<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): July 20, 1996
PORTLAND GENERAL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
OREGON 1-5532 93-0909442
(State of Incorporation) (Commission File Number) (IRS Employer
Identification Number)
</TABLE>
121 SW SALMON STREET
PORTLAND, OREGON 97204
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 464-8820
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<PAGE> 2
ITEM 5. OTHER EVENTS.
On July 20, 1996, Portland General Corporation, an Oregon corporation (the
"Company"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Enron Corp., a Delaware corporation ("Enron") and New Falcon
Corp., an Oregon corporation and wholly owned subsidiary of Enron ("New
Falcon"), pursuant to which Enron will be merged with and into New Falcon with
New Falcon the surviving corporation in the merger (the "Reincorporation
Merger") immediately following which the Company will be merged with and into
New Falcon, with New Falcon the surviving corporation in the merger (the "PGC
Merger"). As a result of the Reincorporation Merger, (i) each outstanding share
of Enron common stock, par value $.10 per share ("Enron Common Stock"), will be
converted into one share of common stock, no par value, of New Falcon ("New
Falcon Common Stock"), and (ii) each outstanding share of Enron's Cumulative
Second Preferred Convertible Stock, par value $1.00 per share, each outstanding
share of Enron's 9.142% Perpetual Second Preferred Stock, par value $1.00 per
share and each share of any series of Preferred Stock, Second Preferred Stock or
Preference Stock of Enron issued after the date of the Merger Agreement and
issued and outstanding immediately prior to the effective time of the
Reincorporation Merger (together, the "Enron Preferred Stock") will be converted
into one share of a class or series of preferred stock of New Falcon having
substantially equivalent rights, preferences and limitations as the
corresponding class or series of Enron Preferred Stock. As a result of the PGC
Merger, each outstanding share of the Company's common stock, par value $3.75
per share, will be converted into one share of New Falcon Common Stock. The PGC
Merger is conditioned upon, among other things, approval by the shareholders of
each of the Company and Enron, and the completion of regulatory procedures at
the Oregon Public Utility Commission and the Federal Energy Regulatory
Commission. The companies are hopeful that the regulatory procedures can be
completed within twelve months from the date of the Merger Agreement. The Merger
Agreement may be terminated by Enron if the average of the closing prices of
Enron Common Stock during the 20 consecutive trading day period ending five
trading days prior to the date of the meeting of the shareholders of the Company
is more than $47.25 per share, and may terminated by the Company if the average
of the closing prices of Enron Common Stock during such period is less than
$36.25 per share. The Merger Agreement is attached as Exhibit 2 hereto and its
terms are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The following exhibits are filed as part of this report:
1. Press release dated July 22, 1996
2. Agreement and Plan of Merger, dated as of July 20, 1996, by and between
Enron Corp., Portland General Corporation and New Falcon Corp.
2
<PAGE> 3
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Dated: July 22, 1996
PORTLAND GENERAL CORPORATION
By: /s/ JOSEPH M. HIRKO
------------------------
Joseph M. Hirko
Senior Vice President and Chief
Financial Officer
3
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- ------------------------------------------------------------------------------------
<C> <S>
1 Press release dated July 22, 1996
2 Agreement and Plan of Merger, dated as of July 20, 1996, by and between Enron Corp.,
Portland General Corporation and New Falcon Corp.
</TABLE>
4
<PAGE> 1
EXHIBIT 1
FOR IMMEDIATE RELEASE
Contact for Enron: Contact for Portland General:
Media: Carol Hensley Media: Carol Dillin
713-853-6498 503-464-8536
Investors: Renita O'Connell Investors: Jo Smith
713-853-6021 503-464-7120
ENRON AND PORTLAND GENERAL ANNOUNCE PRO-COMPETITIVE MERGER
TRANSACTION CREATES NATION'S LARGEST INTEGRATED
NATURAL GAS AND ELECTRICITY COMPANY
Houston, TX and Portland, OR, July 22, 1996 -- Enron Corp. [NYSE: ENE] and
Portland General Corporation [NYSE: PGN] today announced they have signed a
definitive agreement to merge in a tax-free, stock-for-stock transaction
resulting in a combined enterprise with an equity value of approximately $12.5
billion based upon Enron's closing stock price on Friday, July 19, 1996. Enron
will issue approximately 51 million new common shares, valued at approximately
$2.1 billion, to shareholders of Portland General in the transaction. Enron
will consolidate Portland General's debt of approximately $1.1 billion and
account for the transaction on a purchase accounting basis.
