Exhibit 10.1
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BY AND AMONG
ENOVA CORPORATION,
PACIFIC ENTERPRISES,
MINERAL ENERGY COMPANY,
G MINERAL ENERGY SUB
AND
B MINERAL ENERGY SUB
DATED AS OF OCTOBER 12, 1996
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION, dated as of October 12, 1996 (this
"Agreement"), among Enova Corporation, a California
corporation ("Enova"; provided, however, that references
in Article IV hereof to "Enova" prior to January 1, 1996
shall be deemed references to San Diego Gas & Electric, a
California corporation and, since January 1, 1996, a
wholly owned subsidiary of Enova ("Enova Sub")), Pacific
Enterprises, a California corporation ("Pacific"), Mineral
Energy Company, a California corporation, 50% of whose
outstanding capital stock is owned by Enova and 50% of
whose outstanding capital stock is owned by Pacific (the
"Company"), G Mineral Energy Sub, a California corporation
and wholly owned subsidiary of the Company ("Newco Enova
Sub"), and B Mineral Energy Sub , a California corporation
and wholly owned subsidiary of the Company ("Newco Pacific
Sub"),
W I T N E S S E T H:
WHEREAS, Enova and Pacific have each determined that, to
promote the best interests of its shareholders and
employees and those customers and communities served by
its utility subsidiaries, it wishes to compete
aggressively in the rapidly evolving energy marketplace
and that it may best do so through a combination with the
other party, and therefore Pacific and Enova have each
determined to engage in a business combination as peer
firms in a strategic merger of equals and, accordingly,
have formed the Company to participate in such business
combination;
WHEREAS, in furtherance thereof the
respective Boards of Directors of Enova, Pacific, the
Company, Newco Enova Sub and Newco Pacific Sub have
approved the consummation of the reorganization provided
for in this Agreement, pursuant to which Newco Enova Sub
and Newco Pacific Sub will merge with and into Enova and
Pacific, respectively, all in accordance with the
California General Corporation Law (the "California Law")
and on the terms and conditions set forth in this
Agreement (such transactions are referred to herein
individually as the "Enova Merger" and the "Pacific
Merger", respectively, and collectively as the "Mergers"),
as a result of which the common shareholders of Enova and
Pacific will together own all of the outstanding shares of
common stock of the Company (which will, in turn, own all
of the outstanding shares of common stock of Pacific and
Enova) and each share of each other class of capital stock
of Enova and Pacific shall be unaffected and remain
outstanding;
WHEREAS, Pacific and Enova contemplate forming a joint
venture (the "Energy Marketing Joint Venture") to pursue
natural gas and electricity marketing opportunities and
provide energy management and related energy services,
which joint venture will be governed by an agreement
containing substantially the terms set forth in Exhibit A
hereto (the "Energy Marketing Joint Venture Agreement");
WHEREAS, for federal income tax purposes, it is intended
that the Mergers shall collectively qualify as a
transaction described in Section 351 of the Internal
Revenue Code of 1986, as amended (the "Code"), and that
the shareholders of Enova and Pacific will recognize no
gain or loss for federal income tax purposes as a result
of the consummation of the Mergers, except with respect to
any cash received; and
WHEREAS, for accounting purposes, it is intended that the
transactions contemplated hereby shall be accounted for as
a pooling of interests under United States generally
accepted accounting principles applied on a consistent
basis ("GAAP");
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto
hereby agree as follows:
ARTICLE I
THE MERGERS
SECTION 1.01. The Mergers. Upon the terms
and subject to the conditions of this Agreement:
(a)At the Enova Effective Time, Newco Enova
Sub shall be merged with and into Enova (the "Enova
Merger") in accordance with California Law. Enova shall
be the surviving corporation in the Enova Merger and shall
continue its corporate existence under the laws of the
State of California. As a result of the Enova Merger,
Enova shall become a subsidiary of the Company. The
effects and the consequences of the Enova Merger shall be
as set forth in Section 1.03(a).
(b)At the Pacific Effective Time, Newco
Pacific Sub shall be merged with and into Pacific (the
"Pacific Merger") in accordance with California Law.
Pacific shall be the surviving corporation in the Pacific
Merger and shall continue its corporate existence under
the laws of the State of California. As a result of the
Pacific Merger, Pacific shall become a subsidiary of the
Company. The effects and the consequences of the Pacific
Merger shall be as set forth in Section 1.03(b).
SECTION 1.02. Effective Time of the
Mergers; Closing. (a) On the Closing Date, (i) with
respect to the Enova Merger, the parties thereto shall
file the merger agreement in substantially the form
attached as Exhibit 1.02(a)(i) with the Secretary of State
of the State of California in such form as required by,
and executed in accordance with the relevant provisions
of, California Law (the "Enova Merger Agreement"), and
(ii) with respect to the Pacific Merger, the parties
thereto shall file the merger agreement in substantially
the form attached as Exhibit 1.02(a)(ii) with the
Secretary of State of the State of California, in such
form as required by, and executed in accordance with the
relevant provisions of, California Law (the "Pacific
Merger Agreement"). The Enova Merger shall become
effective at the time specified in the Enova Merger
Agreement (the "Enova Effective Time"), and the Pacific
Merger shall become effective at the time specified in the
Pacific Merger Agreement (the "Pacific Effective Time").
The effective time specified in the Enova Merger Agreement
shall also be the effective time specified in the Pacific
Merger Agreement. The term "Effective Time" shall mean
the time and date of the Pacific Effective Time.
(b)The closing (the "Closing") of the
Mergers shall take place at the offices of Shearman &
Sterling, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ at 10:00 A.M., local time,
on the second business day immediately following the date
on which the last of the conditions set forth in Article
VII hereof is fulfilled or waived, or at such other time
and date and place as Pacific and Enova shall mutually
agree (the "Closing Date").
SECTION 1.03. Effects of the Mergers. (a)
At the Enova Effective Time, (i) the Articles of
Incorporation of Enova, as in effect immediately prior to
the Enova Effective Time, shall be the Articles of
Incorporation of Enova as the surviving corporation in the
Enova Merger until thereafter amended as provided by law
and such Articles of Incorporation, and (ii) the Bylaws of
Enova, as in effect immediately prior to the Enova
Effective Time, shall be the Bylaws of Enova as the
surviving corporation in the Enova Merger, until
thereafter amended as provided by law, the Articles of
Incorporation of the surviving corporation and such
Bylaws. Subject to the foregoing, the additional effects
of the Enova Merger shall be as provided in the applicable
provisions of California Law.
