Document:

Unassociated Document

    Exhibit
      10.2

     

    CONFORMED
      COPY

     

    FIRST
      AMENDMENT

    

    FIRST
      AMENDMENT, dated as of November 30, 2005 (this “First
      Amendment”),
      to
      the Credit Agreement, dated as of April 8, 2005 (as amended, supplemented,
      restated or otherwise modified from time to time, the “Credit
      Agreement”)
      among
      PACIFIC GAS AND ELECTRIC COMPANY, a California corporation (the “Borrower”),
      the
      several banks and other financial institutions or entities from time to time
      parties to the Credit Agreement (the “Lenders”),
      CITIGROUP
      GLOBAL MARKETS, INC. and J.P. MORGAN SECURITIES INC., as joint lead arrangers
      and joint bookrunners (together and in such capacities, the “Arrangers”),
      JPMORGAN CHASE BANK, N.A. (“JPMorgan
      Chase Bank”),
      as
      syndication agent (in such capacity, the “Syndication
      Agent”),
      BARCLAYS BANK PLC, BNP PARIBAS and DEUTSCHE BANK SECURITIES INC., as
      documentation agents (together and in such capacities, the “Documentation
      Agents”),
      and
      CITICORP NORTH AMERICA, INC. (“Citicorp”),
      as
      administrative agent (in such capacity, together with any successors thereto,
      the “Administrative
      Agent”).

     

    W
      I T
      N E S S E T H:

     

    WHEREAS,
      pursuant to the Credit Agreement, the Lenders have agreed to make certain loans
      and other extensions of credit to the Borrower; 

     

    WHEREAS,
      the Borrower has requested, and, upon this First Amendment becoming effective,
      the Lenders have agreed, that certain provisions of the Credit Agreement be
      amended as set forth below;

     

    NOW,
      THEREFORE, the parties hereto hereby agree as follows: 

     

    SECTION
      1.    Defined
      Terms.  
      Unless otherwise defined herein, capitalized terms that are defined in the
      Credit Agreement are used herein as therein defined.

     

    SECTION
      2.    Amendments
      to Section 1.1 (Defined Terms).
      

     

    (a)    The
      definition of “Applicable Margin” that appears in Section 1.1 of the Credit
      Agreement is hereby amended by amending and restating the grid that appears
      therein to read as follows:

     

    
      	
              Level

            	
              Rating

              S&P/Moody’s

            	
              Applicable
                Margin

              for

              ABR
                Loans

            	
              Applicable
                Margin

              for

              Eurodollar
                Loans

            
	
              1

            	
              A/A2
                or higher

            	
              0%

            	
              0.180%

            
	
              2

            	
              A-/A3
                

            	
              0%

            	
              0.220%

            
	
              3

            	
              BBB+/Baa1

            	
              0%

            	
              0.310%

            
	
              4

            	
              BBB/Baa2

            	
              0%

            	
              0.390%

            
	
              5

            	
              BBB-/Baa3

            	
              0%

            	
              0.450%

            
	
              6

            	
              BB+/Ba1
                or lower

            	
              0%

            	
              0.675%

            

    

     

    
      
        
          
            Pacific
              Gas and Electric Company - First Amendment to Credit Agreement

            053114-1037-08892-NY01.2522936.8 

          

        

      

      
         

        
          

          2

      

      
         

      

    

    (b)    The
      definition of “Facility Fee Rate” that appears in Section 1.1 of the Credit
      Agreement is hereby amended by amending and restating the grid that appears
      therein to read as follows:

     

    
      	
              Level

            	
              Rating

              S&P/Moody’s

            	
              Facility
                Fee Rate

            
	
              1

            	
              A/A2
                or higher

            	
              0.070%

            
	
              2

            	
              A-/A3
                

            	
              0.080%

            
	
              3

            	
              BBB+/Baa1

            	
              0.090%

            
	
              4

            	
              BBB/Baa2

            	
              0.110%

            
	
              5

            	
              BBB-/Baa3

            	
              0.150%

            
	
              6

            	
              BB+/Ba1
                or lower

            	
              0.200%

            

    

    

    (c)    The
      definition of “Utilization Fee Rate” that appears in Section 1.1 of the Credit
      Agreement is hereby amended by amending and restating the grid that appears
      therein to read as follows:

     

    
      	
              Level

            	
              Rating

              S&P/Moody’s

            	
              Utilization
                Fee

              Rate

            
	
              1

            	
              A/A2
                or higher

            	
              0.050%

            
	
              2

            	
              A-/A3
                

            	
              0.050%

            
	
              3

            	
              BBB+/Baa1

            	
              0.100%

            
	
              4

            	
              BBB/Baa2

            	
              0.100%

            
	
              5

            	
              BBB-/Baa3

            	
              0.100%

            
	
              6

            	
              BB+/Ba1
                or lower

            	
              0.125%

            

    

    

    (d)    The
      following definitions contained in Section 1.1 of the Credit Agreement are
      hereby amended and restated in their respective entireties to read as follows:
      

     

    “L/C
      Commitment”:
      $950,000,000.

     

    “Non-Procurement
      Facility Limit”:
      $400,000,000.

     

    “Procurement
      L/C Facility Limit”:
      $950,000,000.

     

    SECTION
      3.    Amendment
      to Section 2.3(e) (Commitment Increase).
      Section
      2.3(e) of the Credit Agreement is hereby amended by inserting the word
“calendar” immediately before the word “year” in clause (i)
      thereof.

     

    SECTION
      4.    Amendment
      to Section 3.1 (L/C Commitment). Section 3.1 of the Credit Agreement is hereby
      amended by deleting the phrase “or the Other L/C Facility Limit” from the third
      sentence of the first paragraph thereof.

     

    SECTION
      5.    Amendment
      to Section 5.2(b) (Conditions to Each Credit Event). Section 5.2(b) of the
      Credit Agreement is hereby amended by replacing each reference to the phrase
      “Sections 4.2 and 4.6(b)” therein with the phrase “Sections 4.2, 4.6(b) and
      4.13”.

     

    
      
        
          Pacific
            Gas and Electric Company - First Amendment to Credit Agreement

          053114-1037-08892-NY01.2522936.8 

        

      

      
         

        
          

          3

      

      
         

      

    

    SECTION
      6.    Amendment
      to Section 10.1 (Amendments and Waivers). Section 10.1 of the Credit Agreement
      is hereby amended by replacing the phrase “Procurement Facility Limit” in the
      last paragraph therein to “Procurement L/C Facility Limit”.

     

    SECTION
      7.    Conditions
      to Effectiveness. This First Amendment shall become effective as of the date
      first set forth above (such date, the “First Amendment Effective Date”) upon the
      satisfaction of the following conditions precedent: 

     

    (a)    the
      Administrative Agent shall have received counterparts of this First Amendment,
      duly executed and delivered by the Borrower and each of the Lenders;
      and

     

    (b)    the
      Lenders and the Administrative Agent 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 First Amendment
      Effective Date.

     

    SECTION
      8.    Representations
      and Warranties.
      The
      Borrower represents and warrants to each of the Lenders and the Administrative
      Agent that each of the representations and warranties made by the Borrower
      in or
      pursuant to the Credit Agreement, as amended by this First Amendment, that
      does
      not contain a materiality qualification is true and correct in all material
      respects on and as of the First Amendment Effective Date as if made on and
      as of
      such date, and each of the representations and warranties made by the Borrower
      in or pursuant to the Credit Agreement, as amended by this First Amendment,
      that
      contains a materiality qualification is true and correct on and as of such
      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). 

    

    SECTION
      9.    Counterparts.
      This
      First Amendment may be executed by one or more of the parties to this First
      Amendment 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 First Amendment by facsimile
      transmission shall be effective as delivery of a manually executed counterpart
      hereof. A set of the copies of this First Amendment signed by all the parties
      shall be lodged with the Borrower and the Administrative Agent. From and after
      the First Amendment Effective Date, this First Amendment shall be binding upon
      each of the parties hereto and each of their respective successors and assigns
      (including transferees of its Commitments and Loans in whole or in part prior
      to
      effectiveness hereof) and binding in respect of all of its Commitments and
      Loans, including any acquired subsequent to its execution and delivery hereof
      and prior to the effectiveness hereof.

     

    SECTION
      10.    Continuing
      Effect; No Other Amendments. Except as expressly amended, modified and
      supplemented hereby, the provisions of the Credit Agreement and each other
      Loan
      Document are and shall remain unchanged and in full force and effect. Any
      references in the Credit Agreement to “this Agreement”, “hereunder”, “herein” or
      words of like import, and each reference in any other document executed in
      connection with the Credit Agreement to “the Agreement”, “the Credit Agreement”,
“thereunder”, “therein” or words of like import, shall mean and be a reference
      to the Credit Agreement as amended hereby. 

     

    
      
        
          Pacific
            Gas and Electric Company - First Amendment to Credit Agreement

          053114-1037-08892-NY01.2522936.8 

        

      

      
         

        
          

          4

      

      
         

      

    

    SECTION
      11.    GOVERNING
      LAW.   
      THIS FIRST AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL
      BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS
      OF
      THE STATE OF NEW YORK.

     

    

    
      

      

    

    
      
        
          

          Pacific
            Gas and Electric Company - First Amendment to Credit Agreement

          053114-1037-08892-NY01.2522936.8 

        

         

      

      
         

        
          

        

      

      
         

        
           

          

        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
      executed by their respective officers thereunto duly authorized as of the day
      and year first above written.

     

    

    PACIFIC
      GAS AND ELECTRIC COMPANY

    

    

    By:
        /s/
      Nicholas
      Bijur                               

    Name:    Nicholas
      Bijur

    Title:     Assistant
      Treasurer

    

    

    CITICORP
      NORTH AMERICA, INC., as 

    Administrative
      Agent and as a Lender

    

    

    By:
        /s/
      Nietzsche
      Rodricks                          

    Name:
      Nietzsche Rodricks

           
      Title: Vice President

    
      
         

        Signature
          Page - PG&E Corporation - First Amendment to Credit Agreement

        053114-1037-08892-NY01.2522936.8 

         

      

      
         

        
          

        

      

      
         

      

    

    

     

     

    The
      Bank of New York

    

    By:
        /s/
      John V. Yancey,
      Jr.                             

    Name: John
      V.
      Yancey, Jr.

    Title:
       Managing
      Director

    
      
         

        Signature
          Page - PG&E Corporation - First Amendment to Credit Agreement

        053114-1037-08892-NY01.2522936.8 

         

      

      
         

        
          

        

      

      
         

      

    

    Mellon
      Bank, N.A.

    

    By:
        /s/
      Mark W.
      Rogers                                 

    Name: Mark
      W.
      Rogers

    Title:
       Vice
      President

    
      
         

        Signature
          Page - PG&E Corporation - First Amendment to Credit Agreement

        053114-1037-08892-NY01.2522936.8 

         

      

      
         

        
          

        

      

      
         

      

    

    Lehman
      Brothers Bank, FSB

    

    By:
        /s/
      Janine M.
      Shugan                              

    Name: Janine
      M.
      Shugan

    Title:
       Authorized
      Signatory

    
      
         

        Signature
          Page - PG&E Corporation - First Amendment to Credit Agreement

        053114-1037-08892-NY01.2522936.8 

         

      

      
         

        
          

        

      

      
         

      

    

    

    JP
      Morgan Chase Bank, N.A.

    

    By:
        /s/
      Thomas
      Casey                               

    Name: Thomas
      Casey

    Title:
       Vice
      President

    
      
         

        Signature
          Page - PG&E Corporation - First Amendment to Credit Agreement

        053114-1037-08892-NY01.2522936.8 

         

      

      
         

        
          

        

      

      
         

      

    

    

    William
      Street Commitment Corporation (Recourse only to assets of William Street
      Commitment Corporation)

    

    By:
        /s/
      Mark
      Walton                            

    Name: Mark
      Walton

    Title:
       Assistant
      Vice President

    
      
         

        Signature
          Page - PG&E Corporation - First Amendment to Credit Agreement

        053114-1037-08892-NY01.2522936.8 

         

      

      
         

        
          

        

      

      
         

      

    

    Royal
      Bank of Canada

    

    By:
        /s/
      David A. McCLuskey                     

    Name: David
      A.
      McCLuskey

    Title:
       Authorized
      Signatory

    
      
         

        Signature
          Page - PG&E Corporation - First Amendment to Credit Agreement

        053114-1037-08892-NY01.2522936.8 

         

      

      
         

        
          

        

      

      
         

      

    

    

    Union
      Bank of California, N.A.

    

    By:
        /s/
      Alex
      Wernberg                           

    Name: Alex
      Wernberg

    Title:
       Vice
      President

    
      
         

        Signature
          Page - PG&E Corporation - First Amendment to Credit Agreement

        053114-1037-08892-NY01.2522936.8 

         

      

      
         

        
          

        

      

      
         

      

    

    

    UBS
      Loan Finance LLC

    

    By:
        /s/
      Marie A.
      Haddad                            

    Name: Marie
      A.
      Haddad

    Title:
       Associate
      Director Banking Products Services, US

    

    

    

    

    By:
        /s/
      Barbara
      Ezell-McMichael                     

    Name: Barbara
      Ezell-McMichael

    Title:
       Associate
      Director Banking Products Services, US

    
      
         

        Signature
          Page - PG&E Corporation - First Amendment to Credit Agreement

        053114-1037-08892-NY01.2522936.8 

         

      

      
         

        
          

        

      

      
         

      

    

    Morgan
      Stanley Bank

    

    By:
        /s/
      Daniel
      Twenge               

    Name: Daniel
      Twenge

    Title:
       Vice
      President

    
      
         

        Signature
          Page - PG&E Corporation - First Amendment to Credit Agreement

        053114-1037-08892-NY01.2522936.8 

         

      

      
         

        
          

        

      

      
         

      

    

    

    BNP
      Paribas

    

    By:
        /s/
      Mark A.
      Renaud                         

    Name: Mark
      A.
      Renaud

    Title:
       Managing
      Director

    

    

    

    

    By:
        /s/
      Francis J. De
      Laney                   

    Name: Francis
      J. De Laney

    Title:
       Managing
      Director

    
      
         

        Signature
          Page - PG&E Corporation - First Amendment to Credit Agreement

        053114-1037-08892-NY01.2522936.8 

         

      

      
         

        
          

        

      

      
         

      

    

    

    Deutsche
      Bank AG New York Branch

    

    By:
        /s/
      Marcus
      Tarkington                      

    Name: Marcus
      Tarkington

    Title:
       Director

    

    

    

    

    By:
        /s/
      Rainer
      Meier                                  

    Name: Rainer
      Meier

    Title:
       Assistant
      Vice President

    
      
         

        Signature
          Page - PG&E Corporation - First Amendment to Credit Agreement

        053114-1037-08892-NY01.2522936.8 

         

      

      
         

        
          

        

      

      
         

      

    

    

    KBC
      Bank N. V.

    

    By:
        /s/
      Jean-Pierre
      Diels             

    Name: Jean-Pierre
      Diels

    Title:
       First
      Vice President

    

    

    

    

    By:
        /s/
      Eric
      Raskin                      

    Name: Eric
      Raskin

    Title:
      Vice President 

    
      
         

        Signature
          Page - PG&E Corporation - First Amendment to Credit Agreement

        053114-1037-08892-NY01.2522936.8 

         

      

      
         

        
          

        

      

      
         

      

    

    

    Barclays
      Bank PLC

    

    By:
        /s/
      Sydney G.
      Dennis             

    Name: Sydney
      G.
      Dennis

    Title:
       Director

     

    
      
         

        Signature
          Page - PG&E Corporation - First Amendment to Credit Agreement

        053114-1037-08892-NY01.2522936.8 

         

      

      
         

        
          

        

      

      
         

      

    

    

    ABN
      Amro Bank N. V.

    

    

    By:
        /s/
      John D.
      Reed                          

    Name: John
      D.
      Reed

    Title:
       Director

    

    

    

    

    By:
        s/
      Todd D.
      Vaubel                       

    Name: Todd
      D.
      Vaubel

    Title:
       Assistant
      Vice President

    
      
         

        Signature
          Page - PG&E Corporation - First Amendment to Credit Agreement

        053114-1037-08892-NY01.2522936.8Master Confirmation dated November 16, 2005, for accelerated share repurchase
      arrangements between PG&E Corporation and Goldman, Sachs & Co.

     

    

      Exhibit
        10.5

      EXECUTION
        COPY

       

      GOLDMAN
        SACHS & CO. | 85 BROAD STREET | NEW YORK, NEW YORK 10004 | TEL:
        212-902-1000

       

      
        	
                 

                To:

              	
                PG&E
                  Corporation

                One
                  Market Street Spear Tower

                Suite
                  2400

                San
                  Francisco, CA 94105

              
	
                 

                From:

              	
                 

                Goldman,
                  Sachs & Co. 

              
	
                 

                Subject:

              	
                 

                Accelerated
                  Share Repurchase Transaction - VWAP Pricing
                  (Non-Collared)

              
	
                 

                Ref.
                  No:

              	
                 

                As
                  provided in the Supplemental Confirmation

              
	
                 

                Date:

              	
                 

                November
                  16, 2005

              

      

      
        
          

        

      

       

      This
        master confirmation (“Master Confirmation”) dated as of November 16, 2005 is
        intended to supplement the terms and provisions of certain Transactions (each,
        a
“Transaction”) entered into from time to time between Goldman, Sachs & Co.
        (“GS&Co.”) and PG&E Corporation (“Counterparty”). This Master
        Confirmation, taken alone, is neither a commitment by either party to enter
        into
        any Transaction nor evidence of a Transaction. The terms of any particular
        Transaction shall be set forth in a Supplemental Confirmation in the form
        of
        Annex A, which references this Master Confirmation, in which event the terms
        and
        provisions of this Master Confirmation shall be deemed to be incorporated
        into
        and made a part of each such Supplemental Confirmation. This Master Confirmation
        and each Supplemental Confirmation together shall constitute a “Confirmation” as
        referred to in the Agreement specified below.

       

       

      The
        definitions and provisions contained in the 2002 ISDA Equity Derivatives
        Definitions (the “Equity Definitions”), as published by the International Swaps
        and Derivatives Association, Inc., are incorporated into this Master
        Confirmation. This Master Confirmation and each Supplemental Confirmation
        evidences a complete binding agreement between Counterparty and GS&Co. as to
        the terms of each Transaction to which this Master Confirmation and the related
        Supplemental Confirmation relates.

       

       

      This
        Master
        Confirmation and each Supplemental Confirmation, together with all other
        documents referring to the 1992
        ISDA
        Master Agreement (Multicurrency-Cross Border) (the “ISDA Form” or the
“Agreement),
        confirming Transactions entered into between GS&Co. and Counterparty, shall
        supplement, form a part of, and be subject to the ISDA Form as if GS&Co. and
        Counterparty had executed the Agreement (but without any Schedule)
        except
that
        the
        following elections and modifications shall be made:
        (i) the election of Loss and Second Method, New York law (without regard to
        conflicts of law principles) as the governing law and US Dollars (“USD”) as the
        Termination Currency, (ii) the election that subparagraph (ii) of
        Section 2(c) will not apply to Transactions, (iii) the replacement of
        the word “third” in the last line of Section 5(a)(i) with the word “first”,
        (iv) the election that the “Cross Default” provisions of Section 5(a)(vi) shall
        apply to Counterparty, with a “Threshold Amount” of USD 100
        million, and (v) the replacement of clause (1) in Section 6(d)(i) with the
        clause “(1) showing in reasonable detail such calculations and specifying any
        amount payable under Section 6(e) (including, without limitation, providing
        all
        relevant quotations and assumptions and specifying the methodologies used
        in
        sufficient detail so as to enable the other party to replicate the
        calculation)”. Further, for purposes of determining whether an Event of Default
        pursuant to Section 5(a)(vi) of the Agreement has occurred, notwithstanding
        anything to the contrary stated
        in
        that provision, clause (1) of Section 5(a)(vi) will apply only to Specified
        Indebtedness that is actually declared to be due and payable before it would
        otherwise be due and payable under the relevant agreement or instrument,
        and not
        to Specified Indebtedness that is merely “capable at such time of being
        declared” so due and payable.