The proposed transaction, which has been approved by both companies'
boards of directors, would unite Enron, the largest marketer of natural gas in
North America and the largest independent marketer of wholesale electricity in
North America, with Portland General, one of the most successful, low-cost
electric utilities in one of the country's fastest growing regions. With
ownership of more than 5,900 megawatts of electric generating capacity
worldwide and more than 37,000 miles of natural gas pipeline, the combined
company will be well-positioned to provide integrated energy solutions for
wholesale and retail natural gas and electricity customers in North America and
internationally.
Under the terms of the proposed merger, Portland General shareholders will
be entitled to receive one share of Enron common stock for each share of
Portland General common stock held by them. The agreement may be terminated by
Enron if the average of the closing prices of Enron common stock during the 20
consecutive trading day period ending five trading days prior to the date of
the shareholder meetings is more than $47.25 per share, and may be terminated
by Portland General if the average of the closing prices of Enron common stock
during such period is less than $36.25 per share. The agreement provides for
termination fees payable to each party under certain other circumstances.
- more -
<PAGE> 2
- 2 -
"This proposed merger with Portland General represents an outstanding
opportunity for us to create the leading energy company of the future in the
North American energy markets," said Kenneth L. Lay, chairman and chief
executive officer of Enron. "By combining the natural gas and electricity
marketing and risk management expertise of Enron with the wholesale and retail
electricity expertise of Portland General, along with its related assets and
skilled employees, we are uniquely positioned to be the leader in the
increasingly competitive natural gas and electricity marketplace. This
strategic merger is expected to be accretive to Enron's earnings per share
beginning in the first year after completion of the merger, and is thus
consistent with our long-term compound annual earnings growth target of at
least 15 percent.
"Portland General and Enron together will continue their strong traditions
of active community involvement and support for a healthy environment," Lay
continued. "Ken Harrison, upon completion of the transaction, will continue in
his current role as chairman and CEO of Portland General and further strengthen
Enron's senior management team by assuming the additional responsibilities of
vice chairman of the combined company."
"This is a win-win transaction for Portland General's shareholders,
customers and employees," said Ken L. Harrison, chairman and chief executive
officer of Portland General. "Our shareholders will have the opportunity to
participate in the continued earnings growth of one of the largest and most
successful integrated energy companies in the world. Enron has demonstrated a
superior track record of stock price appreciation and sustained dividend
growth. Under a proposal to be filed with the Oregon Public Utility Commission
(OPUC), which will continue to have regulatory jurisdiction over Portland
General, our customers will receive significant benefits from new and revised
pricing options. The Commission's approval of the application to be filed
relating to the merger of Enron and Portland General may accelerate the timing
of those benefits. We have also committed to price stability for Portland
General customers through 1998."
Harrison continued, "The senior management team of Portland General will
remain in place and Portland General will continue to be headquartered in
Portland. Portland General will provide three board members for Enron's board
of directors. Combining our complementary skill sets and experience in
different sectors of the energy industry will enhance our success in the
converging natural gas and electricity market of the future. I want to
emphasize that this merger is about positioning our companies for competition
in an open market, not cost cutting. As a result of this merger, our employees
will have greater career opportunities both in North America and
internationally. All union contracts will be honored. We are excited about
joining forces with a partner recognized for its innovation in energy products
and services worldwide."
"The deregulation of the electricity market in North America represents
one of the most significant industry restructurings ever," said Lay. "Just as
coal was the primary energy source of the 19th Century, and oil was the primary
fuel of the 20th Century, we believe natural gas and electricity will converge
as the primary sources of energy in North America and many other markets around
the world for the 21st Century."
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<PAGE> 3
- 3 -
Lay continued, "Ten years ago, Enron successfully embarked on a new
strategy to compete in the newly deregulating natural gas market in North
America. Customer choice and competition in natural gas, at the wholesale
level and more recently at the retail level, have been a great success for
consumers and the American economy. By applying the experience gained in the
natural gas market, Enron has become, in a very short period of time, the
largest independent marketer of wholesale electricity in North America. As the
move toward deregulation in the retail sector proliferates, Enron is poised to
participate as a leader in the evolution toward a converged gas and electricity
market, with more product choices and competitive prices for all customers,
large and small, both wholesale and retail."
The two chairmen outlined several strategic reasons why the combination
supports Enron's vision of becoming the world's leading energy company:
First, at the wholesale marketing, trading and supply level, we intend to
be the provider of choice in energy products, principally natural gas and
electricity. By combining Enron's collective marketing and risk management
expertise with Portland General's physical delivery capabilities and asset
operation experience, we will be able to strengthen our presence in the
wholesale and retail markets.