(b)At the Pacific Effective Time, (i) the
Articles of Incorporation of Pacific, as in effect
immediately prior to the Pacific Effective Time, shall be
the Articles of Incorporation of Pacific as the surviving
corporation in the Pacific Merger until thereafter amended
as provided by law and such Articles of Incorporation, and
(ii) the Bylaws of Pacific, as in effect immediately prior
to the Pacific Effective Time shall be the Bylaws of
Pacific as the surviving corporation in the Pacific
Merger, until thereafter amended as provided by law, the
Articles of Incorporation of the surviving corporation and
such Bylaws. Subject to the foregoing, the additional
effects of the Pacific Merger shall be as provided in the
applicable provisions of California Law.
(c)The parties shall take all appropriate
action so that at the Effective Time, (i) the Articles of
Incorporation of the Company shall be in such form as
shall mutually be agreed to by Pacific and Enova prior to
the Effective Time, and (ii) the Bylaws of the Company
shall be in such form as shall mutually be agreed to by
Pacific and Enova prior to the Effective Time.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities.
(a) At the Enova Effective Time, by virtue of the Enova
Merger and without any action on the part of any holder of
any capital stock of Enova or Newco Enova Sub:
(i)Cancellation of Certain
Enova Common Stock. Each share of Common Stock, no
par value, of Enova (the "Enova Common Stock") that is
owned by subsidiaries of Enova or by Pacific, the
Company or any of their subsidiaries shall be cancelled
and cease to exist.
(ii)Conversion of Enova Common Stock. Each issued and
outstanding share of Enova Common Stock (other than shares
cancelled pursuant to Section 2.01(a)(i) and Enova
Dissenting Shares) shall be converted into the right to
receive 1.00 (the "Enova Ratio") fully paid and non-
assessable share of Common Stock, no par value, of the
Company (the "Company Common Stock"). Upon such
conversion, each holder of a certificate formerly
representing any such shares 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 upon the surrender of such
certificate in accordance with Section 2.02.
(iii)Conversion of Newco
Enova Sub Common Stock. The aggregate of all shares of
the capital stock of Newco Enova Sub issued and
outstanding immediately prior to the Enova Effective Time
shall be converted into the right to receive that number
of shares of Enova Common Stock which shall be equivalent
to the aggregate number of shares of Enova Common Stock
outstanding immediately prior to the Enova Effective
Time.
(b)At the Pacific Effective Time, by virtue
of the Pacific Merger and without any action on the part
of any holder of any capital stock of Pacific or Newco
Pacific Sub:
(i)Cancellation of Certain Pacific Common Stock. Each
share of Common Stock of Pacific (the "Pacific Common
Stock"), including any associated right (the "Pacific
Right") to receive or purchase shares of the capital stock
of Pacific pursuant to the terms of a Rights Agreement,
dated as of March 7, 1989 between Pacific and Chemical
Bank, as successor Rights Agent thereunder (the "Pacific
Rights Agreement"), that is owned by subsidiaries of
Pacific or by Enova, the Company or any of their
subsidiaries shall be cancelled and cease to exist. All
references in this Agreement to Pacific Common Stock
shall be deemed to include the associated Pacific Rights.
(ii)Conversion of Pacific Common Stock. Each issued and
outstanding share of Pacific Common Stock (other than
shares cancelled pursuant to Section 2.01(b)(i) and
Pacific Dissenting Shares) shall be converted into the
right to receive 1.5038 (the "Pacific Ratio", and
together with the Enova Ratio, the "Exchange Ratios")
shares of fully paid and non-assessable shares of Company
Common Stock. Upon such conversion, each holder of a
certificate formerly representing any such shares 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 upon the surrender of
such certificate in accordance with Section 2.02.
(iii)Conversion of Newco Pacific Sub Common Stock. The
aggregate of all shares of the capital stock of Newco
Pacific Sub issued and outstanding immediately prior to
the Pacific Effective Time shall be converted into the
right to receive that number of shares of Pacific Common
Stock which shall be equivalent to the aggregate number
of shares of Pacific Common Stock outstanding immediately
prior to the Pacific Effective Time. (iv)Pacific
Preferred Stock to Remain Unchanged. All issued and
outstanding shares of Class A Preferred Stock of Pacific
(the "Pacific Class A Preferred Stock") and of Preferred
Stock of Pacific (the "Pacific Preferred Stock") shall be
unchanged and shall remain outstanding after the Pacific
Merger.
(c)At the Effective Time, by virtue of the Mergers and
without any action on the part of any holder of any
capital stock of Enova, Pacific or the Company, each share
of Company Common Stock issued and outstanding immediately
prior to the Effective Time shall be cancelled, and no
consideration shall be delivered in exchange therefor.
SECTION 2.02. Exchange of Certificates.
(a)Deposit with Exchange Agent. As soon as
practicable after the Effective Time, the Company shall
deposit with such bank or trust company mutually agreeable
to Pacific and Enova (the "Exchange Agent"), certificates
representing shares of Company Common Stock required to
effect the exchanges referred to in Sections 2.01(a)(ii)
and (b)(ii).
(b)Exchange Procedures. As soon as
practicable after the Effective Time, the Exchange Agent
shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time
represented outstanding shares of Enova Common Stock or
Pacific Common Stock (the "Certificates") that were
converted (the "Converted Shares") into the right to
receive shares of Company Common Stock (the "Company
Shares") pursuant to Section 2.01, (i) a letter of
transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates
shall pass, only upon actual delivery of the Certificates
to the Exchange Agent) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange
for certificates representing Company Shares. Upon
surrender of a Certificate to the Exchange Agent for
cancellation (or to such other agent or agents as may be
appointed by agreement of Pacific and Enova), together
with a duly executed letter of transmittal and such other
documents as the Exchange Agent shall require, the holder
of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number
of whole Company Shares 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 Enova
or Pacific, as the case may be, a certificate representing
the proper number of Company Shares may be issued to a
transferee if the 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 surrendered as contemplated by this Section
2.02, each Certificate shall be deemed at any time after
the Effective Time to represent only the right to receive
upon such surrender the certificate representing Company
Shares and cash in lieu of any fractional shares of
Company Common Stock ("Merger Consideration") as
contemplated by this Section 2.02.