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      All
        provisions contained in the Agreement shall govern this Master Confirmation
        and
        the related Supplemental Confirmation relating to a Transaction except as
        expressly modified herein
        or in
        the related Supplemental Confirmation. With respect to any relevant Transaction,
        the Agreement, this Master Confirmation and the related Supplemental
        Confirmation shall represent the entire agreement and understanding of the
        parties with respect to the subject matter and terms of such Transaction
        and
        shall supersede all prior or contemporaneous written or oral communications
        with
        respect thereto.

       

       

      If,
        in
        relation to any Transaction to which this Master Confirmation and related
        Supplemental Confirmation relate, there is any inconsistency between the
        Agreement, this Master Confirmation, any Supplemental Confirmation and the
        Equity Definitions that are incorporated into this Master
        Confirmation or any
        Supplemental Confirmation, the following will prevail for purposes of such
        Transaction in the order of precedence indicated: (i) such Supplemental
        Confirmation; (ii) this Master Confirmation; (iii) the Agreement; and (iv)
        the
        Equity Definitions.

       

       

      1.  Each
        Transaction constitutes a Share Forward Transaction for the purposes of the
        Equity Definitions. Set forth below are the terms and conditions which, together
        with the terms and conditions set forth in each Supplemental Confirmation
        (in
        respect of each relevant Transaction), shall govern each such
        Transaction.

       

       

      General
        Terms:

       

      
        	 	
                Trade
                  Date:

              	
                For
                  each Transaction, as set forth in the Supplemental
                  Confirmation.

              

      

       

      
        	 	
                Seller:

              	
                Counterparty

              

      

       

      
        	 	
                Buyer:

              	
                GS&Co.

              

      

       

      
        	 	
                Shares:

              	
                Common
                  Stock of Counterparty (Ticker: PCG)

              

      

       

      
        	 	
                Number
                  of Shares:

              	
                For
                  each Transaction, as set forth in the Supplemental
                  Confirmation.

              

      

       

      
        	 	
                Forward
                  Price:

              	
                For
                  each Transaction, as set forth in the Supplemental
                  Confirmation.

              

      

       

      
        	 	
                Prepayment:

              	
                Not
                  Applicable

              

      

       

      
        	 	
                Variable
                  Obligation:

              	
                Not
                  Applicable

              

      

       

      
        	 	
                Exchange:

              	
                New
                  York Stock Exchange

              

      

       

      
        	 	
                Related
                  Exchange(s):

              	
                All
                  Exchanges

              

      

       

      
        	 	
                Market
                  Disruption Event:

              	
                The
                  definition of “Market Disruption Event” in Section 6.3(a) of the Equity
                  Definitions is hereby amended by inserting the words “at any time on any
                  Scheduled Trading Day during the Valuation Period or” after the word
                  “material,” in the third line
                  thereof.

              

      

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

      Valuation:

       

      
        	 	
                Valuation
                  Period:

              	
                Each
                  Scheduled Trading Day during the period commencing on and including
                  the
                  Valuation Period Start Date to and including the Valuation Date
                  (but
                  excluding any day(s) on which the Valuation Period is suspended
                  in
                  accordance with Section 5 herein and including any day(s) by which
                  the
                  Valuation Period is extended pursuant to the provision
                  below).

              

      

       

      
        	 	 	
                Notwithstanding
                  anything to the contrary in the Equity Definitions, to the extent
                  that any
                  Scheduled Trading Day in the Valuation Period is a Disrupted Day,
                  the
                  Valuation Date shall be postponed and the Calculation Agent in
                  its sole
                  discretion shall extend the Valuation Period and make adjustments
                  to the
                  weighting of each Relevant Price for purposes of determining the
                  Settlement Price, with such adjustments based on, among other factors,
                  the
                  duration of any Market Disruption Event and the volume, historical
                  trading
                  patterns and price of the Shares. To the extent that there are
                  9
                  consecutive Disrupted Days during the Valuation Period, then
                  notwithstanding the occurrence of a Disrupted Day, the Calculation
                  Agent
                  shall have the option in its sole discretion to either determine
                  the
                  Relevant Price using its good faith estimate of the value for the
                  Share on
                  such 9th
                  consecutive Disrupted Day or elect to further extend the Valuation
                  Period
                  as it deems necessary or
                  appropriate.

              

      

       

      
        	 	
                Valuation
                  Period Start Date:

              	
                For
                  each Transaction, as set forth in the Supplemental
                  Confirmation.

              

      

       

      
        	 	
                Valuation
                  Date:

              	
                For
                  each Transaction, as set forth in the Supplemental Confirmation
                  (as the
                  same may be postponed in accordance with the provisions of “Valuation
                  Period” and Section 5 herein).

              

      

       

      Settlement
        Terms:

       

      
        	 	
                Settlement
                  Currency:

              	
                USD
                  (all amounts shall be converted to the Settlement Currency in good
                  faith
                  and in a commercially reasonable manner by the Calculation
                  Agent).

              

      

       

      
        	 	
                Settlement
                  Method Election:

              	
                Applicable;
                  provided that Section 7.1 of the Equity Definitions is hereby amended
                  by deleting the word “Physical”
                  in the sixth line thereof and replacing it with the words “Net
                  Share”
                  and deleting the word “Physical” in the last line thereof and replacing it
                  with the word “Cash”.

              

      

       

      
        	 	
                Electing
                  Party:

              	
                Counterparty

              

      

       

      
        	 	
                Settlement
                  Method Election Date:

              	
                10
                  Scheduled Trading Days prior to the originally scheduled Valuation
                  Date.

              

      

       

      
        	 	
                Default
                  Settlement Method:

              	
                Cash
                  Settlement

              

      

       

      
        	 	
                Forward
                  Cash Settlement Amount:

              	
                An
                  amount in the Settlement Currency equal to the product of (a) the
                  Number of Shares multiplied by (b) an amount equal to (i) the Settlement
                  Price minus (ii) the Forward Price.

              

      

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

      
        	 	
                Settlement
                  Price:

              	
                The
                  arithmetic mean of the Relevant Prices of the Shares for each Exchange
                  Business Day in the Valuation
                  Period.

              

      

       

      
        	 	
                Relevant
                  Price:

              	
                The
                  New York 10b-18 Volume Weighted Average Price per share of the
                  Shares for
                  the regular trading session (including any extensions thereof)
                  of the
                  Exchange on the related Exchange Business Day (without regard to
                  pre-open
                  or after hours trading outside of such regular trading session)
                  as
                  published by Bloomberg at 4:15 p.m. New York time on such date.
                  

              

      

       

      
        	 	
                Cash
                  Settlement Payment Date:

              	
                3
                  Currency Business Days after the Valuation
                  Date.

              

      

       

      Counterparty’s
        Contact Details

      
        	 	
                for
                  Purpose of Giving Notice:

              	
                Nicholas
                  Bijur

              

      

      
        	 	 	
                Assistant
                  Treasurer

              

      

      
        	 	 	
                PG&E
                  Corporation

              

      

      
        	 	 	
                One
                  Market Street, Spear Tower

              

      

      
        	 	 	
                Suite
                  2400

              

      

      
        	 	 	
                San
                  Francisco, CA 94105

              

      

      
        	 	 	
                Telephone
                  No.: (415) 817-8199

              

      

      
        	 	 	
                Facsimile
                  No.: (415) 267-7265

              

      

      

      
        	 	 	
                With
                  a copy to:

              

      

      
        	 	 	
                Gary
                  Encinas

              

      

      
        	 	 	
                Chief
                  Counsel-Corporate

              

      

      
        	 	 	
                PG&E
                  Corporation

              

      

      
        	 	 	
                One
                  Market Street, Spear Tower

              

      

      
        	 	 	
                Suite
                  2400

              

      

      
        	 	 	
                San
                  Francisco, CA 94105

              

      

      
        	 	 	
                Telephone
                  No.: (415) 817-8201

              

      

      
        	 	 	
                Facsimile
                  No.: (415) 817-8225

              

      

      

      GS&Co.’s
        Contact Details for

      Purpose
        of Giving Notice: Telephone
        No.:      (212)
        902-8996

      Facsimile
        No.: (212)
        902-0112

      
        	 	 	
                Attention:
                  Equity Operations: Options and
                  Derivatives

              

      

      

      
        	 	 	
                With
                  a copy to:

              

      

      
        	 	 	
                Kelly
                  Coffey

              

      

      
        	 	 	
                Equity
                  Capital Markets

              

      

      
        	 	 	
                One
                  New York Plaza

              

      

      
        	 	 	
                New
                  York, NY 10004

              

      

      Telephone
        No.: (212)
        902-1037

      Facsimile
        No.: (212)
        346-2126

       

      Net
        Share
        Settlement:

       

      
        	 	
                Net
                  Share Settlement Procedures:

              	
                Net
                  Share Settlement shall be made in accordance with the procedures
                  attached
                  hereto as Annex B.

              

      

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

      
        	 	
                Net
                  Share Settlement Price:

              	
                The
                  Net Share Settlement Price shall be the price per Share as of the
                  Valuation Time on the Net Share Valuation Date as reported in the
                  official
                  real-time price dissemination mechanism for the
                  Exchange. In the event Counterparty owes GS&Co. any amount,
                  the
                  Net Share Settlement Price shall be reduced by the per Share amount
                  of the
                  underwriting discount and/or commissions agreed to pursuant to
                  the
                  registration
                  agreement contemplated by Annex B.

              

      

       

      
        	 	
                Valuation
                  Time:

              	
                As
                  provided in Section 6.1 of the Equity Definitions; provided that
                  Section
                  6.1 of the Equity Definitions is hereby amended by inserting the
                  words
                  “Net Share,” before
                  the words “Valuation Date” in the first and third lines
                  thereof.

              

      

       

      
        	 	
                Net
                  Share Valuation Date:

              	
                The
                  Exchange Business Day immediately following the Valuation
                  Date.

              

      

       

      
        	 	
                Net
                  Share Settlement Date:

              	
                The
                  third Exchange Business Day immediately following the Valuation
                  Date.

              

      

       

      
        	 	
                Reserved
                  Shares:

              	
                For
                  each Transaction, as set forth in the Supplemental
                  Confirmation.

              

      

       

      Fixed,
        Floating and Counterparty 

      Additional
        Payment Amounts Payable:

       

      Floating
        Amount Payable by GS&Co.:

       

      
        	 	
                Floating
                  Amount Payment Date:

              	
                The
                  Cash Settlement Payment Date

              

      

       

      
        	 	
                Floating
                  Amount:

              	
                For
                  each Transaction, an amount equal to the sum of the applicable
                  Federal
                  Funds Rate multiplied by (i) the Daily Notional Amount multiplied
                  by (ii)
                  1/360 for each day from and including the Floating Amount Accrual
                  Date to
                  and including the Valuation Date.

              

      

       

      
        	 	
                Floating
                  Amount Accrual Date:

              	
                Trade
                  Date

              

      

       

      
        	 	
                Federal
                  Funds Rate:

              	
                For
                  any date of determination, the “Fed Funds Open Rate,” which shall be the
                  interest rate reported on Bloomberg under the symbol “FEDSOPEN
                  <index>” on such date. For the avoidance of doubt, for any day which
                  is not a Currency Business Day the “Federal Funds Open Rate” for the
                  immediately preceding Currency Business Day shall
                  apply.

              

      

       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

      
        	 	
                Daily
                  Notional Amount:

              	
                Commencing
                  with the Floating Amount Accrual Date, for any date of determination,
                  the
                  Daily Notional Amount shall be an amount equal to the product of
                  the
                  Initial Notional Amount (as set forth in the Supplemental Confirmation)
                  multiplied by a fraction with a numerator equal to the Originally
                  Scheduled Number of Scheduled Trading Days in the Valuation Period
                  minus
                  the number of Exchange Business Days in the Valuation Period that
                  have
                  elapsed (other than any days during which the Valuation Period
                  is
                  suspended pursuant to Section 5 herein) as of such date of determination
                  and a denominator equal to the Originally Scheduled Number of Scheduled
                  Trading Days in the Valuation Period (such fraction, the “Remaining
                  Percentage”). 

              

      

       

      
        	 	 	
                To
                  the extent that the Valuation Period is extended pursuant to the
                  terms of
                  this Master Confirmation, the Calculation Agent shall adjust the
                  Daily
                  Notional Amount commencing with the first Exchange Business Day
                  after such
                  extension (the “Valuation Period Extension Date”). The notional amount
                  deemed to be remaining at the end of the Exchange Business Day
                  before the
                  Valuation Period Extension Date (the “Remaining Notional Value”) shall be
                  the Initial Notional Value multiplied by the Remaining Percentage
                  at the
                  end of such day. Commencing with the Valuation Period Extension
                  Date, for
                  any date of determination, the Daily Notional Amount shall be equal
                  to the
                  product of the Remaining Notional Value multiplied by a fraction
                  with (a)
                  a numerator equal to (i) the number of Scheduled Trading Days remaining
                  from and including the Valuation Period Extension Date to the Valuation
                  Date after extension (the “Remaining Scheduled Trading Days”) minus (ii)
                  the number of Exchange Business Days in the Valuation Period after
                  extension from and including the Valuation Period Extension Date
                  that have
                  elapsed (other than any days during which the Valuation Period
                  after
                  extension is suspended pursuant to Section 5 herein) as of such
                  date of
                  determination and (b) a denominator equal to the Remaining Scheduled
                  Trading Days.

              

      

       

      Fixed
        Amount Payable by Counterparty:

       

      
        	 	
                Fixed
                  Amount Payment Date:

              	
                The
                  Cash Settlement Payment Date

              

      

       

      
        	 	
                Fixed
                  Amount:

              	
                For
                  each Transaction, an amount equal to the sum
                  of
                  (I)
                  the applicable Daily Additional Spread multiplied by (i) the Daily
                  Notional Amount multiplied by (ii) 1/360
                  for each day from and including the Floating Amount Accrual Date
                  to and
                  including the Valuation Date
                  plus (II)
                  the applicable Fixed Rate
                  multiplied by (i)  the
                  Notional Amount multiplied by (ii) 1/360
                  for each day from and including the Floating Amount Accrual Date
                  to and
                  including the Valuation Date.

              

      

       

      
        	 	
                Fixed
                  Rate:

              	
                For
                  each Transaction, as set forth in the Supplemental
                  Confirmation.

              

      

       

      
        	 	
                Daily
                  Additional Spread:

              	
                The
                  Daily Additional Spread shall be 25
                  basis points.

              

      

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

      
        	 	
                Notional
                  Amount:

              	
                For
                  any date of determination, 105% of the Daily Notional
                  Amount.

              

      

       

      Counterparty
        Additional Amount 

      Payable
        by Company:

       

      
        	 	
                Counterparty
                  Additional

              	
                For
                  each Transaction, as set forth in the
                  Supplemental

              

      

      
        	 	
                Payment
                  Amount:

              	
                Confirmation.
                  

              

      

       

      Counterparty
        Additional 

      
        	 	
                Payment
                  Date:

              	
                The
                  Cash Settlement Payment Date.

              

      

       

      Settlement
        Terms for Fixed Amount, Floating 

      Amount
        and Counterparty Additional 

      Payment
        Amount:

       

      
        	 	
                Settlement
                  Currency:

              	
                USD
                  (all amounts shall be converted to the Settlement Currency in good
                  faith
                  and in a commercially reasonable manner by the Calculation
                  Agent).

              

      

       

      
        	 	
                Settlement
                  Method Election:

              	
                Applicable;
                  provided that Section 7.1 of the Equity Definitions is hereby amended
                  by deleting the word “Physical” in the sixth line thereof and replacing it
                  with the words “Net Share” and deleting the word “Physical” in the last
                  line thereof and replacing it with the word
                  “Cash”.

              

      

       

      
        	 	
                Electing
                  Party:

              	
                Counterparty

              

      

       

      
        	 	
                Settlement
                  Method Election Date:

              	
                10
                  Scheduled Trading Days prior to the originally scheduled Valuation
                  Date.

              

      

       

      
        	 	
                Default
                  Settlement Method:

              	
                Cash
                  Settlement

              

      

       

      Share
        Adjustments:

       

      
        	 	
                Method
                  of Adjustment:

              	
                Calculation
                  Agent Adjustment

              

      

       

      Extraordinary
        Events:

       

      
        	
                Consequences
                  of Merger Events:

              	
                Subject
                  to Section 7(b) of the Master
                  Confirmation:

              

      

       

      
        	 	
                (a)

              	
                Share-for-Share:

              	
                Modified
                  Calculation Agent Adjustment

              

      

       

      
        	 	
                (b)

              	
                Share-for-Other:

              	
                Cancellation
                  and Payment on that portion of the Other Consideration that consists
                  of
                  cash; Modified Calculation Agent Adjustment on the remainder of
                  the Other
                  Consideration.

              

      

       

      
        	 	
                (c)

              	
                Share-for-Combined:

              	
                Component
                  Adjustment

              

      

       

      
        	 	
                Determining
                  Party:

              	
                GS&Co.

              

      

       

      
        	
                Tender
                  Offer:

              	
                Applicable

              

      

       

      
        	
                Consequences
                  of Tender Offers:

              	
                Subject
                  to Section 7(b) of the Master
                  Confirmation:

              

      

       

      
        	 	
                (a)

              	
                Share-for-Share:

              	
                Modified
                  Calculation Agent Adjustment

              

      

       

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

      
        	 	
                (b)

              	
                Share-for-Other:

              	
                Cancellation
                  and Payment on that portion of the Other Consideration that consists
                  of
                  cash; Modified Calculation Agent Adjustment on the remainder of
                  the Other
                  Consideration.

              

      

       

      
        	 	
                (c)

              	
                Share-for-Combined:

              	
                Component
                  Adjustment

              

      

       

      Determining
        Party: GS&Co.

       

      
        	
                Nationalization,
                  Insolvency or Delisting:

              	
                Subject
                  to Section 7(a) of this Master Confirmation, Negotiated Close-out;
                  provided that in addition to the provisions of Section 12.6(a)(iii)
                  of the
                  Equity Definitions, it shall also constitute a Delisting if the
                  Exchange
                  is located in the United States and the Shares are not immediately
                  re-listed, re-traded or re-quoted on any of the New York Stock
                  Exchange,
                  the American Stock Exchange or The NASDAQ National Market (or their
                  respective successors); if the Shares are immediately re-listed,
                  re-traded
                  or re-quoted on any such exchange or quotation system, such exchange
                  or
                  quotation system shall be deemed to be the
                  Exchange.

              

      

       

      Additional
        Disruption Events:

       

      (a)     Change
        in
        Law:           Applicable;
        provided that Section 12.9(a)(ii)(Y) of the Equity Definitions is hereby
        deleted.

       

      (b)     Failure
        to Deliver:          Not
        Applicable

       

      (c)     Insolvency
        Filing:          Applicable

       

      (d)     Loss
        of
        Stock Borrow:      Applicable;
        provided that Loss of
        Stock Borrow shall not constitute an Additional Disruption Event so long
        as
        Counterparty agrees to pay the Hedging Party the amount by which the stock
        loan
        rate necessary to maintain a borrowing of Shares by GS&Co. (“Hedge
        Position”) in connection with the Transaction exceeds the Maximum Stock Loan
        Rate.

       

                         
        Maximum
        Stock Loan Rate:    30
        basis
        points

       

      (e)            
         Hedging
        Disruption:        Not
        Applicable

       

      (f)  Increased
        Cost of Hedging:    Not
        Applicable

       

      (g)     Increased
        Cost of Stock Borrow:    Not
        Applicable

       

      Hedging
        Party:                GS&Co.

       

      
        	 	
                Determining
                  Party:

              	
                GS&Co.

