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AGREEMENT AND PLAN OF
MERGER
BY AND BETWEEN
ENRON CORP.,
PORTLAND GENERAL CORPORATION
AND
NEW FALCON CORP.
DATED AS OF JULY 20, 1996
TABLE OF CONTENTS
ARTICLE I
THE MERGERS
Section 1.1 THE REINCORPORATION MERGER ....................1
Section 1.2 THE PGC MERGER ................................2
Section 1.3 EFFECTIVE TIMES OF THE MERGERS ................3
ARTICLE II
TREATMENT OF SHARES
Section 2.1 EFFECT OF THE REINCORPORATION MERGER ON
CAPITAL STOCK ................................3
Section 2.2 EFFECT OF THE PGC MERGER ON CAPITAL STOCK .....4
Section 2.3 NO EXCHANGE OF ENRON STOCK CERTIFICATES .......4
Section 2.4 EXCHANGE OF PGC COMMON STOCK CERTIFICATES .....5
Section 2.5 ADJUSTMENTS TO PGC CONVERSION RATIO ...........7
ARTICLE III
THE CLOSING
Section 3.1 CLOSING .......................................8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ENRON
Section 4.1 ORGANIZATION AND QUALIFICATION ................8
Section 4.2 SUBSIDIARIES ..................................9
Section 4.3 CAPITALIZATION ................................9
Section 4.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY
APPROVALS; COMPLIANCE .......................10
Section 4.5 REPORTS AND FINANCIAL STATEMENTS .............11
Section 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS .........12
Section 4.7 LITIGATION ...................................12
Section 4.8 REGISTRATION STATEMENT AND PROXY STATEMENT ...12
Section 4.9 TAX MATTERS ..................................13
Section 4.10 EMPLOYEE MATTERS; ERISA .....................14
Section 4.11 ENVIRONMENTAL PROTECTION ....................15
Section 4.12 REGULATION AS A UTILITY .....................17
Section 4.13 VOTE REQUIRED ...............................17
Section 4.14 OPINION OF FINANCIAL ADVISOR ................17
Section 4.15 INSURANCE ...................................18
Section 4.16 APPLICABILITY OF CERTAIN DELAWARE LAW
PROVISIONS .................................18
Section 4.17 OPERATIONS OF THE COMPANY ...................18
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PGC
Section 5.1 ORGANIZATION AND QUALIFICATION ...............18
Section 5.2 SUBSIDIARIES .................................19
Section 5.3 CAPITALIZATION ...............................19
Section 5.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY
APPROVALS; COMPLIANCE........................19
Section 5.5 REPORTS AND FINANCIAL STATEMENTS .............21
Section 5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS .........21
Section 5.7 LITIGATION ...................................21
Section 5.8 REGISTRATION STATEMENT AND PROXY STATEMENT ...22
Section 5.9 TAX MATTERS ..................................22
Section 5.10 EMPLOYEE MATTERS; ERISA .....................23
Section 5.11 ENVIRONMENTAL PROTECTION ....................27
Section 5.12 REGULATION AS A UTILITY .....................28
Section 5.13 VOTE REQUIRED ...............................28
Section 5.14 OPINION OF FINANCIAL ADVISOR ................28
Section 5.15 INSURANCE ...................................28
Section 5.16 APPLICABILITY OF CERTAIN OREGON LAW
PROVISION ..................................29
Section 5.17 STATUS OF PGC NUCLEAR FACILITY ..............29
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 ORDINARY COURSE OF BUSINESS ..................29
Section 6.2 DIVIDENDS AND REPURCHASES ....................30
Section 6.3 ISSUANCE OF SECURITIES .......................31
Section 6.4 CHARTER DOCUMENTS ............................31
Section 6.5 ACQUISITIONS .................................31
Section 6.6 NO DISPOSITIONS ..............................31
Section 6.7 INDEBTEDNESS .................................31
Section 6.8 CAPITAL EXPENDITURES .........................32
Section 6.9 COMPENSATION, BENEFITS .......................32
Section 6.10 TAX-FREE STATUS .............................32
Section 6.11 DISCHARGE OF LIABILITIES ....................32
Section 6.12 COOPERATION, NOTIFICATION ...................33
Section 6.13 CONDUCT OF BUSINESS BY ENRON ................33
Section 6.14 THIRD-PARTY CONSENTS ........................33
Section 6.15 NO BREACH, ETC. .............................33
Section 6.16 INSURANCE ...................................33
Section 6.17 PERMITS .....................................33
Section 6.18 NUCLEAR OPERATIONS ..........................33
Section 6.19 OPERATIONS OF COMPANY .......................34
Section 6.20 AGREEMENTS ..................................34
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ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 ACCESS TO INFORMATION ........................35
Section 7.2 JOINT PROXY STATEMENT AND REGISTRATION
STATEMENT ...................................35
Section 7.3 REGULATORY MATTERS ...........................36
Section 7.4 SHAREHOLDER APPROVALS ........................37
Section 7.5 DIRECTORS' AND OFFICERS' INDEMNIFICATION .....38
Section 7.6 DISCLOSURE SCHEDULES .........................40
Section 7.7 PUBLIC ANNOUNCEMENTS .........................40
Section 7.8 RULE 145 AFFILIATES ..........................40
Section 7.9 EMPLOYEE AGREEMENTS ..........................40
Section 7.10 EMPLOYEE BENEFIT PLANS ......................41
Section 7.11 INCENTIVE, STOCK AND OTHER PLANS ............42
Section 7.12 NO SOLICITATIONS ............................43
Section 7.13 COMPANY BOARD OF DIRECTORS ..................45
Section 7.14 COMPANY OFFICERS ............................45
Section 7.15 EMPLOYMENT CONTRACTS ........................46
Section 7.16 POST-MERGER OPERATIONS ......................46
Section 7.17 NYSE LISTING ................................46
Section 7.18 EXPENSES ....................................46
Section 7.19 FURTHER ASSURANCES ..........................47
ARTICLE VIII
CONDITIONS
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO
EFFECT THE MERGERS...........................47
Section 8.2 CONDITIONS TO OBLIGATION OF ENRON AND THE
COMPANY TO EFFECT THE MERGERS ...............48
Section 8.3 CONDITIONS TO OBLIGATION OF PGC TO EFFECT
THE PGC MERGER ..............................50
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 TERMINATION ..................................51
Section 9.2 EFFECT OF TERMINATION ........................53
Section 9.3 TERMINATION FEES .............................54
Section 9.4 AMENDMENT ....................................55
Section 9.5 WAIVER .......................................55
ARTICLE X
GENERAL PROVISIONS
Section 10.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS ...................55
Section 10.2 BROKERS .....................................56
Section 10.3 NOTICES .....................................56
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Section 10.4 MISCELLANEOUS ...............................57
Section 10.5 INTERPRETATION ..............................57
Section 10.6 COUNTERPARTS; EFFECT ........................58
Section 10.7 PARTIES IN INTEREST .........................58
Section 10.8 SPECIFIC PERFORMANCE ........................58
Section 10.9 WAIVER OF JURY TRIAL ........................58
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INDEX OF DEFINED TERMS
TERM PAGE
1935 Act ......................................................9
Accrued Benefits .............................................41
Act .................................................60, 61
Affiliate Agreement ..........................................40
Agreement .....................................................1
Atomic Energy Act ............................................21
Ceiling Price ................................................53
Change in Control ............................................32
Closing ......................................................8
Closing Date ..................................................8
Closing Price .................................................6
Code ......................................................1
Committee ....................................................34
Company ..................................................1, 60
Company Common Stock ......................................3, 60
Company Preferred Stock .......................................4
Confidentiality Agreement ....................................35
Converted Shares ..............................................5
Current Participants .........................................41
Decommissioning Plan .........................................29
DGCL ......................................................1
Disclosure Schedules .........................................40
Effective Time ................................................3
Enron ..................................................1, 60
Enron Benefit Plans ..........................................14
Enron Business Combination ...................................55
Enron Common Stock ............................................3
Enron Competing Transaction ..................................45
Enron Convertible Preferred Stock .............................4
Enron Disclosure Schedule ....................................40
Enron Employee Arrangements ..................................14
Enron Financial Statements ...................................11
Enron Material Adverse Effect .................................8
Enron Preferred Stock .........................................4
Enron Required Consents ......................................10
Enron Required Statutory Approvals ...........................11
Enron SEC Reports ............................................11
Enron Shareholders' Approval .................................17
Enron Special Meeting ........................................38
Enron Transaction Price ......................................53
Enron Violation ..............................................10
Environmental Claim ..........................................16
Environmental Laws ...........................................16
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Environmental Permits ........................................15
ERISA .....................................................14
Exchange Act .................................................11
Exchange Agent ................................................5
Extraordinary Distribution ....................................7
Extraordinary Distribution Value ..............................7
Final Order ..................................................48
First Effective Time ..........................................3
Floor Price ..................................................53
Foundation ...................................................46
GAAP .....................................................12
Governmental Authority .......................................10
Hazardous Materials ..........................................17
HSR Act .....................................................37
Indemnified Parties ..........................................38
Indemnified Party ............................................38
Joint Proxy Statement ........................................12
Joint Proxy/Registration Statement ...........................35
Merger Agreement .............................................60
Mergers ......................................................2
Nonqualified Plans ...........................................41
NRC .....................................................21
NYSE ......................................................6
OBCA ......................................................1
ODOE .................................................35, 37
Oregon Department of State ....................................3
Permits .....................................................11
PGC ......................................................1
PGC Benefit Plans ............................................24
PGC Business Combination .....................................54
PGC Certificates ..............................................5
PGC Common Stock ..............................................4
PGC Competing Transaction ....................................44
PGC Conversion Ratio ..........................................4
PGC Disclosure Schedule ......................................40
PGC Employees ................................................41
PGC ERISA Affiliate ..........................................24
PGC Financial Statements .....................................21
PGC Group ....................................................23
PGC Material Adverse Effect ..................................18
PGC Merger ....................................................2
PGC Required Consents ........................................20
PGC Required Statutory Approvals .............................20
PGC SEC Reports ..............................................21
PGC Shareholders' Approval ...................................28
PGC Special Meeting ..........................................37
PGC Stock Option .............................................42
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PGC Stock Plan ...............................................42
PGC Violation ................................................20
PGE .....................................................28
Power Act ....................................................21
Registration Statement .......................................12
Regulatory Plans .............................................36
Reincorporation Merger ........................................1
Release .....................................................17
Representatives ..............................................35
Revised Enron Share Value .....................................8
SEC .....................................................11
Second Effective Time .........................................3
Securities Act ...............................................11
Shares .....................................................60
Stock Plans ..................................................43
Surviving Corporation .........................................1
Tax Return ...................................................13
Taxes .....................................................13
Termination Date .............................................51
Trading Day ...................................................6
Transferred Employee .........................................41
Transition Year ..............................................42
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AGREEMENT AND PLAN
OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of July 20, 1996
(this "AGREEMENT"), is by and among Enron Corp., a Delaware corporation
("ENRON"), Portland General Corporation, an Oregon corporation ("PGC"),
and New Falcon Corp., an Oregon corporation and wholly owned subsidiary of
Enron (the "COMPANY").
WHEREAS, the boards of directors of Enron and PGC have approved
and deemed it advisable and in the best interests of their respective
shareholders to consummate the transactions contemplated herein under
which the businesses of Enron and PGC would be combined by means of (i)
the reincorporation of Enron as an Oregon corporation through the merger
of Enron with and into the Company, as a result of which shareholders of
Enron will become shareholders of the Company, and (ii) the subsequent
merger of PGC with and into the Company, as a result of which the
shareholders of PGC will become shareholders of the Company, all on the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, for federal income tax purposes, it is intended that the
transactions contemplated hereby will qualify as reorganizations under the
provisions of Section 368(a) of the Internal Revenue Code of 1986, as
amended, and rules and regulations promulgated thereunder (the "CODE");
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements contained
herein, the parties hereto agree as follows:
ARTICLE I
THE MERGERS
Section 1.1 THE REINCORPORATION MERGER. Upon the terms and
subject to the conditions of this Agreement, at the First Effective Time
(as defined in SECTION 1.3 (A)):
(a) EFFECT. Enron shall be merged with and into the Company
(the "REINCORPORATION MERGER") in accordance with the applicable
provisions of the laws of the States of Delaware and Oregon, as a
result of which the separate corporate existence of Enron shall cease,
and the Company shall be the surviving corporation (sometimes referred
to herein as the "SURVIVING CORPORATION") and shall continue its
corporate existence under the laws of the State of Oregon. The
effects and consequences of the Reincorporation Merger shall be as set
forth in Section 252 of the Delaware General Corporation Law ("DGCL")
and Section 60.497 of the Oregon Business Corporation Act (the
"OBCA").
(b) ARTICLES OF INCORPORATION. At the First Effective Time, the
articles of incorporation of the Company, which shall be substantially
similar to the certificate of
incorporation of Enron in effect on the
date hereof, with such changes as are necessary to comply with the
OBCA or as may be agreed upon by Enron and PGC prior to the PGC
Special Meeting (as defined herein), shall be the articles of
incorporation of the Surviving Corporation and thereafter shall
continue to be its articles of incorporation until amended as provided
therein and pursuant to the applicable provisions of the OBCA, except
that Article 1 of such articles of incorporation shall be amended to
read in its entirety as follows:
"The name of the corporation is Enron Corp."
(c) BYLAWS. The bylaws of the Company, which shall be
substantially similar to the bylaws of Enron in effect on the date
hereof, with such changes as are necessary to comply with the OBCA or
as may be agreed upon by Enron and PGC prior to the PGC Special
Meeting, shall be the bylaws of the Surviving Corporation and
thereafter shall continue to be its bylaws until amended as provided
therein and pursuant to the applicable provisions of the OBCA.
(d) OFFICERS AND DIRECTORS. The directors of Enron immediately
prior to the First Effective Time shall be the directors of the
Surviving Corporation, each to hold office in accordance with the
articles of incorporation and bylaws of the Surviving Corporation, and
the officers of Enron immediately prior to the First Effective Time
shall be the officers of the Surviving Corporation, each to hold
office in accordance with the bylaws of the Surviving Corporation.
Section 1.2 THE PGC MERGER. Upon the terms and subject to the
conditions of this Agreement, at the Second Effective Time (as defined in
SECTION 1.3 (B)):
(a) EFFECT. PGC shall be merged with and into the Company (the
"PGC MERGER" and, together with the Reincorporation Merger, the
"MERGERS") in accordance with the applicable provisions of the OBCA,
as a result of which the separate corporate existence of PGC shall
cease, and the Company shall be the Surviving Corporation and shall
continue its corporate existence under the laws of the State of
Oregon. The effects and consequences of the PGC Merger shall be as
set forth in Section 60.497 of the OBCA.
(b) ARTICLES OF INCORPORATION. At the Second Effective Time,
the articles of incorporation of the Company, as in effect immediately
prior to the Second Effective Time, shall be the articles of
incorporation of the Surviving Corporation and thereafter shall
continue to be its articles of incorporation until amended as provided
therein and pursuant to the applicable provisions of the OBCA.
(c) BYLAWS. The bylaws of the Company, as in effect immediately
prior to the Second Effective Time, shall be the bylaws of the
Surviving Corporation and thereafter shall continue to be its bylaws
until amended as provided therein and pursuant to the applicable
provisions of the OBCA.
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(d) OFFICERS AND DIRECTORS. Subject to SECTION 7.13, the
directors of the Company immediately prior to the Second Effective
Time shall be the directors of the Surviving Corporation, each to hold
office in accordance with the articles of incorporation and bylaws of
the Surviving Corporation and, subject to SECTION 7.14, the officers
of the Company immediately prior to the Second Effective Time shall be
the officers of the Surviving Corporation, each to hold office in
accordance with the bylaws of the Surviving Corporation.
Section 1.3 EFFECTIVE TIMES OF THE MERGERS.
(a) FIRST EFFECTIVE TIME. On the Closing Date (as defined in
SECTION 3.1), articles of merger in proper form under Section 60.494
of the OBCA, and a certificate of merger in proper form under Section
252 the DGCL, each relating to the Reincorporation Merger, will be
duly executed and filed by the parties to the Reincorporation Merger
with the Office of the Department of State of the State of Oregon
(the "OREGON DEPARTMENT OF STATE") and the Office of the Secretary of
State of the State of Delaware in accordance with the applicable
provisions of the OBCA and the DGCL, respectively. The Reincorporation
Merger shall become effective upon the later of the filing of such
articles of merger with the Oregon Department of State or the filing
of such certificate of incorporation with the Secretary of State of
Delaware, or at such later time as may be mutually agreed to by the
parties hereto and specified in such articles of merger or
certificate of merger (the time the Reincorporation Merger becomes
effective being herein called the "FIRST EFFECTIVE TIME").
(b) SECOND EFFECTIVE TIME. On the Closing Date articles of
merger in proper form under Section 60.494 of the OBCA relating to the
PGC Merger will be duly executed and filed by the parties to the PGC
Merger with the Oregon Department of State in accordance with the
applicable provisions of the OBCA. The PGC Merger shall become
effective upon the filing of such articles of merger with the Oregon
Department of State or at such later time as may be mutually agreed
to by the parties hereto and specified in such articles of merger
(the time the PGC Merger becomes effective being herein called the
"SECOND EFFECTIVE TIME"); provided, however, that the Second Effective
Time shall in any event be later than the First Effective Time. As
used herein, the term "EFFECTIVE TIME" refers to the Second Effective
Time.
ARTICLE II
TREATMENT OF SHARES
Section 2.1 EFFECT OF THE REINCORPORATION MERGER ON CAPITAL
STOCK. At the First Effective Time, by virtue of the Reincorporation
Merger and without any action on the part of any holder of any capital
stock of Enron or the Company:
(a) CONVERSION OF ENRON COMMON STOCK. Each share of Enron
common stock, par value $.10 per share ("ENRON COMMON STOCK"), issued
immediately prior to the First Effective Time shall be converted into
and become one share of the common stock, no par value, of the Company
("COMPANY COMMON STOCK").
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(b) CONVERSION OF ENRON PREFERRED STOCK. Each share of
Cumulative Second Preferred Convertible Stock, par value $1.00 per
share ("ENRON CONVERTIBLE PREFERRED STOCK") issued and outstanding
immediately prior to the First Effective Time, each share of 9.142%
Perpetual Second Preferred Stock, par value $1.00 per share, issued
and outstanding immediately prior to the First Effective Time, and
each share of any series of Preferred Stock, Second Preferred Stock or
Preference Stock of Enron issued after the date hereof and issued and
outstanding immediately prior to the First Effective Time (together,
the "ENRON PREFERRED STOCK") shall be converted into and become one
share of a class or series of preferred stock of the Company having
substantially equivalent rights, preferences and limitations as the
corresponding class or series of Enron Preferred Stock (together, the
"COMPANY PREFERRED STOCK").
(c) CANCELLATION OF COMPANY COMMON STOCK. Each share of Company
Common Stock issued and outstanding immediately prior to the First
Effective Time shall be canceled, and no consideration shall be
delivered in exchange therefor.
Section 2.2 EFFECT OF THE PGC MERGER ON CAPITAL STOCK. At the
Second Effective Time, by virtue of the PGC Merger and without any action
on the part of any holder of any capital stock of PGC or the Company:
(a) CANCELLATION OF CERTAIN PGC COMMON STOCK. Each share of PGC
common stock, par value $3.75 per share ("PGC COMMON STOCK"), owned by
PGC or any of its subsidiaries or by Enron, the Company or any of
their respective subsidiaries, shall be canceled and shall cease to
exist, and no consideration shall be delivered in exchange therefor.
(b) CONVERSION OF PGC COMMON STOCK. Each share of PGC Common
Stock issued and outstanding immediately prior to the Second Effective
Time (other than shares canceled pursuant to SECTION 2.2(A)) shall be
converted into one share of Company Common Stock (the "PGC CONVERSION
RATIO"). Upon such conversion as provided for herein, each holder of
a certificate formerly representing any such shares of PGC Common
Stock shall cease to have any rights with respect thereto, except the
right to receive the shares of Company Common Stock to be issued in
consideration therefor (and cash in lieu of fractional shares as
provided below in SECTION 2.4(D)) upon the surrender of such in
accordance with SECTION 2.4.