(c)Distributions with Respect to
Unexchanged Shares. No dividends or other distributions
declared or made after the Effective Time with respect to
Company Shares with a record date after the Effective Time
shall be paid to the holder of any unsurrendered
Certificate with respect to the Company Shares represented
thereby and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to Section
2.02(d) until the holder of record of such Certificate
shall surrender such Certificate. Subject to the effect
of unclaimed property, escheat and other applicable laws,
following surrender of any such Certificate, there shall
be paid to the record holder of the certificates
representing whole Company Shares issued in exchange
therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a
fractional share of Company Common Stock to which such
holder is entitled pursuant to Section 2.02(d) and the
amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with
respect to such whole Company Shares and (ii) at the
appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time
but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole Company
Shares, as the case may be.
(d)No Fractional Securities.
Notwithstanding any other provision of this Agreement, no
certificates or scrip representing fractional shares of
Company Common Stock shall be issued upon the surrender
for exchange of Certificates and such fractional shares
shall not entitle the owner thereof to vote or to any
other rights of a holder of Company Common Stock. Each
holder of a fractional share interest shall be paid an
amount in cash representing such holder's proportionate
interest in the net proceeds from the sale by the Exchange
Agent on behalf of all such holders of the aggregate of
the fractions of shares of Company Common Stock that would
otherwise be issued to such holders ("Excess Shares").
The sale of the Excess Shares by the Exchange Agent shall
be executed on the New York Stock Exchange, Inc. (the
"NYSE") through one or more member firms of the NYSE and
shall be executed in round lots to the extent practicable.
Until the net proceeds of such sale or sales have been
distributed to the former holders of Pacific Common Stock
and Enova Common Stock, the Company will cause the
Exchange Agent to hold such proceeds in trust for the
holders of such fractional share interests (the "Shares
Trust"). The Company shall pay all commissions, transfer
taxes and other out-of-pocket transaction costs, including
the expenses and compensation of the Exchange Agent,
incurred in connection with such sale of the Excess
Shares. The Exchange Agent shall determine the portion of
the Shares Trust to which each former holder of Pacific
Common Stock or Enova Common Stock shall be entitled, if
any, by multiplying the amount of the aggregate net
proceeds comprising the Shares Trust by a fraction the
numerator of which is the amount of the fractional shares
of Company Common Stock to which such former holder of
Pacific Common Stock or Enova Common Stock is entitled and
the denominator of which is the aggregate amount of
fractional share interests to which all holders of Company
Common Stock are entitled. As soon as practicable after
the determination of the amount of cash, if any, to be
paid to former holders of Pacific Common Stock and Enova
Common Stock in lieu of any fractional shares of Company
Common Stock interests, the Exchange Agent shall make
available such amounts to such former holders of Pacific
Common Stock and Enova Common Stock without interest.
(e)Closing of Transfer Books. From and
after the Enova Effective Time or the Pacific Effective
Time, as the case may be, the stock transfer books of
Enova and Pacific shall be closed and no transfer of any
capital stock of Enova or Pacific shall thereafter be
made. If, after the Effective Time, Certificates are
presented to the Company, they shall be cancelled and
exchanged for certificates representing the appropriate
Company Shares as provided in Section 2.02.
(f)Termination of Exchange Agent. Any
certificates representing Company Shares deposited with
the Exchange Agent pursuant to Section 2.02(a) and not
exchanged within one year after the Effective Time
pursuant to this Section 2.02 shall be returned by the
Exchange Agent to the Company, which shall thereafter act
as Exchange Agent. All funds held by the Exchange Agent
for payment to the holders of unsurrendered Certificates
and unclaimed at the end of one year from the Effective
Time shall be returned to the Company, after which time
any holder of unsurrendered Certificates shall look as a
general creditor only to the Company for payment of such
funds to which such holder may be due, subject to
applicable law. The Company shall not be liable to any
person for such shares or funds delivered to a public
official pursuant to any applicable unclaimed property,
escheat or similar law.
SECTION 2.03. Dissenting Shares. (a)
Notwithstanding any provision of this Agreement to the
contrary, any shares of capital stock of Pacific or Enova
held by a holder who has exercised dissenters' rights for
such shares in accordance with California Law and who, as
of the Effective Time, has not effectively withdrawn or
lost such dissenters' rights ("Pacific Dissenting Shares"
or "Enova Dissenting Shares", as the case may be, and
collectively "Dissenting Shares"), shall not be converted
into or represent a right to receive Company Common Stock
in the Pacific Merger (in the case of Pacific Dissenting
Shares) or in the Enova Merger (in the case of Enova
Dissenting Shares), but the holder thereof shall only be
entitled to such rights as are granted by California Law.
(b)Notwithstanding the provisions of subsection (a), if
any holder of Dissenting Shares shall effectively withdraw
or lose (through failure to perfect or otherwise) his
dissenters' rights, then, as of the later of the Pacific
Effective Time or the Enova Effective Time, as applicable,
or the occurrence of such event, such holder's shares
shall automatically be converted into and represent only
the right to receive the applicable Merger Consideration,
without interest thereon, upon surrender of the
certificate or certificates representing such Dissenting
Shares.
(c)Enova shall give Pacific and Pacific
shall give Enova (i) prompt notice of any written demands
received pursuant to Section 1301 of California Law,
withdrawals of such demands, and any other instruments
served pursuant to California Law and received thereby and
(ii) the opportunity to participate in all negotiations
and proceedings with respect to such demands. Neither
Pacific nor Enova shall, except with the prior written
consent of the other, voluntarily make any payment with
respect to any such demands or offer to settle or settle
any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PACIFIC
Pacific represents and warrants to Enova as
follows:
SECTION 3.01. Organization and
Qualification. Except as set forth in Section 3.01 of the
Pacific Disclosure Schedule, each of Pacific and its
subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its state
of incorporation, has all requisite power and authority,
and has been duly authorized by all necessary 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 operations, properties, assets, financial condition or
the results of operations of Pacific and its subsidiaries
taken as a whole or on the consummation of the
transactions contemplated by this Agreement (any such
material adverse effect being hereinafter referred to as a
"Pacific Material Adverse Effect") or a material adverse
effect on the ability of the Energy Marketing Joint
Venture to achieve the business objectives contemplated by
the Summary of Terms attached as Exhibit A (any such
material adverse effect being hereinafter referred to as a
"Joint Venture Material Adverse Effect").