              

      

       

      Non-Reliance:                    
Applicable

       

      Agreements
        and Acknowledgements

      Regarding
        Hedging Activities:   
Applicable

      

       

      
        	
                Additional
                  Acknowledgements:

              	
                Applicable

              

      

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

      Net
        Share
        Settlement following 

      
        	
                Extraordinary
                  Event:

              	
                Counterparty
                  shall have the right, in its sole discretion, to elect that any
                  payment
                  required to be made pursuant to Sections 12.7 or 12.9 of the Equity
                  Definitions (except with respect to any portion of the consideration
                  for
                  the Shares consisting of cash in the event of a Merger Event or
                  Tender
                  Offer) following the occurrence of an Extraordinary Event by Net
                  Share
                  Settlement of the Transactions under this Master Confirmation in
                  accordance with the terms, and subject to the conditions, for Net
                  Share
                  Settlement herein by giving written notice to GS&Co. of such election
                  on the day that the notice fixing the date that the Transactions
                  are
                  terminated or cancelled, as the case may be (the “Cancellation Date”),
                  pursuant to the applicable provisions of Section 12 of the Equity
                  Definitions is effective. If Counterparty elects Net Share Settlement:
                  (a) the Net Share Valuation Date shall be the date specified in the
                  notice fixing the date that the Transactions are terminated or
                  cancelled,
                  as the case may be; provided that the Net Share Valuation Date
                  shall be
                  either the Exchange Business Day that such notice is effective
                  or the
                  first Exchange Business Day immediately following the Exchange
                  Business
                  Day that such notice is effective, (b) the Net Share Settlement
                  Date shall
                  be deemed to be the Exchange Business Day immediately following
                  the
                  Cancellation Date and (c) all references to the Forward Cash Settlement
                  Amount,
                  the Fixed Amount, the Floating Rate Amount and the Counterparty
                  Additional
                  Payment Amount, as the case may be, in Annex B hereto shall be
                  deemed to
                  be references to the Cancellation Amount. The
                  definition of “Cancellation Amount” in Section 12.8 of the Equity
                  Definitions is hereby amended by inserting the following paragraph:
“(h)
                  The Determining Party shall show the other party in reasonable
                  detail its
                  calculation of the Cancellation Amount, including without limitation
                  providing all relevant quotations and assumptions and specifying
                  the
                  methodologies used in sufficient detail so as to enable the other
                  party to
                  replicate the calculation”.

              

      

       

      
        	
                Net
                  Share Settlement Upon
                  Early Termination:

              	
                Counterparty
                  shall have the right, in its sole discretion, to elect that any
                  payment
                  required to be made (the “Early Termination Amount”) pursuant to
                  Sections 6(d) and 6(e) of the Agreement following the occurrence of
                  an Early Termination Date in respect of the Agreement by Net Share
                  Settlement of all the Transactions under this Master Confirmation
                  in
                  accordance with the terms, and subject to the conditions, for Net
                  Share
                  Settlement herein by giving written notice to GS&Co. of such election
                  on the day that the notice fixing an Early Termination Date is
                  effective.
                  If Counterparty elects Net Share Settlement: (a) the Net Share
                  Valuation Date shall be the date specified in the notice fixing
                  an Early
                  Termination Date; provided that the Net Share Valuation Date shall
                  be
                  either the Exchange Business Day that such notice is effective
                  or the
                  first Exchange Business Day immediately following the Exchange
                  Business
                  Day that such notice is effective, (b) the Net Share Settlement
                  Date shall
                  be deemed to be the Exchange Business Day immediately following
                  the Early
                  Termination Date (except
                  for an Early Termination as a result of Section 7(d), in which
                  event the
                  Net Share Settlement Date shall be deemed to be the tenth Exchange
                  Business Day following the Early Termination Date) and
                  (c) all references to Forward Cash Settlement Amount,
                  the Fixed
                  Amount, the Floating Rate Amount and the Counterparty Additional
                  Payment
                  Amount, as the case may be, in Annex B hereto shall be deemed references
                  to the Early Termination Amount. 

              

      

       

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

      
        	
                Transfer:

              	
                Notwithstanding
                  anything to the contrary in the Agreement, GS&Co. may assign, transfer
                  and set over all rights, title and interest, powers, privileges
                  and
                  remedies of GS&Co. under any Transaction, in whole or in part, to an
                  affiliate of GS&Co. that is fully and unconditionally guaranteed by
                  The Goldman Sachs Group, Inc. without the consent of Counterparty,
                  provided that Counterparty is not required to make a payment to
                  GS&Co.
                  in respect of an Indemnifiable Tax as a result of such
                  transfer.

              

      

       

      
        	
                GS&Co.
                  Payment Instructions:

              	
                Chase
                  Manhattan Bank New York

              

      

                                      For
        A/C Goldman,
        Sachs & Co.

                                      A/C
        #
        930-1-011483

                                      ABA:
        021-000021

       

      
        	
                Counterparty
                  Payment Instructions:

              	
                PG&E
                  Corporation Master Account No.
                  099023

              

      

      
        	 	
                Mellon
                  Trust of New England, N.A.

              

      

      
        	 	
                Boston,
                  MA 

              

      

      
        	 	
                ABA
                  Routing No: 011001234

              

      

       

      2.  Calculation
        Agent:
        GS&Co.

       

       

      3.  Representations,
        Warranties and Covenants of GS&Co. and Counterparty.
        

       

       

      (a)  Each
        party represents and warrants that it (i) is an “eligible contract participant”,
        as defined in the U.S. Commodity Exchange Act, as amended and (ii) is entering
        into each Transaction hereunder as principal (and not as agent or in any
        other
        capacity, fiduciary or otherwise) and not for the benefit of any third
        party.

       

      (b)  Each
        party acknowledges that the offer and sale of each Share
        Forward Transaction
        to it is intended to be exempt from registration under the Securities Act
        of
        1933, as amended (the “Securities Act”), by virtue of Section 4(2) thereof and
        the provisions of Regulation D promulgated thereunder (“Regulation D”); and this
        acknowledgement shall not be deemed to extend to Settlement Shares or Early
        Settlement Shares. Accordingly, each party represents and warrants to the
        other
        that (i) it has the financial ability to bear the economic risk of its
        investment in each Share
        Forward Transaction
        and is able to bear a total loss of its investment, (ii) it is an
“accredited investor” as that term is defined under Regulation D, (iii) it will
        purchase each Share
        Forward Transaction
        for investment and not with a view to the distribution or resale thereof,
        and
        (iv) the disposition of each
        Share
        Forward
        Transaction is restricted under this Master Confirmation and each Supplemental
        Confirmation, the Securities Act and state securities laws.

       

      4.  Additional
        Representations, Warranties and Covenants of Counterparty.

       

       

      As
        of the
        date hereof and the date of each Supplemental Confirmation, Counterparty
        represents, warrants and covenants to GS&Co. that:

       

       

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

      (a)  the
        purchase or writing of each Transaction will not violate Rule 13e-1 or
        Rule 13e-4 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”);

       

      (b)  it
        is not
        entering into any Transaction on the basis of, and is not aware of, any material
        non-public information with respect to the Shares or in anticipation of,
        in
        connection with, or to facilitate, a distribution of its securities, a self
        tender offer or a third-party tender offer;

       

      (c)  it
        is not
        entering into any Transaction to create, and will not engage in any other
        securities or derivative transaction to create, a false or misleading appearance
        of active trading or market activity in the Shares (or any security convertible
        into or exchangeable for the Shares), or which would otherwise violate the
        Exchange Act;

       

      (d)  Counterparty
        is in compliance with its reporting obligations under the Exchange Act and
        its
        most recent Annual Report on Form 10-K, together with all reports subsequently
        filed by it pursuant to the Exchange Act, taken together and as amended and
        supplemented to the date of this representation, do not, as of their respective
        filing dates, contain any untrue statement of a material fact or omit any
        material fact required to be stated therein or necessary to make the statements
        therein, in the light of the circumstances in which they were made, not
        misleading;

       

      (e)  each
        Transaction is being entered into pursuant to a publicly disclosed Share
        buy-back program and its Board of Directors has approved the use of the
        Transaction to effect the Share buy-back program;

       

      (f)  notwithstanding
        the generality of Section 13.1 of the Equity Definitions, GS&Co. is not
        making any representations or warranties with respect to the treatment of
        any
        Transaction under FASB Statements 149 or 150, EITF 00-19 (or any successor
        issue
        statements) or under FASB’s Liabilities & Equity Project; 

       

      (g)  it
        has
        not, and during any Valuation Period (as extended pursuant to the provisions
        of
        Section  5
        and
“Valuation Period” herein) it will not, enter into agreements similar to the
        Transactions described herein except
        with GS&Co. or an entity affiliated with GS&Co. where
        the
        valuation period in such other transaction will overlap at any time (including
        as a result of extensions in such valuation period as provided in the relevant
        agreements) with any Valuation Period (as extended pursuant to the provisions
        of
        Section 5 and “Valuation Period” herein) under this Master Confirmation. In the
        event that the valuation period in any other similar transaction with
        an
        entity other than GS&Co. or an entity affiliated with GS&Co.
overlaps
        with any Valuation Period under this Master Confirmation as a result of any
        extension made pursuant to the provisions of Section 5 and “Valuation Period”
herein, Counterparty shall promptly amend such transaction to avoid any such
        overlap;
        and

       

      (h)  it
        shall
        report each Transaction as required under the
        Exchange Act
        and the
        regulations promulgated thereunder.

       

      5.  Suspension
        of Valuation Period; Extension of Valuation Period.
        

       

       

      (a)  If
        Counterparty concludes that it will be engaged in a distribution of the Shares
        for purposes of Regulation M promulgated under the Exchange Act (“Regulation
        M”), Counterparty agrees that it will, on one Scheduled Trading Day’s written
        notice, direct GS&Co. not to purchase Shares in connection with hedging any
        Transaction during the “restricted period” (as defined in Regulation M). If on
        any Scheduled Trading Day Counterparty delivers written notice (and confirms
        by
        telephone) by 8:30 a.m. New York Time (the “Notification Time”), then such
        notice shall be effective to suspend the Valuation Period as of such
        Notification Time. In the event that Counterparty delivers notice and/or
        confirms by telephone after the Notification Time, then the Valuation Period
        shall be suspended effective as of 8:30 a.m. New York Time on the following
        Scheduled Trading Day or as otherwise required by law or agreed between
        Counterparty and GS&Co. The Valuation Period shall be suspended and the
        Valuation Date extended for each Scheduled Trading Day in such restricted
        period.

       

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

      (b)  In
        the
        event that GS&Co. concludes, in its reasonable discretion, that it is
        appropriate with respect to any legal, regulatory or self-regulatory
        requirements or related policies and procedures (whether or not such
        requirements, policies or procedures are imposed by law or have been voluntarily
        adopted by GS&Co.) for it to refrain from purchasing Shares on any Scheduled
        Trading Day during the Valuation Period, GS&Co. may by written notice to
        Counterparty elect to suspend the Valuation Period for such number of Scheduled
        Trading Days as is specified in the notice. The notice shall not specify,
        and
        GS&Co. shall not otherwise communicate to Counterparty, the reason for
        GS&Co.’s election to suspend the Valuation Period. The Valuation Period
        shall be suspended and the Valuation Date extended for each Scheduled Trading
        Day occurring during any such suspension.

       

      (c)  In
        the
        event that the Valuation Period is suspended pursuant to Sections 5(a) or
        (b)
        above during the regular trading session on the Exchange
        then the
        Calculation Agent in its sole discretion shall, in calculating the Forward
        Cash
        Settlement Amount, extend the Valuation Period and make adjustments to the
        weighting of each Relevant Price for purposes of determining the Settlement
        Price, with such adjustments based on, among other factors, the duration
        of any
        such suspension and the volume, historical trading patterns and price of
        the
        Shares.

       

      (d)  On
        the
        first Exchange Business Day of each calendar week during the Valuation Period,
        to the extent that the Number of Daily Reference Shares exceeds 25% of the
        ADTV
        (as defined in Rule 10b-18 under the Exchange Act (“Rule 10b-18”)) for the
        Shares on such day, the Calculation Agent will (i) adjust the Number of Daily
        Reference Shares to equal an amount equal to 15% of ADTV for the Shares
        determined and effective on such Exchange Business Day and (ii) deem the
        remaining Scheduled Trading Days in the Valuation Period to be equal to the
        Remaining Number of Shares divided by the Number of Daily Reference Shares
        (after giving effect to any adjustments pursuant to (i) above), rounded up
        to
        the nearest whole number. 

      

      “Number
        of Daily Reference Shares” means, for each Transaction, initially the Initial
        Number of Daily Reference Shares (as set forth in the Supplemental Confirmation)
        and thereafter as may be adjusted in accordance with this Section 5(d); provided
        that on the first Exchange Business Day of the fifth
        calendar
        week following any such adjustment the Number of Daily Reference Shares shall
        equal the lesser of (i) the Initial Number of Daily Reference Shares and
        (ii)
        15% of the ADTV of the Shares determined on such Exchange Business Day.

      

      “Remaining
        Number of Shares” means, for each Transaction and as of any date of
        determination, a number of Shares equal to (i) the Number of Shares minus
        (ii)
        the sum of, for each Exchange Business Day in the Valuation Period up to
        and
        including such date, the Number of Shares divided by the total number of
        Exchange Business Days in the Valuation Period (the “Daily Amount”). The Daily
        Amount will be deemed to be zero for each day on which the Valuation Period
        is
        suspended in accordance with Sections 5(a) and (b) hereof. In the event that
        the
        Valuation Period is extended pursuant to the terms of this Master Confirmation,
        the Calculation Agent may make corresponding adjustments to the amount of
        the
        Remaining Number of Shares.

       

      6.  Counterparty
        Purchases.
        Counterparty represents, warrants and covenants to GS&Co. that for each
        Transaction:

       

       

      (a)  Counterparty
        (or any “affiliated purchaser” as defined in Rule 10b-18) shall not, purchase
        any Shares, listed contracts on the Shares or securities that are convertible
        into, or exchangeable or exercisable for Shares (including, without limitation,
        any Rule 10b-18 purchases of blocks (as defined in Rule 10b-18)) during any
        Valuation Period (as extended pursuant to the provisions of Section 5 and
        “Valuation Period” herein) except for purchases through GS&Co. or an entity
        affiliated with GS&Co., or if not through GS&Co., with the prior written
        consent of GS&Co., and in compliance with Rule 10b-18 or otherwise in a
        manner that Counterparty and GS&Co. believe is in compliance with applicable
        requirements and except for purchases in connection with management compensation
        plans or other employee benefit arrangements and except for purchases of
        Counterparty’s 9.50% Convertible Subordinated Notes due 2010, provided such
        purchases are made in compliance with any applicable legal regulatory or
        self-regulatory requirements or related policies and procedures (whether
        such
        requirements, policies or procedures are imposed by law or have been voluntarily
        adopted by GS&Co. for uniform application to all such purchases). Any such
        purchase by Counterparty shall be disregarded for purposes of determining
        the
        Forward Cash Settlement Amount. To the extent that Counterparty makes any
        such
        purchase other than through GS&Co., or other than in connection with any
        Transaction, Counterparty hereby represents and warrants to GS&Co. that (a)
        it will not take other action that would or could cause GS&Co.’s purchases
        of the Shares during the Valuation Period not to comply with Rule 10b-18
        and (b)
        any such purchases will not otherwise constitute a violation of Section 9(a)
        or
        Rule 10(b) of the Exchange Act. This subparagraph (a) shall not restrict
        any
        purchases by Counterparty of Shares effected during any suspension of any
        Valuation Period in accordance with Section 5 herein and any purchases
        during such suspension shall be disregarded in calculating the Forward Cash
        Settlement Amount; and for the avoidance of doubt, this subparagraph (a)
        shall not restrict any holders of outstanding securities of Counterparty
        from
        exercising or converting such securities to Shares; and

       

      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

      

      (b)  Counterparty
        is entering into this Master Confirmation and each Transaction hereunder
        in good
        faith and not as part of a plan or scheme to evade the prohibitions of Rule
        10b5-1 under the Exchange Act (“Rule 10b5-1”). It is the intent of the parties
        that each Transaction entered into under this Master Confirmation comply
        with
        the requirements of Rule 10b5-1(c)(1)(i)(A) and (B) and each Transaction
        entered
        into under this Master Confirmation shall be interpreted to comply with the
        requirements of Rule 10b5-1(c). Counterparty will not seek to control or
        influence GS&Co. to make "purchases or sales" (within the meaning of Rule
        10b5-1(c)(1)(i)(B)(3)) under any Transaction entered into under this Master
        Confirmation, including, without limitation, GS&Co.’s decision to enter into
        any hedging transactions. Counterparty represents and warrants that it has
        consulted with its own advisors as to the legal aspects of its adoption and
        implementation of this Master Confirmation and each Supplemental Confirmation
        under Rule 10b5-1.

      

       

      7.  Additional
        Termination Events.
        Additional Termination Events will apply
        under
        Section 5(b)(v) of the Agreement. The following will constitute Additional
        Termination Events, in each case with Counterparty as the sole Affected
        Party:

       

      (a) Notwithstanding
        anything to the contrary in the Equity Definitions, the occurrence of a
        Nationalization, Insolvency or a Delisting (in each case effective on the
        Announcement Date as determined by the Calculation Agent); 

       

      (b) Notwithstanding
        anything to the contrary in the Equity Definitions, the occurrence of a Merger
        Event (effective on the Merger Date) or a Tender Offer (effective on the
        Tender
        Offer Date) in respect of which any Other Consideration received for the
        Shares
        does not consist of cash. For
        the
        avoidance of doubt, in
        the
        event that any portion of the consideration received for the Shares consists
        of
        cash or New Shares, this Additional Termination Event shall only apply with
        respect to all or any Transaction(s) (or portions thereof) remaining after
        giving effect to the provisions in “Consequences of Merger Events” or
“Consequences of Tender Offers”, as the case may be, above; 

       

      (c) [reserved];
        or

       

      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      

      (d) Notwithstanding
        anything to the contrary in the Equity Definitions, one
        day
        prior to the ex-dividend date in respect of any
        Extraordinary Dividend
        (as
        specified in the Supplemental Confirmation) by the Issuer; provided
        that in
        the
event
        that
        GS&Co. and Counterparty enter into a mutually acceptable new transaction
        (using
        their good faith and commercially reasonable efforts) on
        or
        prior to one
        day
        prior to the ex-dividend date in respect of the Extraordinary Dividend, the
        amounts determined pursuant to Section 6(e) of the Agreement or otherwise
        to be
        owed by Counterparty and GS&Co. with respect to the Affected Transaction(s)
        shall be deemed
        to
        be only the amounts that would otherwise be owed hereunder in respect of
        the
        Forward Cash Settlement Amount (the “Termination Forward Settlement Amount”),
        the Floating Amount (the “Termination Floating Amount”), the Fixed Amount (the
“Termination Fixed Amount”) and the Counterparty Additional Payment Amount if
        the Early Termination Date were the Cash Settlement Payment Date, and shall
        be
        payable in cash or (in the case of Counterparty) by Net Share Settlement
        or a
        combination of the two. In
        the
        event that an Early Termination Date would otherwise occur pursuant to this
        clause 7(d) while Counterparty is in possession of, or is aware of, material,
        non-public information, the Early Termination Date shall not be deemed to
        occur
        until the day after the day on which Counterparty is not in possession of,
        and
        is not aware of, material non-public information
        so long
        as, if, at Counterparty’s option, on or prior to one day prior to the
        ex-dividend date for such Extraordinary Dividend, Counterparty agrees to
        pay
        GS&Co. no later than the earlier of the entry into the new transaction or
        the dividend payment date for such Extraordinary Dividend, a fixed amount
        in
        cash or by Net Share Settlement or a combination of the two, that shall be
        determined in good faith by GS&Co. as having a value equal to (i) the amount
        per share of such Extraordinary Dividend multiplied by (ii) the actual number
        of
        Shares that will remain borrowed by GS&Co. in connection with any Hedge
        Positions related to the Transaction
        as of
        such ex-dividend date. If Counterparty does not so agree on or prior to one
        day
        prior to the ex-dividend date for such Extraordinary Dividend, the Early
        Termination Date shall occur at the close of business on the Exchange Business
        Day that is one day prior to the ex-dividend date. For purposes of this Section
        7(d): the Termination Forward Settlement Amount shall mean an amount in
        Settlement Currency equal to the product of (a) the Termination Trading Days
        multiplied by the Initial Number of Daily Reference Shares multiplied by
        (b) an
        amount equal to (i) the Termination Settlement Price minus (ii) the Forward
        Price; the Termination Floating Amount shall mean an amount equal to the
        sum of
        the applicable Federal Funds Rate multiplied by (i) the Daily Notional Amount
        multiplied by (ii) 1/360 for each day from and including the Floating Amount
        Accrual Date to but excluding the Early Termination Date; and the Termination
        Fixed Amount shall mean an amount equal to the sum of (I) the applicable
        Daily
        Additional Spread multiplied by (i) the Daily Notional Amount multiplied
        by
        (ii) 1/360 for each day from and including the Floating Amount Accrual Date
        to but excluding the Early Termination Date plus (II) an amount equal to
        the
        sum
        of the
        applicable Fixed Rate
        multiplied by (i)  the
        Notional Amount multiplied by (ii) 1/360 for each day from and including
        the Floating Amount Accrual Date to but excluding the Early Termination Date.
        Also for purposes of this Section 7(d): “Termination Trading Days” shall mean
        the number of Exchange Business Days (excluding any day(s) on which the
        Valuation Period was suspended in accordance with Section 5 herein or as
        a
        result of any Scheduled Trading Day being a Disrupted Day) from and including
        the Valuation Period Start Date to and including the Early Termination Date;
        “Termination Valuation Period” shall mean the Exchange Business Days during the
        period commencing on and including the Valuation Period Start Date to and
        including the Early Termination Date (but excluding any day(s) on which the
        Valuation Period was suspended in accordance with Section 5 herein or as
        a
        result of any Scheduled Trading Day being a Disrupted Day and including any
        day(s) by which the Valuation Period was extended pursuant to the provision
        below); and the “Termination Settlement Price” shall mean the arithmetic mean of
        the Relevant Prices of the Shares for each Exchange Business Day in the
        Termination Valuation Period. 