Section 2.3 NO EXCHANGE OF ENRON STOCK CERTIFICATES. No
certificates representing Company Common Stock or Company Preferred Stock
shall be issued to holders of Enron Common Stock or Enron Preferred Stock
by virtue of consummation of the Reincorporation Merger unless requested
by such holders. Instead, following the Reincorporation Merger,
certificates that prior to the First Effective Time represented shares of
Enron Common Stock or Enron Preferred Stock shall be deemed for all
purposes to represent an equal number of shares of Company Common Stock or
Company Preferred Stock, as the case may be. From and after the First
Effective Time, the stock transfer books of Enron shall be closed and no
transfer of any such shares shall thereafter be made,
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but when certificates that formerly represented shares of Enron Common
Stock or Enron Preferred
Stock are duly presented to the Company or its transfer
agent for exchange or transfer, the Company will cause to be issued in
respect thereof certificates representing an equal number of shares of
Company Common Stock or Company Preferred Stock, as the case may be.
Section 2.4 EXCHANGE OF PGC COMMON STOCK CERTIFICATES.
(a) DEPOSIT WITH EXCHANGE AGENT. As soon as practicable after
the Effective Time, the Company shall deposit with a bank, trust
company or other agent selected by the Company and acceptable to PGC
("EXCHANGE AGENT"), pursuant to an agreement in form and substance
reasonably acceptable to the Company and PGC, certificates
representing shares of Company Common Stock required to effect the
conversion of PGC Common Stock into Company Common Stock in
accordance with SECTION 2.2(B).
(b) EXCHANGE PROCEDURES. As soon as practicable after the
Effective Time, the Company shall cause the Exchange Agent to mail to
each holder of record as of the Effective Time of a certificate or
certificates that immediately prior to the Effective Time represented
issued and outstanding shares of PGC Common Stock ("PGC CERTIFICATES")
that were converted ("CONVERTED SHARES") into shares of Company Common
Stock pursuant to SECTION 2.2(B), a letter of transmittal and
instructions for use in submitting PGC Certificates to the Exchange
Agent in exchange for certificates representing shares of Company
Common Stock in accordance with the terms hereof. Upon delivery of a
PGC Certificate to the Exchange Agent for exchange, together with a
duly executed letter of transmittal and such other documents as the
Exchange Agent shall require, the holder of such PGC Certificate shall
be entitled to receive in exchange therefor a certificate representing
that number of whole shares of Company Common Stock and the amount of
cash in lieu of fractional share interests which such holder has the
right to receive pursuant to the provisions of this ARTICLE II. In
the event of a transfer of ownership of Converted Shares which is not
registered in the transfer records of PGC, a certificate representing
the proper number of shares of Company Common Stock may be issued to a
transferee if the PGC Certificate representing such Converted Shares
is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence
satisfactory to the Exchange Agent that any applicable stock transfer
taxes have been paid. Until delivered and exchanged for Company
Common Stock as contemplated by this SECTION 2.4, and except as
provided in SECTION 2.4(C), each PGC Certificate shall be deemed at
any time after the Effective Time to represent only the right to
receive upon such delivery the certificate representing shares of
Company Common Stock and cash in lieu of any fractional shares as
contemplated by this SECTION 2.4.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. Unless
and until the certificate or certificates representing Converted
Shares have been surrendered for exchange to the Exchange Agent as
contemplated in SECTION 2.4, no dividends or other distributions
payable to holders of Company Common Stock as of a record date at or
after the Effective Time shall be paid to any holder of a certificate
representing such unexchanged Converted Shares. Subject to the effect
of unclaimed property, escheat and other applicable laws,
-5-
following delivery of any such certificate, there shall be paid to
the record holder (or
transferee) of the certificates representing whole shares
of Company Common Stock issued in exchange therefor, without interest,
(i) the amount of dividends or other distributions with a record date
after the Effective Time theretofore paid with respect to such whole
shares of Company Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record
date at or after the Effective Time but prior to delivery and a
payment date subsequent to delivery payable with respect to such whole
shares of Company Common Stock, as the case may be.
(d) NO FRACTIONAL SHARES. No certificates or scrip representing
fractional shares of Company Common Stock shall be issued upon the
delivery for exchange of Converted Shares, and such fractional share
interests will not entitle the owner thereof to vote or to any rights
of a shareholder of the Company. In lieu of any such fractional
shares, each holder of a certificate previously evidencing Converted
Shares, upon surrender of such certificate for exchange pursuant to
this SECTION 2.4, shall be paid an amount in cash, without interest,
rounded to the nearest cent, determined by multiplying (a) the average
of the Closing Prices (as defined herein) of the Enron Common Stock
for the ten Trading Days ending on and including the Trading Day prior
to the Closing Date, by (b) the fractional interest to which such
holder would otherwise be entitled (after taking into account all
Converted Shares held of record by such holder at the Effective Time).
The "CLOSING PRICE" for each day shall be the last reported sale
price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange ("NYSE"). The term "TRADING
DAY" shall mean a day on which the NYSE is open for the transaction of
business.
(e) CLOSING OF TRANSFER BOOKS. From and after the Effective
Time, the stock transfer books of PGC shall be closed and no transfer
of any such shares shall thereafter be made. If, after the Effective
Time, PGC Certificates are presented to the Company, they shall be
canceled and exchanged for certificates representing the appropriate
number of whole shares of Company Common Stock and cash in lieu of
fractional shares of Company Common Stock as provided in this SECTION
2.4.
(f) TERMINATION OF EXCHANGE AGENT DUTIES. Any certificates
representing shares of Company Common Stock deposited with the
Exchange Agent pursuant to SECTION 2.4(A) and not exchanged within six
months after the Effective Time pursuant to this SECTION 2.4 shall be
returned by the Exchange Agent to the Company, which shall thereafter
act as Exchange Agent.
(g) ESCHEAT. The Company shall not be liable to any person for
such shares or funds delivered to a public official pursuant to the
requirements of any applicable abandoned property, escheat or similar
law.
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(h) TAXES. The Company shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to
any former holder of
Converted Shares such amounts as the Company (or
any affiliate thereof) is required to deduct and withhold with respect
to the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are so
withheld by the Company, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the former
holder of the Converted Shares in respect of which such deduction and
withholding was made by the Company.
Section 2.5 ADJUSTMENTS TO PGC CONVERSION RATIO.
(a) If, on or after the date hereof and prior to the Effective
Time, there is a change in the number of shares of Enron Common Stock
issued and outstanding as a result of reclassification, stock split
(including a reverse stock split), stock dividend or similar
transaction, the PGC Conversion Ratio, the Ceiling Price (as defined
in SECTION 9.1(M)) and the Floor Price (as defined SECTION 9.1(L))
shall be equitably adjusted to eliminate the effects of such event.
(b) If, on or after the date hereof and prior to the Effective
Time, Enron effects a distribution to all holders of Enron Common
Stock of shares of any class or series of capital stock (but
excluding any distribution that results in an adjustment under clause
(a) above and any dividends paid exclusively in cash) (an
"EXTRAORDINARY DISTRIBUTION"), the PGC Conversion Ratio in effect
immediately prior to such Extraordinary Distribution shall be adjusted
to equal $41.75 (or, if applicable, the Revised Enron Share Value
determined in connection with any previous adjustment in the PGC
Conversion Ratio) divided by the Revised Enron Share Value (as
hereinafter defined). In addition, the Ceiling Price in effect
immediately prior to such Extraordinary Distribution shall be adjusted
to equal 1.1317 multiplied by the Revised Enron Share Value, and the
Floor Price in effect immediately prior to such Extraordinary
Distribution shall be adjusted to equal 0.8683 multiplied by the
Revised Enron Share Value. The PGC Conversion Ratio, the Ceiling
Price and Floor Price shall be so adjusted successively whenever an
Extraordinary Distribution shall occur on or after the date hereof and
prior to the Effective Time. Any securities distributed by Enron in
an Extraordinary Distribution shall be listed on the NYSE from and
after the time such distribution is made.
(c) For purposes of this Section 2.5(b), the following terms
shall have the following meanings in respect of any Extraordinary
Distribution:
"Extraordinary Distribution Value" means the aggregate number of
securities distributed to each holder of Enron Common Stock pursuant
to such Extraordinary Distribution multiplied by the market price of
such security, with the "market price" being the average of the daily
closing prices (as hereinafter defined) per share of such security for
the 20 consecutive Trading Days immediately following the date of such
Extraordinary Distribution.
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"Revised Enron Share Value" shall equal $41.75 (or, if
applicable, the Revised Enron Share Value determined in connection
with any previous adjustment in the PGC Conversion Ratio) less the
Extraordinary Distribution Value.
(d) If, on or after the date hereof and prior to the Effective
Time, there is consummated a transaction other than a transaction of
the type described in SECTIONS 2.5(A) OR (B) above pursuant to which
shares of Enron Common Stock become converted into the right to
receive cash, securities or other property or any combination thereof,
Enron shall make appropriate provision so that the corporation
surviving such transaction is substituted for Enron as a party hereto,
and appropriate adjustment is made to SECTION 2.2(B) hereof so that,
upon consummation of the Mergers, each share of PGC Common Stock shall
be converted into such amount of cash, securities or other property or
combination thereof as each such share would have been converted had
the Mergers occurred prior to such transaction.
ARTICLE III
THE CLOSING
Section 3.1 CLOSING. The closing (the "CLOSING") of the
transactions contemplated by this Agreement shall take place at a place
and time to be mutually agreed upon by the parties hereto on the second
business day immediately following the date on which the last of the
conditions set forth in ARTICLE VIII (other than conditions that by their
nature are required to be performed on the Closing Date, but subject to
satisfaction of such conditions) is fulfilled or waived, or at such other
time and date as PGC and Enron shall mutually agree (the "CLOSING DATE").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ENRON
Enron represents and warrants to PGC as follows:
Section 4.1 ORGANIZATION AND QUALIFICATION. Except as disclosed
in Section 4.1 of the Enron Disclosure Schedule (as defined in SECTION
7.6(II)), Enron and each of its subsidiaries (as defined below) is a
corporation or other entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
organization, has all requisite corporate power and authority, and has
been duly authorized by all necessary regulatory approvals and orders, to
own, lease and operate its assets and properties and to carry on its
business as it is now being conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its assets and properties makes
such qualification necessary other than in such jurisdictions where the
failure to be so qualified and in good standing will not, when taken
together with all other such failures, have a material adverse effect on
the business, properties, financial condition, results of operations or
prospects of Enron and its subsidiaries and joint ventures, taken as a
whole or on the consummation of this Agreement (any such material adverse
effect being hereinafter referred to as an "ENRON MATERIAL ADVERSE
EFFECT"). As used in this Agreement, references to a "subsidiary" of
Enron means any corporation or other
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entity (including partnerships and
other business associations) in which Enron directly or indirectly owns
outstanding capital stock or other voting securities having the power,
under ordinary circumstances, to elect a majority of the directors or
similar members of the governing body of such corporation or other entity.
Section 4.2 SUBSIDIARIES. Section 4.2 of the Enron Disclosure
Schedule contains a listing as of the date hereof of all material and
certain other subsidiaries and joint ventures of Enron, including the name
of each such entity, the state or jurisdiction of its incorporation or
organization and Enron's interest therein. Such entities are not subject
to, or are exempt from, regulation as a "public utility company", a
"holding company", a "subsidiary company" or an "affiliate" of any public
utility company within the meaning of Section 2(a)(5), 2(a)(7), 2(a)(8) or
2(a)(11) of the Public Utility Holding Company Act of 1935, as amended
(the "1935 ACT"), respectively. Except as disclosed in Section 4.2 of the
Enron Disclosure Schedule, all of the issued and outstanding shares of
capital stock of each subsidiary of Enron are validly issued, fully paid,
nonassessable and free of preemptive rights and are owned directly or
indirectly by Enron. Except as disclosed in Section 4.2 of the Enron
Disclosure Schedule, such shares are owned free and clear of any liens,
claims, encumbrances, security interests, equities, charges and options of
any nature whatsoever, and there are no outstanding subscriptions,
options, calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating any such subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of its capital stock or obligating it to grant, extend or enter
into any such agreement or commitment, except for any of the foregoing
that could not reasonably be expected to have an Enron Material Adverse
Effect. As used in this Agreement, references to a "joint venture" of
Enron means any corporation or other entity (including partnerships and
other business associations and joint ventures) in which Enron and its
subsidiaries in the aggregate own an equity interest that is less than a
majority of the outstanding voting securities but at least 10% of such
voting securities.
Section 4.3 CAPITALIZATION.
(a) The authorized capital stock of Enron and the number of
shares of each class or series of capital stock outstanding as of the
close of business on July 18, 1996 is set forth in Section 4.3 of the
Enron Disclosure Schedule. All of the issued and outstanding shares of
the capital stock of Enron are validly issued, fully paid,
nonassessable and free of preemptive rights. Except as disclosed in
Section 4.3 of the Enron Disclosure Schedule, as of the date hereof
there are no outstanding subscriptions, options, calls, contracts,
voting trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or
other agreement, obligating Enron to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of the capital
stock or other voting securities of Enron or obligating Enron to
grant, extend or enter into any such agreement or commitment.
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(b) The authorized capital stock of the Company consists of
1,000 shares of Company Common Stock and no shares of preferred stock.
As of the date hereof, 1,000 shares of Company Common Stock and no
shares of preferred stock were issued and outstanding.
Section 4.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.
(a) AUTHORITY. Enron and the Company have all requisite power
and authority to enter into this Agreement and, subject to the Enron
Shareholders' Approval (as defined in SECTION 4.13) and the Enron
Required Statutory Approvals (as defined in SECTION 4.4(C)), to
consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation by Enron and the
Company of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Enron or
the Company, as the case may be, subject to obtaining the Enron
Shareholders' Approval. This Agreement has been duly and validly
executed and delivered by Enron and the Company and, assuming the due
authorization, execution and delivery of this Agreement by PGC,
constitutes the legal, valid and binding obligation of Enron and the
Company, enforceable against Enron and the Company in accordance with
its terms.
(b) NON-CONTRAVENTION. Except as disclosed in Section 4.4(b) of
the Enron Disclosure Schedule, the execution and delivery of this
Agreement by Enron do not, and the consummation of the transactions
contemplated hereby will not, violate, conflict with or result in a
breach of any provision of, or constitute a default (with or without
notice or lapse of time or both) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination, cancellation or acceleration of any obligation under, or
result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Enron or any of
its subsidiaries or, to Enron's knowledge, any of its joint ventures
(any such violation, conflict, breach, default, right of termination,
cancellation or acceleration, loss or creation, a "ENRON VIOLATION"),
under any provisions of (i) the certificate of incorporation, bylaws
or similar charter documents of Enron or any of its subsidiaries or,
to Enron's knowledge, any of its joint ventures, (ii) subject to
obtaining the Enron Required Statutory Approvals and the receipt of
the Enron Shareholders' Approval, any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or
license of any court, governmental or regulatory body (including a
stock exchange or other self-regulatory body) or authority, domestic
or foreign (each, a "GOVERNMENTAL AUTHORITY"), applicable to Enron or
any of its subsidiaries or, to Enron's knowledge, any of its joint
ventures, or any of their respective properties or assets or (iii)
subject to obtaining the third-party consents or other approvals set
forth in Section 4.4(b) of the Enron Disclosure Schedule (the "ENRON
REQUIRED CONSENTS"), any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or
other instrument, obligation or agreement of any kind to which Enron
or any of its subsidiaries or, to Enron's knowledge, any of its joint
ventures, is now a party or by which any of them or any of their
respective properties or assets may be bound or affected, excluding
from the foregoing clauses (ii) and (iii) such Enron Violations as
would not have, in the aggregate, an Enron Material Adverse Effect.
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(c) STATUTORY APPROVALS. Except as disclosed in Section 4.4(c)
of the Enron Disclosure Schedule, no declaration, filing or
registration with, or notice to or authorization, consent, finding by
or approval of, any Governmental Authority is necessary for the
execution and delivery of this Agreement by Enron and the Company or
the consummation by Enron and the Company of the transactions
contemplated hereby, the failure to obtain, make or give which would
have, in the aggregate, an Enron Material Adverse Effect (the "ENRON
REQUIRED STATUTORY APPROVALS"), it being understood that references in
this Agreement to "obtaining" such Enron Required Statutory Approvals
shall mean making such declarations, filings or registrations; giving
such notice; obtaining such consents or approvals; and having such
waiting periods expire as are necessary to avoid a violation of law.
(d) COMPLIANCE. Except as disclosed in Section 4.4(d) or 4.11
of the Enron Disclosure Schedule or as disclosed in the Enron SEC
Reports (as defined in SECTION 4.5), neither Enron nor any of its
subsidiaries nor, to Enron's knowledge, its joint ventures, is in
violation of or under investigation with respect to, or has been given
notice or been charged with any violation of, any law, statute, order,
rule, regulation, ordinance or judgment (including, without
limitation, any applicable Environmental Laws (as defined in SECTION
4.11(F)) of any Governmental Authority, except for violations that, in
the aggregate, do not have, and, to the knowledge of Enron, are not
reasonably likely to have, an Enron Material Adverse Effect. Except
as disclosed in Section 4.4(d) or 4.11 of the Enron Disclosure
Schedule, Enron and its subsidiaries and, to Enron's knowledge, its
joint ventures, have all permits, licenses, franchises and other
governmental authorizations, consents and approvals necessary to
conduct their respective businesses as currently conducted
(collectively, "PERMITS"), except those which the failure to obtain
would, in the aggregate, not have an Enron Material Adverse Effect.
Section 4.5 REPORTS AND FINANCIAL STATEMENTS. The filings
required to be made by Enron and its subsidiaries since January 1, 1991
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), and
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), have
been filed with the Securities and Exchange Commission (the "SEC") and
complied in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder. Enron has made
available to PGC a true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by Enron with
the SEC since January 1, 1991 and through the date hereof (as such
documents have since the time of their filing been amended, the "ENRON SEC
REPORTS"). The Enron SEC Reports, including without limitation any
financial statements or schedules included therein, at the time filed did
not, and any forms, reports or other documents filed by Enron with the
SEC after the date hereof will not, contain any 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 light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial
statements of Enron included in the Enron SEC Reports (collectively, the
"ENRON FINANCIAL STATEMENTS") that have been included in Enron SEC Reports
have been prepared, and the Enron Financial Statements to be included in
any forms, reports or other documents filed by Enron with
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the SEC after
the date hereof will be prepared, in accordance with generally accepted
accounting principles applied on a consistent basis ("GAAP") (except as
may be indicated therein or in the notes thereto and except with respect
to unaudited statements as permitted by Form 10-Q) and fairly present the
consolidated financial position of Enron as of the respective dates
thereof or the consolidated results of operations and cash flows for the
respective periods then ended, as the case may be, subject, in the case of
the unaudited interim financial statements, to normal, recurring audit
adjustments. True, accurate and complete copies of the certificate or
articles of incorporation and bylaws of Enron and the Company, each as in
effect on the date hereof, have been delivered to PGC.
Section 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the Enron SEC Reports filed prior to the date hereof or as
disclosed in Section 4.6 or 4.7 of the Enron Disclosure Schedule, since
December 31, 1995 (i) there has not been and, no event has occurred which
has had, and no fact or condition exists that would have or, to the
knowledge of Enron, is reasonably likely to have, an Enron Material
Adverse Effect, and (ii) none of Enron nor any of its subsidiaries has
taken any action that would have been prohibited by Article VI hereof had
this Agreement been in effect at the time of such action.
Section 4.7 LITIGATION. Except as disclosed in the Enron SEC
Reports filed prior to the date hereof or as disclosed in Section 4.7, 4.9
or 4.11 of the Enron Disclosure Schedule, (i) there are no claims, suits,
actions or proceedings pending or, to the knowledge of Enron, threatened,
nor, to the knowledge of Enron, are there any investigations or reviews
pending or threatened against, relating to or affecting Enron or any of
its subsidiaries or any Enron Benefit Plan or Enron Employee Arrangement,
(ii) there are no judgments, decrees, injunctions, rules or orders of any
court, governmental department, commission, agency, instrumentality or
authority or any arbitrator applicable to Enron or any of its
subsidiaries, except for any of the foregoing under clauses (i) and (ii)
that individually or in the aggregate would not reasonably be expected to
have an Enron Material Adverse Effect.