SECTION 3.02.
Subsidiaries. Section 3.02 of the Pacific Disclosure
Schedule sets forth a description as of the date hereof of
all subsidiaries and joint ventures of Pacific, including
the name of each such entity and Pacific's interest
therein, and, as to each subsidiary or joint venture
identified as a "Material Pacific Entity" in Section 3.02
of the Pacific Disclosure Schedule, a brief description of
the principal line or lines of business conducted by each
such entity. Except as set forth in Section 3.02 of the
Pacific 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 Public Utility Holding
Company Act of 1935, as amended (the "1935 Act"),
respectively, or a "public utility" within the meaning of
Section 201(e) of the Federal Power Act (the "Power Act").
Except as set forth in Section 3.02 of the Pacific
Disclosure Schedule, all of the issued and outstanding
shares of capital stock of each subsidiary of Pacific are
validly issued, fully paid, nonassessable and free of
preemptive rights, are owned directly or indirectly by
Pacific free and clear of any liens, claims, encumbrances,
security interests, equities, charges and options of any
nature whatsoever ("Encumbrances") 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.
SECTION 3.03. Capitalization.
(a)Pacific. The authorized capital stock
of Pacific consists of (i) 600,000,000 shares of Pacific
Common Stock, (ii) 5,000,000 shares of Pacific Class A
Preferred Stock and (iii) 10,000,000 shares of Pacific
Preferred Stock. As of the close of business on September
30, 1996, there were issued and outstanding (i) 85,034,885
shares of Pacific Common Stock, (ii) no shares of Pacific
Class A Preferred Stock and (iii) 800,253 shares of
Pacific Preferred Stock consisting of 300,000 shares of a
series of $4.50 dividend preferred stock, 100,000 shares
of a series of $4.40 dividend preferred stock, 200,000
shares of a series of $4.75 dividend preferred stock,
200,000 shares of a series of $4.36 dividend preferred
stock and 253 shares of a series of $4.75 dividend
preferred stock (convertible on or before October 31,
1996). All of the issued and outstanding shares of the
capital stock of Pacific are validly issued, fully paid,
nonassessable and free of preemptive rights. Except as
set forth in Section 3.03(a) of the Pacific 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
Pacific or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional
shares of the capital stock of Pacific or obligating
Pacific or any of its subsidiaries to grant, extend or
enter into any such agreement or commitment, other than
under the Pacific Rights Agreement.
(b)Pacific Sub. The authorized capital stock of
Southern California Gas Company, a California corporation
all of whose issued and outstanding common stock is owned
by Pacific ("Pacific Sub"), consists of (i) 100,000,000
shares of common stock, no par value (the "Pacific Sub
Common Stock"), and (ii) shares of preferred and
preference stock (collectively the "Pacific Sub Preferred
Stock") consisting of (A) 160,000 shares of Preferred
Stock, par value $25 each (the "Pacific Sub $25
Preferred"), (B) 840,000 shares of Preferred Stock, Series
A, par value $25 each (the "Pacific Sub Series A
Preferred"), (C) 5,000,000 shares of Series Preferred
Stock, no par value (the "Pacific Sub Series Preferred"),
and (D) 5,000,000 shares of Preference Stock (the "Pacific
Sub Preference Stock"). As of the close of business on
September 30, 1996, there were issued and outstanding
91,300,000 shares of Pacific Sub Common Stock, 79,011
shares of Pacific Sub $25 Preferred, 783,036 shares of
Pacific Sub Series A Preferred, 3,000,000 shares of
Pacific Sub Series Preferred and no shares of Pacific Sub
Preference Stock. All of the issued and outstanding
shares of the capital stock of Pacific Sub are validly
issued, fully paid, nonassessable and free of preemptive
rights. Except as set forth in Section 3.03(b) of the
Pacific 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 Pacific or any of its subsidiaries
to issue, deliver or sell, or cause to be issued,
delivered or sold, the capital stock of Pacific Sub or
obligating Pacific or any of its subsidiaries to grant,
extend or enter into any such agreement or commitment.
SECTION 3.04. Authority; Non-
Contravention; Statutory Approvals; Compliance.
(a)Authority. Pacific has all requisite power and
authority to enter into this Agreement and the Energy
Marketing Joint Venture Agreement and, subject to the
applicable Pacific Shareholders' Approval and the
applicable Pacific Required Statutory Approvals, to
consummate the transactions contemplated hereby or
thereby. The execution and delivery of this Agreement and
the Energy Marketing Joint Venture Agreement and the
consummation by Pacific of the transactions contemplated
hereby and thereby have been duly authorized by all
necessary corporate action on the part of Pacific, subject
in the case of this Agreement to obtaining the applicable
Pacific Shareholders' Approval. This Agreement has been,
and the Energy Marketing Joint Venture Agreement upon
execution and delivery will be, duly and validly executed
and delivered by Pacific and, assuming the due
authorization, execution and delivery hereof and thereof
by Enova, the Company, Newco Enova Sub and Newco Pacific
Sub, as the case may be, constitutes or will constitute
the valid and binding obligation of Pacific enforceable
against it in accordance with its terms.
(b)Non-Contravention. Except as set forth
in Section 3.04(b) of the Pacific Disclosure Schedule, the
execution and delivery of this Agreement and the Energy
Marketing Joint Venture Agreement by Pacific do not, and
the consummation of the transactions contemplated hereby
or thereby will not (with or without notice or lapse of
time or both), violate, conflict with, or result in a
breach of any provision of, or constitute a default 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 or the loss of a material benefit under, or
result in the creation of any Encumbrance upon any of the
properties or assets (any such violation, conflict,
breach, default, right of termination, cancellation or
acceleration, loss or creation, a "Violation") of Pacific
or any of its subsidiaries or joint ventures pursuant to
any provisions of (i) the articles of incorporation, by-
laws or similar governing documents of Pacific or any of
its subsidiaries or joint ventures, (ii) subject to
obtaining the Pacific Required Statutory Approvals and the
receipt of the Pacific Shareholders' Approval, any
statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any
Governmental Authority applicable to Pacific 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 set forth in Section 3.04(b) of the
Pacific Disclosure Schedule (the "Pacific 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 Pacific or any of its subsidiaries or joint
ventures is now a party or by which it or any of its
properties or assets may be bound or affected, excluding
from the foregoing clauses (ii) and (iii) such Violations
that would not, in the aggregate, have a Pacific Material
Adverse Effect or a Joint Venture Material Adverse Effect.