       

       

      8.  Automatic
        Termination Provisions.
        Notwithstanding anything to the contrary in Section 6 of the
        Agreement:

       

       

      (a)  An
        Additional Termination Event with Counterparty as the sole Affected Party
        will
        automatically occur without any notice or action by GS&Co. or Counterparty
        if the price of the Shares on the Exchange at any time falls below the
        Termination Price (as specified in the related Supplemental Confirmation)
        provided that (for the avoidance of doubt only) such Additional Termination
        Event shall be an Additional Termination Event only with respect to the
        Transaction documented in such related Supplemental Confirmation. The Exchange
        Business Day that the price of the Shares on the Exchange at any time falls
        below the Termination Price will be the “Early Termination Date” for purposes of
        the Agreement.

       

      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      

      (b)  Notwithstanding
        anything to the contrary in Section 6(d) of the Agreement, following the
        occurrence of such an Additional Termination Event, GS&Co. will notify
        Counterparty of the amount owing under Section 6(e) of the Agreement within
        a
        commercially reasonable time period (with such period based upon the amount
        of
        time, determined by GS&Co. (or any of its Affiliates) in its reasonable
        discretion, that it would take to unwind any of its Hedge Position(s) related
        to
        the Transaction in a commercially reasonable manner based on relevant market
        indicia). For purposes of the “Net Share Settlement Upon Early Termination”
provisions herein, (i) the date that such notice is effective (the “Notice
        Date”) shall constitute the “Net Share Valuation Date”, (ii) the Exchange
        Business Day immediately following the Notice Date shall be the Net Share
        Settlement Date and (iii) all references to the Forward
        Cash Amount or
        the
        Fixed Amount in
        Annex
        B hereto shall be deemed to be the Early Termination Amount. For the avoidance
        of doubt, Hedge Position shall only mean any purchase, sale, entry into or
        maintenance of one or more stock borrowing transactions by GS&Co. or its
        Affiliates in respect of the Shares in connection with this Transaction and,
        notwithstanding the forgoing portions of this paragraph and Sections 6(d)
        and
        (e) of the Agreement, Counterparty shall be entitled to satisfy the Hedge
        Position by delivery of the Number of Early Settlement Shares as defined
        in and
        pursuant to the provisions of Section 10.

       

      9.  Special
        Provisions for Merger Events.
        Notwithstanding anything to the contrary herein or in the Equity Definitions,
        to
        the extent that an Announcement Date for a potential Merger Transaction occurs
        during any Valuation Period:

       

       

      (a)  Promptly
        after request from GS&Co., Counterparty shall provide GS&Co. with
        written notice specifying (i) Counterparty’s average daily Rule 10b-18 Purchases
        (as defined in Rule 10b-18) during the three full calendar months immediately
        preceding the Announcement Date that were not effected through GS&Co. or its
        affiliates and (ii) the number of Shares purchased pursuant to the proviso
        in
        Rule 10b-18(b)(4) under the Exchange Act for the three full calendar months
        preceding the Announcement Date. Such written notice shall be deemed to be
        a
        certification by Counterparty to GS&Co. that such information is true and
        correct. Counterparty understands that GS&Co. will use this information in
        calculating the trading volume for purposes of Rule 10b-18; and

       

      (b)  GS&Co.
        in its sole discretion may (i) make adjustments to the terms of any Transaction,
        including, without limitation, the Valuation Date and the Number of Shares
        to
        account for the number of Shares that could be purchased on each day during
        the
        Valuation Period in compliance with Rule 10b-18 following the Announcement
        Date
        or (ii) treat the occurrence of the Announcement Date as an Additional
        Termination Event with Counterparty as the sole Affected Party. 

       

      “Merger
        Transaction” means any merger, acquisition or similar transaction involving a
        recapitalization as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange
        Act.

       

       

      10.  Special
        Settlement Following Early Termination and Extraordinary Events.
        Notwithstanding anything to the contrary in this Master Confirmation or any
        Supplemental Confirmation hereunder, in the event that an Extraordinary Event
        under Article 12 of the Equity Definitions occurs or an Early Termination
        Date
under
        Section 6 of the Agreement occurs
        or
        is designated with respect to any Transaction (each an “Affected Transaction”),
        then either
        party may elect, by
        notice
        to the
        other
        party, to have Counterparty deliver the Number of Early Settlement Shares
        to
        GS&Co. on the date that such notice is effective
        (provided that GS&Co. determines in its good faith sole discretion that such
        delivery is in compliance with any legal, regulatory or self-regulatory
        requirements or related policies and procedures), except for a termination
        as a
        result of Section 7(d), in which event the date of delivery shall be the
        tenth
        Business Day thereafter.
        To the extent that Counterparty elects to deliver Shares to
        GS&Co.
        accompanied by an effective Registration Statement (satisfactory to GS&Co.
        in its reasonable
        discretion) covering such Early Settlement Shares, Counterparty must be in
        compliance with the conditions specified in (iii) though (ix) in Annex B
        hereto
        at the time of such delivery. If Counterparty elects to deliver Unregistered
        Shares (as defined in Annex B) to GS&Co., Counterparty and GS&Co. will
        negotiate in good faith on acceptable procedures and documentation relating
        to
        the sale of such Unregistered Shares.

       

       

      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      

      “Number
        of Early Settlement Shares” means a number of Shares based on the Hedge
        Positions of GS&Co. or any of its Affiliates with respect to each Affected
        Transaction under this Master Confirmation at the time of the Extraordinary
        Event or Early Termination Date, as applicable.

       

       

      In
        determining the amount of Loss under Section 6(e) of the Agreement or the
        Cancellation Amount under Article 12, the parties shall take into account
        the
        Floating Rate Amount that would have otherwise been due to Counterparty and
        the
        Fixed Amount that would have otherwise been due to GS&Co., and the
        difference between the New York 10b-18 Volume Weighted Average Price per
        share
        of the Shares over the Valuation Period as compared to the Forward Price.
        Further, if Counterparty delivers Early Settlement Shares, an amount equal
        to
        the product of (i)  the
        Number of Early Settlement Shares multiplied by (ii) the Forward Price (or
        if
        Counterparty delivers Unregistered Shares, as reduced by a discount determined
        by GS&Co. in a good faith commercially reasonable manner based on the
        discount to the New York 10b-18 Volume Weighted Average Price at which it
        could
        sell the Shares and whether GS&Co. and Counterparty have agreed on
        acceptable procedures and documentation relating to such Unregistered Shares
        as
        described above) shall be credited against any amount owing under Section
        6(e)
        of the Agreement or pursuant to Article 12 of the Equity Definitions
        or
        otherwise under this Master Confirmation.

       

       

      11.  Acknowledgments.
        The
        parties hereto intend for:

       

       

      (a)  Each
        Transaction to be a “securities contract” as defined in Section 741(7) of the
        U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy
        Code”), a “swap agreement” as defined in Section 101(53B) of the Bankruptcy
        Code, or a “forward contract” as defined in Section 101(25) of the Bankruptcy
        Code, and the parties hereto to be entitled to the protections afforded by,
        among other sections, Sections 362(b)(6), 362(b)(17), 555, 556 and 560 of
        the
        Bankruptcy Code;

       

      (b)  A
        party’s
        right to liquidate or terminate any Transaction, net out or offset termination
        values of payment amounts, and to exercise any other remedies upon the
        occurrence of any Event of Default under the Agreement with respect to the
        other
        party to constitute a “contractual right” (as defined in the Bankruptcy
        Code);

       

      (c)  All
        payments for, under or in connection with each Transaction, all payments
        for the
        Shares and the transfer of such Shares to constitute “settlement payments” and
“transfers” (as defined in the Bankruptcy Code).

       

      12.  Set-Off.
        The
        parties agree to amend Section 6 of the Agreement by adding a new Section
        6(f)
        thereto as follows:

       

       

      “(f)
        Upon
        the occurrence of an Event of Default or Termination Event with respect to
        a
        party who is the Defaulting Party or the Affected Party ("X"), the other
        party
        ("Y") will have the right (but not be obliged) without prior notice to X
        or any
        other person to set-off or apply any obligation of X owed to Y
        (whether
        or not matured or contingent and whether or not arising under the Agreement,
        and
        regardless of the currency, place of payment or booking office of the
        obligation) against any obligation of Y
        owed to
        X (whether or not matured or contingent and whether or not arising under
        the
        Agreement, and regardless of the currency, place of payment or booking office
        of
        the obligation). Y will give notice to X of any set-off effected under this
        Section 6(f). 

       

      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      

      Amounts
        (or the relevant portion of such amounts) subject to set-off may be converted
        by
        Y into the Termination Currency at the rate of exchange at which such party
        would be able, acting in a reasonable manner and in good faith, to purchase
        the
        relevant amount of such currency. If any obligation is unascertained, Y may
        in
        good faith estimate that obligation and set-off in respect of the estimate,
        subject to the relevant party accounting to the other when the obligation
        is
        ascertained. Nothing in this Section 6(f) shall be effective to create a
        charge
        or other security interest. This Section 6(f) shall be without prejudice
        and in
        addition to any right of set-off, combination of accounts, lien or other
        right
        to which any party is at any time otherwise entitled (whether by operation
        of
        law, contract or otherwise).”

       

      13.  Payment
        Date Upon Early Termination.
        Notwithstanding anything to the contrary in Section 6(d)(ii) of the Agreement,
        all amounts calculated as being due in respect of an Early Termination Date
        under Section 6(e) of the Agreement will be payable on the day that notice
        of
        the amount payable is effective, except as otherwise provided in this Master
        Confirmation or any Supplemental Confirmation.

       

      14.  Share
        Settlement; Maximum Shares.
        Notwithstanding anything contained in this Master Confirmation, the Agreement
        or
        the Equity Definitions, Counterparty or GS&Co. at the election by
        Counterparty may satisfy all amounts it may owe to the other party hereunder
        and
        under each Supplemental Confirmation by delivery of Shares in accordance
        with
        Annex B and/or Section 10 hereof, and Counterparty is solely vested with
        the
        right to determine whether such obligations may be satisfied in Shares, in
        cash
        or in a combination of the two. Notwithstanding anything contained in this
        Master Confirmation, the Agreement or the Equity Definitions, Counterparty
        and
        GS&Co. agree that in the event Counterparty owes an amount to GS&Co. and
        Counterparty elects to satisfy its obligations to GS&Co. by delivery of
        Shares, the delivery of a number of Shares equal to the Reserved Shares will
        satisfy in full the obligation of Counterparty to make any payments pursuant
        to
        Section 6(e) of the Agreement, Article 12 of the Equity Definitions or otherwise
        in respect of the Transaction.

       

      15.  Governing
        Law.
        The
        Agreement, this Master Confirmation and each Supplemental Confirmation and
        all
        matters arising in connection with the Agreement, this Master Confirmation
        and
        each Supplemental Confirmation shall be governed by, and construed and enforced
        in accordance with, the laws of the State of New York without reference to
        its
        choice of law doctrine.

       

      16.  Offices.

       

       

      (a)  The
        Office of GS&Co. for each Transaction is: One New York Plaza, New York, New
        York 10004.

       

      (b)  The
        Office of Counterparty for each Transaction is: One Market Street, Spear
        Tower,
        Suite 2400, San Francisco, CA 94105.

       

      17.  Arbitration.

       

       

      (a)  Arbitration
        is final and binding on Counterparty and GS&Co.

       

      (b)  Counterparty
        and GS&Co. are waiving their right to seek remedies in court, including the
        right to a jury trial.

       

      (c)  Pre-arbitration
        discovery is generally more limited than and different from court
        proceedings.

       

      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      

      (d)  The
        arbitrators’ award is not required to include factual findings or legal
        reasoning and any party’s right to appeal or to seek modification of rulings by
        the arbitrators is strictly limited.

       

      (e)  The
        panel of arbitrators will typically include a minority of arbitrators who
        were
        or are affiliated with the securities industry.

       

      Any
        controversy between or among GS&Co. or its affiliates, or any of its or
        their partners, directors, agents or employees, on the one hand, and
        Counterparty or its agents and affiliates, on the other hand, arising out
        of or
        relating to the Agreement or any Transaction entered into hereunder, shall
        be
        settled by arbitration, in accordance with the then current rules
        of
        the American Arbitration Association (“AAA”), except that the provisions of this
        Section 17 shall supersede any conflicting or inconsistent provisions of
        such
        rules. Each party shall appoint a qualified arbitrator within 5 days after
        the
        giving of notice by either party. If either party shall fail timely to appoint
        a
        qualified arbitrator, the appointed, qualified arbitrator shall select the
        second qualified arbitrator within 5 days after such party's failure to appoint.
        The qualified arbitrators so appointed shall meet and shall, if possible,
        determine such matter within 10 days after the second qualified arbitrator
        is
        appointed, and their determination shall be binding on the parties. If for
        any
        reason such two qualified arbitrators fail to agree on such matter within
        such
        period of 10 days, then either party may request the AAA to appoint a qualified
        arbitrator who shall be impartial within 7 days of such request and both
        parties
        shall be bound by any appointment so made by the AAA. Within 7 days after
        the
        third qualified arbitrator has been appointed, each of the first two qualified
        arbitrators shall submit their respective determinations to the third qualified
        arbitrator who must select one or the other of such determinations (whichever
        the third qualified arbitrator believes to be correct or closest to a correct
        determination) within 7 days after the first two qualified arbitrators shall
        have submitted their respective determinations to the third qualified
        arbitrator, and the selection so made shall in all cases be binding upon
        the
        parties, and judgment upon such decision may be entered into any court having
        jurisdiction. In the event of the failure, refusal or inability of a qualified
        arbitrator to act, a successor shall be appointed within 10 days as hereinbefore
        provided. The costs of the arbitration shall be funded 50% by each party,
        and
        the parties shall bear their own attorneys' fees, during the arbitration.
        The
        prevailing party shall be repaid all of such expenses by the non-prevailing
        party within 10 days after the final determination of the qualified
        arbitrator(s). The award of the arbitrators shall be final, and judgment
        upon
        the award rendered may be entered in any court, state or Federal, having
        jurisdiction.

       

       

      Neither
        party shall bring a putative or certified class action to arbitration, nor
        seek
        to enforce any pre-dispute arbitration agreement against any person who has
        initiated in court a putative class action; who is a member of a putative
        class
        who has not opted out of the class with respect to any claims encompassed
        by the
        putative class action until:

       

       

      (i)  the
        class certification is denied;

       

      (ii)  the
        class is decertified; or

       

      (iii)  the
        party is excluded from the class by the court.

       

      Such
        forbearance to enforce an agreement to arbitrate shall not constitute a waiver
        of any rights under the Agreement except to the extent stated
        herein.

       

       

      [SIGNATURE
        PAGE FOLLOWS]

       

       

      

       

      
        
          
            NYLIB5
              855220.7

          

          
          

        

        
          -18-

          
            

          

        

        
          
          

          
          

        

      

       

      18.  Counterparty
        hereby agrees (a) to check this Master Confirmation carefully and
        immediately upon receipt so that errors or discrepancies can be promptly
        identified and rectified and (b) to confirm that the foregoing (in the
        exact form provided by GS&Co.) correctly sets forth the terms of the
        agreement between GS&Co. and Counterparty with respect to any Transaction,
        by manually signing this Master Confirmation or this page hereof as evidence
        of
        agreement to such terms and providing the other information requested herein
        and
        immediately returning an executed copy to Equity Derivatives Documentation
        Department, facsimile No. 212-428-1980/83.

      

         

                            Yours
          sincerely,

         

                            GOLDMAN,
          SACHS &
CO.

         

                            By
/s/
          Sharon
          Siebold            

         

                            Authorized
          Signatory

         

        Agreed
          and Accepted By:

         

         

        PG&E
          CORPORATION

         

        By: 
          /s/
          Christopher P.
          Johns           

        Name:

        Title:

      

       

      

       

      

      
        
          
            NYLIB5
              855220.7

          

          
          

        

        
          -19-

          
            

          

        

        
          
          

          
          

        

      

       

      ANNEX
        A

       

      

       

      SUPPLEMENTAL
        CONFIRMATION FOR FULLY UNCOLLARED TRANSACTIONS

       

      

      
        	
                 

                To:

              	
                PG&E
                  Corporation

                One
                  Market Street, Spear Tower

                Suite
                  2400

                San
                  Francisco, CA 94105

              
	
                 

                From:

              	
                 

                Goldman,
                  Sachs & Co. 

              
	
                 

                Subject:

              	
                 

                Accelerated
                  Share Repurchase Transaction - VWAP Pricing

              
	
                 

                Ref.
                  No:

              	
                 

                EN51R8000000000

              
	
                 

                Date:

              	
                 

                November
                  16, 2005

              

      

       

      

       

      The
        purpose of this Supplemental Confirmation is to confirm the terms and conditions
        of the Transaction entered into between Goldman, Sachs & Co. (“GS&Co.”)
        and PG&E Corporation (“Counterparty”) (together, the “Contracting Parties”)
        on the Trade Date specified below. This Supplemental Confirmation is a binding
        contract between GS&Co. and Counterparty as of the relevant Trade Date for
        the Transaction referenced below. 

       

       

      1. This
        Supplemental Confirmation supplements, forms part of, and is subject to the
        Master Confirmation dated as of November
        16, 2005
        (the
“Master Confirmation”) between the Contracting Parties, as amended and
        supplemented from time to time. The definitions and provisions contained
        in the
        Master Confirmation are incorporated into this Supplemental Confirmation,
        except
        as expressly modified below. In the event of any inconsistency between those
        definitions and provisions and this Supplemental Confirmation, this Supplemental
        Confirmation will govern.

       

       

      2. The
        terms
        of the Transaction to which this Supplemental Confirmation relates are as
        follows:

       

      
        	
                 

                Trade
                  Date:

              	
                 

                November
                  16, 2005

              
	
                 

                Forward
                  Price:

              	
                 

                USD
                  34.75 per Share

              
	
                 

                Number
                  of Shares:

              	
                 

                31,650,300
                  Shares

              
	
                 

                Valuation
                  Period Start Date:

              	
                 

                November
                  17, 2005

              
	
                 

                Valuation
                  Date:

              	
                 

                June
                  8, 2006 

              
	
                 

                Termination
                  Price:

              	
                 

                $10.00
                  per Share

              
	
                 

                Fixed
                  Rate:

              	
                 

                25
                  basis points

              
	
                 

                Reserved
                  Shares:

              	
                 

                Two
                  times the Number of Shares

              
	
                 

                Extraordinary
                  Dividends:

              	
                 

                Any
                  cash dividend declared by the Issuer in excess of $0.00 per Share;
                  provided that the cash dividend declared by the Counterparty in
                  December
                  2005 shall not be an Extraordinary
                  Dividend.