Section 4.8 REGISTRATION STATEMENT AND PROXY STATEMENT. None of
the information supplied or to be supplied by or on behalf of Enron that
is included or incorporated by reference in (i) the registration statement
on Form S-4 to be filed with the SEC by the Company in connection with the
issuance of shares of Company Common Stock in the PGC Merger (the
"REGISTRATION STATEMENT") will, at the time the Registration Statement
becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading
and (ii) the joint proxy statement/prospectus in definitive form, relating
to the meetings of the shareholders of PGC and Enron to be held in
connection with the Mergers and the prospectus relating to the Company
Common Stock to be issued in the PGC Merger (the "JOINT PROXY STATEMENT")
will, at the date mailed to such shareholders and, as the same may be
amended or supplemented, at the times of such meetings, contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. All documents that Enron is
responsible for filing with the SEC in connection with the transactions
contemplated herein shall comply as to form in all material respects with
the applicable
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requirements of the Securities Act and the rules and
regulations thereunder and the Exchange Act and the rules and regulations
thereunder.
Section 4.9 TAX MATTERS. "TAXES", as used in this Agreement,
means any federal, state, county, local or foreign taxes, charges, fees,
levies, or other assessments, including all net income, gross income,
sales and use, ad valorem, transfer, gains, profits, excise, franchise,
real and personal property, gross receipts, capital stock, production,
business and occupation, disability, employment, payroll, license,
estimated, stamp, custom duties, severance or withholding taxes or charges
imposed by any governmental entity, and includes any interest and
penalties (civil or criminal) on or additions to any such taxes and any
expenses incurred in connection with the determination, settlement or
litigation of any tax liability. "TAX RETURN", as used in this Agreement,
means a report, return or other information required to be supplied to a
governmental entity with respect to Taxes including, where permitted or
required, combined or consolidated returns for any group of entities that
includes Enron or any of its subsidiaries on the one hand, or PGC or any
of its subsidiaries on the other hand.
(a) FILING OF TIMELY TAX RETURNS. Except as disclosed in
Section 4.9(a) of the Enron Disclosure Schedule, Enron and each of its
subsidiaries have filed all Tax Returns required to be filed by each
of them under applicable law. All Tax Returns were (and, as to Tax
Returns not filed as of the date hereof, will be) in all material
respects true, complete and correct and filed on a timely basis.
(b) PAYMENT OF TAXES. Enron and each of its subsidiaries have,
within the time and in the manner prescribed by law, paid (and until
the Closing Date will pay within the time and in the manner prescribed
by law) all Taxes that are currently due and payable except for those
contested in good faith and for which adequate reserves have been
taken.
(c) TAX LIENS. There are no Tax liens upon the assets of Enron
or any of its subsidiaries except liens for Taxes not yet due.
(d) WITHHOLDING TAXES. Enron and each of its subsidiaries have
complied (and until the Closing Date will comply) in all material
respects with the provisions of the Code relating to the payment and
withholding of Taxes, including, without limitation, the withholding
and reporting requirements under Code Sections 1441 through
1464, 3401 through 3606, and 6041 and 6049, as well as similar
provisions under any other laws, and have, within the time and in the
manner prescribed by law, withheld from employee wages and paid over
to the proper governmental authorities all amounts required.
(e) EXTENSIONS OF TIME FOR FILING TAX RETURNS. Except as
disclosed in Section 4.9(e) of the Enron Disclosure Schedule, neither
Enron nor any of its subsidiaries has requested any extension of time
within which to file any Tax Return, which Tax Return has not since
been filed.
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(f) WAIVERS OF STATUTE OF LIMITATIONS. Except as disclosed in
Section 4.9(f) of the Enron Disclosure Schedule, neither Enron nor any
of its subsidiaries has executed any outstanding waivers or comparable
consents regarding the application of the statute of limitations with
respect to any Taxes or Tax Returns.
(g) AVAILABILITY OF TAX RETURNS. Enron and its subsidiaries
have made available to PGC complete and accurate copies, covering all
years ending on or after December 31, 1991, of (i) all Tax Returns,
and any amendments thereto, filed by Enron or any of its subsidiaries,
(ii) all audit reports received from any taxing authority relating to
any Tax Return filed by Enron or any of its subsidiaries and (iii) any
closing agreements entered into by Enron or any of its subsidiaries
with any taxing authority.
Section 4.10 EMPLOYEE MATTERS; ERISA.
(a) BENEFIT PLANS. Section 4.10(a) of the Enron Disclosure
Schedule contains a true and complete list of: (i) each "employee
benefit plan" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") covering
employees or former employees of Enron (the "ENRON BENEFIT PLANS");
and (ii) each contract, agreement or arrangement other than the Enron
Benefit Plans with or covering any employee or director pursuant to
which Enron or any of its subsidiaries could have material statutory
or contractual liability (the "ENRON EMPLOYEE ARRANGEMENTS"). With
respect to each Enron Benefit Plan, Enron has made available to PGC a
true and correct copy of, as applicable, (i) the current plan document
(including all amendments adopted since the most recent restatement)
and its most recently prepared summary plan description and all
summaries of material modifications prepared since the most recent
summary plan description, (ii) the most recently prepared annual
report (IRS Form 5500 Series) including financial statements, (iii)
each related trust agreement, insurance contract, service provider or
investment management agreement (including all amendments to each such
document), (iv) the most recent IRS determination letter with respect
to the qualified status under Code Section 401(a) of such plan and a
copy of any application of an IRS determination letter filed since the
most recent IRS determination letter was issued, and (v) the most
recent actuarial report or valuation.
(b) QUALIFICATION; COMPLIANCE. Except as disclosed in Section
4.10(b) of the Enron Disclosure Schedule, (i) each Enron Benefit Plan
that is intended to be "qualified" within the meaning of Code
Section 401(a) has been determined by the IRS to be so qualified,
and, to the knowledge of Enron, no event or condition exists or has
occurred that could reasonably be expected to result in the revocation
of any such determination; (ii) each Enron Benefit Plan and each Enron
Employee Arrangement is and has been operated and administered
substantially in compliance with its terms and provisions and in
compliance with all applicable laws, rules and regulations; (iii) no
individual or entity has engaged in any transaction with respect to
any Enron Benefit Plan as a result of which Enron or any of its
subsidiaries could reasonably expect to be subject to liability
pursuant to ERISA Section 409 or Section 502, or subjected to
Taxes; and (iv) no Enron Benefit Plan is subject to any ongoing audit,
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investigation, or other administrative proceeding of any federal,
state, or local governmental entity, or is the subject of any pending
application with any federal, state or local governmental entity for
administrative or other relief.
(c) TITLE IV LIABILITIES. No event has occurred and, to the
knowledge of Enron, there exists no condition or set of circumstances,
that could subject or potentially subject Enron or any of its
subsidiaries to any liability arising under or based upon the
provision of Title IV of ERISA (whether to a governmental agency, a
multiemployer plan or to any other person or entity) which could
reasonably be expected to have an Enron Material Adverse Effect.
Section 4.11 ENVIRONMENTAL PROTECTION.
(a) COMPLIANCE. Except as disclosed in Section 4.11(a) of the
Enron Disclosure Schedule, or as disclosed in the Enron SEC Reports,
Enron and each of its subsidiaries is in compliance with all
applicable Environmental Laws (as hereinafter defined in SECTION
4.11(F)), except where the failure to be so in compliance would not in
the aggregate have an Enron Material Adverse Effect. Except as
disclosed in Section 4.11(a) of the Enron Disclosure Schedule, neither
Enron nor any of its subsidiaries has received any written notice from
any person or Governmental Authority that alleges that Enron or any of
its subsidiaries is not in compliance with applicable Environmental
Laws, except where the failure to be in such compliance would not in
the aggregate have an Enron Material Adverse Effect.
(b) ENVIRONMENTAL PERMITS. Except as disclosed in Section
4.11(b) of the Enron Disclosure Schedule, or as disclosed in the Enron
SEC Reports, Enron and each of its subsidiaries has obtained or has
applied for all environmental, health and safety permits and
authorizations (collectively, "ENVIRONMENTAL PERMITS") necessary for
the construction of their facilities and the conduct of their
operations, and all such Environmental Permits are in good standing
or, where applicable, a renewal application has been timely filed and
is pending agency approval, and Enron and its subsidiaries are in
compliance with all terms and conditions of all such Environmental
Permits and are not required to make any expenditures in connection
with any renewal application pending agency approval, except where the
failure to obtain or be in such compliance and the requirement to make
such expenditures would not have in the aggregate an Enron Material
Adverse Effect.
(c) ENVIRONMENTAL CLAIMS. Except as disclosed in Section
4.11(c) of the Enron Disclosure Schedule, or as disclosed in the Enron
SEC Reports, there is no Environmental Claim (as hereinafter defined
in SECTION 4.11(F)) pending, or to the knowledge of Enron, threatened
(i) against Enron or any of its subsidiaries or, to Enron's knowledge,
any of its joint ventures, (ii) against any person or entity whose
liability for any Environmental Claim Enron or any of its subsidiaries
or, to Enron's knowledge, any of its joint ventures, has or may have
retained or assumed either contractually or by operation of law or
(iii) against any real or personal property or operations that Enron
or any of its subsidiaries or, to Enron's
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knowledge, any of its joint
ventures, owns, leases or manages, in whole or in part, that, if
adversely determined, would have in the aggregate an Enron Material
Adverse Effect.
(d) RELEASES. Except as disclosed in Section 4.11(c) or 4.11(d)
of the Enron Disclosure Schedule, or as disclosed in the Enron SEC
Reports, to the knowledge of Enron, there has been no Release (as
hereinafter defined in SECTION 4.11(F)) of any Hazardous Material (as
hereinafter defined in SECTION 4.11(F)) that would be reasonably
likely to form the basis of any Environmental Claim against Enron or
any subsidiary or joint venture of Enron, or against any person or
entity whose liability for any Environmental Claim Enron or any
subsidiary of Enron has or may have retained or assumed either
contractually or by operation of law, except for Releases of Hazardous
Materials the liability for which would not have in the aggregate an
Enron Material Adverse Effect.
(e) PREDECESSORS. Except as disclosed in Section 4.11(e) of the
Enron Disclosure Schedule, or as disclosed in the Enron SEC Reports,
to the knowledge of Enron, with respect to any predecessor of Enron or
any subsidiary or joint venture of Enron, there are no Environmental
Claims pending or threatened, or any Releases of Hazardous Materials
that would be reasonably likely to form the basis of any Environmental
Claims that would have, or that Enron reasonably believes would have,
in the aggregate an Enron Material Adverse Effect.
(f) As used in this Agreement:
(i) "ENVIRONMENTAL CLAIM" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters,
directives, claims, liens, investigations, proceedings or notices
of noncompliance or violation by any person or entity (including,
without limitation, any Governmental Authority) alleging
potential liability (including, without limitation, potential
liability for enforcement costs, investigatory costs, cleanup
costs, response costs, removal costs, remedial costs, natural
resources damages, property damages, personal injuries, fines or
penalties) arising out of, based on or resulting from (A) the
presence, or Release or threatened Release of any Hazardous
Materials at any location, whether or not owned, operated, leased
or managed by Enron or any of its subsidiaries or joint ventures
(for purposes of this SECTION 4.11 only), or by PGC or any of its
subsidiaries (for purposes of SECTION 5.11 only),
(B) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law or (C) any and all claims by
any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from
the presence or Release of any Hazardous Materials.
(ii) "ENVIRONMENTAL LAWS" means all federal, state and
local laws, rules and regulations relating to pollution or
protection of human health or the environment as in effect on the
date hereof (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) including,
without limitation,
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laws and regulations relating to Releases or
threatened Releases of Hazardous Materials or otherwise relating
to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials.
(iii) "HAZARDOUS MATERIALS" means (A) any petroleum or
petroleum products or petroleum wastes (including crude oil or
any fraction thereof), radioactive materials, friable asbestos or
friable asbestos-containing material, urea formaldehyde foam
insulation, and transformers or other equipment that contain
dielectric fluid containing polychlorinated biphenyls, (B) any
chemicals, materials or substances which are now defined as or
included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic
pollutants", or words of similar import, under any Environmental
Law and (C) any other chemical, material, substance or waste,
exposure to which is now prohibited, limited or regulated under
any Environmental Law in a jurisdiction in which Enron or any of
its subsidiaries or joint ventures operates (for purposes of this
SECTION 4.11 only) or in which PGC or any of its subsidiaries or
joint ventures operates (for purposes of SECTION 5.11 only).
(iv) "RELEASE" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or
migration into the atmosphere, soil, surface water, groundwater
or property (indoors or outdoors).
Section 4.12 REGULATION AS A UTILITY. Enron shall not, prior to
the Effective Time, become a "holding company" within the meaning the 1935
Act without complying with the registration, exemption or other provisions
applicable thereto.
Section 4.13 VOTE REQUIRED. The approval by the holders of a
majority of the votes entitled to be cast by holders of the Enron Common
Stock and the Enron Convertible Preferred Stock, voting together as a
single class, with each share of Enron Common Stock being entitled to one
vote per share and each share of Enron Convertible Preferred Stock being
entitled to a number of votes per share equal to the number of shares of
Enron Common Stock into which such share of Enron Preferred Stock is then
convertible (the "ENRON SHAREHOLDERS' APPROVAL"), is the only vote of the
holders of any class or series of the capital stock of Enron required to
approve the Reincorporation Merger, this Agreement and the other
transactions contemplated hereby. Enron, as the sole shareholder of the
Company, has duly approved the Mergers and this Agreement and the
transactions contemplated hereby, and no other vote of the holders of any
class or series of the capital stock of the Company is required to
consummate such transactions.
Section 4.14 OPINION OF FINANCIAL ADVISOR. Enron has received
the opinion of Smith Barney Inc., dated the date hereof, to the effect
that, as of the date hereof, the consideration to be issued to holders of
PGC Common Stock in the PGC Merger is fair from a financial point of view
to the holders of Enron Common Stock and the Enron Preferred Stock.
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Section 4.15 INSURANCE. Except as disclosed in Section 4.15 of
the Enron Disclosure Schedule, each of Enron and each of its subsidiaries
is, and has been continuously since January 1, 1991, insured in such
amounts and against such risks and losses as are customary for companies
conducting the respective businesses conducted by Enron and its
subsidiaries during such time period. Except as disclosed in Section 4.15
of the Enron Disclosure Schedule, neither Enron nor any of its
subsidiaries has received any notice of cancellation or termination with
respect to any material insurance policy thereof. All material insurance
policies of Enron and its subsidiaries are valid and enforceable policies.
Section 4.16 APPLICABILITY OF CERTAIN DELAWARE LAW PROVISIONS.
Neither the business combination provisions of Section 203 of the DGCL nor
any similar provisions of the certificate of incorporation or bylaws of
Enron are applicable to the transactions contemplated by this Agreement.
Section 4.17 OPERATIONS OF THE COMPANY. The Company was formed
for purposes of the transactions contemplated by this Agreement and,
except as contemplated by this Agreement, has not conducted any business
operations or incurred any liabilities since its formation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PGC
PGC represents and warrants to Enron and the Company as follows:
Section 5.1 ORGANIZATION AND QUALIFICATION. Except as disclosed
in Section 5.1 of the PGC Disclosure Schedule (as defined in SECTION
7.6(I)), PGC and each of its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction
of incorporation, has all requisite corporate power and authority, and has
been duly authorized by all necessary regulatory approvals and orders, to
own, lease and operate its assets and properties and to carry on its
business as it is now being conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its assets and properties makes
such qualification necessary other than in such jurisdictions where the
failure to be so qualified and in good standing will not, when taken
together with all other such failures, have a material adverse effect on
the business, properties, financial condition, results of operations or
prospects (in the case of prospects, taking into account the effect of the
Regulatory Plans described below) of PGC and its subsidiaries and joint
ventures, taken as a whole or on the consummation of this Agreement (any
such material adverse effect being hereinafter referred to as a "PGC
MATERIAL ADVERSE EFFECT"). As used in this Agreement, references to a
"subsidiary" of PGC means any corporation or other entity (including
partnerships and other business associations) in which PGC directly or
indirectly owns outstanding capital stock or other voting securities
having the power, under ordinary circumstances, to elect a majority of the
directors or similar members of the governing body of such corporation or
other entity, or otherwise to direct the management and policies of such
corporation or other entity.
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Section 5.2 SUBSIDIARIES. Section 5.2 of the PGC Disclosure
Schedule contains a description as of the date hereof of all subsidiaries
and joint ventures of PGC, including the name of each such entity, the
state or jurisdiction of its incorporation or organization and PGC's
interest therein. Except as disclosed in Section 5.2 of the PGC
Disclosure Schedule, none of such entities is a "public utility company",
a "holding company", a "subsidiary company" or an "affiliate" of any
public utility company within the meaning of Section 2(a)(5), 2(a)(7),
2(a)(8) or 2(a)(11) of the 1935 Act, respectively. Except as disclosed in
Section 5.2 of the PGC Disclosure Schedule, all of the issued and
outstanding shares of capital stock of each subsidiary of PGC are validly
issued, fully paid, nonassessable and free of preemptive rights and are
owned directly or indirectly by PGC free and clear of any liens, claims,
encumbrances, security interests, equities, charges and options of any
nature whatsoever, and there are no outstanding subscriptions, options,
calls, contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants, including
any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating any such subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional
shares of its capital stock or obligating it to grant, extend or enter
into any such agreement or commitment. As used in this Agreement,
references to a "joint venture" of PGC means any corporation or other
entity (including partnerships and other business associations and joint
ventures) in which PGC or one or more of its subsidiaries owns an equity
interest that is less than a majority of any class of the outstanding
voting securities but at least 10% of such voting securities.
Section 5.3 CAPITALIZATION. The authorized capital stock of PGC
consists of 100,000,000 shares of PGC Common Stock and 30,000,000 shares
of preferred stock. As of the close of business on June 30, 1996,
51,116,367 shares of PGC Common Stock and no shares of preferred stock
were issued and outstanding. All of the issued and outstanding shares of
the capital stock of PGC are validly issued, fully paid, nonassessable and
free of preemptive rights. Except as disclosed in Section 5.3 of the PGC
Disclosure Schedule, as of the date hereof there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement, obligating PGC or any
of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock or other voting
securities of PGC or obligating PGC or any of its subsidiaries to grant,
extend or enter into any such agreement or commitment.
Section 5.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.
(a) AUTHORITY. PGC has all requisite power and authority to
enter into this Agreement and, subject to the PGC Shareholders'
Approval (as defined in SECTION 5.13) and the PGC Required Statutory
Approvals (as defined in SECTION 5.4(C), to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation by PGC of the transactions contemplated
hereby and thereby have been duly authorized by all necessary
corporate action on the part of PGC, subject to obtaining the PGC
Shareholders' Approval. This Agreement has been duly and validly
executed and delivered by PGC and, assuming the due authorization,
execution and delivery hereof by Enron and
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the Company, constitutes
the legal, valid and binding obligation of PGC enforceable against PGC
in accordance with its terms.
(b) NON-CONTRAVENTION. Except as disclosed in Section 5.4(b) of
the PGC Disclosure Schedule, the execution and delivery of this
Agreement by PGC do not, and the consummation of the transactions
contemplated hereby will not, violate, conflict with or result in a
breach of any provision of, or constitute a default (with or without
notice or lapse of time or both) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination, cancellation or acceleration of any obligation under, or
result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of PGC or any of its
subsidiaries, or, to PGC's knowledge, any of its joint ventures (any
such violation, conflict, breach, default, right of termination,
cancellation or acceleration, loss or creation, a "PGC VIOLATION")
under any provisions of (i) the articles of incorporation, bylaws or
similar governing documents of PGC or any of its subsidiaries or joint
ventures, (ii) subject to obtaining the PGC Required Statutory
Approvals and the receipt of the PGC Shareholders' Approval, any
statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any Governmental Authority
applicable to PGC or any of its subsidiaries or joint ventures or any
of their respective properties or assets, or (iii) subject to
obtaining the third-party consents or other approvals disclosed in
Section 5.4(b) of the PGC Disclosure Schedule (the "PGC REQUIRED
CONSENTS"), any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which PGC or any of
its subsidiaries or joint ventures is now a party or by which any of
them or any of their respective properties or assets may be bound or
affected, excluding from the foregoing clauses (ii) and (iii) such PGC
Violations as would not have, in the aggregate, a PGC Material Adverse
Effect.