(c)Statutory Approvals. Except as set
forth in Section 3.04(c) of the Pacific Disclosure
Schedule, no declaration, filing or registration with, or
notice to or authorization, consent or approval 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") is
necessary for (i) the execution and delivery of this
Agreement or the Energy Marketing Joint Venture Agreement
by Pacific or the consummation by Pacific of the
transactions contemplated hereby or thereby, the failure
to obtain, make or give which would have, in the
aggregate, a Pacific Material Adverse Effect or a Joint
Venture Material Adverse Effect, and (ii) the execution
and delivery of this Agreement by the Company or the
consummation by the Company of the transactions
contemplated hereby, the failure to obtain, make or give
which would have, in the aggregate, a material adverse
effect on the operations, properties, assets, financial
condition or the results of operations of the Company and
its prospective subsidiaries taken as a whole or on the
consummation of the transactions contemplated by this
Agreement (collectively, the "Pacific Required Statutory
Approvals", it being understood that references in this
Agreement to "obtaining" such Pacific 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 set forth in
Section 3.04(d) of the Pacific Disclosure Schedule or in
Section 3.11 of the Pacific Disclosure Schedule, or as
disclosed in the Pacific SEC Reports, neither Pacific nor
any of its subsidiaries nor, to the knowledge of Pacific,
any of its joint ventures, is in violation of or is 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 law,
ordinance or regulation) of any Governmental Authority,
except for violations which, in the aggregate do not, and
could not reasonably be expected to, have a Pacific
Material Adverse Effect or a Joint Venture Material
Adverse Effect. Except as set forth in Section 3.04(d) of
the Pacific Disclosure Schedule or in Section 3.11 of the
Pacific Disclosure Schedule, Pacific and each of its
subsidiaries and joint ventures have all permits,
licenses, franchises and other governmental
authorizations, consents and approvals necessary to
conduct their businesses as presently conducted, except
those which the failure to obtain would not, in the
aggregate, have a Pacific Material Adverse Effect or a
Joint Venture Material Adverse Effect.
SECTION 3.05. Reports and Financial
Statements. The filings required to be made by Pacific
and its subsidiaries under the Securities Act of 1933, as
amended (the "Securities Act"), the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), the
California Public Utilities Act, the Power Act, the
Natural Gas Act (the "Gas Act") or the 1935 Act have been
filed with the Securities and Exchange Commission (the
"SEC"), the California Public Utilities Commission (the
"CPUC") or the Federal Energy Regulatory Commission (the
"FERC"), as the case may be, including all forms,
statements, reports, agreements (oral or written) and all
documents, exhibits, amendments and supplements
appertaining thereto, and Pacific has complied in all
material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder.
Pacific has made available to Enova a true and complete
copy of each report, schedule, registration statement and
definitive proxy statement filed by Pacific with the SEC
since January 1, 1994 (as such documents have since the
time of their filing been amended, the "Pacific SEC
Reports"). As of their respective dates, the Pacific SEC
Reports did 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 Pacific included in the Pacific SEC Reports
(collectively, the "Pacific Financial Statements") have
been 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
of the SEC) and fairly present the financial position of
Pacific as of the dates thereof and the results of its
operations and cash flows for the periods then ended,
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 Pacific, as in effect on the
date hereof, have previously been made available to Enova.
SECTION 3.06. Absence of Certain Changes
or Events; Absence of Undisclosed Liabilities.
(a) Except as set forth in the Pacific SEC Reports or
Section 3.06 of the Pacific Disclosure Schedule, from
January 1, 1996 through the date hereof each of Pacific
and its subsidiaries and joint ventures has conducted its
business only in the ordinary course of business
consistent with past practice and there has not been, and
no fact or condition exists which could reasonably be
expected to have, a Pacific Material Adverse Effect or a
Joint Venture Material Adverse Effect.
(b)Neither Pacific nor any of its
subsidiaries has any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of a nature
required by GAAP to be reflected in a consolidated
corporate balance sheet, except liabilities, obligations
or contingencies that are accrued or reserved against in
the consolidated financial statements of Pacific or
reflected in the notes thereto for the year ended December
31, 1995, or which were incurred after December 31, 1995
in the ordinary course of business and would not, in the
aggregate, have a Pacific Material Adverse Effect or a
Joint Venture Material Adverse Effect.
SECTION 3.07. Litigation. Except as
disclosed in the Pacific SEC Reports or as set forth in
Section 3.07 of the Pacific Disclosure Schedule or in
Section 3.11 of the Pacific Disclosure Schedule, (i) there
are as of the date hereof no claims, suits, actions or
proceedings, pending or, to the knowledge of Pacific,
threatened, nor are there, to the knowledge of Pacific,
any investigations or reviews pending or threatened
against, relating to or affecting Pacific or any of its
subsidiaries or joint ventures, (ii) there have not been
any developments since June 30, 1996 with respect to such
disclosed claims, suits, actions, proceedings,
investigations or reviews and (iii) there are no
judgments, decrees, injunctions, rules or orders of any
court, governmental department, commission, agency,
instrumentality or authority or any arbitrator applicable
to Pacific or any of its subsidiaries or joint ventures,
which, when taken together with any other nondisclosures
described in clauses (i), (ii) or (iii), could reasonably
be expected to have a Pacific Material Adverse Effect or a
Joint Venture Material Adverse Effect.
SECTION 3.08. Registration Statement and
Proxy Statement. None of the information supplied or to
be supplied by or on behalf of Pacific for inclusion or
incorporation 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 Mergers (the "Registration
Statement") will, at the time the Registration Statement
is filed with the SEC and at the time it 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 in definitive form relating to the meetings of
Pacific and Enova shareholders to be held in connection
with the Mergers (the "Proxy Statement") will, at the date
mailed to shareholders of Pacific and Enova and at the
times of the meetings of shareholders to be held in
connection with the Mergers, contain any untrue statement
of a material fact or omit to state any material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances
under which they are made, not misleading. The
Registration Statement and the Proxy Statement will comply
as to form in all material respects with the provisions of
the Securities Act and the Exchange Act, respectively, and
the rules and regulations thereunder.