              

      

       

      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

      
        	
                 

                Initial
                  Number of Daily Reference Shares:

              	
                 

                227,700
                  Shares

              
	
                 

                Initial
                  Notional Amount:

              	
                 

                The
                  Number of Shares multiplied by the Forward Price.

              
	
                 

                Counterparty
                  Additional Payment Amount:

              	
                 

                USD
                  8,415,792.00

              

      

       

      [SIGNATURE
        PAGE FOLLOWS]

       

       

      

       

       

      

       

      
        
          
             

            NYLIB5
              855220.7

          

          
          

        

        
          A-2

          
            

          

        

        
          
          

          
          

        

      

       

      3. 
Counterparty
        represents and warrants to GS&Co. that neither it (nor any “affiliated
        purchaser” as defined in Rule 10b-18 under the Exchange Act) have made any
        purchases of blocks except through GS&Co. or an entity affiliated with
        GS&Co. pursuant to the proviso in Rule 10b-18(b)(4) under the Exchange Act
        during the four full calendar weeks immediately preceding the Trade
        Date.

       

       

       
        Counterparty hereby agrees (a) to check this Supplemental Confirmation
        carefully and immediately upon receipt so that errors or discrepancies can
        be
        promptly identified and rectified and (b) to confirm that the foregoing (in
        the exact form provided by GS&Co.) correctly sets forth the terms of the
        agreement between GS&Co. and Counterparty with respect to this Transaction,
        by manually signing this Supplemental Confirmation or this page hereof as
        evidence of agreement to such terms and providing the other information
        requested herein and immediately returning an executed copy to Equity
        Derivatives Documentation Department, facsimile No.
        212-428-1980/83.

      

         

                            Yours
          sincerely,

         

                            GOLDMAN,
          SACHS &
CO.

         

                            By
/s/
          Sharon
          Siebold            

                               
          Authorized Signatory

         

        Agreed
          and Accepted By:

         

         

        PG&E
          CORPORATION

         

        By: 
          /s/
          Christopher P.
          Johns           

        Name:

        Title:

      

      
        
          
             

            NYLIB5
              855220.7

          

          
          

        

        
          A-3

          
            

          

        

        
          
          

          
          

        

      

       

      ANNEX
        B

       

       

      NET
        SHARE SETTLEMENT PROCEDURES

       

       

      In
        the
        event that the Counterparty has elected Net Share Settlement in accordance
        with
        the Master Confirmation, then the settlement procedure shall be as
        follows:

       

       

      In
        the
        event that the sum of the Forward Cash Settlement Amount, the
        Fixed
        Amount,
        the
        Floating Rate Amount and the Counterparty Additional Payment Amount (the
“Final
        Settlement Amount”) is an amount GS&Co. owes Counterparty, settlement shall
        be made by delivery of the number of Shares equal in value to the Final
        Settlement Amount, with such Shares’ value based on the Relevant Prices per
        Share further described below. In such event, on each succeeding Exchange
        Business Day after the Net Share Valuation Date, GS&Co. shall purchase
        one-half of the maximum amount of Shares Counterparty could purchase each
        day in
        accordance with the provisions of Rule 10b-18(2), (3) and (4), subject to
        any
        delays between the execution and reporting of a trade of the Shares on the
        Exchange and other circumstances beyond its reasonable control, until the
        sum of
        the products of the number of Shares purchased by GS&Co. multiplied by the
        Relevant Price for the regular trading session (including any extensions
        thereof) of the Exchange on the related Exchange Business Day equals the
        Final
        Settlement Amount. GS&Co. shall deliver all Shares purchased pursuant to
        this paragraph free of any contractual or other restriction, in good
        transferable form on the Third Exchange Business Day following the day on
        which
        GS&Co. completes all such purchases.

       

       

      In
        the
        event that the Final Settlement Amount is an amount that Counterparty owes
        GS&Co., settlement shall be made by delivery of the number of Shares equal
        in value to the Final Settlement Amount (the “Settlement Shares”), with such
        Shares’ value based on the Net Share Settlement Price. Delivery of such
        Settlement Shares shall be made free of any contractual or other restrictions
        in
        good transferable form (other than with respect to any Unregistered Shares
        (as
        defined below)) on the Net Share Settlement Date. Counterparty (i) shall
        represent and warrant to GS&Co. at the time of such delivery that it has
        good, valid and marketable title or right to sell and transfer all such Shares
        to GS&Co. under the terms of the related Transaction free of any lien
        charge, claim or other encumbrance and (ii) shall make the representations
        and
        agreements contained in Section 9.11(ii) through (iv) of the Equity Definitions
        to GS&Co. with respect to the Settlement Shares. GS&Co. or any affiliate
        of GS&Co. designated by GS&Co. (GS&Co. or such affiliate, “GS”)
        shall resell the Settlement Shares owed to GS&Co. during a period (the
“Resale Period”) commencing no earlier than the Exchange Business Day on which
        the Settlement Shares are delivered. GS shall use its good faith, commercially
        reasonable efforts to sell the Settlement Shares as promptly as possible
        at
        commercially reasonable prices based on prevailing market prices for the
        Shares.
        The Resale Period shall end on the Exchange Business Day on which GS completes
        the sale of all Settlement Shares or a sufficient number of Settlement Shares
        so
        that the realized net proceeds of such sales exceed the sum of Forward Cash
        Settlement Amount, the Fixed Amount and the Counterparty Additional Payment
        Amount. Notwithstanding the foregoing, if resale by GS of the Settlement
        Shares,
        as determined by GS in its sole discretion (i) occurs during a distribution
        for purposes of Regulation M, and if GS would be subject to the restrictions
        of
        Rule 101 of Regulation M in connection with such distribution, the Resale
        Period will be postponed or tolled, as the case may be, until the Exchange
        Business Day immediately following the end of any “restricted period” as such
        term is defined in Regulation M with respect to such distribution under
        Regulation M or (ii) conflict with any legal, regulatory or self-regulatory
        requirements or related policies and procedures applicable to GS (whether
        or not
        such requirements, policies or procedures are imposed by law or have been
        voluntarily adopted by GS), the Resale Period will be postponed or tolled,
        as
        the case may be, until such conflict is no longer applicable. During the
        Resale
        Period, if the realized net proceeds from the resale of the Settlement Shares
        exceed the sum of the Forward Cash Settlement Amount, the Fixed Amount and
        the
        Counterparty Additional Payment Amount, GS shall refund such excess in cash
        to
        Counterparty by the close of business on the third Exchange Business Day
        immediately following the last day of the Resale Period. If the sum of the
        Forward Cash Settlement Amount, the Fixed Amount and the Counterparty Additional
        Payment Amount exceeds the realized net proceeds from such resale, Counterparty
        shall transfer to GS by the open of the regular trading session on the Exchange
        on the third Scheduled Trading Day immediately following the last day of
        the
        Resale Period the amount of such excess (the “Additional Amount”) in
the
        number of Shares (“Make-whole Shares”) in an amount that, based on the Net Share
        Settlement Price on the last day of the Resale Period (as if such day was
        the
“Net Share Valuation Date” for purposes of computing such Net Share Settlement
        Price), has a dollar value equal to the Additional Amount. The Resale Period
        shall continue to enable the sale of the Make-whole Shares. The requirements
        and
        provisions set forth below shall apply to Shares delivered to pay such
        Additional Amounts. This provision shall be applied successively until the
        Additional Amount is equal to zero. 

       

      
        
          
          

        

        
          B-1

          
            

          

        

        
          
          

        

      

       

      Net
        Share
        Settlement of a Transaction by Counterparty is subject to the following
        conditions:

       

       

      Counterparty
        at its sole expense shall:

       

       

      (i) as
        promptly as practicable (but in no event more than five (5) Exchange Business
        Days immediately following the Settlement Method Election Date or, in the
        case
        of an election of Net Share Settlement upon the occurrence of an Extraordinary
        Event or an Early Termination Date, no more than one Exchange Business Day
        immediately following either the Cancellation Date or the Early Termination
        Date, as the case may be) file under the Securities Act and use its best
        efforts
        to make effective, as promptly as practicable, a registration statement or
        supplement or amend an outstanding registration statement, in any such case,
        in
        form and substance reasonably satisfactory to GS (the “Registration Statement”)
        covering the offering and sale by GS of not less than 150% of the Shares
        necessary to fulfill the Net Share Settlement delivery obligation by
        Counterparty (determining the number of such Shares to be registered on the
        basis of the average of the Settlement Prices on the five (5) Exchange
        Business Days prior to the date of such filing, amendment or supplement,
        as the
        case may be);

       

       

      (ii) maintain
        the effectiveness of the Registration Statement until GS has sold all shares
        to
        be delivered by Counterparty necessary to satisfy its Net Share Settlement
        obligations;

       

       

      (iii) have
        afforded GS and its counsel and other advisers a reasonable opportunity to
        conduct a due diligence investigation of Counterparty customary in scope
        for
        transactions in which GS acts as underwriter of equity securities, and GS
        shall
        have been satisfied (with the approval of its Commitments Committee in
        accordance with its customary review process) with the results of such
        investigation;

       

       

      (iv) have
        negotiated and entered into a registration agreement with GS in substantially
        the form attached as Schedule 1, which such form the parties agree to amend
        by
        January 1, 2006 or anytime thereafter as mutually agreed by the parties in
        writing in order to reflect amendments to Rule 415 and Rule 462 and certain
        other rules set forth in Securities Act Release 33-8591 (the "Registration
        Agreement") covering the shares to be delivered by Counterparty in satisfaction
        of its Net Share Settlement obligations;

       

       

      (v) have
        delivered to GS such number of prospectuses relating thereto as GS shall
        have
        reasonably requested and shall promptly update and provide GS with replacement
        prospectuses as necessary to ensure the prospectus does not contain any untrue
        statement of a material fact or any omission of a material fact required
        to be
        stated therein or necessary to make the statements therein, in the light
        of the
        circumstances in which they were made, not misleading;

       

       

      (vi) have
        retained for GS nationally-recognized underwriting counsel acceptable to
        GS (in
        its sole discretion) with broad experience in similar registered securities
        offerings and such counsel shall have agreed to act as such;

       

       

      (vii) have
        taken all steps necessary for the shares sold by GS to be listed or quoted
        on
        the primary exchange or quotation system that the Shares are listed or quoted
        on;

       

       

      (viii) have
        paid
        all reasonable and actual out-of-pocket costs and expenses of GS and all
        reasonable and actual fees and expenses of GS’s outside counsel and other
        independent experts contemplated by the Registration Agreement; and

       

       

      (ix) take
        such
        action as is required to ensure that GS’s sale of the Shares does not violate,
        or result in a violation of, the federal or state securities laws.

       

      
        
          
          

        

        
          B-2

          
            

          

        

        
          
          

        

      

       

      In
        the
        event that the Registration Statement is not declared effective by the
        Securities Exchange Commission (the “SEC”) or any of the conditions specified in
        (ii) through (ix) above are not satisfied on or prior to the Valuation Date
        (or,
        in the case of an election of Net Share Settlement upon the occurrence of
        an
        Extraordinary Event or an Early Termination Date, on or prior to the first
        Exchange Business Day following either the Cancellation Date or the Early
        Termination Date, as the case may be except for any Early Termination as
        result
        of Section 7(d) of the Master Confirmation, in which case, such date shall
        be
        the tenth Exchange Business Day following such Early Termination Date), then
        Counterparty may deliver Unregistered Shares to GS in accordance with the
        following conditions. If GS and Counterparty can agree on acceptable pricing,
        procedures and documentation relating to the sale of such Unregistered Shares
        (including, without limitation, applicable requirements in (iii) through
        (ix)
        above and insofar as pertaining to private offerings), then such Unregistered
        Shares shall be deemed to be the “Settlement Shares” for the purposes of the
        related Transaction and the settlement procedure specified in this Annex
        B shall
        be followed except that in the event that the Forward Cash Settlement Amount
        plus the Fixed Amount, exceeds the proceeds from the sale of such Unregistered
        Shares then for the purpose of calculating the number of “Make-whole Shares” to
        be delivered by Counterparty, GS shall determine the discount to the Net
        Share
        Settlement Price at which it can sell the Unregistered Shares. Notwithstanding
        the delivery of the Unregistered Shares, Counterparty shall endeavor in good
        faith to have a registration statement declared effective by the SEC as soon
        as
        practical. In the event that GS has not sold sufficient Unregistered Shares
        to
        satisfy Counterparty’s obligations to GS contained herein at the time that a
        Registration Statement covering the offering and sale by GS of a number of
        Shares equal in value to not less than 150% of the amount then owed to GS
        is
        declared effective (based on the Net Share Settlement Price on the Exchange
        Business Day (as if such Exchange Business Day were the “Net Share Valuation
        Date” for purposes of computing such Net Share Settlement Price) that the
        Registration Statement was declared effective), GS shall return all unsold
        Unregistered Shares to Counterparty and Counterparty shall deliver such number
        of Shares covered by the effective Registration Statement equal to 100% of
        the
        amount then owed to GS based on such Net Share Settlement Price. Such delivered
        shares shall be deemed to be the “Settlement Shares” for the purposes of the
        related Transaction and the settlement procedure specified in this Master
        Confirmation, including, without limitation, this Annex B, (including the
        obligation to deliver any Make-whole Shares, if applicable) shall be followed.
        In all cases GS shall be entitled to take any and all required actions in
        the
        course of its sales of the Settlement Shares, including without limitation
        making sales of the Unregistered Shares only to “Qualified Institutional Buyers”
(as such term is defined under the Securities Act), to ensure that the sales
        of
        the Unregistered Shares and the Settlement Shares covered by the Registration
        Statement are not integrated resulting in a violation of the securities laws
        and
        Counterparty agrees to take all actions requested by GS in furtherance
        thereof.

       

       

      If
        GS and
        Counterparty cannot agree on acceptable pricing, procedures and documentation
        relating to the sales of such Unregistered Shares then the number of
        Unregistered Shares to be delivered to GS pursuant to the provisions above
        shall
        not be based on the Net Share Settlement Price but rather GS shall determine
        the
        value attributed to each Unregistered Share in a commercially reasonable
        manner
        and based on such value Counterparty shall deliver a number of Shares equal
        in
        value to the Forward Cash Settlement Amount plus the Fixed Amount. For the
        purposes hereof “Unregistered Shares” means Shares that have not been registered
        pursuant to an effective registration statement under the Securities Act
        or any
        state securities laws (“Blue Sky Laws”) and that cannot be sold, transferred,
        pledged or otherwise disposed of without registration under the Securities
        Act
        or under applicable Blue Sky Laws unless such sale, transfer, pledge or other
        disposition is made in a transaction exempt from registration
        thereunder.

       

       

      In
        the
        event that Counterparty delivers Shares pursuant to an election of Net Share
        Settlement, then Counterparty and GS agree to indemnify and hold harmless
        each
        other to the extent provided in the Registration Agreement.

       

       

      In
        no
        event shall the number of Settlement Shares (including, but without duplication
        or double counting, any Unregistered Shares) and any Make-whole Shares
        deliverable by Counterparty hereunder to GS&Co., be greater than the
        Reserved Shares minus the amount of any Shares actually delivered under any
        other Transaction(s) under this Master Confirmation (the result of such
        calculation, the “Capped Number”). Counterparty represents and warrants (which
        shall be deemed to be repeated on each day that a Transaction is outstanding)
        that the Capped Number is equal to or less than the number of Shares determined
        according to the following formula:

       

      
        
          
          

        

        
          B-3

          
            

          

        

        
          
          

        

      

       

      A
        -
        B

       

       

      
        	 	
                Where

              	
                A
                  =
                  the number of authorized but unissued shares of the Issuer that
                  are not
                  reserved for future issuance on the date of the determination of
                  the
                  Capped Number; and

              

      

       

       

      
        	 	 	
                B
                  =
                  the maximum number of Shares required to be delivered to third
                  parties if
                  Counterparty elected Net Share Settlement of all transactions in
                  the
                  Shares (other than Transactions in the Shares under this Master
                  Confirmation) with all third parties that are then currently outstanding
                  and unexercised.

              

      

       

       

      

       

      
        
          
          

        

        
          B-4

          
            

          

        

        
          
          

        

      

       

      SCHEDULE
        1

       

      Form
        of
        Registration Agreement

       

      

      
        
          
          

        

        
          B-1

          
            

          

        

        
          
          

          
            

          

        

      

      PG&E
        Corporation

       

      Common
        Stock

       

      Registration
        Agreement

       

      [                       
         ] [  ],
        2005           

       

      Goldman,
        Sachs & Co.

      85
        Broad
        Street

      New
        York,
        New York 10004

      

      Ladies
        and Gentlemen:

       

      PG&E
        Corporation, a California corporation (the “Company”), proposes to deliver to
        Goldman, Sachs & Co. (“GS&Co.”) pursuant to this Registration Agreement
        (this “Agreement”) up to [_____] shares of common stock (no par value) (“Stock”)
        of the Company (the “Shares”) in satisfaction of the Company’s obligations to
        GS&Co., as counterparty under an Accelerated Share Repurchase Transaction,
        Reference Number [_____], as documented pursuant to a Master Confirmation
        (the
“Master Confirmation”), dated as of [ ] [ ], 2005 (the Master Confirmation, as
        may be
        amended,
        restated, supplemented or otherwise modified from time to time, the
        “ASB”), subject to the terms and conditions stated herein and in the ASB. The
        Company does not expect to receive any proceeds from the sale of the
        Shares.