(c) STATUTORY APPROVALS. Except as disclosed in Section 5.4(c)
of the PGC Disclosure Schedule, no declaration, filing or registration
with, or notice to or authorization, consent, finding by or approval
of, any Governmental Authority, is necessary for the execution and
delivery of this Agreement by PGC or the consummation by PGC of the
transactions contemplated hereby, the failure to obtain, make or give
which would have, in the aggregate, a PGC Material Adverse Effect (the
"PGC REQUIRED STATUTORY APPROVALS"), it being understood that
references in this Agreement to "obtaining" such PGC Required
Statutory Approvals shall mean making such declarations, filings or
registrations; giving such notice; obtaining such consents or
approvals; and having such waiting periods expire as are necessary to
avoid a violation of law.
(d) COMPLIANCE. Except as disclosed in Section 5.4(d) or 5.11
of the PGC Disclosure Schedule or as disclosed in the PGC SEC Reports
(as defined in SECTION 5.5), neither PGC nor any of its subsidiaries
nor, to the knowledge of PGC, any of its joint ventures, is in
violation of or under investigation with respect to, or has been given
notice or been charged with any violation of, any law, statute, order,
rule, regulation, ordinance or judgment (including, without
limitation, any applicable Environmental Laws), of any
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Governmental
Authority, except for violations that, in the aggregate, do not have,
and, to the knowledge of PGC, are not reasonably likely to have, a PGC
Material Adverse Effect. Except as disclosed in Section 5.4(d) or
5.11 of the PGC Disclosure Schedule, PGC, its subsidiaries and, to the
knowledge of PGC, its joint ventures have all Permits, except those
which the failure to obtain would not, in the aggregate, have a PGC
Material Adverse Effect.
Section 5.5 REPORTS AND FINANCIAL STATEMENTS. The filings
required to be made by PGC and its subsidiaries since January 1, 1991
under the Securities Act, the 1935 Act, the Atomic Energy Act of 1954, as
amended (the "ATOMIC ENERGY ACT"), the Exchange Act, applicable Oregon
laws and regulations and the Federal Power Act ("POWER ACT") have been
filed with the SEC, the Oregon Public Utility Commission, the FERC, or the
Nuclear Regulatory Commission ("NRC") as the case may be, and complied in
all material respects with all applicable requirements of the appropriate
act and the rules and regulations thereunder. PGC has made available to
Enron a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by PGC with the SEC since
January 1, 1991 and through the date hereof (as such documents have since
the time of their filing been amended, the "PGC SEC REPORTS"). The PGC
SEC Reports, including without limitation any financial statements or
schedules included therein, at the time filed did not, and any forms,
reports or other documents filed by PGC with the SEC after the date hereof
will not, contain any 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 light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited interim financial statements of PGC included in the PGC SEC
Reports (collectively, the "PGC FINANCIAL STATEMENTS") that have been
included in PGC SEC Reports have been prepared, and the PGC Financial
Statements to be included in any forms, reports or other documents filed
by PGC with the SEC after the date hereof will be prepared, in accordance
with GAAP (except as may be indicated therein or in the notes thereto and
except with respect to unaudited statements as permitted by Form 10-Q) and
fairly present the consolidated financial position of PGC as of the
respective dates thereof or the consolidated results of operations and
cash flows for the respective periods then ended, as the case may be,
subject, in the case of the unaudited interim financial statements, to
normal, recurring audit adjustments. True, accurate and complete copies
of the articles of incorporation and bylaws of PGC and each of its
subsidiaries, as in effect on the date hereof, have been delivered to
Enron.
Section 5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in the PGC SEC Reports filed prior to the date hereof or as
disclosed in Section 5.6 or 5.7 of the PGC Disclosure Schedule, since
December 31, 1995 (i) each of PGC and each of its subsidiaries has
conducted its business only in the ordinary course of business consistent
with past practice and no event has occurred which has had, and no fact or
condition exists that would have or, to the knowledge of PGC, is
reasonably likely to have, a PGC Material Adverse Effect, and (ii) none of
PGC nor any of its subsidiaries has taken any action that would have been
prohibited by Article VI hereof had this Agreement been in effect at the
time of such action.
Section 5.7 LITIGATION. Except as disclosed in the PGC SEC
Reports filed prior to the date hereof or as disclosed in Sections 5.7,
5.9 or 5.11 of the PGC Disclosure Schedule, (i)
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there are no claims,
suits, actions or proceedings pending or, to the knowledge of PGC,
threatened, nor, to the knowledge of PGC, are there any investigations or
reviews pending or threatened against, relating to or affecting PGC or any
of its subsidiaries or any PGC Benefit Plan or PGC Employee Arrangement,
and (ii) there are no judgments, decrees, injunctions, rules or orders of
any court, governmental department, commission, agency, instrumentality or
authority or any arbitrator applicable to PGC or any of its subsidiaries,
except for any of the foregoing under clauses (i) and (ii) that
individually or in the aggregate would not reasonably be expected to have
a PGC Material Adverse Effect.
Section 5.8 REGISTRATION STATEMENT AND PROXY STATEMENT. None of
the information supplied or to be supplied by or on behalf of PGC that is
included or incorporated by reference in (i) the Registration Statement
will, at the time the Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading and (ii) the Joint Proxy Statement
will, at the date mailed to the shareholders of PGC and Enron and, as the
same may be amended or supplemented, at the times of the meetings of such
shareholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. All documents that PGC is
responsible for filing with the SEC in connection with the transactions
contemplated herein shall comply as to form in all material respects with
the applicable requirements of the Securities Act and the rules and
regulations thereunder and the Exchange Act and the rules and regulations
thereunder.
Section 5.9 TAX MATTERS.
(a) FILING OF TIMELY TAX RETURNS. Except as disclosed in
Section 5.9(a) of the PGC Disclosure Schedule, PGC and each of its
subsidiaries have filed all Tax Returns required to be filed by each
of them under applicable law. All Tax Returns were (and, as to Tax
Returns not filed as of the date hereof, will be) in all material
respects true, complete and correct and filed on a timely basis.
(b) PAYMENT OF TAXES. PGC and each of its subsidiaries have,
within the time and in the manner prescribed by law, paid (and until
the Closing Date will pay within the time and in the manner prescribed
by law) all Taxes that are currently due and payable except for those
contested in good faith and for which adequate reserves have been
taken.
(c) TAX LIENS. There are no Tax liens upon the assets of PGC or
any of its subsidiaries except liens for Taxes not yet due.
(d) WITHHOLDING TAXES. PGC and each of its subsidiaries have
complied (and until the Closing Date will comply) in all material
respects with the provisions of the Code relating to the payment and
withholding of Taxes, including, without limitation, the withholding
and reporting requirements under Code Sections 1441 through
1464, 3401 through 3606, and 6041 and 6049, as well as similar
provisions under any other laws, and have,
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within the time and in the
manner prescribed by law, withheld from employee wages and paid over
to the proper governmental authorities all amounts required.
(e) EXTENSIONS OF TIME FOR FILING TAX RETURNS. Except as
disclosed in Section 5.9(e) of the PGC Disclosure Schedule, neither
PGC nor any of its subsidiaries has requested any extension of time
within which to file any Tax Return, which Tax Return has not since
been filed.
(f) WAIVERS OF STATUTE OF LIMITATIONS. Except as disclosed in
Section 5.9(f) of the PGC Disclosure Schedule, neither PGC nor any of
its subsidiaries has executed any outstanding waivers or comparable
consents regarding the application of the statute of limitations with
respect to any Taxes or Tax Returns.
(g) AVAILABILITY OF TAX RETURNS. PGC and its subsidiaries have
made available to Enron complete and accurate copies covering all
years ending on or after December 31, 1991, of (i) all Tax Returns,
and any amendments thereto, filed by PGC or any of its subsidiaries,
(ii) all audit reports received from any taxing authority relating to
any Tax Return filed by PGC or any of its subsidiaries and (iii) any
closing agreements entered into by PGC or any of its subsidiaries with
any taxing authority.
(h) INTERCOMPANY TRANSACTIONS. Section 5.9(h) of the PGC
Disclosure Schedule sets forth all intercompany transactions (within
the meaning of Treas. Reg. Section 1.1502-13) between members of the
affiliated group of corporations of which PGC is the common parent
corporation (the "PGC GROUP") for which any income or gain will remain
unrecognized as of the close of the last taxable year prior to the
date hereof, listing for each such transaction the selling member, the
buying member, and the amount of such income or gain. Except as set
forth on Schedule 5.9(h) of the PGC Disclosure Schedule, there have
been no material changes in amount of income or gain attributable to
intercompany transactions.
(i) EXCESS LOSS ACCOUNTS. Section 5.9(i) of the PGC Disclosure
Schedule sets forth the amount of each excess loss account (within the
meaning of Treas. Reg. Section 1.1502-19) of any member of the PGC
Group in the stock of any other member of the PGC Group as of the
close of the last taxable year prior to the date hereof. Except as
set forth on Schedule 5.9(i) of the PGC Disclosure Schedule, there
have been no material changes in amount of such excess loss accounts.
Section 5.10 EMPLOYEE MATTERS; ERISA.
(a) BENEFIT PLANS. Section 5.10(a) of the PGC Disclosure
Schedule contains a true and complete list of: (i) each employee
benefit plan, program or arrangement covering employees, former
employees or directors of PGC (or any of its subsidiaries) or any of
their dependents or beneficiaries, or providing benefits to such
persons in respect of services provided to any such entity, including,
but not limited to, any "employee benefit plan" within the meaning of
ERISA Section 3(3) (whether or not terminated, if PGC or any of its
subsidiaries
-23-
could have statutory or contractual liability with
respect thereto on or after the date hereof); (ii) each management,
employment, deferred compensation, severance (including any payment,
right or benefit resulting from a change in control), bonus, contract
for personal services, arrangement or agreement with or covering any
current officer, key employee or director or any consulting contract
with any person who prior to entering into such contract was a
director or officer of PGC or any of its subsidiaries (whether or not
terminated, if PGC or any of its subsidiaries could have statutory or
contractual liability with respect thereto on or after the date
hereof); (iii) each "employee pension benefit plan" (within the
meaning of ERISA Section 3(2)) subject to Title IV of ERISA or the
minimum funding requirements of Code Section 412 maintained or
contributed to by PGC or any entity required to be aggregated
therewith pursuant to Code Section 414(b) or (c) (a "PGC ERISA
AFFILIATE") at any time during the seven-year period immediately
preceding the date hereof (the plans, programs and arrangements
described in items (i), (ii) and (iii) above being hereinafter
referred to collectively as the "PGC BENEFIT PLANS") and (iv) with
respect to each PGC Benefit Plan that is described in item (i) or (ii)
above and that is funded other than from general assets of PGC and its
affiliates, the source or sources of benefit payments under the plan
(including, where applicable, the identity of any trust (whether or
not a grantor trust), insurance contract, custodial account, agency
agreement, or other arrangement that holds the assets of, or serves as
a funding vehicle or source of benefits for, such PGC Benefit Plan).
(b) CONTRIBUTIONS. Except as disclosed in Section 5.10(b) of
the PGC Disclosure Schedule, all material contributions and other
payments required to have been made by PGC or any of its subsidiaries
pursuant to any PGC Benefit Plan (or to any person pursuant to the
terms thereof) have been timely made or the amount of such payment or
contribution obligation has been reflected in the PGC Financial
Statements.
(c) QUALIFICATION; COMPLIANCE. Except as disclosed in Section
5.10(c) of the PGC Disclosure Schedule, each PGC Benefit Plan that is
intended to be "qualified" within the meaning of Code Section 401(a)
has been determined by the IRS to be so qualified, and, to the
knowledge of PGC, no event or condition exists or has occurred that
could reasonably be expected to result in the revocation of any such
determination. PGC and each of its subsidiaries are in compliance
with, and each PGC Benefit Plan is and has been operated in compliance
with, all applicable laws, rules and regulations governing such plan,
including, without limitation, ERISA and the Code, except for
violations that could not reasonably be expected to have a PGC
Material Adverse Effect. To the knowledge of PGC, no individual or
entity has engaged in any transaction with respect to any PGC Benefit
Plan as a result of which PGC or any of its subsidiaries could
reasonably expect to be subject to material liability pursuant to
ERISA Section 409 or Section 502, or subject to an excise tax
pursuant to Code Section 4975. To the knowledge of PGC, (i) no PGC
Benefit Plan is subject to any ongoing audit, investigation, or other
administrative proceeding of the Internal Revenue Service, the
Department of Labor, or any other federal, state, or local
governmental entity, and (ii) no PGC Benefit Plan is the subject of
any pending application for administrative relief under any voluntary
compliance program of any governmental entity (including, without
limitation,
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the IRS's Voluntary Compliance Resolution Program or Walk-
in Closing Agreement Program, or the Department of Labor's Delinquent
Filer Voluntary Compliance Program).
(d) LIABILITIES. With respect to the PGC Benefit Plans
described in item (i) of SECTION 5.10(A), individually and in the
aggregate, no termination or partial termination of any PGC Benefit
Plan or other event has occurred and, to the knowledge of PGC, there
does not exist any condition or set of circumstances, that could
subject PGC or any of its subsidiaries to any liability arising under
the Code, ERISA or any other applicable law (including, without
limitation, any liability to or under any such plan or to the PBGC),
whether directly or pursuant to an indemnity agreement, excluding
liabilities for benefit claims and funding obligations payable in the
ordinary course and liability for PBGC insurance premiums payable in
the ordinary course, which liability could reasonably be expected to
have a PGC Material Adverse Effect.
(e) WELFARE PLANS. Except as disclosed in Section 5.10(e) of
the PGC Disclosure Schedule, no PGC Benefit Plan that is a "welfare
plan" (within the meaning of ERISA Section 3(1)) provides benefits
for any retired or former employees (other than as required pursuant
to ERISA Section 601).
(f) DOCUMENTS MADE AVAILABLE. PGC has made available to Enron a
true and correct copy of each collective bargaining agreement to which
PGC is a party or under which PGC has obligations and, with respect to
each PGC Benefit Plan that is an "employee benefit plan" within the
meaning of ERISA Section 3(3), as applicable (i) the current plan
document (including all amendments adopted since the most recent
restatement) and its most recently prepared summary plan description
and all summaries of material modifications prepared since the most
recent summary plan description, (ii) the most recently prepared
annual report (IRS Form 5500 Series) including financial statements,
(iii) each related trust agreement, insurance contract, service
provider or investment management agreement (including all amendments
to each such document), (iv) the most recent IRS determination letter
with respect to the qualified status under Code Section 401(a) of
such plan and a copy of any application of an IRS determination letter
filed since the most recent IRS determination letter was issued, and
(v) the most recent actuarial report or valuation.
(g) PAYMENTS RESULTING FROM MERGER. Other than as set forth in
SECTION 7.11 or disclosed in Section 5.10(g) of the PGC Disclosure
Schedule, the consummation or announcement of any transaction
contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or further acts or events) result in any
(i) payment (whether of severance pay or otherwise) becoming due from
PGC or any of its subsidiaries under any applicable PGC Benefit Plans
to any officer, employee, former employee or director thereof or to
the trustee under any "rabbi trust" or similar arrangement, or (ii)
benefit under any PGC Benefit Plan being established or becoming
accelerated, vested or payable, except for a payment or benefit that
would have been payable under the same terms and conditions without
regard to the transactions contemplated by this Agreement.
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(h) FUNDED STATUS OF PLANS. Except as disclosed in Section
5.10(h) of the PGC Disclosure Schedule, each PGC Benefit Plan that is
subject to either or both of the minimum funding requirements of ERISA
Section 302 or to Title IV of ERISA has assets that, as of the date
of such plan's most recently prepared actuarial valuation report, have
a fair market value equal to or exceeding the present value of the
accrued benefit obligations thereunder, based on the actuarial
methods, tables and assumptions theretofore utilized by such plan's
actuary in preparing such report. No PGC Benefit Plan subject to the
minimum funding requirements of ERISA Section 302 has incurred any
"accumulated funding deficiency" (within the meaning of ERISA
Section 302).
(i) MULTIEMPLOYER PLANS. No PGC Benefit Plan is or was a
"multiemployer plan" (within the meaning of ERISA
Section 4001(a)(3)), a multiple employer plan described in Code
Section 413(c), or a "multiple employer welfare arrangement" (within
the meaning of ERISA Section 3(40)); and none of PGC, any subsidiary
thereof or any PGC ERISA Affiliate has been obligated to contribute
to, or otherwise has or has had any liability with respect to, any
multiemployer plan, multiple employer plan, or multiple employer
welfare arrangement.
(j) REPORTABLE EVENTS; CLAIMS. Except as disclosed in
Section 5.10(j) of the PGC Disclosure Schedule, (i) no event
constituting a "reportable event" (within the meaning of ERISA
Section 4043(b)) for which the 30-day notice requirement has not
been waived by the PBGC has occurred with respect to any PGC Benefit
Plan and (ii) no liability, claim, action or litigation has been made,
commenced or, to the knowledge of PGC, threatened, by or against PGC
or any of its subsidiaries with respect to any PGC Benefit Plan (other
than for benefits or PBGC premiums payable in the ordinary course)
that could reasonably be expected to have a PGC Material Adverse
Effect.
(k) LABOR AGREEMENTS. To the knowledge of PGC, as of the date
hereof, there is no current labor union representation issue involving
employees of PGC or any of its subsidiaries, nor does PGC or any of
its subsidiaries know of any activity or proceeding of any labor
organization (or representative thereof) or employee group (or
representative thereof) to organize any such employees. Except as
disclosed in the PGC SEC Reports or as disclosed in Section 5.10(k) of
the PGC Disclosure Schedule: (i) neither PGC nor any of its
subsidiaries is a party to any collective bargaining agreement or
other labor agreement with any union or labor organization; (ii) there
is no unfair labor practice charge or grievance arising out of a
collective bargaining agreement or other grievance procedure against
PGC or any of its subsidiaries pending, or to the knowledge of PGC,
threatened, that has, or reasonably may be expected by PGC to have, a
PGC Material Adverse Effect; (iii) there is no complaint, lawsuit or
proceeding in any forum by or on behalf of any present or former
employee, any applicant for employment or classes of the foregoing
alleging breach of any express or implied contract of employment, any
law or regulation governing employment or the termination thereof or
other discriminatory, wrongful or tortious conduct in connection with
the employment relationship against PGC or any of its subsidiaries
pending, or to the knowledge of PGC, threatened, that has, or
reasonably may be expected by PGC to have, a PGC Material Adverse
Effect; (iv) there is no strike, dispute, slowdown, work stoppage or
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lockout pending, or to the knowledge of PGC, threatened, against or
involving PGC or any of its subsidiaries that has or, insofar as
reasonably can be foreseen, could have, a PGC Material Adverse Effect;
(v) PGC and each of its subsidiaries are in compliance with all
applicable laws respecting employment and employment practices, terms
and conditions of employment, wages, hours of work and occupational
safety and health, except for non-compliance that, in the aggregate,
does not, and insofar as reasonably can be foreseen, will not, have a
PGC Material Adverse Effect; and (vi) there is no proceeding, claim,
suit, action or governmental investigation pending or, to the
knowledge of PGC, threatened in respect to which any director,
officer, employee or agent of PGC or any of its subsidiaries is or may
be entitled to claim indemnification from PGC or any of its
subsidiaries pursuant to their respective articles of incorporation or
bylaws or as provided in the indemnification agreements listed on
Section 5.10(k) of the PGC Disclosure Schedule.
Section 5.11 ENVIRONMENTAL PROTECTION.
(a) COMPLIANCE. Except as disclosed in Section 5.11(a) of the
PGC Disclosure Schedule or as disclosed in the PGC SEC Reports, PGC
and each of its subsidiaries is in compliance with all applicable
Environmental Laws, except where the failure to be so in compliance
would not in the aggregate have a PGC Material Adverse Effect. Except
as disclosed in Section 5.11(a) of the PGC Disclosure Schedule,
neither PGC nor any of its subsidiaries has received any written
notice from any person or Governmental Authority that alleges that PGC
or any of its subsidiaries is not in compliance with applicable
Environmental Laws, except where the failure to be so in compliance
would not in the aggregate have a PGC Material Adverse Effect.