SECTION 3.09. Tax Matters.
"Taxes", as used in this Agreement, means any U.S.
federal, state, county, local or foreign taxes, charges,
fees, levies, or other assessments, including, without
limitation, all net income, gross income, sales and use,
ad valorem, transfer, gains, profits, excise, franchise,
real and personal property, gross receipt, 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 any governmental entity with respect to Taxes
including, where permitted or required, combined or
consolidated returns.
(a)Filing of Timely Tax Returns. Except as
set forth in Section 3.09(a) of the Pacific Disclosure
Schedule, Pacific and each of its subsidiaries have filed
(or there has been filed on their behalf) all Tax Returns
required to be filed by each of them under applicable law.
All Tax Returns were in all material respects (and, as to
Tax Returns not filed as of the date hereof, will be)
true, complete and correct and filed on a timely basis.
(b)Payment of Taxes. Pacific 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 Reserves. Pacific and its
subsidiaries have established (and until the Closing Date
will maintain) on their books and records reserves
adequate to pay all Taxes, all deficiencies in Taxes
asserted or proposed against Pacific or its subsidiaries
and reserves for deferred income taxes in accordance with
GAAP.
(d) Tax Liens. There are no Tax liens upon
the assets of Pacific or any of its subsidiaries except
liens for Taxes not yet due.
(e) Withholding Taxes. Pacific and each of
its subsidiaries have complied (and until the Closing Date
will comply) in all respects with the provisions of the
Code relating to the payment and withholding of Taxes,
including, without limitation, the withholding and
reporting requirements under Sections 1441 through 1464,
3401 through 3406, and 6041 and 6049 of the Code, 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.
(f) Extensions of Time for Filing Tax
Returns. Except as set forth in Section 3.09(f) of the
Pacific Disclosure Schedule, neither Pacific 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.
(g)Waivers of Statute of Limitations. Except as set forth
in Section 3.09(g) of the Pacific Disclosure Schedule,
neither Pacific 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.
(h)Expiration of Statute of Limitations.
Except as set forth in Section 3.09(h) of the Pacific
Disclosure Schedule, the statute of limitations for the
assessment of all federal income and California franchise
Taxes has expired for all related Tax Returns of Pacific
and each of its subsidiaries or those Tax Returns have
been examined by the appropriate taxing authorities for
all periods through the date hereof, and no deficiency for
any such Taxes has been proposed, asserted or assessed
against Pacific or any of its subsidiaries that has not
been resolved and paid in full.
(i)Audit, Administrative and Court
Proceedings. Except as set forth in Section 3.09(i) of
the Pacific Disclosure Schedule, no audits or other
administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns
of Pacific or any of its subsidiaries, and neither Pacific
nor any of its subsidiaries has any knowledge of any
threatened action, audit or administrative or court
proceeding with respect to any such Taxes or Tax Returns.
(j)Powers of Attorney. Except as set forth
in Section 3.09(j) of the Pacific Disclosure Schedule, no
power of attorney currently in force has been granted by
Pacific or any of its subsidiaries concerning any Tax
matter.
(k)Tax Rulings. Except as set forth in
Section 3.09(k) of the Pacific Disclosure Schedule,
neither Pacific nor any of its subsidiaries has received a
Tax Ruling or entered into a Closing Agreement with any
taxing authority that would have a continuing adverse
effect after the Closing Date. "Tax Ruling", as used in
this Agreement, shall mean a written ruling of a taxing
authority relating to Taxes. "Closing Agreement", as used
in this Agreement, shall mean a written and legally
binding agreement with a taxing authority relating to
Taxes.
(l)Availability of Tax Returns. Pacific
and its subsidiaries have made available to Enova complete
and accurate copies of (i) all Tax Returns, and any
amendments thereto, filed by Pacific or any of its
subsidiaries, (ii) all audit reports received from any
taxing authority relating to any Tax Return filed by
Pacific or any of its subsidiaries and (iii) any Closing
Agreements entered into by Pacific or any of its
subsidiaries with any taxingauthority.
(m)Tax Sharing Agreements. Except as set
forth in Section 3.09(m) of the Pacific Disclosure
Schedule, no agreements relating to allocating or sharing
of Taxes exist between or among Pacific and any of its
subsidiaries.
(n)Code Section 341(f). Neither Pacific nor
any of its subsidiaries has filed (or will file prior to
the Closing) a consent pursuant to Section 341(f) of the
Code or has agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as
that term is defined in Section 341(f)(4) of the Code)
owned by Pacific or any of its subsidiaries.
(o)Code Section 168. No property of
Pacific or any of its subsidiaries is property that
Pacific or any such subsidiary or any party to this
transaction is or will be required to treat as being owned
by another person pursuant to the provisions of Section
168(f)(8) of the Code (as in effect prior to its amendment
by the Tax Reform Act of 1986) or is "tax-exempt use
property" within the meaning of Section 168 of the Code.
(p)Code Section 481 Adjustments. Except as
set forth in Section 3.09(p) of the Pacific Disclosure
Schedule and except for adjustments that in the aggregate
could not reasonably be expected to have a Pacific
Material Adverse Effect, neither Pacific nor any of its
subsidiaries is required to include in income any
adjustment pursuant to Section 481(a) of the Code by
reason of a voluntary change in accounting method
initiated by Pacific or any of its subsidiaries, and to
the best of the knowledge of Pacific, the Internal Revenue
Service (the "IRS") has not proposed any such adjustment
or change in accounting method.
(q)Code Sections 6661 and 6662. All
transactions that could give rise to an understatement of
federal income tax (within the meaning of Section 6661 of
the Code for Tax Returns the due date for which was on or
before December 31, 1989 and within the meaning of Section
6662 of the Code for Tax Returns the due date for which
was after December 31, 1989) that could reasonably be
expected to result in a Pacific Material Adverse Effect
have been adequately disclosed (or, with respect to Tax
Returns filed following the Closing, will be adequately
disclosed) on the Tax Returns of Pacific and its
subsidiaries in accordance with Section 6661(b)(2)(B) of
the Code for Tax Returns the due date for which was on or
before to December 31, 1989, and in accordance with
Section 6662(d)(2)(B) of the Code for Tax Returns the due
date for which was after December 31, 1989.