      1.  The
        Company represents and warrants to, and agrees with, GS&Co.
        that:

       

      (i)  A
        registration statement on Form S-3, as amended (File No. 333- 121518) (including
        all documents incorporated by reference in the prospectus contained therein,
        the
“Initial Registration Statement”), in respect of the Shares and the offering
        thereof from time to time in accordance with Rule 415 under the Securities
        Act
        of 1933, as amended (the “Securities Act”), has been filed with the Securities
        and Exchange Commission (the “Commission”); the Initial Registration Statement
        and any post-effective amendment thereto, each in the form heretofore delivered
        to GS&Co. (excluding exhibits thereto), have been declared effective by the
        Commission in such form; no other document with respect to the Initial
        Registration Statement has heretofore been filed with the Commission; and
        no
        stop order suspending the effectiveness of the Initial Registration Statement
        or
        any post-effective amendment thereto has been issued and no proceeding for
        that
        purpose has been initiated or threatened by the Commission (any preliminary
        prospectus included in the Initial Registration Statement or filed with the
        Commission pursuant to Rule 424(a) of the rules and regulations of the
        Commission under the Securities Act is hereinafter called a “Preliminary
        Prospectus”; the various parts of the Initial Registration Statement, including
        all exhibits thereto and including the documents incorporated by reference
        in
        the prospectus contained in the Initial Registration Statement at the time
        such
        part of the Initial Registration Statement became effective, each as amended
        at
        the time such part of the Initial Registration Statement became effective
        are
        hereinafter collectively called the “Registration Statement”; such final
        prospectus, in the form first filed pursuant to Rule 424(b) under the Securities
        Act, is hereinafter called the “Prospectus”; any reference herein to any
        Preliminary Prospectus or the Prospectus shall be deemed to refer to and
        include
        the documents incorporated by reference therein pursuant to Item 12 of Form
        S-3
        under the Securities Act, as of the date of such Preliminary Prospectus or
        Prospectus, as the case may be; and any reference to any amendment or supplement
        to any Preliminary Prospectus or the Prospectus shall be deemed to refer
        to and
        include any documents filed after the date of such Preliminary Prospectus
        or
        Prospectus, as the case may be, under the Securities Exchange Act of 1934,
        as
        amended (the “Exchange Act”), and incorporated by reference in such Preliminary
        Prospectus or Prospectus, as the case may be; and any reference to any amendment
        to the Registration Statement shall be deemed to refer to and include any
        annual
        report of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange
        Act after the effective date of the Initial Registration Statement that is
        incorporated by reference in the Registration Statement);

       

      
        
          
          

        

        
          -1-

          
            

          

        

        
          
          

        

      

      (ii)  No
        order
        preventing or suspending the use of any Preliminary Prospectus has been issued
        by the Commission, and each Preliminary Prospectus, at the time of filing
        thereof, conformed in all material respects to the requirements of the
        Securities Act and the rules and regulations of the Commission thereunder,
        and
        did not contain an untrue statement of a material fact or omit to state a
        material fact required to be stated therein or necessary to make the statements
        therein, in the light of the circumstances under which they were made, not
        misleading; provided, however, that this representation and warranty shall
        not
        apply to any statements or omissions made in reliance upon and in conformity
        with information furnished in writing to the Company by GS&Co. expressly for
        use in any Preliminary Prospectus;

       

      (iii)  The
        documents incorporated by reference in the Prospectus, when they became
        effective or were filed with the Commission, as the case may be, conformed
        in
        all material respects to the requirements of the Securities Act or the Exchange
        Act, as applicable, and the rules and regulations of the Commission thereunder,
        and none of such documents contained an untrue statement of a material fact
        or
        omitted to state a material fact required to be stated therein or necessary
        to
        make the statements therein not misleading; and any further documents so
        filed
        and incorporated by reference in the Prospectus or any further amendment
        or
        supplement thereto, when such documents become effective or are filed with
        the
        Commission, as the case may be, will conform in all material respects to
        the
        requirements of the Securities Act or the Exchange Act, as applicable, and
        the
        rules and regulations of the Commission thereunder and will not contain an
        untrue statement of a material fact or omit to state a material fact required
        to
        be stated therein or necessary to make the statements therein not
        misleading;

       

      (iv)  The
        Registration Statement conforms, and the Prospectus and any further amendments
        or supplements to the Registration Statement or the Prospectus will conform,
        in
        all material respects to the requirements of the Securities Act and the rules
        and regulations of the Commission thereunder and do not and will not, as
        of the
        applicable effective date as to the Registration Statement and any amendment
        thereto, and as of the applicable filing date as to the Prospectus and any
        amendment or supplement thereto, contain an untrue statement of a material
        fact
        or omit to state a material fact required to be stated therein or necessary
        to
        make the statements therein not misleading; provided, however, that this
        representation and warranty shall not apply to any statements or omissions
        made
        in reliance upon and in conformity with information furnished in writing
        to the
        Company by GS&Co. expressly for use in the Registration Statement or the
        Prospectus;

       

      (v)  Neither
        the Company nor any of its subsidiaries has sustained since the date of the
        latest audited financial statements included in the Prospectus any material
        loss
        or interference with its business from fire, explosion, flood or other calamity,
        whether or not covered by insurance, or from any labor dispute or court or
        governmental action, order or decree, otherwise than as set forth or
        contemplated in the Prospectus; and, since the respective dates as of which
        information is given in the Registration Statement and the Prospectus, there
        has
        not been any material change in the capital stock (other than changes occurring
        in the ordinary course of business and changes resulting from transactions
        relating to employee benefit plans or dividend reinvestment, stock option,
        stock
        award, retirement and stock purchase plans or repurchases of capital stock
        by
        the Company, including repurchases associated with the ASB) or any material
        increase in the long-term debt of the Company or any of its subsidiaries
        or any
        material adverse change, or any development which would reasonably be expected
        to result in a material adverse change, in or affecting the general affairs,
        management, financial position, shareholders’ equity or results of operations of
        the Company and its subsidiaries, otherwise than as set forth or contemplated
        in
        the Prospectus;

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

      (vi)  The
        Company has been duly incorporated and is a validly existing corporation
        in good
        standing under the laws of the State of California, with corporate power
        and
        authority to own its properties and conduct its business as described in
        the
        Prospectus; 

       

      (vii)  Each
        corporation, association, partnership or other business entity of which more
        than 50% of the total voting power or other interests entitled to vote in
        the
        election of directors, managers or trustees thereof that is deemed by the
        Company to be significant to its operations, as set forth on Schedule I hereto,
        and that is controlled, directly or indirectly, by (i) the Company, (ii)
        the
        Company and one or more subsidiaries or (iii) one or more subsidiaries of
        the Company (each, a “Subsidiary” and collectively, the “Subsidiaries”), has
        been duly incorporated or organized and is a validly existing corporation,
        partnership or limited liability company in good standing under the laws
        of the
        jurisdiction of its incorporation or organization with corporate, partnership
        or
        limited liability company power and authority, as applicable, to own its
        properties and conduct its business as described in the Prospectus; all of
        the
        issued and outstanding capital stock, partnership or membership interests
        of
        each Subsidiary has been duly authorized and validly issued and is fully
        paid
        and nonassessable; and, except as disclosed in the Prospectus, the capital
        stock
        or membership interests of each Subsidiary are owned directly or indirectly
        by
        the Company, free and clear of all liens, encumbrances and defects;

       

      (viii)  The
        Company has an authorized capitalization as set forth in the Prospectus,
        and all
        of the issued shares of capital stock of the Company have been duly authorized
        and validly issued, are fully paid and non-assessable and conform in all
        material respects to the description of the Stock contained in the Prospectus;
        

       

      (ix)  The
        Shares have been duly and validly authorized and, when issued and delivered
        as
        provided herein, will be duly and validly issued and fully paid and
        non-assessable and will conform to the description of the Stock contained
        in the
        Prospectus; upon delivery of the Shares to GS&Co. pursuant to this
        Agreement, good and valid title to the Shares, free and clear of liens,
        encumbrances, equities or claims, will pass to GS&Co.; and, other than the
        delivery of (i) an opinion of counsel and (ii) the Prospectus and, if required,
        an amendment or supplement thereto, clauses (i) - (iv) of Section 9.11 of
        the
        Equity Definitions (as defined in the ASB) apply to the Shares and the delivery
        of the Shares to GS&Co.;

       

      (x)  The
        issuance and delivery of Shares by the Company and the compliance by the
        Company
        with all of the provisions of this Agreement and the consummation of the
        transactions herein contemplated will not conflict with or result in a breach
        or
        violation of any of the terms or provisions of, or constitute a default under,
        any indenture, mortgage, deed of trust, loan agreement or other agreement
        or
        instrument to which the Company or any of its subsidiaries is a party or
        by
        which the Company or any of its subsidiaries is bound or to which any of
        the
        property or assets of the Company or any of its subsidiaries is subject,
        except
        any such conflict, breach, violation or default which has been consented
        to or
        waived by the appropriate counterparty thereto, prior to the execution and
        delivery of this Agreement, nor will such action result in any violation
        of the
        provisions of the Certificate of Incorporation or By-laws of the Company
        or any
        statute or any order, rule or regulation of any court or governmental agency
        or
        body having jurisdiction over the Company or any of its subsidiaries or any
        of
        their properties, except for conflicts, breaches, violations or defaults
        (other
        than any relating to the Articles of Incorporation or By-Laws of the Company)
        that would not, individually or in the aggregate, impair the Company’s ability
        to consummate the transactions herein contemplated; and no consent, approval,
        authorization, order, registration or qualification of or with any such court
        or
        governmental agency or body is required on the part of the Company for the
        sale
        of the Shares or the consummation by the Company of the transactions
        contemplated by this Agreement, except (i) the registration under the Securities
        Act of the Shares and such consents, approvals, authorizations, registrations
        or
        qualifications as may be required under state securities or Blue Sky laws
        in
        connection with the sale of the Shares by GS&Co. and (ii) where the
        failure to obtain such consent, approval, authorization, order, registration
        or
        qualification would not, individually or in the aggregate, impair the Company’s
        ability to consummate the transactions herein contemplated;

       

      (xi)  None
        of
        the Company or its subsidiaries is (i) in violation of its Articles of
        Incorporation or By-Laws (or similar organizational document), or (ii) in
        default (nor has any event occurred which with notice or passage of time,
        or
        both, would constitute a default) in the performance or observance of any
        material obligation, agreement, covenant or condition contained in any
        indenture, mortgage, deed of trust, loan agreement or other material agreement
        or instrument to which it is a party or to which it is subject;

       

      (xii)  The
        statements set forth in the Prospectus under the caption “Description of Capital
        Stock,” insofar as they purport to constitute a summary of the terms of the
        Stock, and the statements under the caption “Plan of Distribution”, insofar as
        they purport to describe the provisions of the laws and documents referred
        to
        therein, are accurate, complete and fair in all material respects; and the
        statements in the Prospectus with respect to the ASB are accurate, complete
        and
        fair in all material respects; provided, however, that this representation
        and
        warranty shall not apply to any statements or omissions made in reliance
        upon
        and in conformity with information furnished in writing to the Company by
        GS&Co. expressly for use in the Registration Statement or
        Prospectus;

       

      (xiii)  Other
        than with GS&Co. or as set forth in the Prospectus, there are no contracts,
        agreements or understandings between the Company and any person granting
        such
        person the right to require the Company to file a registration statement
        under
        the Securities Act with respect to any securities of the Company owned or
        to be
        owned by such person or to require the Company to include such securities
        in the
        securities registered pursuant to the Registration Statement or in any
        securities being registered pursuant to any other registration statement
        filed
        by the Company under the Securities Act;

       

      (xiv)  Other
        than as set forth in the Prospectus, there are no legal or governmental
        proceedings pending to which the Company or any of its subsidiaries is a
        party
        or of which any property of the Company or any of its subsidiaries is the
        subject, which, if determined adversely to the Company or any of its
        subsidiaries, would individually or in the aggregate have a material adverse
        effect on the current or future consolidated financial position, shareholders’
equity or results of operations of the Company and its subsidiaries; and,
        to the
        Company’s knowledge, no such proceedings are threatened or contemplated by
        governmental authorities or threatened by others;

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

      (xv)  The
        Company is not and, after giving effect to the offering and sale of the Shares,
        will not be an “investment company”, as such term is defined in the Investment
        Company Act of 1940, as amended;

       

      (xvi)  Neither
        the Company nor any of its affiliates does business with the government of
        Cuba
        or with any person or affiliate located in Cuba within the meaning of Section
        517.075 of the Florida Statutes;

       

      (xvii)  Deloitte
        & Touche LLP, who have certified certain financial statements of the Company
        and its subsidiaries and have audited the Company’s internal control over
        financial reporting and management’s assessment thereof, are an independent
        registered public accounting firm as required by the Securities Act and the
        rules and regulations of the Commission and the Public Company Accounting
        Oversight Board (United States) (the “PCAOB”) thereunder;

       

      (xviii)  The
        Company maintains a system of internal control over financial reporting (as
        such
        term is defined in Rule 13a-15(f) of the Exchange Act) that complies with
        the
        requirements of the Exchange Act
        and has
        been designed by the Company’s principal executive officer and principal
        financial officer, or under their supervision,
        to
        provide reasonable assurance regarding
        the reliability of financial reporting and the
        preparation of financial statements for
        external purposes in
        accordance with
        generally accepted accounting principles;
        except
        as disclosed in the Prospectus, the Company’s internal control over financial
        reporting is effective and the Company is not aware of any material weaknesses
        in its internal control over financial reporting;

       

      (xix)  Except
        as
        disclosed in the Prospectus, since the date of the latest audited financial
        statements included in the Prospectus, there has been no
        change
        in the Company’s internal control over financial reporting that has materially
        adversely affected, or is reasonably likely to materially adversely affect,
        the
        Company’s internal control over financial reporting;

       

      (xx)  The
        Company maintains disclosure controls and procedures (as such term is defined
        in
        Rule 13a-15(e) of the Exchange Act)
        that
        comply with the requirements of the Exchange Act; such
        disclosure controls and procedures have been designed to ensure that material
        information relating to the Company and its subsidiaries is made known to
        the
        Company’s management, including its principal executive officer and principal
        financial officer, by others within those entities;
        except
        as disclosed in the Prospectus, such disclosure controls and procedures are
        effective;

       

      (xxi)  Prior
        to
        the date hereof, neither the Company nor any of its subsidiaries has taken
        any
        action which is designed to or which has constituted or which might have
        been
        expected to cause or result in stabilization or manipulation of the price
        of any
        security of the Company or any of its subsidiaries in connection with the
        offering of securities of the Company contemplated hereby;

       

      (xxii)  The
        financial statements of the Company included in the Prospectus present fairly
        in
        all material respects the financial position of the Company and its consolidated
        subsidiaries as of the dates shown and their results of operations and cash
        flows for the periods shown, and such financial statements have been prepared
        in
        conformity with generally accepted accounting principles in the United States
        applied on a consistent basis, subject, in the case of interim statements,
        to
        normal year-end adjustments; 

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

      (xxiii)  The
        common stock of the Company is registered pursuant to Section 12(b) of the
        Exchange Act and the outstanding shares of common stock (including the Shares)
        are listed for quotation on the New York Stock Exchange (the “NYSE”), and the
        Company has taken no action designed to, or likely to have the effect of,
        terminating the registration of the common stock under the Exchange Act or
        de-listing the common stock from the NYSE, nor has the Company received any
        notification that the Commission or the NYSE is contemplating terminating
        such
        registration or listing;

       

      (xxiv)  The
        Company acknowledges and agrees that (i) in connection with the sale of Shares
        pursuant to this Agreement and with the process leading to such transaction
        GS&Co. is acting solely as a principal and not the agent or fiduciary of the
        Company, (ii) GS&Co. has not assumed an advisory or fiduciary responsibility
        in favor of the Company with respect to the offering contemplated hereby
        or the
        process leading thereto (irrespective of whether GS&Co. has advised or is
        currently advising the Company on other matters) or any other obligation
        to the
        Company except the obligations expressly set forth in this Agreement and
        (iv)
        the Company has consulted its own legal and financial advisors to the extent
        it
        deemed appropriate. The Company agrees that it will not claim that GS&Co.
        has rendered advisory services of any nature or respect, or owes a fiduciary
        or
        similar duty to the Company, in connection with such transaction or the process
        leading thereto; and 

       

      (xxv)  All
        of
        the representations and warranties of the Company in or made pursuant to
        the ASB
        are true and correct as of the time when made, when required to be made and
        when
        deemed to be repeated, in each case as specified therein.

       

      2.  Upon
        the
        delivery of the Shares to GS&Co. and the satisfaction or waiver of the
        conditions set forth in Section 6 of this Agreement, GS&Co. proposes to
        offer the Shares from time to time for sale upon the terms and conditions
        set
        forth in the Prospectus. GS&Co. intends to sell only such number of Shares
        so that the realized proceeds (net of customary expenses and commissions
        as set
        forth below) of such sales (the “Proceeds”) are equal to the amount that the
        Company owes to GS&Co. under the ASB, and all of the Proceeds of such sales
        shall be retained by GS&Co. in satisfaction of the Company’s obligations
        under the ASB. Once GS&Co. has sold such number of Shares so that the
        Proceeds of such sales are equal to the amount that the Company owes to
        GS&Co. under the ASB, and the Company’s obligations to GS&Co. under the
        ASB shall have been satisfied in full, any Shares that have been delivered
        to
        but not sold by GS&Co. shall be promptly returned to the Company and any
        Proceeds in excess of the amount that was owed by the Company to GS&Co.
        under the ASB shall be promptly refunded to the Company. All commissions
        and
        customary expenses incurred by GS&Co. in connection with the sale of the
        Shares set forth in Section 5 of this Agreement shall be deemed to be incurred
        for the Company’s account, and not for the account of GS&Co. and shall be
        paid by the Company. In no event shall commissions exceed 2.00% of the sales
        price of the shares.

       

      3.  The
        Shares to be delivered to GS&Co. hereunder, in definitive form, and in such
        authorized denominations and registered in such names as GS&Co. may request
        upon at least forty-eight hours’ prior notice to the Company, shall be delivered
        by or on behalf of the Company to GS&Co., through the facilities of The
        Depository Trust Company (“DTC”), for the account of GS&Co. The Company will
        cause the certificates representing the Shares to be made available for checking
        and packaging at least twenty-four hours prior to the Time of Delivery (as
        defined below) at the office of DTC or its designated custodian (the “Designated
        Office”). The time and date of such delivery shall be 9:30 a.m., New York City
        time, on [ ___ ], 2005 or such other time and date as GS&Co. and
        the Company may agree upon in writing. Such time and date for delivery of
        the
        Shares is herein called the “Time of Delivery”.

       

       

      The
        documents to be delivered at the Time of Delivery by or on behalf of the
        parties
        hereto pursuant to Section 6 hereof, including the cross receipt for the
        Shares
        and any additional documents requested by GS&Co. pursuant to Section 6(j)
        hereof, will be delivered at the offices of Cadwalader, Wickersham & Taft
        LLP, One World Financial Center, New York, New York 10281 (the “Closing
        Location”), and the Shares will be delivered at the Designated Office, all at
        the Time of Delivery. A meeting will be held at the Closing Location at
        4:00 p.m., New York City time, on the New York Business Day next preceding
        the Time of Delivery, at which meeting the final drafts of the documents
        to be
        delivered pursuant to the preceding sentence will be available for review
        by the
        parties hereto. For the purposes of this Section 3, “New York Business Day”
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is
        not a
        day on which banking institutions in New York are generally authorized or
        obligated by law or executive order to close.

       

      
        
          
          

        

        
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      4.  The
        Company agrees with GS&Co.:

      
         

        (a)  To
          prepare the Prospectus in a form approved by GS&Co. and to file such
Prospectus
          pursuant
          to Rule 424(b) under the Securities Act not later than the Commission’s close of
          business on the second business day following the execution and delivery
          of this
          Agreement, or, if applicable, such earlier time as may be required by Rule
          430A(a)(3) under the Securities Act; maintain the effectiveness of the
          Registration Statement until GS&Co. has sold all of the Shares to be sold as
          provided in Section 2 hereof; to make no further amendment or any supplement
          to
          the Registration Statement or Prospectus (other than by filing a document
          under
          the Exchange Act in the ordinary course of business, which will be incorporated
          by reference into the Registration Statement or the Prospectus) which shall
          be
          disapproved by GS&Co. after reasonable notice thereof; to advise GS&Co.,
          promptly after the Company receives notice thereof, of the time when any
          amendment to the Registration Statement has been filed or becomes effective
          or
          any supplement to the Prospectus or any amended Prospectus has been filed
          and to
          furnish GS&Co. with copies thereof; to file promptly all reports and any
          definitive proxy or information statements required to be filed by the
          Company
          with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
          Exchange Act subsequent to the date of the Prospectus and for so long as
          the
          delivery of a prospectus is required in connection with the offering or
          sale of
          the Shares; to advise GS&Co., promptly after the Company receives notice
          thereof, of the issuance by the Commission of any stop order or of any
          order
          preventing or suspending the use of any Preliminary Prospectus or prospectus,
          of
          the suspension of the qualification of the Shares for offering or sale
          in any
          jurisdiction, of the initiation or threatening of any proceeding for any
          such
          purpose, or of any request by the Commission for the amending or supplementing
          of the Registration Statement or Prospectus or for additional information;
          and,
          in the event of the issuance of any stop order or of any order preventing
          or
          suspending the use of any Preliminary Prospectus or prospectus or suspending
          any
          such qualification, promptly to use its best efforts to obtain the withdrawal
          of
          such order;

         

        (b)  Promptly
          from
          time to time to take such action as GS&Co. may reasonably request to qualify
          the Shares for offering and sale under the securities laws of such jurisdictions
          as GS&Co. may request and to comply with such laws so as to permit the
          continuance of sales and dealings therein in such jurisdictions for as
          long as
          may be necessary to complete the sale of all of the Shares to be sold as
          provided in Section 2, provided that in connection therewith the Company
          shall
          not be required to qualify as a foreign corporation or to file a general
          consent
          to service of process in any jurisdiction;

         