(b) ENVIRONMENTAL PERMITS. Except as disclosed in Section
5.11(b) of the PGC Disclosure Schedule or as disclosed in the PGC SEC
Reports, each of PGC and each of its subsidiaries has obtained or has
applied for all Environmental Permits necessary for the construction
of their facilities and the conduct of their operations, and all such
Environmental Permits are in good standing or, where applicable, a
renewal application has been timely filed and is pending agency
approval, and PGC and its subsidiaries are in compliance with all
terms and conditions of all such Environmental Permits and are not
required to make any expenditures in connection with any renewal
application pending agency approval, except where the failure to
obtain or be in such compliance and the requirement to make such
expenditures would not have in the aggregate a PGC Material Adverse
Effect.
(c) ENVIRONMENTAL CLAIMS. Except as disclosed in Section
5.11(c) of the PGC Disclosure Schedule or as disclosed in the PGC SEC
Reports, to the knowledge of PGC, there is no Environmental Claim (as
defined in SECTION 4.11(F)) pending, or to the knowledge of PGC,
threatened (i) against PGC or any of its subsidiaries or joint
ventures, (ii) against any person or entity whose liability for any
Environmental Claim PGC or any of its subsidiaries or joint ventures
has or may have retained or assumed either contractually or by
operation of law or (iii) against any real or personal property or
operations that PGC or any of its
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subsidiaries or joint ventures owns,
leases or manages, in whole or in part, that, if adversely determined,
would have in the aggregate a PGC Material Adverse Effect.
(d) RELEASES. Except as disclosed in Section 5.11(c) or 5.11(d)
of the PGC Disclosure Schedule or as disclosed in the PGC SEC Reports,
to the knowledge of PGC, there has been no Release of any Hazardous
Material that would be reasonably likely to form the basis of any
Environmental Claim against PGC or any subsidiary or joint venture of
PGC, or against any person or entity whose liability for any
Environmental Claim PGC or any subsidiary or joint venture of PGC has
or may have retained or assumed either contractually or by operation
of law, except for Releases of Hazardous Materials the liability for
which would not have in the aggregate a PGC Material Adverse Effect.
(e) PREDECESSORS. Except as disclosed in Section 5.11(e) of the
PGC Disclosure Schedule or as disclosed in the PGC SEC Reports, to the
knowledge of PGC, with respect to any predecessor of PGC or any
subsidiary or joint venture of PGC, there are no Environmental Claims
pending or threatened, or any Releases of Hazardous Materials that
would be reasonably likely to form the basis of any Environmental
Claims that would have, or that PGC reasonably believes would have, in
the aggregate, a PGC Material Adverse Effect.
Section 5.12 REGULATION AS A UTILITY. PGC is an electric utility
holding company and is the parent of Portland General Electric Company
("PGE"), a regulated public utility in the State of Oregon and in no other
state. Except as disclosed in Section 5.12 of the PGC Disclosure
Schedule, neither PGC nor any subsidiary company or affiliate of PGC is
subject to regulation as a public utility or public service company (or
similar designation) by any other state in the United States, by the
United States or any agency or instrumentality of the United States or by
any foreign country. PGC is a holding company exempt from all provisions
of the 1935 Act except Section 9(a)(2) of the 1935 Act pursuant to
Section 3(a)(1) of the 1935 Act.
Section 5.13 VOTE REQUIRED. The approval of the PGC Merger by
the holders of a majority of the shares of outstanding PGC Common Stock
(the "PGC SHAREHOLDERS' APPROVAL") is the only vote of the holders of any
class or series of the capital stock of PGC required to approve this
Agreement, the PGC Merger and the other transactions contemplated hereby.
Section 5.14 OPINION OF FINANCIAL ADVISOR. PGC has received the
opinion of Goldman, Sachs & Co. dated the date hereof, to the effect that,
as of the date hereof, the consideration to be received by the holders of
PGC Common Stock in the PGC Merger is fair from a financial point of view
to the holders of PGC Common Stock.
Section 5.15 INSURANCE. Except as disclosed in Section 5.15 of
the PGC Disclosure Schedule, each of PGC and each of its subsidiaries is,
and has been continuously since January 1, 1991, insured in such amounts
and against such risks and losses as are customary for companies
conducting the respective businesses conducted by PGC and its subsidiaries
during such time period. Except as disclosed in Section 5.15 of the PGC
Disclosure Schedule, neither PGC nor any of its
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subsidiaries has received
any notice of cancellation or termination with respect to any material
insurance policy thereof. All material insurance policies of PGC and its
subsidiaries are valid and enforceable policies.
Section 5.16 APPLICABILITY OF CERTAIN OREGON LAW PROVISION. None
of the transactions contemplated by this Agreement is subject to the
control share acquisition provisions of Section 60.801 ET SEQ. of the
OBCA, the business combination provisions of Section 60.825 of the OBCA or
any similar provisions of the articles of incorporation or bylaws of PGC.
Section 5.17 STATUS OF PGC NUCLEAR FACILITY. Except as set forth
in Section 5.17 of the PGC Disclosure Schedule, the operation of the PGC
Nuclear Facility and the operations related to decommissioning of the PGC
Nuclear Facility have at all times been conducted in compliance with
applicable health, safety, regulatory and other legal requirements, except
where the failure to be so in compliance in the aggregate does not have,
and cannot reasonably be expected to have, a PGC Material Adverse Effect.
Except as set forth in such Schedule, neither the operations of the PGC
Nuclear Facility nor the operations related to decommissioning of the PGC
Nuclear Facility are the subject of any outstanding notices of violation
or requests for information from the NRC or any other agency with
jurisdiction over such facility. PGC maintains, and is in compliance
with, an emergency plan designed to protect the health and safety of the
public in the event of an unplanned release of radioactive materials from
the PGC Nuclear Facility, and the NRC has determined that such plan is in
compliance with its requirements. Liability insurance to the full extent
required by law for non-operating nuclear facilities and consistent with
PGC's view of the risks inherent in the decommissioning of the PGC Nuclear
Facility remains in full force and effect regarding such facility, and the
amount of such liability insurance has been approved by the NRC. Plans
for the decommissioning of the PGC Nuclear Facility, and for the storage
of spent nuclear fuel, conform with the requirements of applicable law,
and PGC has funded such plans to the extent required by law. The PGC
Decommissioning Plan as approved by the NRC on April 15, 1996 (the
"DECOMMISSIONING PLAN"), has not been amended, and remains a true and
correct copy of the decommissioning plan approved by the NRC. Except as
disclosed in Section 5.17 of the PGC Disclosure Schedule, PGE has no
intention of varying its operations from those described in the
Decommissioning Plan and has no other material commitments (whether
written or oral) to Governmental Authorities with respect to the PGC
Nuclear Facility.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
After the date hereof and prior to the Effective Time or earlier
termination of this Agreement, each of Enron and PGC agrees as to itself
and its subsidiaries, except as expressly contemplated or permitted in
this Agreement, or to the extent the other party shall otherwise consent
in writing, which consent shall not be unreasonably withheld, as follows:
Section 6.1 ORDINARY COURSE OF BUSINESS. PGC shall, and shall
cause its subsidiaries to, carry on their respective businesses in all
material respects in the usual, regular and ordinary course, consistent
with past practice, and shall, and shall cause its subsidiaries to, use
all reasonable
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efforts to (i) preserve intact their present business
organizations and goodwill, preserve the goodwill and relationships with
customers, suppliers and others having business dealings with them, (ii)
subject to prudent management of workforce needs and ongoing or planned
programs relating to downsizing, re-engineering and similar matters, keep
available the services of their present officers and employees as a group,
(iii) maintain and keep its material properties and assets in as good
repair and condition as at present, subject to ordinary wear and tear, and
maintain supplies and inventories in quantities consistent with past
practice and (iv) with respect to wholesale power and energy trading and
transactions, comply with prudent policies, practices and procedures with
respect to risk management and trading limitations, all to the end that
their goodwill and ongoing businesses shall not be impaired in any
material respect at the Effective Time.
Section 6.2 DIVIDENDS AND REPURCHASES.
(a) PGC shall not and shall not permit any of its subsidiaries
to: (i) declare or pay any dividends on or make other distributions
in respect of any of their capital stock other than (A) dividends by a
wholly-owned subsidiary to PGC or another wholly-owned subsidiary, (B)
dividends by a less than wholly-owned subsidiary consistent with past
practice, (C) stated dividends on PGE Preferred Stock, or (D) regular
dividends on PGC Common Stock with usual record and payment dates
that, in any fiscal year, do not exceed 106% of the dividends for the
prior fiscal year; (ii) split, combine or reclassify any of its
capital stock or the capital stock of any subsidiary or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of, or in substitution for, shares of its capital stock or
the capital stock of any subsidiary; or (iii) redeem, repurchase or
otherwise acquire any shares of its capital stock or the capital stock
of any subsidiary other than (A) redemptions, repurchases and other
acquisitions of shares of capital stock in connection with the
administration of employee benefit and dividend reinvestment plans as
in effect on the date hereof in the ordinary course of the operation
of such plans consistent with past practice, or (B) intercompany
acquisitions of capital stock.
(b) Except as set forth on Section 6.2(b) of the Enron
Disclosure Schedule, Enron shall not, and shall not permit any
subsidiary to, redeem, repurchase or otherwise acquire any shares of
its capital stock or the capital stock of any subsidiary other than
(i) redemptions, repurchases and other acquisitions of shares of
capital stock in connection with the administration of employee
benefit and dividend reinvestment plans as in effect on the date
hereof in the ordinary course of the operation of such plans
consistent with past practice or (ii) any market repurchase plans
consistent with Rule 10b-18 under the Exchange Act, or (iii)
intercompany acquisitions of capital stock.
(c) Enron shall not and shall not permit any of its
subsidiaries to directly or indirectly declare or pay any dividend on
the Enron Common Stock consisting of shares of capital stock of Enron
Capital & Trade Resources Corp. or effect a distribution, whether by
dividend, recapitalization, reclassification or otherwise, to the
holders of Enron Common Stock consisting of evidences of indebtedness,
rights, options or warrants to purchase securities (other than rights
attached to the Enron Common Stock).
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(d) Enron shall not pay any cash dividends in any fiscal year on
the Enron Common Stock in excess of 110% of the dividends for the
prior fiscal year.
Section 6.3 ISSUANCE OF SECURITIES. PGC shall not, nor shall it
permit any of its subsidiaries to, issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of its capital stock
or the capital stock of any subsidiary or any class or any securities
convertible into or exchangeable for, or any rights, warrants or options
to acquire, any such shares of capital stock , other than the issuance of
common stock or stock appreciation or similar rights, as the case may be,
pursuant to PGC's existing Long Term Incentive Master Plan, Retirement
Savings Plan, Employee Stock Ownership Plan or Outside Directors Stock
Compensation Plan, consistent in kind and amount with past practice and
other than issuances by wholly-owned subsidiaries of PGC of securities to
other wholly-owned subsidiaries of PGC.
Section 6.4 CHARTER DOCUMENTS. Except as disclosed in Section
6.4 of the Enron Disclosure Schedule or the PGC Disclosure Schedule, none
of Enron, the Company or PGC shall amend or propose to amend its
certificate or articles of incorporation or by-laws, except as
contemplated herein, in any way that would adversely affect the
consummation of the transactions contemplated by this Agreement or that
would alter the terms of the securities to be issued in the PGC Merger.
Section 6.5 ACQUISITIONS. Except as disclosed in Section 6.5 of
the PGC Disclosure Schedule, PGC shall not, nor shall it permit any of its
subsidiaries to, acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any material
amount of assets other than in the ordinary course of business.
Section 6.6 NO DISPOSITIONS. Except as disclosed in Section 6.6
of the PGC Disclosure Schedule, and other than in the ordinary course of
business consistent with past practice, PGC shall not nor shall it permit
any of its subsidiaries to, sell, lease, license, encumber or otherwise
dispose of, any of its assets.
Section 6.7 INDEBTEDNESS. PGC shall not, nor shall it permit any
of its subsidiaries to, incur or guarantee any indebtedness (including any
debt borrowed or guaranteed or otherwise assumed, including, without
limitation, the issuance of debt securities or warrants or rights to
acquire debt) other than (a) short-term indebtedness in the ordinary
course of business consistent with past practice, (b) long-term
indebtedness incurred by PGE in connection with the refinancing of
existing indebtedness either at its stated maturity or at a lower cost of
funds, (c) up to $175 million in long-term indebtedness, and up to $15
million in long-term indebtedness for pollution control bonds, in each
case incurred by PGE in the ordinary course of business consistent with
past practice, (d) up to $100 million in indebtedness having maturities
not to exceed 5 years from its date of incurrence incurred by PGC or
Portland General Holdings, Inc. ("PGH"), provided that if such
indebtedness has a maturity in excess of one year from the date of its
incurrence, such indebtedness shall be incurred only after consultation
with Enron, and (e) the securitization referred to in item 2 of Section
6.6 of
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the PGC Disclosure Schedule. Notwithstanding the foregoing, PGC
shall not guarantee any indebtedness of PGE, but PGC and PGH shall be
permitted to guarantee obligations under commercial contracts in the
ordinary course of business that are not prohibited by this Agreement.
Section 6.8 CAPITAL EXPENDITURES. Except as disclosed in Section
6.8 of the PGC Disclosure Schedule or as required by law, PGC shall not,
nor shall it permit any of its subsidiaries to, make any capital
expenditures, other than capital expenditures to repair or replace
facilities destroyed or damaged due to casualty or accident (whether or
not covered by insurance).
Section 6.9 COMPENSATION, BENEFITS. Except as disclosed in
Section 6.9 of the PGC Disclosure Schedule, PGC shall not, nor shall it
permit any of its subsidiaries to, (i) enter into, adopt or amend (except
as may be required by applicable law), or increase the amount or
accelerate the payment or vesting of any benefit or amount payable under,
any employee benefit plan or other contract, agreement, commitment,
arrangement, plan or policy maintained by, contributed to or entered into
by PGC or any of its subsidiaries, or increase, or enter into any
contract, agreement, commitment or arrangement to increase in any manner,
the compensation or fringe benefits, or otherwise to extend, expand or
enhance the engagement, employment or any related rights, of any director,
officer or other employee of PGC or any of its subsidiaries, except
pursuant to binding legal commitments and except for normal (including
incentive) increases, extensions, expansions, enhancements, amendments or
adoptions in the ordinary course of business consistent with past practice
that, in the aggregate, do not result in a material increase in benefits
or compensation expense to PGC and its subsidiaries taken as a whole or
(ii) enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
contract, agreement or arrangement with any director or officer of PGC or
any of its subsidiaries other than in the ordinary course of business
consistent with past practice. PGC shall take such action as shall be
necessary so that neither the execution of this Agreement nor the
transactions contemplated hereby shall constitute a "CHANGE IN CONTROL"
within the meaning of the Portland General Corporation Retirement Savings
Plan.
Section 6.10 TAX-FREE STATUS. Neither Enron nor PGC shall, nor
shall either permit any of its subsidiaries to, take any actions that
would, or would be reasonably likely to, adversely affect the
qualification of the Mergers as reorganizations within the meaning of
Section 368(a) of the Code.
Section 6.11 DISCHARGE OF LIABILITIES. PGC shall not pay,
discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction, in the ordinary course
of business consistent with past practice (which includes the payment of
final and nonappealable judgments and the refinancing of existing
indebtedness for borrowed money either at its stated maturity or at a
lower cost of funds) or in accordance with their terms, of liabilities
reflected or reserved against in, or contemplated by, its most recent
consolidated financial statements (or the notes thereto) included in its
reports filed with the SEC, or incurred in the ordinary course of business
consistent with past practice or as disclosed in Section 6.11 of the PGC
Disclosure Schedule.
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Section 6.12 COOPERATION, NOTIFICATION. Each of Enron and PGC
shall: (a) confer on a regular and frequent basis with one or more
representatives of the other to discuss the general status of its ongoing
operations; (b) promptly notify the other of any significant changes in
its business, properties, financial condition or results of operations;
(c) advise the other of any change or event that has had or, insofar as
reasonably can be foreseen, is reasonably likely to result in, an Enron
Material Adverse Effect or a PGC Material Adverse Effect, as the case may
be; and (d) promptly provide the other with copies of all filings made by
it or any of its subsidiaries with any state or federal court,
administrative agency, commission or other Governmental Authority in
connection with this Agreement and the transactions contemplated hereby.
Section 6.13 CONDUCT OF BUSINESS BY ENRON. Prior to the
Effective Time, Enron will conduct its business, and will cause its
subsidiaries to conduct their respective businesses, so that the character
of the business of Enron and its subsidiaries taken as a whole will not be
fundamentally altered.
Section 6.14 THIRD-PARTY CONSENTS. Enron shall, and shall cause
its subsidiaries to, use all reasonable efforts to obtain all Enron
Required Consents. Enron shall promptly notify PGC of any failure or
anticipated failure to obtain any such consents and, if requested by PGC,
shall provide copies of all Enron Required Consents obtained by Enron to
PGC. PGC shall, and shall cause its subsidiaries to, use all reasonable
efforts to obtain all PGC Required Consents. PGC shall promptly notify
Enron of any failure or anticipated failure to obtain any such consents
and, if requested by Enron, shall provide copies of all PGC Required
Consents obtained by PGC to Enron.
Section 6.15 NO BREACH, ETC. No party shall, nor shall any party
permit any of its subsidiaries to, take any action that would or is
reasonably likely to result in a material breach of any provision of this
Agreement or in any of its representations and warranties set forth in
this Agreement being untrue on and as of the Closing Date.
Section 6.16 INSURANCE. Each of Enron and PGC shall, and shall
cause its subsidiaries to, maintain with financially responsible insurance
companies insurance in such amounts and against such risks and losses as
are customary for companies engaged in their respective businesses.
Section 6.17 PERMITS. Each party shall, and shall cause its
subsidiaries to, use all reasonable efforts to maintain in effect all
existing Permits (as defined in SECTION 4.4) pursuant to which such party
or such party's subsidiaries operate.
Section 6.18 NUCLEAR OPERATIONS.
(a) PGC shall not (i) repudiate or breach any existing contract
or arrangement for the disposal or storage of spent nuclear fuel or
components of the PGC Nuclear Facility; or (ii) obligate itself to the
payment of decommissioning expenses for the PGC Nuclear Facility, or
propose or adopt a budget for such decommissioning expenses, which
exceeds the budget for decommissioning expenses set forth in Section
6.18 of the PGC Disclosure Schedule, by
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an amount sufficient to
produce a PGC Material Adverse Effect when measured over the life of
the payment obligation or budget for such expenses. PGC shall not
engage in, or enter into the business of undertaking to engage in, the
transportation, treatment or disposal of radioactive waste generated
by third parties. To the extent not prohibited by applicable laws,
regulations, facility licenses, permits and agreements with third
parties existing as of the date of this Agreement, at all times prior
to the Closing, PGC shall make available to Enron, upon its request,
any existing information relevant to the operation or decommissioning
of the PGC Nuclear Facility, and shall inform Enron promptly of any
proposed changes to the Decommissioning Plan. If PGC is prohibited by
agreement with a third party from providing information to Enron, PGC
shall use reasonable efforts (including taking into account Enron's
willingness to execute appropriate confidentiality agreements) to
obtain the consent of such third party to the release of such
information. In addition, upon reasonable notice, PGC shall allow
access by two individuals designated by Enron to all portions of the
PGC Nuclear Facility, affording those persons the same degree of
access to facilities and information to the same extent afforded the
Director of Nuclear Decommissioning & Thermal Operations. Access by
the individuals selected by Enron shall be pursuant to existing
procedures for access to the PGC Nuclear Facility, including any
security clearance and training normally required of PGC nuclear
personnel.
(b) Within fifteen days following the date of execution of this
Agreement, Enron and PGC shall create a Nuclear Oversight Committee
(the "COMMITTEE") consisting of two members appointed by Enron and two
members appointed by PGC. The Committee shall have no authority to
control, manage, operate or participate in the management of the PGC
Nuclear Facility or the decommissioning of such facility, but shall be
advisory only. Each member of the Committee shall have responsibility
only to the entity that appointed that member to the Committee. To
the extent not prohibited by applicable laws, regulations and facility
licenses and permits, the Committee and each member thereof shall have
access to the PGC Nuclear Facility to the same extent granted to
senior nuclear personnel employed by PGC, and PGC employees shall
cooperate with members of the Committee in obtaining such access and
in promptly responding to all inquiries concerning the PGC Nuclear
Facility. Access by the individuals selected by Enron shall be
pursuant to existing procedures for access to the PGC Nuclear
Facility, including any security clearance and training normally
required of PGC nuclear personnel. The Committee shall consult with
the management of PGC and Enron at regular intervals (but not less
frequently than monthly) concerning the progress of decommissioning of
the PGC Nuclear Facility.