(r)NOLs. As of the date hereof, Pacific
and its subsidiaries had net operating loss carryovers
available to offset future income as set forth in Section
3.09(r) of the Pacific Disclosure Schedule. Section
3.09(r) of the Pacific Disclosure Schedule sets forth the
amount of and year of expiration of each company's net
operating loss carryovers.
(s)Credit Carryover. As of the date
hereof, Pacific and its subsidiaries had tax credit
carryovers available to offset future tax liability as set
forth in Section 3.09(s) of the Pacific Disclosure
Schedule. Section 3.09(s) of the Pacific Disclosure
Schedule sets forth the amount and year of expiration of
each company's tax credit carryovers.
(t)Code Section 338 Elections. Except as
set forth in Section 3.09(t) of the Pacific Disclosure
Schedule, no election under Section 338 of the Code (or
any predecessor provision) has been made by or with
respect to Pacific or any of its subsidiaries or any of
their respective assets or properties.
(u)Acquisition Indebtedness. Except as set
forth in Section 3.09(u) of the Pacific Disclosure
Schedule, no indebtedness of Pacific or any of its
subsidiaries is "corporate acquisition indebtedness"
within the meaning of Section 279(b) of the Code.
(v)Intercompany Transactions. Except as
set forth in Section 3.09(v) of the Pacific Disclosure
Schedule, neither Pacific nor any of its subsidiaries has
engaged in any intercompany transactions within the
meaning of Section 1.1502-13 of the Treasury Regulations
for which any income remains unrecognized as of the close
of the last taxable year prior to the Closing Date.
(w)Code Section 280G. Except as set forth
in Section 3.09(w) of the Pacific Disclosure Schedule,
neither Pacific nor any of its subsidiaries is a party to
any agreement, contract, or arrangement that could result,
on account of the transactions contemplated hereunder,
separately or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of Section
280G of the Code.
SECTION 3.10. Employee Matters; ERISA.
(a)Benefit Plans. Section 3.10(a) of the
Pacific Disclosure Schedule contains a true and complete
list of each material employee benefit plan, program or
arrangement currently sponsored, maintained or contributed
to by Pacific or any of its subsidiaries for the benefit
of employees, former employees or directors and their
beneficiaries in respect of services provided to any such
entity, including, but not limited to, any employee
benefit plans within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and any material employment,
consulting, non-compete, severance or change in control
agreement (collectively, the "Pacific Benefit Plans").
For the purposes of this Section 3.10 only, the term
"Pacific" shall be deemed to include predecessors thereof.
(b)Contributions. Except as set forth in
Section 3.10(b) of the Pacific Disclosure Schedule, all
material contributions and other payments required to be
made by Pacific or any of its subsidiaries to any Pacific
Benefit Plan (or to any person pursuant to the terms
thereof) have been made or the amount of such payment or
contribution obligation has been reflected in the Pacific
Financial Statements.
(c)Qualification; Compliance. Except as
set forth in Section 3.10(c) of the Pacific Disclosure
Schedule, each of the Pacific Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the
Code has been determined by the IRS to be so qualified,
and, to the best knowledge of Pacific, no circumstances
exist that are reasonably expected by Pacific to result in
the revocation of any such determination. Pacific is in
compliance in all material respects with, and each Pacific
Benefit Plan is and has been operated in all material
respects in compliance with, all applicable laws, rules
and regulations governing such plan, including, without
limitation, ERISA and the Code. Each Pacific Benefit Plan
intended to provide for the deferral of income, the
reduction of salary or other compensation, or to afford
other income tax benefits, complies with the requirements
of the applicable provisions of the Code or other laws,
rules and regulations required to provide such income tax
benefits.
(d)Liabilities. With respect to the
Pacific Benefit Plans individually and in the aggregate,
no event has occurred, and, to the best knowledge of
Pacific, there exists no condition or set of circumstances
that could subject Pacific or any of its subsidiaries to
any liability arising under the Code, ERISA or any other
applicable law (including, without limitation, any
liability to any such plan or the Pension Benefit Guaranty
Corporation (the "PBGC")), or under any indemnity
agreement to which Pacific is a party, which liability,
excluding liability for benefit claims or PBGC premiums
and funding obligations payable in the ordinary course,
could reasonably be expected to have a Pacific Material
Adverse Effect.
(e)Welfare Plans. Except as set forth in
Section 3.10(e) of the Pacific
Disclosure Schedule, none of the Pacific Benefit Plans
that are "welfare plans", within the
meaning of Section 3(1) of ERISA, provides for any retiree
benefits other than coverage
mandated by applicable law or benefits the full cost of
which is borne by the retiree.
(f)Documents Made Available. Pacific has
made available to Enova a true and correct copy of each
collective bargaining agreement to which Pacific or any of
its subsidiaries is a party or under which Pacific or any
of its subsidiaries has obligations and, with respect to
each Pacific Benefit Plan, (i) such plan and summary plan
description, (ii) the most recent annual report filed with
the IRS, (iii) each related trust agreement, insurance
contract, service provider or investment management
agreement (including all amendments to each such
document), (iv) the most recent determination of the IRS
with respect to the qualified status of such plan and (v)
the most recent actuarial report or valuation.
(g)Payments Resulting from Mergers. Except
as set forth in Section 3.10(g) of the Pacific Disclosure
Schedule or specifically provided for herein, neither
Pacific nor any of its subsidiaries is a party to any
plan, agreement or arrangement pursuant to the terms of
which the consummation or announcement of any transaction
contemplated by this Agreement will (either alone or in
connection with the occurrence of any additional or
further acts or events) result in any (A) payment (whether
of severance pay or otherwise) becoming due from Pacific
or any of its subsidiaries to any officer, employee,
former employee or director thereof or to a trustee under
any "rabbi trust" or similar arrangement, or (B) benefit
under any Pacific Benefit Plan being established or
becoming accelerated, or immediately vested or payable.
