Lender”), if any, in
respect of the Obligations owing to such Non-Benefitted Lender hereunder, such
Benefitted Lender shall purchase for cash from the Non-Benefitted Lenders a
participating interest in such portion of the Obligations owing to each
Non-Benefitted Lender hereunder, or shall provide the Non-Benefitted Lenders
with the benefits of any such collateral, as shall be necessary to cause such
Benefitted Lender to share the excess payment or benefits of such collateral
ratably among the Benefit Lender and the Non-Benefitted Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.

(b) In addition to any rights and remedies of the Lender provided by law,
including other rights of set-off, the Lender shall have the right, without
prior notice to the Borrower, any

 

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such notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), after
any applicable grace period, to set off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Lender or any branch,
Affiliate or agency thereof to or for the credit or the account of the Borrower.

8.8 Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Lender.

8.9 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

8.10 Integration. This Agreement and the other Loan Documents represent the
entire agreement of the Borrower and the Lender with respect to the subject
matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the Lender relative to the subject matter
hereof or thereof not expressly set forth or referred to herein or therein.

8.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.

8.12 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably and
unconditionally:

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the City of New York,
Borough of Manhattan, State of New York, the courts of the United States for the
Southern District of New York, and appellate courts from any thereof;

(b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

 

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(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower at its
address set forth in Section 8.2 or at such other address of which the Lender
shall have been notified pursuant thereto;

(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

(e) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding relating to this Agreement
or any other Loan Document any special, exemplary, punitive or consequential
damages.

8.13 Acknowledgments. The Borrower hereby acknowledges that:

(a) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Loan Documents;

(b) the Lender has no fiduciary relationship with or duty to the Borrower
arising out of or in connection with this Agreement or any of the other Loan
Documents, and the relationship between the Lender, on one hand, and the
Borrower, on the other hand, in connection herewith is solely that of debtor and
creditor; and

(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby between the
Lender and the Borrower.

8.14 Confidentiality. The Lender agrees to keep confidential in accordance with
such party’s customary practices (and in any event in compliance with applicable
law regarding material non-public information) all non-public information
provided to it by the Borrower pursuant to or in connection with this Agreement
that is designated by the provider thereof as confidential; provided that
nothing herein shall prevent the Lender from disclosing any such information
(a) to any Affiliate of the Lender, (b) subject to an agreement to comply with
the provisions of this Section or substantially equivalent provisions, to any
actual or prospective Transferee or, any direct or indirect counterparty to any
Swap Agreement (or any professional advisor to such counterparty) or any credit
insurance providers, (c) to its employees, directors, agents, attorneys,
accountants and other professional advisors or those of any of its Affiliates
(as long as such attorneys, accountants and other professional advisors are
subject to confidentiality requirements substantially equivalent to this
Section), (d) upon the request or demand of any Governmental Authority, (e) in
response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to any Requirement of Law, (f) if requested or
required to do so in connection with any litigation or similar proceeding,
(g) that has been publicly disclosed, (h) to the National Association of
Insurance Commissioners or any similar organization or any nationally recognized
rating agency that requires access to information about the Lender’s investment
portfolio in connection with ratings issued with respect to the Lender, or
(i) in connection with the exercise of any remedy hereunder or under any other
Loan Document, provided that, in the case of clauses (d), (e) and (f) of this
Section 8.14, with the exception of disclosure to bank regulatory authorities,
the Borrower (to the extent legally permissible) shall be given prompt prior
notice so that it may seek a protective order or other appropriate remedy.

 

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8.15 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, THE BORROWER
AND THE LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENTS AND FOR ANY COUNTERCLAIM THEREIN.

8.16 USA Patriot Act. The Lender hereby notifies the Borrower that pursuant to
the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Act”), it is required to obtain, verify and
record information that identifies the Borrower, which information includes the
name and address of the Borrower and other information that will allow the
Lender to identify the Borrower in accordance with the Act.