Second, at the retail level, our vision encompasses being the leading
national brand-name total energy provider. By combining our respective retail
marketing expertise in natural gas, electricity and energy management, we will
be able to provide a full range of energy products and specialty services to
commercial, industrial and individual customers. Building on Portland
General's extensive experience in automated metering, billing, auditing and
other end-user customer service functions, we will be able to offer reliable,
low-cost energy and energy management services to customers nationwide. In
addition, Portland General has developed several non-regulated service and
infrastructure investments which we believe have significant growth potential.
Third, we expect to be the most innovative and efficient manager of
electric generation, transmission and distribution assets in the rapidly
changing new marketplace. By leveraging the operating and engineering
expertise of Portland General with Enron's worldwide asset base and experience,
we will be able to expand domestic and international activities across multiple
fuel lines including gas, oil, coal, hydro and renewables.
Both Enron and Portland General are recognized leaders and innovators in
the energy marketplace. By combining their resources, the merged company will
be solidly positioned to provide customized, reliable and low-cost products and
services to customers, to provide a challenging and rewarding work environment
for employees, and to continue to generate attractive returns for shareholders.
The merger is conditioned, among other things, upon the approvals of each
company's shareholders and the completion of regulatory procedures at the
Oregon Public Utility Commission (OPUC) and the Federal Energy Regulatory
Commission (FERC). The companies are hopeful that the regulatory procedures
can be completed in less than 12 months.
- more-
<FF>
<PAGE> 4
- 4 -
Smith Barney Inc. is serving as financial advisor and provided a financial
opinion to Enron. Goldman, Sachs & Co. is serving as financial advisor and
provided a fairness opinion to Portland General.
Portland General Corporation is an electric utility holding company. PGE
serves more than 657,000 retail electricity customers in northwest Oregon, as
well as wholesale electricity customers throughout the western United States.
Enron Corp., one of the world's largest integrated natural gas companies
with approximately $13 billion in assets, operates the second largest natural
gas transmission system in the world; is the largest purchaser and marketer of
natural gas and the largest non-regulated marketer of electricity in North
America; produces and markets natural gas liquids worldwide; owns 59 percent
of Enron Oil & Gas Company, one of the largest independent (non-integrated)
exploration and production companies in the United States; owns 59 percent of
Enron Global Power & Pipelines L.L.C., which is owner and manager of operating
power plants and natural gas pipelines around the world; and is one of the
largest independent developers and producers of electricity in the world.
This press release includes forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Although Enron believes that its expectations are based
on reasonable assumptions, it can give no assurance that its goals will be
achieved. Important factors that could cause actual results to differ
materially from those in the forward looking statements herein include
political developments in foreign countries, the pace of deregulation of retail
natural gas and electricity markets in the United States, federal and state
regulatory developments, the timing and extent of changes in commodity prices
for oil, gas, electricity and interest rates, the extent of success in
acquiring oil and gas properties and in discovering, developing and producing
reserves, the timing and success of efforts to develop international power,
pipeline and other infrastructure projects and conditions of the capital
markets and equity markets during the periods covered by the forward looking
statements.
# # #
There will be a press teleconference, with a question-and-answer
period, today, July 22, 1996, at 8:00 AM PDT (10:00 AM CDT). To access
the call, please call (800) 553-0326 fifteen minutes prior to the call,
and ask to be connected to the Enron/Portland General teleconference.
International callers are asked to call (303) 446-0284.
SATELLITE UPLINK FOR ENRON AND PORTLAND GENERAL B-ROLL:
Monday, July 22
09:00 - 09:30 EDT
Ku-band uplink & space segment for Galaxy K4-61 [11 Upper]
C-band uplink & space segment for Galaxy C6 Transponder 2
Monday, July 22
11:30 - 12:00 EDT
Ku-band uplink & space segment for Galaxy K4-61 [11 Upper]
C-band uplink & space segment for Galaxy C6 Transponder 2
If you have any technical questions or problems with the satellite feed for
Enron and Portland General B-roll, please call Emy Nakase at (212) 627-5622
<PAGE> 1
Exhibit 2
Conformed Copy
--------------
AGREEMENT AND PLAN OF
MERGER
BY AND BETWEEN
ENRON CORP.,
PORTLAND GENERAL CORPORATION
AND
NEW FALCON CORP.
DATED AS OF JULY 20, 1996
<PAGE> 2
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
-i-
<PAGE> 3
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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<PAGE> 4
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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<PAGE> 5
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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<PAGE> 6
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
-v-
<PAGE> 7
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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<PAGE> 8
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
-vii-
<PAGE> 9
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
<PAGE> 10
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,
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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
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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, partner-
ship, 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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