Section 6.19 OPERATIONS OF COMPANY. Prior to the First Effective
Time, the Company shall not, and Enron shall not permit the Company to,
conduct any activities or hold assets except as required in connection
with the transactions contemplated hereby.
Section 6.20 AGREEMENTS. No party or any of its subsidiaries
shall agree in writing to take any action prohibited by this ARTICLE VI.
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ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 ACCESS TO INFORMATION. Upon reasonable notice and
during normal business hours, each party shall, and shall cause its
subsidiaries to, afford to the officers, directors, employees,
accountants, counsel, investment bankers, financial advisors and other
representatives of the other party (collectively, "REPRESENTATIVES")
reasonable access, during normal business hours throughout the period
prior to the Effective Time, to all of its properties, books, contracts,
commitments and records (including, but not limited to, Tax Returns) and,
during such period, each party shall, and shall cause its subsidiaries to,
furnish promptly to the other (i) a copy of each report, schedule and
other document filed or received by it or any of its subsidiaries pursuant
to the requirements of federal or state securities laws or filed with the
SEC, the FERC, the NRC, the Department of Justice, the Federal Trade
Commission, the OPUC, the Oregon Department of Energy ("ODOE") or any
other federal or state regulatory agency or commission with respect to the
transactions contemplated hereby and (ii) all information concerning
themselves, their subsidiaries, directors, officers and shareholders and
such matters as may be reasonably requested by the other party in
connection with any filings, applications or approvals required or
contemplated by this Agreement. All documents and information furnished
pursuant to this SECTION 7.1 shall be subject to the Confidentiality
Agreement between Enron and PGC dated as of March 11, 1996 (the
"CONFIDENTIALITY AGREEMENT"). The party requesting copies of any
documents from any other party hereto shall be responsible for all out-of-
pocket expenses incurred by the party to whom such request is made in
complying with such request, including any cost of reproducing and
delivering any required information.
Section 7.2 JOINT PROXY STATEMENT AND REGISTRATION STATEMENT.
(a) PREPARATION AND FILING. As promptly as reasonably
practicable after the date hereof, the parties shall prepare and file
with the SEC the Registration Statement and the Joint Proxy Statement
(together the "JOINT PROXY/REGISTRATION STATEMENT"). The parties
shall take such actions as may be reasonably required to cause the
Registration Statement to be declared effective under the Securities
Act as promptly as practicable after such filing. The parties shall
also take such action as may be reasonably required to cause the
shares of Company Common Stock and Company Preferred Stock issuable in
connection with the Mergers to be registered under or to obtain an
exemption from registration under applicable state "blue sky" or
securities laws; PROVIDED, HOWEVER, that none of the Company, PGC or
Enron shall be required to register or qualify as a foreign
corporation or to take any other action that would subject it to
general service of process in any jurisdiction in which the Company
will not, following the Effective Time, be so subject. Each of the
parties shall furnish all information concerning itself that is
required or customary for inclusion in the Joint Proxy/Registration
Statement. If, at any time prior to the Effective Time, Enron
discovers any event or circumstance relating to Enron or any of its
subsidiaries, or its or their respective officers or directors, that
should be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement, Enron shall promptly inform
PGC. If, at any time prior to the Effective Time, PGC discovers any
event or circumstance relating
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to PGC or any of its subsidiaries, or
its or their respective officers or directors that should be set forth
in an amendment to the Registration Statement or a supplement to the
Joint Proxy Statement, PGC shall promptly inform Enron. No
representation, covenant or agreement contained in this Agreement is
made by any party hereto with respect to information supplied by any
other party hereto for inclusion in the Joint Proxy/Registration
Statement. The Joint Proxy/Registration Statement shall comply as to
form in all material respects with the Securities Act and the rules
and regulations thereunder.
(b) LETTER OF ENRON'S ACCOUNTANTS. Following receipt by Arthur
Andersen LLP, Enron's independent auditors, of an appropriate request
from PGC pursuant to SAS No. 72, Enron shall use best efforts to cause
to be delivered to the Company and PGC a letter of Arthur Andersen
LLP, dated a date within two business days before the effective date
of the Registration Statement, and addressed to the Company and PGC,
in form and substance reasonably satisfactory to the Company and PGC
and customary in scope and substance for "cold comfort" letters
delivered by independent public accountants in connection with
registration statements and proxy statements similar to the Joint
Proxy/Registration Statement.
(c) LETTER OF PGC'S ACCOUNTANTS. Following receipt by Arthur
Andersen LLP, PGC's independent auditors, of an appropriate request
from Enron pursuant to SAS No. 72, PGC shall use best efforts to cause
to be delivered to the Company and Enron a letter of Arthur Andersen
LLP dated a date within two business days before the effective date of
the Registration Statement, and addressed to the Company and Enron, in
form and substance satisfactory to the Company and Enron and customary
in scope and substance for "cold comfort" letters delivered by
independent public accountants in connection with registration
statements and proxy statements similar to the Joint
Proxy/Registration Statement.
(d) FAIRNESS OPINIONS. Prior to mailing the Joint Proxy
Statement to the shareholders of PGC and Enron (i) Enron shall have
received an opinion from Smith Barney Inc., dated the date of the
Joint Proxy Statement, to the effect that, as of the date thereof, the
consideration to be issued to the holders of PGC Common Stock in the
PGC Merger is fair to the holders of Enron Common Stock and Enron
Convertible Preferred Stock from a financial point of view, and (ii)
PGC shall have received an opinion from Goldman, Sachs & Co., dated
the date of the Joint Proxy Statement, to the effect that, as of the
date thereof, the consideration to be received by holders of PGC
Common Stock pursuant to the PGC Merger is fair to such holders from a
financial point of view.
Section 7.3 REGULATORY MATTERS.
(a) REGULATORY PLANS. Schedule 7.3(a) sets forth the material
terms of the federal and state regulatory plans (the "REGULATORY
PLANS") to be hereafter filed with the FERC and OPUC. The parties
understand and agree that implementing the Regulatory Plans is a
collaborative process. As a consequence, PGC and Enron shall
cooperate in good faith, consult with each other and obtain each
other's consent and agreement (which shall not be
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unreasonably
withheld) on all components of, significant steps toward the
completion of, and significant amendments to, the Regulatory Plans and
with respect to filings, communications, agreements, arrangements or
consents, written or oral, formal or informal, with the OPUC, ODOE,
FERC or the NRC which are reasonably expected to have a significant
effect on the fulfillment of the Regulatory Plans.
(b) OTHER REGULATORY APPROVALS. Each party hereto shall
cooperate and use all reasonable efforts to promptly prepare and file
all necessary documentation, to effect all necessary applications,
notices, petitions, filings and other documents, and to use all
reasonable efforts to obtain all necessary permits, consents,
approvals and authorizations of all Governmental Authorities and all
other persons necessary or advisable to consummate the transactions
contemplated by this Agreement, including, without limitation, the
Enron Required Statutory Approvals, and the PGC Required Statutory
Approvals. Enron and PGC shall each consult with the other with
respect to the obtaining of all such necessary or advisable permits,
consents, approvals and authorizations of Governmental Authorities.
Further, the parties hereto shall cooperate and use all reasonable
efforts to seek appropriate authority to engage in transactions
between affiliates, including OPUC approval for transactions between
affiliated interests.
(c) HSR FILINGS. Each party hereto shall file or cause to be
filed with the Federal Trade Commission and the Department of Justice
any notifications required to be filed by their respective "ultimate
parent" entities under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR ACT"), and the rules and regulations
promulgated thereunder with respect to the transactions contemplated
hereby. Such parties will use all reasonable efforts to make such
filings on a timely basis and shall respond promptly to any requests
for additional information made by either of such agencies.
Section 7.4 SHAREHOLDER APPROVALS.
(a) APPROVAL OF PGC SHAREHOLDERS. PGC shall, as promptly as
reasonably practicable after the date hereof (i) take all steps
reasonably necessary to call, give notice of, convene and hold a
special meeting of its shareholders (the "PGC SPECIAL MEETING") for
the purpose of securing the PGC Shareholders' Approval,
(ii) distribute to its shareholders the Joint Proxy Statement in
accordance with applicable federal and state law and with its articles
of incorporation and bylaws, which Joint Proxy Statement shall contain
the recommendation of the Board of Directors of PGC that its
shareholders approve the PGC Merger, this Agreement and the
transactions contemplated hereby, (iii) use all reasonable efforts to
solicit from its shareholders proxies in favor of the approval and
adoption of the PGC Merger, this Agreement and the transactions
contemplated hereby and to secure the PGC Shareholders' Approval, and
(iv) cooperate and consult with Enron with respect to each of the
foregoing matters; PROVIDED, that nothing contained in this SECTION
7.4(A) shall prohibit the PGC Board of Directors from failing to make
or from withdrawing or modifying its recommendation to the PGC
shareholders hereunder if the Board of Directors of PGC, after
consultation with and based upon the written advice of independent
legal counsel,
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determines in good faith that such action is necessary
for such Board of Directors to comply with its fiduciary duties to its
shareholders under applicable law.
(b) APPROVAL OF ENRON SHAREHOLDERS. Enron shall, as promptly as
reasonably practicable after the date hereof (i) take all steps
reasonably necessary to call, give notice of, convene and hold a
special meeting of its shareholders (the "ENRON SPECIAL MEETING") for
the purpose of securing the Enron Shareholders' Approval, (ii)
distribute to its shareholders the Joint Proxy Statement in accordance
with applicable federal and state law and its articles of
incorporation and bylaws, which Joint Proxy Statement shall contain
the recommendation of the Enron Board of Directors that its
shareholders approve the Reincorporation Merger, this Agreement and
the transactions contemplated hereby and (iii) use all reasonable
efforts to solicit from its shareholders proxies in favor of the
approval and adoption of the Reincorporation Merger, this Agreement
and the transactions contemplated hereby and to secure the Enron
Shareholders' Approval, and (iv) cooperate and consult with PGC with
respect to each of the foregoing matters; PROVIDED, that nothing
contained in this SECTION 7.4(B) shall prohibit the Enron Board of
Directors from failing to make or from withdrawing or modifying its
recommendation to the Enron shareholders hereunder if the Board of
Directors of Enron, after consultation with and based upon the written
advice of independent legal counsel, determines in good faith that
such action is necessary for such Board of Directors to comply with
its fiduciary duties to its shareholders under applicable law.
(c) MEETING DATE. The Enron Special Meeting and the PGC Special
Meeting shall be held on the same day unless otherwise agreed by Enron
and PGC.
Section 7.5 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) INDEMNIFICATION. To the extent, if any, not provided by an
existing right of indemnification or other agreement or policy, from
and after the Effective Time, the Company shall, to the fullest extent
not prohibited by applicable law, indemnify, defend and hold harmless
the present and former directors, officers and management employees of
the parties hereto and their respective subsidiaries (each an
"INDEMNIFIED PARTY" and, collectively, the "INDEMNIFIED PARTIES")
against (i) all losses, expenses (including reasonable attorneys' fees
and expenses), claims, damages, costs, liabilities, judgments or
(subject to the proviso of the next succeeding sentence) amounts that
are paid in settlement of or in connection with any claim, action,
suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was
a director, officer or management employee of such party or any
subsidiary thereof, whether pertaining to any matter existing or
occurring at or prior to or after the Effective Time and whether
asserted or claimed prior to, at or after the Effective Time and (ii)
all liabilities based in whole or in part on, or arising in whole or
in part out of, or pertaining to this Agreement or the transactions
contemplated hereby. In the event of any such loss, expense, claim,
damage, cost, liability, judgment or settlement (whether or not
arising before the Effective Time), (x) the Company shall pay the
reasonable fees and expenses of counsel selected by the Indemnified
Parties, which counsel shall be reasonably satisfactory to the
Company,
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promptly after statements therefor are received, and
otherwise advance to the Indemnified Parties upon request
reimbursement of documented expenses reasonably incurred, in either
case to the extent not prohibited by the laws of the State of Oregon,
(y) the Company shall cooperate in the defense of any such matter and
(z) any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards under
applicable law or as set forth in the Company's articles of
incorporation or bylaws shall be made by independent counsel mutually
acceptable to the Company and the Indemnified Party; PROVIDED,
HOWEVER, that the Company shall not be liable for any settlement
effected without its written consent (which consent shall not be
unreasonably withheld or delayed). The Indemnified Parties as a group
may retain only one law firm (other than local counsel) with respect
to each related matter except to the extent there is, in the sole
opinion of counsel to an Indemnified Party, under applicable standards
of professional conduct, a conflict on any significant issue between
positions of any two or more Indemnified Parties, in which case each
Indemnified Party with a conflicting position on a significant issue
shall be entitled to separate counsel. In the event any Indemnified
Party is required to bring any action to enforce rights or to collect
moneys due under this Agreement and is successful in such action, the
Company shall reimburse such Indemnified Party for all of its expenses
in bringing and pursuing such action. Each Indemnified Party shall be
entitled to the advancement of expenses to the full extent
contemplated in this SECTION 7.5(A) in connection with any such
action.
(b) INSURANCE. For a period of six (6) years after the
Effective Time, the Company shall cause to be maintained in effect the
policies of directors' and officers' liability insurance maintained by
Enron and PGC; PROVIDED that the Company may substitute therefor
policies of at least the same coverage containing terms that are no
less advantageous with respect to matters occurring at or prior to the
Effective Time to the extent such liability insurance can be
maintained annually at a cost to the Company not greater than 200
percent of the current annual premiums for the policies currently
maintained by Enron and PGC for their directors' and officers'
liability insurance; PROVIDED FURTHER, that if such insurance cannot
be so maintained or obtained at such cost, the Company shall maintain
or obtain a policy providing the best coverage available, as
determined by the Board of Directors of the Company, for a premium not
exceeding 200 percent of the respective current annual premiums of
each of Enron and PGC for their directors' and officers' liability
insurance and other indemnity agreements.
(c) SUCCESSORS. In the event the Company or any of its
successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then and
in either such case, proper provision shall be made so that the
successors and assigns of the Company shall assume the obligations set
forth in this SECTION 7.5.
(d) SURVIVAL OF INDEMNIFICATION. To the fullest extent not
prohibited by law, from and after the Effective Time, all rights to
indemnification now existing in favor of the
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employees, agents,
directors or officers of Enron, PGC and their respective subsidiaries
with respect to their activities as such prior to or at the Effective
Time, as provided in their respective articles or certificate of
incorporation or bylaws or indemnification agreements in effect on the
date of such activities or otherwise in effect on the date hereof,
shall survive the Mergers and shall continue in full force and effect
for a period of not less than six years from the Effective Time,
provided that, in the event any claim or claims are asserted or made
within such six year period, all such rights to indemnification in
respect of any claim or claims shall continue until final disposition
of such claim or claims.
Section 7.6 DISCLOSURE SCHEDULES. On or before the date of this
Agreement, (i) PGC has delivered to Enron a schedule (the "PGC DISCLOSURE
SCHEDULE") accompanied by a certificate signed by the chief financial
officer of PGC stating that the Disclosure Schedule is being delivered
pursuant to this SECTION 7.6(I) and (ii) Enron has delivered to PGC a
schedule (the "ENRON DISCLOSURE SCHEDULE") accompanied by a certificate
signed by an executive officer of Enron stating that the Enron Disclosure
Schedule is being delivered pursuant to this SECTION 7.6(II). The PGC
Disclosure Schedule and the Enron Disclosure Schedule are collectively
referred to herein as the "DISCLOSURE SCHEDULES". The Disclosure
Schedules constitute an integral part of this Agreement and modify the
respective representations, warranties, covenants or agreements of the
parties hereto contained herein to the extent that such representations,
warranties, covenants or agreements expressly refer specifically to the
applicable section of the Disclosure Schedules. Any and all statements,
representations, warranties or disclosures set forth in the Disclosure
Schedules shall be deemed to have been made on and as of the date of this
Agreement.
Section 7.7 PUBLIC ANNOUNCEMENTS. Enron and PGC shall cooperate
with each other in the development and distribution of all news releases
and other public information disclosures with respect to this Agreement or
any of the transactions contemplated hereby and, subject to each party's
disclosure obligations imposed by law or any applicable national
securities exchange, (a) shall consult with each other with respect to any
public announcements or statements and (b) shall not issue any public
announcement or statement with respect to the transactions contemplated by
this Agreement that is inconsistent with any public announcement or
statement previously made by either party with the consent of the other
party.
Section 7.8 RULE 145 AFFILIATES. PGC shall identify in a letter
to Enron all persons who are, on the date hereof, "affiliates" of PGC, as
such term is used in Rule 145 under the Securities Act. PGC shall use all
reasonable efforts to cause its respective affiliates to deliver to Enron
not later than 10 days prior to the date of the PGC Special Meeting, a
written agreement substantially in the form attached as EXHIBIT A (an
"AFFILIATE AGREEMENT"), and shall use all reasonable efforts to cause
persons who become "affiliates" after such date but prior to the Closing
Date to execute and deliver agreements at least 5 days prior to the
Closing Date.
Section 7.9 EMPLOYEE AGREEMENTS. Subject to SECTION 7.10 and
SECTION 7.15, the Company and its subsidiaries shall honor, all contracts,
agreements, collective bargaining agreements and commitments of the
parties that apply to any current or former employees or current or former
directors of the parties hereto; PROVIDED, HOWEVER, that this undertaking
is not intended to prevent
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the Company from enforcing such contracts,
agreements, collective bargaining agreements and commitments in accordance
with their terms or from exercising any right (including any right
resulting from mutual consent) to amend, modify, suspend, revoke or
terminate any such contract, agreement, collective bargaining agreement or
commitment.
Section 7.10 EMPLOYEE BENEFIT PLANS.
(a) MAINTENANCE OF BENEFITS. The Company or its subsidiaries
shall provide PGC Employees (as defined below) (other than represented
employees), for a period of not less than two years following the
Effective Time, with benefits that are not materially less favorable
in the aggregate than those provided to such individuals under the PGC
Benefit Plans; provided, that the foregoing shall not require the
Company to maintain or prevent the Company from amending, terminating,
or merging any particular PGC Benefit Plan. PGC Employees means (i)
individuals who are, as of the Effective Time, employees of PGC and
its subsidiaries, except that such an individual shall cease to be
considered a "PGC Employee" and shall thereafter be considered a
"Transferred Employee" if and when he or she transfers to the
employment of Enron or an affiliate of Enron other than PGC and its
subsidiaries; and (ii) individuals who are, as of the Effective Time,
former employees of PGC and its subsidiaries entitled to benefits
according to the provisions of any PGC Benefit Plan as of the
Effective Time.
(b) NONQUALIFIED PLANS AND SEVERANCE. In addition to, and
without limitation of the foregoing, for two years following the
Effective Time: (i) the Portland General Corporation Supplemental
Executive Retirement Plan and the Portland General Corporation
Management Deferred Compensation Plan (the "NONQUALIFIED PLANS") shall
continue in effect without any amendment that could adversely affect
PGC Employees who are participants in such plans as of the Effective
Time ("CURRENT PARTICIPANTS") (including without any limitation an
amendment that reduces the rate at which benefits are accrued); (ii)
the Portland General Electric Company Umbrella Trust for Management
shall continue in existence with assets sufficient to provide for all
benefits of Current Participants that have accrued through the
Effective Time (the "ACCRUED BENEFITS"), and such assets shall not be
used for any purposes other than the payment of the Accrued Benefits
or to pay creditors of PGC and its affiliates in the event of
insolvency, until such time as all Accrued Benefits have been paid;
and (iii) PGC Employees and Transferred Employees (other than
represented employees) shall be entitled to severance benefits in
amounts and upon terms and conditions no less favorable than those in
effect under the Portland General Corporation Involuntary Severance
and Outplacement Plan, as in effect as of the Effective Time.