        (c)  Prior
          to
          10:00 a.m., New York City time, on the New York Business Day next succeeding
          the date
          of this Agreement and from time to time, to furnish GS&Co. with written and
          electronic copies of the Prospectus in New York City in such quantities
          as it
          may reasonably request, and, if the delivery of a prospectus is required
          at any
          time prior to the time of the completion of the offering or sale of the
          Shares
          to be sold as provided in Section 2 and if at such time any event shall
          have
          occurred as a result of which the Prospectus as then amended or supplemented
          would include an untrue statement of a material fact or omit to state any
          material fact necessary in order to make the statements therein, in the
          light of
          the circumstances under which they were made when such Prospectus is delivered,
          not misleading, or, if for any other reason it shall be necessary during
          such
          period to amend or supplement the Prospectus or to file under the Exchange
          Act
          any document incorporated by reference in the Prospectus in order to comply
          with
          the Securities Act or the Exchange Act, to notify GS&Co. and upon its
          request to file such document and to prepare and furnish without charge
          to
          GS&Co. and to any dealer in securities as many written and electronic copies
          as GS&Co. may from time to time reasonably request of an amended Prospectus
          or a supplement to the Prospectus which will correct such statement or
          omission
          or effect such compliance, and in case GS&Co. is required to deliver a
          prospectus in connection with sales of any of the Shares at any time nine
          months
          or more after the time of issue of the Prospectus, upon your request but
          at the
          expense of GS&Co., to prepare and deliver to GS&Co. as many written and
          electronic copies as you may request of an amended or supplemented Prospectus
          complying with Section 10(a)(3) of the Securities Act;

         

        (d)  To
          make
          generally available to its securityholders as soon as practicable, but
          in any
          event not later than eighteen months after the effective date of the
          Registration Statement (as defined in Rule 158(c) under the Securities
          Act), an
          earnings statement of the Company and its subsidiaries (which need not
          be
          audited) complying with Section 11(a) of the Securities Act and the rules
          and
          regulations thereunder (including, at the option of the Company, Rule
          158);

         

        (e)  If
          not
          otherwise available on EDGAR or a similar system during a period of five
          years
          from the effective date of the Registration Statement, to furnish to its
          shareholders as soon as practicable after the end of each fiscal year,
          but in
          any event within the time period after the end of each fiscal year of the
          Company that would have been required
          of the
          Company under Form 10-K, an annual report (including a balance sheet and
          statements of income, shareholders’ equity and cash flows of the Company and its
          consolidated subsidiaries certified by independent public accountants)
          and, as
          soon as practicable after the end of each of the first three quarters of
          each
          fiscal year (beginning with the fiscal quarter ending after the effective
          date
          of the Registration Statement), but in any event within the time period
          after
          the end of each fiscal quarter of the Company that would have been required
          of
          the Company under Form 10-Q, to make available to its shareholders consolidated
          summary financial information of the Company and its subsidiaries for such
          quarter in reasonable detail;

         

        (f)  If
          not
          otherwise available on EDGAR or a similar system during a period of five
          years
          from the effective date of the Registration Statement, to furnish to GS&Co.
          copies of all reports or other communications (financial or other) furnished
          to
          shareholders, and to deliver to GS&Co. (i) as soon as they are available,
          copies of any reports and financial statements furnished to or filed with
          the
          Commission or any national securities exchange on which any class of securities
          of the Company is listed; and (ii) such additional information concerning
          the
          business and financial condition of the Company as GS&Co. may from time to
          time reasonably request (such financial statements to be on a consolidated
          basis
          to the extent the accounts of the Company and its subsidiaries are consolidated
          in reports furnished to its shareholders generally or to the Commission);
          provided
          that the
          Company shall not be required to deliver any information that would cause
          the
          Company to make a public disclosure under Regulation FD as promulgated
          under the
          Exchange Act; and 

         

        (g)  Upon
          request of GS&Co., to furnish, or cause to be furnished, to GS&Co. an
electronic
          version
          of the Company’s trademarks, servicemarks and corporate logo for use on the
          website, if any, operated by GS&Co. for the purpose of facilitating the
          on-line offering of the Shares (the “License”). The License shall be granted
          without any fee.

        

        5.  The
          Company covenants and agrees with GS&Co. that the Company will pay or cause
          to be paid the following: (i) the fees, disbursements and expenses of the
          Company’s counsel and accountants and of outside counsel to GS&Co. and other
          independent experts retained by GS&Co. in connection with the registration
          of the Shares under the Securities Act and all other expenses in connection
          with
          the preparation, printing and filing of the Registration Statement, any
          Preliminary Prospectus and the Prospectus and amendments and supplements
          thereto
          and the mailing and delivering of copies thereof to GS&Co. and dealers; (ii)
          the cost of printing or producing this Agreement, the Blue Sky Memorandum,
          closing documents (including any compilations thereof) and any other documents
          in connection with the offering, sale and delivery of the Shares; (iii)
          all
          expenses in connection with the qualification of the Shares for offering
          and
          sale under state securities laws as provided in Section 4(b) hereof, including
          the fees and disbursements of counsel for GS&Co. in connection with such
          qualification and in connection with the Blue Sky survey; (iv) the cost of
          preparing stock certificates; (v) the cost and charges of any transfer
          agent or registrar; and (vi) all other reasonable and actual costs and
          expenses incident to the performance of its obligations hereunder. Except
          as
          provided in this Section 5 and Section 7 of this Agreement, GS&Co. shall pay
          all other expenses it incurs in connection with the registration, offering
          and
          sale of the Shares.

         

        
          
            
            

          

          
            -6-

            
              

            

          

          
            
            

          

        

        6.  The
          obligations of GS&Co. to accept the Shares to be delivered at the Time of
          Delivery in satisfaction of the Company’s obligations under the ASB, and the
          obligations of GS&Co. hereunder with respect to the Shares to be delivered
          at the Time of Delivery, shall be subject, in its discretion, to the condition
          that all representations and warranties and other statements of the Company
          herein and in the ASB are, at and as of the Time of Delivery, as of the
          time
          when made, (and when required to be made and deemed to be repeated with
          respect
          to the representations and warranties and other statements of the Company
          in the
          ASB, in each case as specified therein), true and correct, the condition
          that
          the Company shall have performed all of its obligations hereunder and under
          the
          ASB theretofore to be performed, and the following additional
          conditions:

         

         

        (a)  The
          Prospectus (the form of which was previously approved by GS&Co.) shall
have
          been
          filed with the Commission pursuant to Rule 424(b) within the applicable
          time
          period prescribed for such filing by the rules and regulations under the
          Securities Act and in accordance with Section 4(a) hereof; no stop order
          suspending the effectiveness of the Registration Statement or any part
          thereof
          shall have been issued and no proceeding for that purpose shall have been
          initiated or threatened by the Commission; and all requests for additional
          information on the part of the Commission shall have been complied with
          to
          GS&Co.’s reasonable satisfaction;

         

        (b)  Cadwalader,
          Wickersham & Taft LLP,
          counsel
          for GS&Co., shall have furnished to GS&Co. their written opinion (a
          draft of such opinion is attached as Annex II(a) hereto),
          dated
          the Time of Delivery, and such counsel shall have received such papers
          and
          information as they may reasonably request to enable them to pass upon
          such
          matters;

         

        (c)  Orrick,
          Herrington & Sutcliffe LLP, counsel for the Company, shall have furnished to
          GS&Co. their written opinion (a draft of such opinion is attached as Annex
          II(b) hereto), dated the Time of Delivery, in form and substance satisfactory
          to
          GS&Co., to the effect that:

        

        (i)  The
          Company and Pacific Gas and Electric Company, a California corporation
          (the
“Utility”) have each been duly incorporated and are validly existing and in good
          standing under the laws of the State of California. The Company has all
          necessary corporate power and authority to execute, deliver and perform
          its
          obligations under this Agreement and to own and hold its properties and
          conduct
          its business as described in the Registration Statement.

         

        (ii)  This
          Agreement and the ASB have been duly authorized, executed and delivered
          by the
          Company.

         

        (iii)  The
          statements in the Prospectus under the caption “Description of Capital Stock,”
insofar as they purport to constitute a summary of the terms of the Shares,
          and
          under the caption “Plan of Distribution,” only to the extent that they purport
          to constitute summaries of United States federal statutes, rules and
          regulations, or portions thereof, and agreements referred to therein are
          accurate and fair in all material respects.

         

        (iv)  The
          Registration Statement and the Prospectus and any further amendments and
          supplements thereto made by the Company prior to the date hereof appear
          on their
          face to be appropriately responsive in all material respects to the requirements
          of the Securities Act and the rules and regulations of the Commission under
          the
          Securities Act except for the financial statements, financial statement
          schedules and other financial data included or incorporated by reference
          in or
          omitted from either of them, as to which we express no opinion; and each
          document filed under the Securities Exchange Act of 1934, as amended (the
          “Exchange Act”), and incorporated by reference in the Registration Statement and
          Prospectus (except for financial statements, financial statement schedules
          and
          other financial data included in either of them, as to which we express
          no
          opinion) appears on its face to be appropriately responsive in all material
          respects when so filed to the requirements of the Exchange Act and the
          rules and
          regulations under the Exchange Act.

         

        
          
            
            

          

          
            -7-

            
              

            

          

          
            
            

          

        

        (v)  The
          Company is not required to be registered as an investment company under
          the
          Investment Company Act of 1940, as amended, and the rules and regulations
          of the
          Commission promulgated thereunder.

         

        Such
          counsel shall also state that they have participated in the preparation
          of the
          Registration Statement and the Prospectus and are familiar with the documents
          incorporated by reference therein and, although the limitations inherent
          in the
          independent verification of factual matters and in the role of outside
          counsel
          are such that they have not undertaken to investigate or verify independently,
          and do not assume responsibility for, the accuracy, completeness or fairness
          of
          the statements contained in either of them (other than as explicitly stated
          in
          paragraph (iv) above), based upon such participation (and relying as to
          certain
          factual matters in their evaluation of materiality to the extent they deemed
          reasonable on officers, employees and other representatives of the Company),
          no
          facts have come to their attention that led them to believe that (a) the
          Registration Statement or any amendment (except for the financial statements,
          financial statement schedules and other financial data included or incorporated
          by reference in or omitted from those documents, as to which such counsel
          may
          express no such belief), at the time it became effective, contained an
          untrue
          statement of a material fact or omitted to state a material fact required
          to be
          stated therein or necessary to make the statements therein not misleading
          or (b)
          the Prospectus or any amendment or supplement (except for the financial
          statements, financial statement schedules and other financial data included
          or
          incorporated by reference in or omitted from those documents, as to which
          such
          counsel may express no such belief), at the time the Prospectus was issued
          or on
          the date of such counsel’s opinion, included or includes an untrue statement of
          a material fact or omitted or omits to state a material fact necessary
          in order
          to make the statements therein, in the light of the circumstances under
          which
          they were made, not misleading. Such counsel does not know of any amendment
          to
          the Registration Statement required to be filed or of any contracts or
          other
          documents of a character required to be filed as an exhibit to the Registration
          Statement or required to be incorporated by reference into the Prospectus
          or
          required to be described in the Registration Statement or the Prospectus
          which
          are not filed or incorporated by reference or described as
          required.

         

         

        (d)  Bruce
          R.
          Worthington, Esq., Senior Vice President and General Counsel of the Company,
          shall have furnished to GS&Co. his written opinion (a draft of such opinion
          is attached as Annex II(c) hereto), dated the Time of Delivery, in form
          and
          substance satisfactory to GS&Co., to the effect that:

        

        (i)  The
          Shares to be delivered at the Time of Delivery have been duly authorized
          and,
          when delivered and paid for in accordance with this Agreement, will be
          validly
          issued and outstanding, fully paid and non-assessable. All of the issued
          and
          outstanding shares of common stock of the Utility have been duly authorized
          and
          are validly issued and outstanding, fully paid and non-assessable, are
          owned of
          record directly or indirectly by the Company and, to such counsel’s knowledge,
          are owned free and clear of all liens, encumbrances, equities or claims,
          except
          as disclosed in the Prospectus. 

         

        
          
            
            

          

          
            -8-

            
              

            

          

          
            
            

          

        

        (ii)  The
          Registration Statement and the Prospectus and any further amendments and
          supplements thereto made by the Company prior to the date hereof appear
          on their
          face to be appropriately responsive in all material respects to the requirements
          of the Securities Act and the rules and regulations of the Commission under
          the
          Securities Act except for the financial statements, financial statement
          schedules and other financial data included or incorporated by reference
          in or
          omitted from either of them, as to which such counsel may express no opinion;
          and each document filed under the Exchange Act, and incorporated by reference
          in
          the Registration Statement and Prospectus (except for financial statements,
          financial statement schedules and other financial data included in either
          of
          them, as to which such counsel may express no opinion) appears on its face
          to be
          appropriately responsive in all material respects when so filed to the
          requirements of the Exchange Act and the rules and regulations under the
          Exchange Act.

         

        (iii)  The
          compliance by the Company with all of the provisions of this Agreement
          applicable to it and the performance by the Company of its obligations
          hereunder
          will not (i) result in a violation of Company’s Articles of Incorporation, as
          amended, or By-Laws, as amended, (ii) breach or result in a default under
          any
          agreement, indenture or instrument listed as an Exhibit to the Registration
          Statement or (iii) violate any Applicable Law (other than any state securities
          laws, as to which such counsel may express no opinion) or any judgment,
          order or
          decree of any court or arbitrator known to such counsel, except in the
          case of
          clauses (ii) and (iii) where the breach or violation would not have a material
          adverse effect on the Company and its subsidiaries taken as a whole. For
          purposes of this opinion, the term “Applicable Law” means the federal laws of
          the United States and the laws of the State of California, in each case
          which,
          in such counsel’s experience, are normally applicable to the transactions of the
          type contemplated by this Agreement.

         

        (iv)  Based
          on
          such counsel’s review of Applicable Law, but without any investigation
          concerning any other laws, rules or regulations, no consent, approval,
          authorization or order of, or filing, registration or qualification with,
          any
          Governmental Authority, which has not been obtained, taken or made (other
          than
          as required by any state securities laws, as to which we express no opinion)
          is
          required under any Applicable Law for the performance by the Company of
          its
          obligations under this Agreement. For purposes of this opinion, the term
          “Governmental Authority” means any executive, legislative, judicial,
          administrative or regulatory body of the State of New York, the State of
          California or the United States of America.

         

        (v)  To
          such
          counsel’s knowledge (without making any docket search or similar investigation)
          and other than as set forth in the Prospectus, there are no legal proceedings
          pending or threatened against the Company or the Subsidiaries that could
          reasonably be expected to have a material adverse effect on the Company
          and the
          Subsidiaries, taken as a whole, or could reasonably be expected to materially
          impair the Company’s ability to perform its obligations under this Agreement. To
          such counsel’s knowledge, there are no legal or governmental actions, suits or
          proceedings pending or threatened which are required to be disclosed in
          the
          Registration Statement, other than those disclosed therein.

         

        
          
            
            

          

          
            -9-

            
              

            

          

          
            
            

          

        

        Such
          counsel shall also state that he has participated in the preparation of
          the
          Registration Statement and the Prospectus and is familiar with the documents
          incorporated by reference therein and, although he has not undertaken to
          investigate or verify independently, and does not assume responsibility
          for, the
          accuracy, completeness or fairness of the statements contained in either
          of
          them, based upon such participation (and relying as to certain factual
          matters
          in his evaluation of materiality to the extent they deemed reasonable on
          officers, employees and other representatives of the Company), no facts
          have
          come to his attention that led him to believe that (a) the Registration
          Statement or any amendment (except for the financial statements, financial
          statement schedules and other financial data included or incorporated by
          reference in or omitted from those documents, as to which such counsel
          may
          express no such belief), at the time it became effective, contained an
          untrue
          statement of a material fact or omitted to state a material fact required
          to be
          stated therein or necessary to make the statements therein not misleading
          or (b)
          the Prospectus or any amendment or supplement (except for the financial
          statements, financial statement schedules and other financial data included
          or
          incorporated by reference in or omitted from those documents, as to which
          such
          counsel may express no such belief), at the time the Prospectus was issued
          or on
          the date of such counsel’s opinion, included or includes an untrue statement of
          a material fact or omitted or omits to state a material fact necessary
          in order
          to make the statements therein, in the light of the circumstances under
          which
          they were made, not misleading. Such counsel does not know of any amendment
          to
          the Registration Statement required to be filed or of any contracts or
          other
          documents of a character required to be filed as an exhibit to the Registration
          Statement or required to be incorporated by reference into the Prospectus
          or
          required to be described in the Registration Statement or the Prospectus
          which
          are not filed or incorporated by reference or described as
          required.

         

         

        (e)  On
          the
          date of the Prospectus at a time prior to the execution of this Agreement,
          at
          9:30 a.m., New York City time, on the effective date of any post-effective
          amendment to the Registration Statement filed subsequent to the date of
          this
          Agreement and also at the Time of Delivery, Deloitte & Touche LLP shall have
          furnished to you a letter or letters, dated the respective dates of delivery
          thereof, in form and substance satisfactory to you, to the effect set forth
          in
          Annex I hereto (the executed copy of the letter delivered prior to the
          execution
          of this Agreement is attached as Annex I(a) hereto and a draft of the form
          of
          letter to be delivered on the effective date of any post-effective amendment
          to
          the Registration Statement and as of the Time of Delivery is attached as
          Annex
          I(b) hereto);

         

        (f)  (i)
          Neither the Company nor any of its subsidiaries shall have sustained since
          the
          date of the latest audited financial statements included in the Prospectus
          any
          loss or interference with its business from fire, explosion, flood or other
          calamity, whether
          or not
          covered by insurance, or from any labor dispute or court or governmental
          action,
          order or decree, otherwise than as set forth or contemplated in the Prospectus,
          and (ii) since the respective dates as of which information is given in
          the
          Prospectus there shall not have been any material change in the capital
          stock
          (other than changes occurring in the ordinary course of business and changes
          resulting from transactions relating to employee benefit plans or dividend
          reinvestment, stock option, stock award, retirement and stock purchase
          plans or
          repurchases of capital stock by the Company, including repurchases associated
          with the ASB or long-term debt of the Company or any of its subsidiaries
          or any
          change, or any development which would reasonably be expected to result
          in a
          change, in or affecting the general affairs, management, financial position,
          shareholders’ equity or results of operations of the Company and its
          subsidiaries, otherwise than as set forth or contemplated in the Prospectus,
          the
          effect of which, in any such case described in clause (i) or (ii), is in
          the
          judgment of GS&Co. so material and adverse as to make it impracticable or
          inadvisable to proceed with the public offering or the delivery of the
          Shares
          being delivered at the Time of Delivery on the terms and in the manner
          contemplated in the Prospectus;

         

        
          
            
            

          

          
            -10-

            
              

            

          

          
            
            

          

        

        (g)  On
          or
after
          the date
          hereof (i) no downgrading shall have occurred in the rating accorded the
          Company’s debt securities by any “nationally recognized statistical rating
          organization”, as that term is defined by the Commission for purposes of Rule
          436(g)(2) under the Securities Act, and (ii) no such organization shall
          have
          publicly announced that it has under surveillance or review, with possible
          negative implications, its rating of any of the Company’s debt
          securities;

         

        (h)  On
          or
          after the date hereof there shall not have occurred any of the following:
          (i) a
          suspension or material limitation in trading in securities generally on
          the New
          York Stock Exchange; (ii) a suspension or material limitation in trading
          in the
          Company’s securities on the New York Stock Exchange; (iii) a general moratorium
          on commercial banking activities declared by either Federal or New York
          State
          authorities or a material disruption in commercial banking or securities
          settlement or clearance services in the United States; (iv) the outbreak
          or
          escalation of hostilities involving the United States or the declaration
          by the
          United States of a national emergency or war or (v) the occurrence of any
          other
          calamity or crisis or any change in financial, political or economic conditions
          in the United States or elsewhere, if the effect of any such event specified
          in
          clause (iv) or (v) in the judgment of GS&Co. makes it impracticable or
          inadvisable to proceed with the public offering or the delivery of the
          Shares
          being delivered at the Time of Delivery on the terms and in the manner
          contemplated in the Prospectus;

         

        (i)  The
          Shares to be delivered at the Time of Delivery shall have been duly listed
          on
          the New York Stock Exchange;

         

        (j)  The
          Company shall have complied with the provisions of Section 4(c) hereof
          with
          respect to the furnishing of prospectuses on the New York Business Day
          next
          succeeding the
          date of
          this Agreement; and

         

        (k)  The
          Company shall have furnished or caused to be furnished to GS&Co. at the Time
          of Delivery certificates of officers of the Company satisfactory to GS&Co.
          as to the accuracy of the representations and warranties of the Company
          herein
          at and as of the Time of Delivery, as to the performance by the Company
          of all
          of its obligations hereunder to be performed at or prior to the Time of
          Delivery, and as to the other matters as GS&Co. may reasonably request, and
          the Company shall have furnished certificates as to the matters set forth
          in
          subsections (a) and (e) of this Section, and as to such other matters as
          GS&Co. may reasonably request.