8.17 Judicial Reference. If any action or proceeding is filed in a court of the
State of California by or against any party hereto in connection with any of the
transactions contemplated by this Agreement or the other Loan Documents, (i) the
court shall, and is hereby directed to, make a general reference pursuant to
California Code of Civil Procedure Section 638 to a referee (who shall be a
single active or retired judge) to hear and determine all of the issues in such
action or proceeding (whether of fact or of law) and to report a statement of
decision, provided that at the option of any party to such proceeding, any such
issues pertaining to a “provisional remedy” as defined in California Code of
Civil Procedure Section 1281.8 shall be heard and determined by the court, and
(ii) without limiting the generality of Section 8.5, the Borrower shall be
solely responsible to pay all fees and expenses of any referee appointed in such
action or proceeding.

8.18 No Advisory or Fiduciary Responsibility. In connection with all aspects of
each transactions contemplated hereby (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document),
the Borrower acknowledges and agrees that: (i) (A) the arranging and other
services regarding this Agreement provided by the Lender are arm’s-length
commercial transactions between the Borrower, on the one hand, and the Lender,
on the other hand, (B) the Borrower has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate, and (C) the
Borrower is capable of evaluating, and understands and accepts, the terms, risks
and conditions of the transactions contemplated hereby and by the other Loan
Documents; (ii) (A) Lender is and has been acting solely as a principal and,
except as expressly agreed in writing by the relevant parties, has not been, is
not, and will not be acting as an advisor, agent or fiduciary for the Borrower
or any other Person and (B) the Lender has no obligation to the Borrower or any
of its Affiliates with respect to the transactions contemplated hereby except
those obligations expressly set forth herein and in the other Loan Documents;
and (iii) the Lender and its respective Affiliates may be engaged in a broad
range of transactions that involve interests that differ from those of the
Borrower and its Affiliates, and Lender has no obligation to disclose any of
such interests to the Borrower or its Affiliates. To the fullest extent
permitted by law, the Borrower hereby waives and releases any claims that it may
have against the Lender with respect to any breach or alleged breach of agency
or fiduciary duty in connection with any aspect of any transaction contemplated
hereby other than a breach of the confidentiality provisions set forth in
Section 8.14.

[Remainder of page intentionally left blank. Signature pages follow.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

 

PACIFIC GAS AND ELECTRIC COMPANY By:  

/s/ Nicholas M. Bijur

Name:   Nicholas M. Bijur Title:   Vice President and Treasurer

 

-Signature Page-

Pacific Gas and Electric Company

Term Loan Agreement

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THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,

as the Initial Lender

By:  

/s/ Lindsay Minneman

Name:   Lindsay Minneman Title:   Vice President

 

-Signature Page-

Pacific Gas and Electric Company

Term Loan Agreement

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SCHEDULE 8.2

 

LOGO [g144509g0304074948440.jpg]

 

1. a) Legal Name:    The Bank of Tokyo-Mitsubishi UFJ, Ltd.     b) Address:   
1251 Avenue of the Americas    New York, NY 10020-1104 2. Credit & Legal Docs
Contacts:    Financial Information

Portfolio Manager:

   Lindsay Minneman, Vice President    MUFG Union Bank, N.A.    445 S. Figueroa
St., 15th Floor    Los Angeles, CA 90071

Telephone No.:

   213-236-5726

Email address:

   lminneman@us.mufg.jp

Relationship Banker:

   Nietzsche Rodricks, Managing Director    U.S. Banking - Power & Utilities   
The Bank of Tokyo-Mitsubishi UFJ, Ltd.

1251 Avenue of the Americas

   New York, NY 10020-1104    Telephone No.: 212-782-5568    Email address:
nrodricks@us.mufg.jp

Loan Docs Specialist:

   Executed Loan Documents    Nadia Sleiman, Documentation Unit    Operations
Division for the Americas    The Bank of Tokyo-Mitsubishi UFJ, Ltd.    1251
Avenue of the Americas, 10th Floor    New York, NY 10020-1104

Telephone No.:

   212-782-6974 3. Operations Contact:    Borrowings, Paydowns, Interest, Fees,
etc.

Contact:

   Maria De’Jesus / Elisa Hidalgo    Commercial Loans Department    BTMU
Operations Office for the Americas    Harborside Financial Center Plaza III   
34 Exchange Place    Jersey City, NJ 07311

Telephone No.:

   201-413-8571 / 201-413-8630

Fax Nos.:

   201-521-2304

 

Schedule 8.2