(c) CONTINUITY OF BENEFITS. The Company and its subsidiaries
shall (i) for all purposes under all compensation and benefit plans
and policies applicable to employees of the Company and its
subsidiaries, treat all service by PGC Employees and Transferred
Employees with PGC or any of its affiliates before the Effective Time
as service with the Company and its subsidiaries, except to the extent
such treatment would result in a duplication of benefits, (ii) for
purposes of any welfare or other employee benefit plan
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maintained by
them for the benefit of PGC Employees and/or Transferred Employees or
in which any PGC Employees and/or Transferred Employees participate
after the Effective Time, waive any waiting periods and limitations
regarding pre-existing conditions, and if any PGC Employee or
Transferred Employee transfers from one such plan to another such plan
during a plan year, cause the second plan to recognize any out-of-
pocket expenses incurred by such PGC Employee or Transferred Employee
and his or her eligible dependents during the portion of the plan year
before such transfer for purposes of determining their deductibles and
out-of-pocket maximums.
Section 7.11 INCENTIVE, STOCK AND OTHER PLANS.
(a) EXISTING PGC STOCK OPTIONS. As of the Effective Time, each
outstanding option to purchase shares of PGC Common Stock (each, a
"PGC STOCK OPTION") pursuant to the 1990 Portland General Corporation
Long-Term Incentive Master Plan (the "PGC STOCK PLAN") shall be
amended to constitute an option to acquire shares of Company Common
Stock, on the same terms and conditions as were applicable under such
PGC Stock Option, based on the same number of shares of the Company
Common Stock as the holder of such PGC Stock Option would have been
entitled to receive pursuant to the Mergers in accordance with Article
II had such holder exercised such option in full immediately prior to
the Effective Time; provided, that the option price of such option
shall be adjusted as necessary to preserve both (A) the aggregate gain
(or loss) on the PGC Stock Option immediately prior to the Effective
Time and (B) the ratio of the exercise price per share subject to the
PGC Stock Option to the fair market value (determined immediately
prior to the Effective Time) per share subject to such option.
(b) OTHER STOCK COMPENSATION. Following the Effective Time
until December 31, 2000, PGC Employees shall be entitled to receive
either (i) a company matching contribution to a profit sharing plan,
in the form of Company Common Stock, on terms and conditions no less
favorable than those in effect under the Portland General Corporation
Retirement Savings Plan immediately before the Effective Time, or (ii)
stock options under the Enron All-Employee Stock Option Program on
terms and conditions no less favorable than similarly situated
employees of Enron and its subsidiaries, but pro-rated to reflect the
time remaining between the time PGC Employees begin to participate in
such plan until December 31, 2000.
(c) ANNUAL INCENTIVE PLAN. For the year in which the Effective
Time occurs ( the "TRANSITION YEAR"), the Portland General Corporation
Annual Incentive Master Plan shall remain in effect and shall be
administered by the individuals who constitute the Compensation
Committee of PGC immediately before the Effective Time, with only such
amendments as such individuals and Enron shall jointly determine to be
appropriate. For the two years following the Transition Year, the
employees of PGC shall participate in an annual incentive plan
administered by the Chief Executive Officer of PGC or his designees;
PROVIDED, HOWEVER, that the funding levels for such plan shall be
determined by the Compensation Committee of Enron following the
Effective Time.
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(d) COMPANY ACTION. With respect to each PGC Benefit Plan and
each other plan referred to above under which the delivery of PGC
Common Stock or Company Common Stock is required upon payment of
benefits, grant of awards or exercise of options (the "STOCK PLANS"),
the Company shall take all corporate action necessary or appropriate
to (i) provide for the issuance or purchase in the open market of
Company Common Stock rather than PGC Common Stock pursuant thereto,
and otherwise to amend the Stock Plans to reflect this Agreement and
the Mergers, (ii) obtain shareholder approval with respect to such
Stock Plan to the extent such approval is required for purposes of the
Code or other applicable law, or to enable such Stock Plan to comply
with Rule 16b-3 promulgated under the Exchange Act, (iii) reserve for
issuance under such plan or otherwise provide a sufficient number of
shares of Company Common Stock for delivery upon payment of benefits,
grant of awards or exercise of options under such Stock Plan and (iv)
as soon as practicable after the Effective Time, file registration
statements on Form S-3 or Form S-8 or amendments on such forms to the
Form S-4 Registration Statement, as the case may be (or any successor
or other appropriate forms), with respect to the shares of Company
Common Stock subject to such Stock Plan to the extent such
registration statement is required under applicable law, and the
Company shall use its best efforts to maintain the current status of
the prospectuses contained therein) for so long as such benefits and
grants remain payable and such options remain outstanding. With
respect to those individuals who subsequent to the Mergers will be
subject to the reporting requirements under Section 16(a) of the
Exchange Act, the Company shall administer the Stock Plans, where
applicable, in a manner that complies with Rule 16b-3 promulgated
under the Exchange Act.
Section 7.12 NO SOLICITATIONS.
(a) From the date of this Agreement until the Effective Time or
until this Agreement is terminated in accordance with ARTICLE IX
hereof, PGC shall not initiate, solicit or encourage (including by way
of furnishing information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal relating to,
or that may reasonably be expected to lead to, any PGC Competing
Transaction (as defined below), or enter into discussions or negotiate
with any person or entity in furtherance of such inquiries or to
obtain a PGC Competing Transaction, or agree to or endorse any PGC
Competing Transaction, or authorize or permit any of the officers,
directors or employees of PGC or any of its subsidiaries or any
investment banker, financial advisor, attorney, accountant or other
representative retained by PGC or any of PGC's subsidiaries to take
any such action, and PGC shall promptly notify Enron of all relevant
terms (including the identities of the parties involved) of any such
inquiries and proposals received by PGC or any of its subsidiaries or
by any such officer, director, investment banker, financial advisor,
attorney, accountant or other representative relating to any of such
matters and if such inquiry or proposal is in writing, PGC shall
promptly deliver or cause to be delivered to Enron a copy of such
inquiry or proposal; PROVIDED, HOWEVER, that, prior to receipt of the
PGC Shareholders' Approval at the PGC Special Meeting, nothing
contained in this SECTION 7.12 shall prohibit the Board of Directors
of PGC from (i) furnishing information to, or entering into
discussions or negotiations with, any person or entity in connection
with an unsolicited bona fide offer in
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writing by such person or
entity to acquire PGC pursuant to a merger, consolidation, share
exchange, business combination or other similar transaction or to
acquire a substantial portion of the assets of PGC or any of its
subsidiaries, to the extent and only to the extent that (A) the Board
of Directors of PGC, after consultation with and based upon the
written advice of independent legal counsel, determines in good faith
that such action is necessary for such Board of Directors to comply
with its fiduciary duties to its shareholders under applicable law and
(B) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity PGC (x)
provides written notice to Enron to the effect that it is furnishing
information to, or entering into discussions or negotiations with,
such person or entity and (y) enters into a confidentiality agreement
with such person or entity reasonably calculated under the
circumstances, in the reasonable judgment of PGC, to protect the
confidentiality of PGC's proprietary data; or (ii) complying with
Rule 14e-2 promulgated under the Exchange Act with regard to a PGC
Competing Transaction. For purposes of this Agreement, "PGC COMPETING
TRANSACTION" shall mean any of the following (other than the
transactions contemplated by this Agreement) involving PGC or any of
its subsidiaries: (i) any merger, consolidation, share exchange,
business combination or similar transaction; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 20% or
more of the assets of PGC and its subsidiaries, taken as a whole,
(iii) any tender offer or exchange offer for 20% or more of the
outstanding shares of capital stock of PGC; (iv) any person acquiring
beneficial ownership of, or any group (as such term is defined under
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) being formed which beneficially owns or has
the right to acquire beneficial ownership of, 20% or more of the
outstanding shares of capital stock of PGC; or (v) any public
announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
(b) From the date of this Agreement until the Effective Time or
until this Agreement is terminated in accordance with ARTICLE IX
hereof, Enron shall not initiate, solicit or encourage (including by
way of furnishing information or assistance), or take any other action
to facilitate, any inquiries or the making of any proposal relating
to, or that may reasonably be expected to lead to, any Enron Competing
Transaction (as defined below), or enter into discussions or negotiate
with any person or entity in furtherance of such inquiries or to
obtain an Enron Competing Transaction, or agree to or endorse any
Enron Competing Transaction, or authorize or permit any of the
officers, directors or employees of Enron or any of its subsidiaries
or any investment banker, financial advisor, attorney, accountant or
other representative retained by Enron or any of Enron's subsidiaries
to take any such action, and Enron shall promptly notify PGC of all
relevant terms (including the identities of the parties involved) of
any such inquiries and proposals received by Enron or any of its
subsidiaries or by any such officer, director, investment banker,
financial advisor, attorney, accountant or other representative
relating to any of such matters and if such inquiry or proposal is in
writing, Enron shall promptly deliver or cause to be delivered to PGC
a copy of such inquiry or proposal; PROVIDED, HOWEVER, that prior to
receipt of the Enron Shareholders' Approval at the Enron Special
Meeting, nothing contained in this SECTION 7.12(B) shall prohibit the
Board of Directors of Enron from (i) furnishing information to, or
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entering into discussions or negotiations with, any person or entity
in connection with an unsolicited bona fide offer in writing by such
person or entity to acquire Enron pursuant to a merger, consolidation,
share exchange, business combination or other similar transaction or
to acquire a substantial portion of the assets of Enron or any of its
subsidiaries, to the extent and only to the extent that (A) the Board
of Directors of Enron, after consultation with and based upon the
written advice of independent legal counsel, determines in good faith
that such action is necessary for such Board of Directors to comply
with its fiduciary duties to its shareholders under applicable law and
(B) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity Enron (x)
provides written notice to PGC to the effect that it is furnishing
information to, or entering into discussions or negotiations with,
such person or entity and (y) enters into a confidentiality agreement
with such person or entity comparable to those customarily used by
Enron to protect the confidentiality of Enron's proprietary data; or
(ii) complying with Rule 14e-2 promulgated under the Exchange Act with
regard to an Enron Competing Transaction. For purposes of this
Agreement, a "ENRON COMPETING TRANSACTION" shall mean any of the
following (other than the transactions contemplated by this Agreement)
involving Enron or any of its subsidiaries: (i) any merger,
consolidation, share exchange, business combination or similar
transaction pursuant to which holders of Enron Common Stock prior to
such transaction would own in the aggregate less than 50% of the
voting power of the entity surviving or resulting from such
transaction (or the ultimate parent entity thereof); (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of
50% or more of the assets of Enron and its subsidiaries, taken as a
whole, (iii) any tender offer or exchange offer for 30% or more of
the outstanding shares of capital stock of Enron; (iv) any person
acquiring beneficial ownership of, or any group (as such term is
defined under Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder) being formed which beneficially
owns or has the right to acquire beneficial ownership of, 30% or more
of the outstanding shares of capital stock of Enron; or (v) any public
announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing;
PROVIDED, that notwithstanding anything herein to the contrary, none
of the foregoing shall be deemed an Enron Competing Transaction unless
such transaction by its terms would prevent the consummation of the
transactions contemplated by this Agreement or be conditioned upon the
termination of this Agreement.
Section 7.13 COMPANY BOARD OF DIRECTORS. The parties hereto will
take such action as may be necessary to cause the number of directors
comprising the full Board of Directors of the Company at the Effective
Time to be not more than 16 persons, of whom three shall be designated by
PGC and reasonably acceptable to Enron and of whom one shall be Ken L.
Harrison; PROVIDED, HOWEVER, that if, prior to the Effective Time, any of
such designees shall decline or be unable to serve, PGC shall designate
another person to serve in such person's stead reasonably acceptable to
Enron.
Section 7.14 COMPANY OFFICERS. At the Effective Time, pursuant
to the terms hereof and the employment contract referred to in
SECTION 7.15, Ken L. Harrison shall hold the positions of Vice Chairman
of the Board of the Company and Chairman of the Board and Chief
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Executive
Officer of PGE and Joseph M. Hirko shall hold the position of Senior Vice
President of the Company.
Section 7.15 EMPLOYMENT CONTRACTS. Concurrently with the
execution and delivery of this Agreement, the Company has entered into
employment contracts in the forms set forth in Exhibits B and C, with
Messrs. Harrison and Hirko, respectively. Such employment agreements
shall become effective immediately at the Effective Time in accordance
with their terms.
Section 7.16 POST-MERGER OPERATIONS. Following the Effective
Time, the Company shall conduct its operations in accordance with the
following:
(a) PRINCIPAL CORPORATE OFFICES. PGE shall maintain its
principal corporate offices in the city of Portland in the State of
Oregon.
(b) CORPORATE OFFICERS OF PGE. The corporate officers of PGE
shall be entitled to maintain their current titles and
responsibilities as officers of PGE, except to the extent modified by
the forms of employment contracts set forth pursuant to SECTION 7.15,
and unless and until otherwise determined by the Board of Directors of
the Company. Following the Effective Time, Enron shall designate a
number of directors of PGE consisting of directors of Enron and/or
employees of Enron or any subsidiary thereof, including Ken L.
Harrison and Joseph M. Hirko. Furthermore, PGC shall have the right
to designate no more than seven non-voting advisory directors for PGE.
(c) CHARITIES. Immediately prior to the Effective Time, each of
Enron and PGC shall cause contributions of $10 million to be made to
the assets of the PGE Foundation (the "FOUNDATION"), and the assets of
the Foundation shall be used for charitable purposes in accordance
with the constituent documents of the Foundation in the service area
of PGE. The current directors of the Foundation, or persons nominated
by a majority of such directors or nominated by their successors in
accordance with this provision, shall be the directors of the
Foundation
Section 7.17 NYSE LISTING. The parties shall take such action as
may be reasonably required to cause the shares of Company Common Stock to
be issued in the Mergers and any Company Preferred Stock issued in
exchange for shares of Enron Convertible Preferred Stock to be approved
for listing on the NYSE and the exchanges on which the Enron Common Stock
or Enron Convertible Preferred Stock was listed, each subject to official
notice of issuance.
Section 7.18 EXPENSES. Subject to SECTION 7.1 and SECTION 9.3,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such expenses, except that those expenses incurred in connection
with printing the Joint Proxy/Registration Statement, as well as the
filing fee relating thereto, shall be shared equally by Enron, on the one
hand, and PGC, on the other hand.
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Section 7.19 FURTHER ASSURANCES.
(a) Each of PGC and Enron shall, and shall cause their
respective subsidiaries to, execute such further documents and
instruments and take such further actions as may reasonably be
requested by the other in order to consummate the Mergers and the
transactions contemplated hereby, and to use its reasonable efforts to
take or cause to be taken all actions, and to do or cause to be done
all things, necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Mergers and the other
transactions contemplated hereby, including fully cooperating with the
other in obtaining the PGC Required Statutory Approvals, the Enron
Required Statutory Approvals and all other approvals and
authorizations of any Governmental Authorities necessary or advisable
to consummate the transactions contemplated hereby.
(b) Enron and PGC acknowledge that in the absence of applicable
regulatory constraints under the 1935 Act it may be preferable for
Enron to remain organized as a Delaware corporation and not to effect
the Reincorporation Merger, consistent with the preservation of the
economic benefits of the Mergers. Accordingly, if, at the time at
which all of the conditions to the parties' respective obligations to
consummate the Mergers have been satisfied or waived, no such
constraints under the 1935 Act shall require the Reincorporation
Merger to occur, the parties shall use all reasonable efforts to
effect a business combination among themselves by means of a mutually
agreed structure other than the Reincorporation Merger that so
preserves such economic benefits and in which Enron remains organized
as a Delaware corporation, and this Agreement shall be appropriately
modified to reflect the fact that the Reincorporation Merger will not
occur; PROVIDED that it shall be a condition to such restructuring
that it shall not have an adverse effect on any material third party
or Governmental Authority declarations, filings, registrations,
notices, authorizations, consents or approvals previously obtained.
ARTICLE VIII
CONDITIONS
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGERS. The respective obligations of each party to effect the Mergers
shall be subject to the satisfaction prior to the Closing Date of the
following conditions, except to the extent such condition is waived by the
parties in writing pursuant to SECTION 9.5:
(a) SHAREHOLDER APPROVALS. The PGC Shareholders' Approval and
the Enron Shareholders' Approval shall have been obtained.
(b) NO INJUNCTION. No temporary restraining order or
preliminary or permanent injunction or other judgment, decree, ruling
or order by any court of competent jurisdiction preventing
consummation of either of the Mergers shall have been issued and
continuing in effect, and the Mergers and the other transactions
contemplated hereby shall not have been prohibited under any
applicable federal or state law or regulation.
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(c) REGISTRATION STATEMENT. The Registration Statement shall
have become effective in accordance with the provisions of the
Securities Act, and no stop order suspending such effectiveness shall
have been issued and remain in effect.
(d) LISTING OF SHARES. The shares of Company Common Stock
issuable in the Mergers pursuant to ARTICLE II shall have been
approved for listing on the NYSE upon official notice of issuance.
(e) STATUTORY APPROVALS. The Enron Required Statutory Approvals
and the PGC Required Statutory Approvals shall have been obtained at
or prior to the Effective Time, such approvals shall have become Final
Orders (as hereinafter defined) and no Final Order shall impose terms
or conditions that would have, or would be reasonably likely to have,
an Enron Material Adverse Effect or a PGC Material Adverse Effect. A
"FINAL ORDER" means action by the relevant regulatory authority that
has not been reversed, stayed, enjoined, set aside, annulled or
suspended, with respect to which any waiting period prescribed by law
before the transactions contemplated hereby may be consummated has
expired, and as to which all conditions to the consummation of such
transactions prescribed by law, regulation or order have been
satisfied.
Section 8.2 CONDITIONS TO OBLIGATION OF ENRON AND THE COMPANY TO
EFFECT THE MERGERS. The obligation of Enron and the Company to effect
the Reincorporation Merger and of the Company to effect the PGC Merger
shall be further subject to the satisfaction, on or prior to the Closing
Date, of the following conditions, except as may be waived by Enron in
writing pursuant to SECTION 9.5:
(a) PERFORMANCE OF OBLIGATIONS OF PGC. PGC shall have performed
in all material respects its agreements and covenants contained in or
contemplated by this Agreement required to be performed by it at or
prior to the Effective Time; PROVIDED, HOWEVER, that with respect to
the agreements and covenants set forth in SECTIONS 6.11, 6.17 and 6.18
(and SECTION 6.20 to the extent related to any of the foregoing) and
ARTICLE VII (other than SECTIONS 7.3 and 7.12), this condition shall
be deemed to be satisfied if (without giving effect for purposes of
this SECTION 8.2(A) to the individual materiality standards otherwise
contained in such sections) there was no failure to comply that,
individually or in the aggregate, could reasonably be expected to have
a PGC Material Adverse Effect.
(b) REPRESENTATIONS AND WARRANTIES. Except as otherwise
contemplated by this Agreement, the representations and warranties of
PGC set forth in this Agreement shall be true and correct as of the
date hereof and as of the Closing Date as if made on and as of the
Closing Date, in each case except for such failures to be so true and
correct (without giving effect for purposes of this SECTION 8.2(B) to
the individual materiality standards otherwise contained in ARTICLE V
hereof) which would not, individually or in the aggregate, reasonably
be expected to have a PGC Material Adverse Effect; PROVIDED, that to
the extent that such representations and warranties are made
specifically as of the date hereof or as of an earlier
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date, such
representations and warranties must be satisfied only as of the date
hereof or such earlier date, as the case may be.
(c) CLOSING CERTIFICATES. Enron shall have received a
certificate signed by the Chief Executive Officer and Chief Financial
Officer of PGC, dated the Closing Date, to the effect that, to the
best of each such officer's knowledge, the conditions set forth in
SECTION 8.2(A) and SECTION 8.2(B) have been satisfied.
(d) TAX OPINION. Enron shall have received an opinion of
counsel from Vinson & Elkins L.L.P., in form and substance
satisfactory to Enron, dated the Closing Date, which opinion may be
based on appropriate representations of Enron, PGC and the Company
that are in form and substance reasonably satisfactory to such
counsel, to the effect that the Mergers will be treated as
reorganizations within the meaning of Section 368(a) of the Code and
that no gain or loss will be recognized to Enron or the holders of
capital stock of Enron as a result thereof.
.
(e) PGC REQUIRED CONSENTS. The PGC Required Consents shall have
been obtained, except for such PGC Required Consents the failure of
which to obtain would not have a PGC Material Adverse Effect.