         

                7.        (a)   The
          Company shall indemnify
          and hold harmless GS&Co., and any such person who may be deemed to be an
“Underwriter” within the meaning of the Securities Act, each person, if any, who
          controls GS&Co. within the meaning of either Section 15 of the Securities
          Act or Section 20 of the Exchange Act, and each partner, principal, member,
          officer, director, employee and agent of GS&Co. from and against any and all
          losses, claims, damages or liabilities to which GS&Co. may become subject,
          under the Securities Act or otherwise, insofar as such losses, claims,
          damages
          or liabilities (or actions in respect thereof) arise out of or are based
          upon an
          untrue statement or alleged untrue statement of a material fact contained
          in any
          Preliminary Prospectus, the Registration Statement or the Prospectus, or
          any
          amendment or supplement thereto, or arise out of or are based upon the
          omission
          or alleged omission to state therein a material fact required to be stated
          therein or necessary to make the statements therein not misleading, and
          will
          reimburse GS&Co. for any legal or other expenses reasonably incurred by
          GS&Co. in connection with investigating or defending any such action or
          claim as such expenses are incurred; provided,
          however,
          that
          the Company shall not be liable in any such case to the extent that any
          such
          loss, claim, damage or liability arises out of or is based upon an untrue
          statement or alleged untrue statement or omission or alleged omission made
          in
          any Preliminary Prospectus, the Registration Statement or the Prospectus
          or any
          such amendment or supplement in reliance upon and in conformity with written
          information furnished to the Company by GS&Co. expressly for use
          therein.

         

        
          
            
            

          

          
            -11-

            
              

            

          

          
            
            

          

        

         

        (b)  GS&Co.
          will indemnify and hold harmless the Company against any losses, claims,
          damages
          or liabilities to which the Company may become subject, under the Act or
          otherwise, insofar as such losses, claims, damages or liabilities (or actions
          in
          respect thereof) arise out of or are based upon an untrue statement or
          alleged
          untrue statement of a material fact contained in any Preliminary Prospectus,
          the
          Registration Statement, the Prospectus, the Prospectus as amended or
          supplemented or any other prospectus relating to the Shares, or any amendment
          or
          supplement thereto, or arise out of or are based upon the omission or alleged
          omission to state therein a material fact required to be stated therein
          or
          necessary to make the statements therein not misleading, in each case to
          the
          extent, but only to the extent, that such untrue statement or alleged untrue
          statement or omission or alleged omission was made in any Preliminary
          Prospectus, the Registration Statement, the Prospectus, the Prospectus
          as
          amended or supplemented or any other prospectus relating to the Shares,
          or any
          such amendment or supplement, in reliance upon and in conformity with written
          information furnished to the Company by GS&Co. expressly for use therein;
          and will reimburse the Company for any legal or other expenses reasonably
          incurred by the Company in connection with investigating or defending any
          such
          action or claim as such expenses are incurred.

         

        (c)  Promptly
          after receipt by an indemnified party under subsection (a) or (b) above
          of
          notice of the commencement
          of any
          action, such indemnified party shall, if a claim in respect thereof is
          to be
          made against the indemnifying party under such subsection, notify the
          indemnifying party in writing of the commencement thereof; but the omission
          so
          to notify the indemnifying party shall not relieve it from any liability
          which
          it may have to any indemnified party otherwise
          than under such subsection.
          In case
          any such action shall be brought against any indemnified party and it shall
          notify the indemnifying party of the commencement thereof, the indemnifying
          party shall be entitled to participate therein and, to the extent that
          it shall
          wish, jointly with any other indemnifying party similarly notified, to
          assume
          the defense thereof, with counsel satisfactory to such indemnified party
          (who
          shall not, except with the consent of the indemnified party, be counsel
          to the
          indemnifying party), and, after notice from the indemnifying party to such
          indemnified party of its election so to assume the defense thereof, the
          indemnifying party shall not be liable to such indemnified party under
          such
          subsection for any legal expenses of other counsel or any other expenses,
          in
          each case subsequently incurred by such indemnified party, in connection
          with
          the defense thereof other than reasonable costs of investigation. No
          indemnifying party shall, without the written consent of the indemnified
          party,
          effect the settlement or compromise of, or consent to the entry of any
          judgment
          with respect to, any pending or threatened action or claim in respect of
          which
          indemnification or contribution may be sought hereunder (whether or not
          the
          indemnified party is an actual or potential party to such action or claim)
          unless such settlement, compromise or judgment (i) includes an unconditional
          release of the indemnified party from all liability arising out of such
          action
          or claim and (ii) does not include any statement as to or an admission
          of fault,
          culpability or a failure to act, by or on behalf of any indemnified
          party.

         

        (d)  If
          the
          indemnification provided for in this Section 7 is unavailable to or insufficient
          to hold harmless an indemnified party under subsection (a) or (b) above
          in
          respect of any losses, claims, damages or liabilities
          (or
          actions in respect thereof) referred to therein, then each indemnifying
          party
          shall contribute to the amount paid or payable by such indemnified party
          as a
          result of such losses, claims, damages or liabilities (or actions in respect
          thereof) in such proportion as is appropriate to reflect the relative benefits
          received by the Company on the one hand and GS&Co. on the other from the
          offering of the Shares to which such loss, claim, damage or liability (or
          action
          in respect thereof) relates. If, however, the allocation provided by the
          immediately preceding sentence is not permitted by applicable law or if
          the
          indemnified party failed to give the notice required under subsection (c)
          above,
          then each indemnifying party shall contribute to such amount paid or payable
          by
          such indemnified party in such proportion as is appropriate to reflect
          not only
          such relative benefits but also the relative fault of the Company on the
          one
          hand and GS&Co. on the other in connection with the statements or omissions
          which resulted in such losses, claims, damages or liabilities (or actions
          in
          respect thereof), as well as any other relevant equitable considerations.
          The
          relative benefits received by the Company on the one hand and GS&Co. on the
          other shall be deemed to be in the same proportion as the total net proceeds
          from such offering (before deducting expenses) received by the Company
          bear to
          the total commissions received by GS&Co. The relative fault shall be
          determined by reference to, among other things, whether the untrue or alleged
          untrue statement of a material fact or the omission or alleged omission
          to state
          a material fact relates to information supplied by the Company on the one
          hand
          or GS&Co. on the other and the parties’ relative intent, knowledge, access
          to information and opportunity to correct or prevent such statement or
          omission.
          The Company and GS&Co. agree that it would not be just and equitable if
          contributions pursuant to this subsection (d) were determined by pro rata
          allocation (even if GS&Co. were treated as one entity for such purpose) or
          by any other method of allocation which does not take account of the equitable
          considerations referred to above in this subsection (d). The
          amount paid or payable by an indemnified party as a result of the losses,
          claims, damages or liabilities (or actions in respect thereof) referred
          to above
          in this subsection (d) shall be deemed to include any legal or other expenses
          reasonably incurred by such indemnified party in connection with investigating
          or defending any such action or claim. Notwithstanding
          the provisions of this subsection (d), GS&Co. shall not be required to
          contribute any amount in excess of the amount by which the total price
          at which
          the applicable Shares distributed to the public were offered to the public
          exceeds the amount of any damages which GS&Co.
          has
          otherwise been required to pay by reason of such untrue or alleged untrue
          statement or omission or alleged omission. No
          person
          guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
          of
          the Securities Act) shall be entitled to contribution from any person who
          was
          not guilty of such fraudulent misrepresentation.

         

        
          
            
            

          

          
            -12-

            
              

            

          

          
            
            

          

        

        (e)  The
          obligations of, and the indemnification provided by, the Company and GS&Co.
          under this Section 7 shall be in addition to any liability which the Company
          and
          GS&Co. may otherwise have, and, for the avoidance of doubt, shall be in
          addition to any other indemnification provided by the Company and GS&Co. or
          any other party, including the indemnification provided under the ASB,
          and shall
          extend, upon the same terms and conditions, to each Indemnified Party (as
          defined in the ASB); provided, however, that only this Section 7 and not
          clause
          (ii) of paragraph 8 of Annex B to the ASB shall apply in respect of the
          Shares.

        

        8.  The
          respective indemnities, agreements, representations, warranties and other
          statements of the Company and GS&Co., as set forth in this Agreement or made
          by or on behalf of them, respectively, pursuant to this Agreement, shall
          remain
          in full force and effect, regardless of any investigation (or any statement
          as
          to the results thereof) made by or on behalf of GS&Co. or any controlling
          person of GS&Co. or the Company or any officer or director or controlling
          person of the Company and shall survive delivery of and payment for the
          Shares.

         

        9.  All
          statements, requests, notices and agreements hereunder shall be in writing,
          and
          if to GS&Co. shall be delivered or sent by mail, telex or facsimile
          transmission to Goldman, Sachs & Co., 85 Broad Street, New York, New York
          10004, Attention: [Registration Department] and if to the Company shall
          be
          delivered or sent by mail to the address of the Company set forth in the
          Registration Statement, Attention: General Counsel. Any such statements,
          requests, notices or agreements shall take effect upon receipt
          thereof.

         

        10.  This
          Agreement shall be binding upon, and inure solely to the benefit of, GS&Co.
          and the Company and, to the extent provided in Sections 7 and 8 hereof,
          each
          Indemnified Party (as defined in the ASB), and their respective heirs,
          executors, administrators, successors and assigns, and no other person
          shall
          acquire or have any right under or by virtue of this Agreement. No purchaser
          of
          any of the Shares from GS&Co. shall be deemed a successor or assign by
          reason merely of such purchase.

         

        11.  Time
          shall be of the essence of this Agreement. As used herein, the term “business
          day” shall mean any day when the Commission’s office in Washington, D.C. is open
          for business.

         

        12.  This
          Agreement shall be governed by and construed in accordance with the laws
          of the
          State of New York.

         

        13.  Each
          of
          the Company and GS&Co. hereby irrevocably waives, to the fullest extent
          permitted by applicable law, any and all right to trial by jury in any
          legal
          proceeding arising out of or relating to this Agreement or the transactions
          contemplated hereby.

         

        
          
            
            

          

          
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        14.  This
          Agreement may be executed by any one or more of the parties hereto in any
          number
          of counterparts, each of which shall be deemed to be an original, but all
          such
          counterparts shall together constitute one and the same instrument.

         

        15.  The
          Company is authorized, subject to applicable law, to disclose any and all
          aspects of this potential transaction that are necessary to support any
          U.S.
          federal income tax benefits expected to be claimed with respect to such
          transaction, and all materials of any kind (including tax opinions and
          other tax
          analyses) related to those benefits, without GS&Co. imposing any limitation
          of any kind. However, any information relating to the tax treatment and
          tax
          structure shall remain confidential (and the foregoing sentence shall not
          apply)
          to the extent necessary to enable any person to comply with securities
          laws. For
          this purpose, “tax structure” is limited to any facts that may be relevant to
          that treatment.

         

        
          
            
               

               

               

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        If
          the
          foregoing is in accordance with your understanding, please sign and return
          to us
          five counterparts hereof, and upon the acceptance hereof by GS&Co., this
          letter and such acceptance hereof shall constitute a binding agreement
          between
          GS&Co. and the Company.

        Very
          truly  yours,

        PG&E
          Corporation

         

        By:                                                                     
          

        Name: 

        Title: 

        

        
          
             

             

             

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        Accepted
          as of the date hereof:

         

        Goldman,
          Sachs & Co.

         

        By:                                               
           

              
(Goldman,
          Sachs & Co.)

        

        
          
            
               

               

               

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        SCHEDULE
          I

         

        

         

        Name                                                           
                State
          of Incorporation 

        Pacific
          Gas and Electric Company       California

        
          
            
               

              NYLIB5
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        ANNEX
          I

         

        Pursuant
          to Section 6(e) of the Agreement, the accountants shall furnish letters
          to
          GS&Co. to the effect that:

        

        (i) They
          are
          an independent registered public accounting firm with respect to the Company
          and
          its subsidiaries within the meaning of the Securities Act and the applicable
          published rules and regulations thereunder adopted by the Commission and
          the
          PCAOB;

        

        (ii) In
          their
          opinion, the financial statements and any supplementary financial information
          and schedules (and, if applicable, financial forecasts and/or pro forma
          financial information) audited by them and included or incorporated by
          reference
          in the Prospectus or the Registration Statement comply as to form in all
          material respects with the applicable accounting requirements of the Securities
          Act or the Exchange Act, as applicable, and the related published rules
          and
          regulations thereunder; and, if applicable, they have made a review in
          accordance with standards established by the PCAOB of the unaudited consolidated
          interim financial statements, selected financial data, pro forma financial
          information, financial forecasts and/or condensed financial statements
          derived
          from audited financial statements of the Company for the periods specified
          in
          such letter, as indicated in their reports thereon, copies of which have
          been
          separately furnished to GS&Co.;

        

        (iii) They
          have
          made a review in accordance with standards established by the PCAOB of
          the
          unaudited condensed consolidated statements of income, consolidated balance
          sheets and consolidated statements of cash flows included in the Prospectus
          and/or included in the Company’s quarterly report on Form 10-Q incorporated by
          reference into the Prospectus as indicated in their reports thereon copies
          of
          which have been separately furnished to GS&Co.; and on the basis of
          specified procedures including inquiries of officials of the Company who
          have
          responsibility for financial and accounting matters regarding whether the
          unaudited condensed consolidated financial statements referred to in paragraph
          (vi)(A)(i) below comply as to form in all material respects with the applicable
          accounting requirements of the Securities Act and the Exchange Act and
          the
          related published rules and regulations, nothing came to their attention
          that
          caused them to believe that the unaudited condensed consolidated financial
          statements do not comply as to form in all material respects with the applicable
          accounting requirements of the Securities Act and the Exchange Act and
          the
          related published rules and regulations;

        

        (iv) The
          unaudited selected financial information with respect to the consolidated
          results of operations and financial position of the Company for the five
          most
          recent fiscal years included in the Prospectus and included or incorporated
          by
          reference in Item 6 of the Company’s Annual Report on Form 10-K for the most
          recent fiscal year agrees with the corresponding amounts (after restatements
          where applicable) in the audited consolidated financial statements for
          such five
          fiscal years which were included or incorporated by reference in the Company’s
          Annual Reports on Form 10-K for such fiscal years;

        

        (v) On
          the
          basis of limited procedures, not constituting an examination in accordance
          with
          the standards of the PCAOB, consisting of a reading of the unaudited financial
          statements and other information referred to below, a reading of the latest
          available interim financial statements of the Company and its subsidiaries,
          inspection of the minute books of the Company and its subsidiaries since
          the
          date of the latest audited financial statements included in the Prospectus,
          inquiries of officials of the Company and its subsidiaries responsible
          for
          financial and accounting matters and such other inquiries and procedures
          as may
          be specified in such letter, nothing came to their attention that caused
          them to
          believe that:

        

        
          
            
            

          

          
            -1-

            
              

            

          

          
            
            

          

        

        (A)
          (i)
          the unaudited consolidated statements of income, consolidated balance sheets
          and
          consolidated statements of cash flows included in the Prospectus and/or
          included
          or incorporated by reference in the Company’s Quarterly Reports on Form 10-Q
          incorporated by reference in the Prospectus do not comply as to form in
          all
          material respects with the applicable accounting requirements of the Securities
          Act and the Exchange Act and the related published rules and regulations,
          or
          (ii) any material modifications should be made to the unaudited condensed
          consolidated statements of income, consolidated balance sheets and consolidated
          statements of cash flows included in the Prospectus or included in the
          Company’s
          Quarterly Reports on Form 10-Q incorporated by reference in the Prospectus
          for
          them to be in conformity with generally accepted accounting
          principles;

        

        (B) any
          other
          unaudited income statement data and balance sheet items included or incorporated
          by reference in the Prospectus do not agree with the corresponding items
          in the
          unaudited consolidated financial statements from which such data and items
          were
          derived, and any such unaudited data and items were not determined on a
          basis
          substantially consistent with the basis for the corresponding amounts in
          the
          audited consolidated financial statements included or incorporated by reference
          in the Company’s Annual Report on Form 10-K for the most recent fiscal year
          incorporated by reference in the Prospectus;

        

        (C) the
          unaudited financial statements which were not included in the Prospectus
          but
          from which were derived any unaudited condensed financial statements referred
          to
          in clause (A) and any unaudited income statement data and balance sheet
          items
          included or incorporated by reference in the Prospectus and referred to
          in
          clause (B) were not determined on a basis substantially consistent with
          the
          basis for the audited consolidated financial statements included or incorporated
          by reference in the Company’s Annual Report on Form 10-K for the most recent
          fiscal year incorporated by reference in the Prospectus;

        

        (D) any
          unaudited pro forma consolidated condensed financial statements included
          or
          incorporated by reference in the Prospectus do not comply as to form in
          all
          material respects with the applicable accounting requirements of the Securities
          Act and the Exchange Act and the published rules and regulations thereunder
          or
          the pro forma adjustments have not been properly applied to the historical
          amounts in the compilation of those statements;

        

        (E) as
          of a
          specified date not more than five days prior to the date of such letter,
          there
          have been any changes in the consolidated capital stock (other than issuances
          of
          capital stock upon exercise of options and stock appreciation rights, upon
          earn-outs of performance shares and upon conversions of convertible securities,
          in each case which were outstanding on the date of the latest financial
          statements included or incorporated by reference in the Prospectus) or
          any
          increase in the consolidated long-term debt of the Company and its subsidiaries,
          or any decreases in consolidated net current assets or shareholders’ equity or
          other items specified by GS&Co., or any increases in any items specified by
          GS&Co., in each case as compared with amounts shown in the latest balance
          sheet included or incorporated by reference in the Prospectus, except in
          each
          case for changes, increases or decreases which the Prospectus discloses
          have
          occurred or may occur or which are described in such letter; and

        

        (F) for
          the
          period from the date of the latest financial statements included or incorporated
          by reference in the Prospectus to the specified date referred to in clause
          (E)
          there were any decreases in consolidated net revenues or operating profit
          or the
          total or per share amounts of consolidated net income or other items specified
          by GS&Co., or any increases in any items specified by GS&Co., in each
          case as compared with the comparable period of the preceding year and with
          any
          other period of corresponding length specified by GS&Co., except in each
          case for decreases or increases which the Prospectus discloses have occurred
          or
          may occur or which are described in such letter; and

         

        
          
            
            

          

          
            -2-

            
              

            

          

          
            
            

          

        

        (vi) In
          addition to the examination referred to in their report(s) included or
          incorporated by reference in the Prospectus and the limited procedures,
          inspection of minute books, inquiries and other procedures referred to
          in
          paragraphs (iii) and (vi) above, they have carried out certain specified
          procedures, not constituting an examination in accordance with generally
          accepted auditing standards, with respect to certain amounts, percentages
          and
          financial information specified by GS&Co., which are derived from the
          general accounting records of the Company and its subsidiaries, which appear
          in
          the Prospectus (excluding documents incorporated by reference) or in Part
          II of,
          or in exhibits and schedules to, the Registration Statement specified by
          GS&Co. or in documents incorporated by reference in the Prospectus specified
          by GS&Co., and have compared certain of such amounts, percentages and
          financial information with the accounting records of the Company and its
          subsidiaries and have found them to be in agreement.

        

        

        
          
            
               

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        ANNEX
          II(a)

         

        FORM
          OF
          OPINION

        OF
          CADWALADER, WICKERSHAM & TAFT LLP

         

        

        

        

        
          
            
               

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        ANNEX
          II(b)

         

        FORM
          OF
          OPINION

        OF
          ORRICK, HERRINGTON & SUTCLIFFE LLP

         

        
          
             

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        ANNEX
          II(c)

         

        FORM
          OF
          OPINION

        OF
          BRUCE
          R. WORTHINGTON, ESQ.

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