(f) APPROVAL OF REGULATORY PLANS. The regulatory approval
process for approving the Regulatory Plans shall have resulted in
Final Orders that confirm the matters set forth in paragraphs 2, 3 and
4 of Schedule 7.3(a) without any condition or qualification that would
adversely affect the Company's or its subsidiaries' ability to compete
following the Effective Time on comparable terms and conditions in the
markets for their products and services. Furthermore, the Regulatory
Plans shall otherwise have been approved without imposition or
threatened imposition of changes to the Regulatory Plans during the
period covered thereby that individually or in the aggregate (and
taken together with any failure of any representations and warranties
of PGC set forth in this Agreement to be true and correct, without
giving effect for purposes of this SECTION 8.2(F) to the individual
materiality standards otherwise contained in ARTICLE V hereof) have or
could reasonably be expected to have a PGC Material Adverse Effect.
For purposes of this SECTION 8.2(F), the term "threatened imposition"
shall mean a formal or informal expression of intent by any
Governmental Authority.
(g) SATISFACTION OF PGC CONDITIONS. PGC shall have delivered a
written representation to Enron to the effect that no conditions to
its obligations to consummate the PGC Merger remain to be satisfied,
and that upon consummation of the Reincorporation Merger, PGC will
consummate the PGC Merger.
(h) MARKET-BASED RATES. Enron Power Marketing, Inc. shall not
have been subjected to a loss, in whole or in significant part, of its
FERC authority to sell power (other than sales to Enron's affiliates
(including PGE)) at market-based rates as a consequence of
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the
execution of this Agreement, the performance of the transactions
contemplated by this Agreement or affiliation with PGC or PGE.
Section 8.3 CONDITIONS TO OBLIGATION OF PGC TO EFFECT THE PGC
MERGER. The obligation of PGC to effect the PGC Merger shall be further
subject to the satisfaction, on or prior to the Closing Date, of the
following conditions, except as may be waived by PGC in writing pursuant
to SECTION 9.5:
(a) PERFORMANCE OF OBLIGATIONS OF ENRON. Enron shall have
performed in all material respects its agreements and covenants
contained in or contemplated by this Agreement required to be
performed by it at or prior to the Effective Time; PROVIDED, HOWEVER,
that with respect to the agreements and covenants set forth in ARTICLE
VII (other than SECTION 7.3 and 7.12), this condition shall be deemed
to be satisfied if (without giving effect for purposes of this SECTION
8.3(A) to the individual materiality standards otherwise contained in
such sections) there was no failure to comply that, individually or in
the aggregate, could reasonably be expected to have an Enron Material
Adverse Effect.
(b) REPRESENTATIONS AND WARRANTIES. Except as otherwise
contemplated by this Agreement, the representations and warranties of
Enron set forth in this Agreement shall be true and correct as of the
date hereof and as of the Closing Date as if made on and as of the
Closing Date, in each case except for such failures to be so true and
correct (without giving effect for purposes of this SECTION 8.3(B) to
the individual materiality standards otherwise contained in ARTICLE IV
hereof) which would not, individually or in the aggregate, reasonably
be expected to have an Enron Material Adverse Effect; PROVIDED, that
to the extent that such representations and warranties are made
specifically as of the date hereof or as of an earlier date, such
representations and warranties must be satisfied only as of the date
hereof or such earlier date, as the case may be.
(c) CLOSING CERTIFICATES. PGC shall have received a certificate
signed by the President or any Vice President and the Treasurer of
Enron, dated the Closing Date, to the effect that, to the best of each
such officer's knowledge, the conditions set forth in SECTION 8.3(A)
and SECTION 8.3(B) have been satisfied.
(d) TAX OPINION. PGC shall have received an opinion of counsel
from Wachtell, Lipton, Rosen & Katz, in form and substance
satisfactory to PGC, dated the Closing Date, which opinion may be
based on appropriate representations of Enron, PGC and the Company
that are in form and substance reasonably satisfactory to such
counsel, to the effect that the Mergers will be treated as
"reorganizations" within the meaning of Section 368(a) of the Code and
that no gain or loss will be recognized to PGC or the holders of PGC
Common Stock except with respect to cash received in lieu of
fractional share interests.
(e) ENRON REQUIRED CONSENTS. The Enron Required Consents shall
have been obtained, except for such Enron Required Consents the
failure of which to obtain would not have an Enron Material Adverse
Effect.
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(f) CONSUMMATION OF THE REINCORPORATION MERGER. The
Reincorporation Merger shall have become effective, except as
otherwise contemplated by SECTION 7.19(B).
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 TERMINATION. This Agreement may be terminated at any
time prior to the Closing Date, whether before or after approval by the
shareholders of the respective parties hereto contemplated by this
Agreement:
(a) by mutual written consent of Enron and PGC, duly authorized
by their respective Boards of Directors;
(b) by Enron or PGC, by written notice to the other, if the
Effective Time shall not have occurred on or before the first
anniversary of the date hereof (the "TERMINATION DATE"); PROVIDED,
HOWEVER, that either party may extend the Termination Date for an
additional six months from such anniversary if (i) all the conditions
to consummation of the Mergers set forth in Article VIII hereof have
either been satisfied or are then capable of being satisfied by such
date, other than the condition set forth in SECTION 8.2(F) and (ii)
such party believes that there is a reasonable probability that such
condition will be satisfied by or before such extended Termination
Date; and PROVIDED FURTHER, that the right to terminate this Agreement
under this SECTION 9.1(B) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Effective Time to occur
on or before the termination date;
(c) by Enron or PGC, by written notice to the other party, if
the Enron Shareholders' Approval shall not have been obtained at the
Enron Special Meeting, including any adjournments thereof, or the PGC
Shareholders' Approval shall not have been obtained at the PGC Special
Meeting, including any adjournments thereof;
(d) by Enron or PGC, if any state or federal law, order, rule or
regulation is adopted or issued, that has the effect, as supported by
the written, reasoned opinion of outside counsel for such party, of
prohibiting either of the Mergers or causing an Enron Material Adverse
Effect or PGC Material Adverse Effect, or by any party hereto, if any
court or administrative agency of competent jurisdiction in the United
States or any State shall have issued an order, judgment or decree
permanently restraining, enjoining or otherwise prohibiting either of
the Mergers or causing an Enron Material Adverse Effect or PGC
Material Adverse Effect, and such order, judgment or decree shall have
become final and nonappealable;
(e) by Enron if (i) the Board of Directors of PGC fails to make
or withdraws, modifies or changes its recommendation of this Agreement
or the PGC Merger in a manner adverse to Enron or shall have resolved
to do any of the foregoing, in each case other than under
circumstances in which an Enron Material Adverse Effect has occurred;
(ii) the Board
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of Directors of PGC shall have recommended to the
shareholders of PGC any PGC Competing Transaction or entered into an
agreement with respect to a PGC Competing Transaction or shall have
resolved to do so; or (iii) a tender offer or exchange offer for 20%
or more of the outstanding shares of capital stock of PGC is
commenced, and the Board of Directors of PGC does not recommend,
within the time period specified under Rule 14e-2 under the Exchange
Act, that shareholders not tender their shares into such tender or
exchange offer;
(f) prior to receipt of the PGC Shareholders' Approval at the
PGC Special Meeting, by PGC, upon two days' prior notice to Enron, if,
as a result of a bona fide written offer or proposal (including a
tender offer) by a party other than Enron or any of its affiliates
relating to a PGC Competing Transaction, the Board of Directors of
PGC, after consultation with and based upon the written advice of
independent legal counsel, determines in good faith that its fiduciary
duties to its shareholders under applicable law require that such
other written offer or proposal be accepted; PROVIDED, HOWEVER, that
prior to any such termination, PGC shall use its reasonable efforts
to, and shall use reasonable efforts to cause its respective financial
and legal advisors to, negotiate in good faith with Enron to make such
adjustments in the terms and conditions of this Agreement as would
enable PGC to proceed with the transactions contemplated herein;
(g) by PGC if (i) the Board of Directors of Enron fails to make
or withdraws, modifies or changes its recommendation of this Agreement
or the Reincorporation Merger in a manner adverse to PGC or shall have
resolved to do any of the foregoing, in each case other than in
circumstances in which a PGC Material Adverse Effect has occurred;
(ii) the Board of Directors of Enron shall have recommended to the
shareholders of Enron any Enron Competing Transaction or entered into
an agreement with respect to an Enron Competing Transaction or shall
have resolved to do so, or (iii) a tender offer or exchange is
commenced that, if consummated, would constitute an Enron Competing
Transaction, and the Board of Directors of Enron does not recommend,
within the time period specified under Rule 14e-2 under the Exchange
Act, that shareholders not tender their shares into such tender or
exchange offer;
(h) prior to receipt of the Enron Shareholders' Approval at the
Enron Special Meeting by Enron, upon two days' prior notice to PGC,
if, as a result of a bona fide written offer or proposal (including a
tender offer) by a party other than PGC or any of its affiliates
relating to an Enron Competing Transaction, the Board of Directors of
Enron, after consultation with and based upon the written advice of
independent legal counsel, determines in good faith that its fiduciary
duties to its shareholders under applicable law require that such
other written offer or proposal be accepted;
(i) by Enron, if there shall exist a breach of any
representation, warranty, covenant or agreement on the part of PGC set
forth in this Agreement, which breach is not cured within 20 business
days after receipt by PGC of a written notice of such breach from
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Enron specifying the breach and requesting that it be cured, and the
effect of such breach is that the conditions set forth in SECTION
8.2(A) or SECTION 8.2(B) would not be satisfied;
(j) by PGC, if there shall exist a breach of any representation,
warranty, covenant or agreement on the part of Enron set forth in this
Agreement, which breach is not cured within 20 business days after
receipt by Enron of a written notice of such breach from PGC
specifying the breach and requesting that it be cured, and the effect
of such breach is that the conditions set forth in SECTION 8.3(A) or
SECTION 8.3(B) would not be satisfied;
(k) by PGC, if Enron adopts a plan of complete or partial
liquidation or dissolution or if Enron enters into an agreement for,
or there is consummated, (i) a merger, consolidation, share exchange,
business combination or similar transaction pursuant to which the
holders of Enron capital stock prior to such transaction would own
less than 50% of the voting power attributable to the capital stock of
the entity surviving or resulting from such transaction (or the
ultimate parent entity thereof), (ii) a sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 50% or more of the
assets of Enron and its subsidiaries, taken as a whole, or (iii) a
transaction pursuant to which a person or "group" (within the meaning
of Rule 13d-1 under the Exchange Act) acquires or would acquire
"beneficial ownership" (within the meaning of Rule 13d-3 under the
Exchange Act) of at least 30% of the Enron Common Stock;
(l) prior to the PGC Special Meeting, by PGC, if the Enron
Transaction Price (as defined in SECTION 9.1(M)) is less than $36.25
(the "FLOOR PRICE"); and
(m) prior to the Enron Special Meeting, by Enron, if the Enron
Transaction Price is greater than $47.25 (the "CEILING PRICE"). For
the purposes of paragraphs (l) and (m) hereof, the term"ENRON
TRANSACTION PRICE" shall mean the average of the Closing Prices on the
20 consecutive Trading Day period ending five Trading Days prior to
the date of the PGC Special Meeting.
Section 9.2 EFFECT OF TERMINATION. In the event of termination
of this Agreement by either Enron or PGC pursuant to SECTION 9.1, there
shall be no liability on the part of either Enron or PGC or their
respective officers or directors hereunder, except as provided in SECTION
9.3 and that the agreement contained in the second to the last sentence of
SECTION 7.1 shall survive any such termination, and except that nothing
herein or pursuant hereto (including the making of any payment pursuant to
SECTION 9.3) shall relieve a party of any liability for (i) breach of the
covenants or agreements set forth in this Agreement, or (ii) breach of any
representation or warranty under this Agreement.
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Section 9.3 TERMINATION FEES.
(a) PGC agrees that if this Agreement is terminated pursuant to:
(i) SECTION 9.1(B), SECTION 9.1(C) as a result of the
failure of PGC to receive the PGC Shareholders Approval at the
PGC Special Meeting, or SECTION 9.1(I) as a result of a wilful
breach of any representation, warranty, covenant or agreement of
PGC contained herein, and at the time of the event giving rise to
any such termination, there shall exist a proposal or offer from
a third party relating to a PGC Competing Transaction and within
twelve months after the date of termination of this Agreement a
PGC Business Combination (as defined in SECTION 9.3(C)) shall
have occurred or PGC shall have entered into a definitive
agreement providing for a PGC Business Combination in either case
involving the party (or an affiliate thereof) proposing the PGC
Competing Transaction referred to above; or
(ii) SECTION 9.1(E) or SECTION 9.1(F);
then PGC shall pay to Enron promptly (but not later than five business
days after receipt of notice of the amount due from Enron) an amount
in cash equal to $60 million.
(b) Enron agrees that if this Agreement is terminated pursuant
to:
(i) SECTION 9.1(B), SECTION 9.1(C) as a result of the
failure of Enron to receive the Enron Shareholders Approval at
the Enron Special Meeting, SECTION 9.1(J) as a result of a wilful
breach of any representation, warranty, covenant or agreement of
Enron contained herein, and at the time of the event giving rise
to any such termination, there shall exist a proposal or offer
from a third party relating to Enron Competing Transaction and
within twelve months after the date of termination of this
Agreement an Enron Business Combination (as defined in SECTION
9.3(C)) shall have occurred or Enron shall have entered into a
definitive agreement providing for an Enron Business Combination
in either case involving the party (or an affiliate thereof)
proposing the Enron Competing Transaction referred to above; or
(ii) SECTION 9.1(G), SECTION 9.1(H) or SECTION 9.1(K);
then Enron shall pay to PGC promptly (but not later than five business
days after receipt of notice of the amount due from PGC) an amount in
cash equal to $150 million.
(c) For purposes of this SECTION 9.3, the term "PGC BUSINESS
COMBINATION" means (i) a merger, consolidation, share exchange,
business combination or similar transaction involving PGC, (ii) a
sale, lease, exchange, transfer or other disposition of 20% or more of
the assets of PGC and its subsidiaries, taken as a whole, in a single
transaction or a series of transactions, or (iii) the acquisition, by
a person (other than Enron or any affiliate thereof) or group (as such
term is defined under Section 13(d) of the Exchange Act and the
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rules
and regulations thereunder) of beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) of 20% or more of the PGC Common
Stock whether by tender or exchange offer or otherwise, and the term
"ENRON BUSINESS COMBINATION" means (i) a merger, consolidation, share
exchange, business combination or similar transaction involving Enron
as a result of which the shareholders of Enron prior to such
transaction in the aggregate cease to own at least a majority of the
voting securities of the entity surviving or resulting from such
transaction (or the ultimate parent entity thereof), (ii) a sale,
lease, exchange, transfer or other disposition of more than 50% of the
assets of Enron and its subsidiaries, taken as a whole, in a single
transaction or a series of transactions, or (iii) the acquisition, by
a person (other than PGC or any affiliate thereof) or group (as such
term is defined under Section 13(d) of the Exchange Act and the rules
and regulations thereunder) of beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) of more than 30% of the Enron
Common Stock whether by tender or exchange offer or otherwise.
Section 9.4 AMENDMENT. This Agreement may be amended by the
parties hereto pursuant to action of the respective Boards of Directors of
each of Enron and PGC, at any time before or after approval hereof by the
shareholders of Enron and PGC and prior to the Effective Time, but after
such approvals, no such amendment shall (a) alter or change the amount or
kind of shares, rights or any of the proceedings of the exchange and/or
conversion under ARTICLE II, (b) alter or change any of the terms and
conditions of this Agreement if any of the alterations or changes, alone
or in the aggregate, would materially and adversely affect the rights of
holders of Enron Common Stock or PGC Common Stock or (c) alter or change
any term of the articles of incorporation of the Company, except for
alterations or changes that could otherwise be adopted by the Board of
Directors of the Company, without the further approval of such
shareholders, as applicable. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties hereto.
Section 9.5 WAIVER. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto and (c) waive compliance with any
of the agreements or conditions contained herein. Any agreement to any
such extension or waiver shall be valid only if set forth in an instrument
in writing signed by a duly authorized officer of each party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS. No representation, warranty, covenant or
agreement in this Agreement shall survive the Effective Time, except the
covenants and agreements contained in this SECTION 10.1 and in ARTICLE II
(Treatment of Shares), the second to the last sentence of SECTION 7.1
(Access to Information), SECTION 7.5 (Directors' and Officers'
Indemnification), SECTION 7.9 (Employee Agreements), SECTION 7.10
(Employee Benefit Plans), SECTION 7.11 (Incentive, Stock and Other Plans),
SECTION 7.13 (Company Board of Directors), SECTION 7.14 (Company
Officers), SECTION 7.16
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(Expenses), SECTION 10.2 (Brokers) and SECTION
10.7 (Parties in Interest), each of which shall survive in accordance with
its terms.
Section 10.2 BROKERS. Enron represents and warrants that, except
for Smith Barney Inc., its investment banking firm, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Enron. PGC
represents and warrants that, except for Goldman, Sachs & Co., its
investment banking firm, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of PGC.
Section 10.3 NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given (a) if delivered
personally, or (b) if sent by overnight courier service (receipt confirmed
in writing), or (c) if delivered by facsimile transmission (with receipt
confirmed), or (d) three days after being mailed by registered or
certified mall (return receipt requested) to the parties, in each case to
the following addresses (or at such other address for a party as shall be
specified by like notice):
(i) If to PGC, to:
Alvin Alexanderson
Senior Vice President, General
Counsel and Secretary
121 SW Salmon Street
Portland, Oregon 97204
Fax:(503) 464-2087
with a copy to:
Seth A. Kaplan
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Fax: (212) 403-2000
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(ii) If to Enron or the Company, to:
James V. Derrick
Robert D. Eickenroht
1400 Smith Street
Houston, Texas 77002
Fax: (713) 646-3393
with a copy to:
J. Mark Metts
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin
Houston, Texas 77002
Fax: (713) 758-2346
Douglas W. Hawes
Steven H. Davis
LeBoeuf, Lamb, Greene & MacRae L.L.P.
125 West 55th Street
New York, NY 10019
Fax: (212) 424-8500
Section 10.4 MISCELLANEOUS. This Agreement (including the
documents and instruments referred to herein): (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to
the subject matter hereof other than the Confidentiality Agreement; and
(b) shall not be assigned by operation of law or otherwise. This
Agreement shall be governed by and construed in accordance with the laws
of the State of Delaware applicable to contracts executed in and to be
fully performed in such State, without giving effect to its conflicts of
laws statutes, rules or principles. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect. The parties hereto shall negotiate in
good faith to replace any provision of this Agreement so held invalid or
unenforceable with a valid provision that is as similar as possible in
substance to the invalid or unenforceable provision.
Section 10.5 INTERPRETATION. When reference is made in this
Agreement to Articles, Sections or Exhibits, such reference shall be to an
Article, Section or Exhibit of this Agreement, as the case may be, unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words
"include", "includes", or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
Whenever "or" is used in this Agreement it shall be construed in the
nonexclusive sense. Whenever reference is
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made to the "knowledge" of any
person or entity in this Agreement or to information "known" to any person
or entity in this Agreement, such terms shall refer to information
actually known to the person, in a case of an individual, or in the case
of a corporation or other entity, information actually known to an
executive officer of such corporation or entity, as well as information
which the individual or executive officer involved should reasonably be
expected to have obtained as a result of undertaking an investigation of
such a scope and extent as a reasonably prudent man would undertake
concerning the particular subject matter.
Section 10.6 COUNTERPARTS; EFFECT. This Agreement may be
executed in one or more counterparts, each of which shall be deemed to be
an original, but all of which shall constitute one and the same agreement.
Section 10.7 PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and,
except for rights of Indemnified Parties as set forth in SECTION 7.5
(Directors' and Officers' Indemnification), nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights
or remedies of any nature whatsoever under or by reason of this Agreement.
Section 10.8 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms
or were otherwise breached. It is accordingly agreed that the parties
hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
Section 10.9 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES
THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER,
(iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH
PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.9.
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IN WITNESS WHEREOF, Enron, PGC and the Company have caused this
Agreement to be signed by their respective officers thereunto duly
authorized as of the date first above written.
ENRON CORP.
By: /s/ Edmund P. Segner, III
Name: Edmund P. Segner, III
Title: Executive Vice President and
Chief of Staff
PORTLAND GENERAL CORPORATION
By: /s/ Ken L. Harrison
Name: Ken L. Harrison
Title: Chairman of the Board and
Chief Executive Officer
NEW FALCON CORP.
By: /s/ Edmund P. Segner, III
Name: Edmund P. Segner, III
Title: President
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