(h)Labor Agreements. As of the date
hereof, except as set forth in Section 3.10(h) of the
Pacific Disclosure Schedule, neither Pacific nor any of
its subsidiaries is a party to any collective bargaining
agreement or other labor agreement with any union or labor
organization. To the best knowledge of Pacific, as of the
date hereof, except as set forth in Section 3.10(h) of the
Pacific Disclosure Schedule, there is no current union
representation question involving employees of Pacific or
any of its subsidiaries, nor does Pacific know of any
activity or proceeding of any labor organization (or
representative thereof) or employee group to organize any
such employees. Except as set forth in the Pacific SEC
Reports or in Section 3.10(h) of the Pacific Disclosure
Schedule, (i) there is no unfair labor practice,
employment discrimination or other complaint against
Pacific pending, or to the best knowledge of Pacific,
threatened, which has or could reasonably be expected to
have, a Pacific Material Adverse Effect, (ii) there is no
strike, dispute, slowdown, work stoppage or lockout
pending, or to the best knowledge of Pacific, threatened,
against or involving Pacific or any of its subsidiaries
which has or could reasonably be expected to have a
Pacific Material Adverse Effect and (iii) there is no
proceeding, claim, suit, action or governmental
investigation pending or, to the best knowledge of
Pacific, threatened, in respect of which any director,
officer, employee or agent of Pacific or any of its
subsidiaries is or may be entitled to claim
indemnification from Pacific pursuant to their respective
articles of incorporation or bylaws or as provided in the
Indemnification Agreements listed in Section 3.10(h) of
the Pacific Disclosure Schedule.
SECTION 3.11. Environmental Protection.
(a)Compliance. Except as set forth in the
Pacific SEC Reports, except as set forth in Section
3.11(a) of the Pacific Disclosure Schedule and except
where the failure to be in compliance could not reasonably
be expected to have a Pacific Material Adverse Effect, (i)
each of Pacific and its subsidiaries is in compliance with
all applicable Environmental Laws and (ii) neither Pacific
nor any of its subsidiaries has received any written
communication, from any person or Governmental Authority
that alleges that Pacific or any of its subsidiaries is
not in such compliance with applicable Environmental Laws.
(b)Environmental Permits. Except as set
forth in the Pacific SEC Reports or as set forth in
Section 3.11(b) of the Pacific Disclosure Schedule, each
of Pacific and its subsidiaries has obtained or has
applied for all environmental, health and safety permits
and governmental authorizations (collectively, the
"Environmental Permits") necessary for the construction of
their facilities or the conduct of their operations, and
all such permits are in good standing or, where
applicable, a renewal application has been timely filed
and is pending agency approval, and Pacific and its
subsidiaries are in material compliance with all terms and
conditions of the Environmental Permits, except where the
failure to obtain or be in compliance with such
Environmental Permit could not reasonably be expected to
have a Pacific Material Adverse Effect.
(c)Environmental Claims. Except as set
forth in the Pacific SEC Reports or as set forth in
Section 3.11(c) of the Pacific Disclosure Schedule, to the
best knowledge of Pacific, there is no Environmental Claim
pending (i) against Pacific or any of its subsidiaries or
joint ventures, (ii) against any person or entity whose
liability for any Environmental Claim Pacific or any of
its subsidiaries or joint ventures has retained or assumed
contractually or (iii) against any real or personal
property or operations which Pacific or any of its
subsidiaries or joint ventures owns, leases or manages, in
whole or in part, which, if adversely determined, could
reasonably be expected to have, in the aggregate, a
Pacific Material Adverse Effect.
(d)Releases. Except as set forth in the
Pacific SEC Reports or as set forth in Section 3.11(c) or
Section 3.11(d) of the Pacific Disclosure Schedule,
Pacific has no knowledge of any Releases of any Hazardous
Material that would be reasonably likely to form the basis
of any Environmental Claim against Pacific or any of its
subsidiaries or joint ventures, or against any person or
entity whose liability for any Environmental Claim Pacific
or any of its subsidiaries or joint ventures has retained
or assumed contractually, which could reasonably be
expected to have, in the aggregate, a Pacific Material
Adverse Effect.
(e)Predecessors. Except as set forth in
the Pacific SEC Reports or as set forth in Section 3.11(e)
of the Pacific Disclosure Schedule, Pacific has no
knowledge, with respect to any predecessor of Pacific or
any subsidiary or joint venture of Pacific, of any
Environmental Claim pending or threatened, or of any
Release of Hazardous Materials that would be reasonably
likely to form the basis of any Environmental Claim, which
could reasonably be expected to have a Pacific Material
Adverse Effect.
(f)Disclosure. To Pacific's best
knowledge, Pacific has disclosed to Enova all material
facts which Pacific reasonably believes form the basis of
a Pacific Material Adverse Effect arising from (i) the
cost of Pacific pollution control equipment currently
required or known to be required in the future; (ii)
current Pacific remediation costs or Pacific remediation
costs known to be required in the future; or (iii) any
other environmental matter affecting Pacific.
(g)Cost Estimates. To Pacific's best
knowledge, no environmental matter set forth in the
Pacific SEC Reports or the Pacific Disclosure Schedule
could reasonably be expected to exceed the cost estimates
provided in the Pacific SEC Reports by an amount that
individually or in the aggregate could reasonably be
expected to have a Pacific Material Adverse Effect.
(h)Certain Definitions. As used in this
Agreement:
(i)"Environmental Claim"
means any and all written 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 any Governmental Authority) alleging
potential liability (including, without limitation,
potential liability for enforcement, investigatory costs,
cleanup costs, governmental response costs, removal costs,
remedial costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of,
based on or resulting from (A) the presence, or Release or
threatened Release into the environment, of any Hazardous
Materials at any location, whether or not owned,
operated, leased or managed by Pacific or any of its
subsidiaries or joint ventures (for purposes of this
Section 3.11), or by Enova or any of its subsidiaries or
joint ventures (for purposes of Section 4.11); (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, local
laws, rules and regulations relating to pollution or
protection of human health or the environment (including,
without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata),
including, without limitation, 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, radioactive materials, asbestos in
any form that is or could become friable, urea
formaldehyde foam insulation, and transformers or other
equipment that contain dielectric fluid containing
polychlorinated biphenyls ("PCBs"); (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 Pacific or
any of its subsidiaries or joint ventures operates (for
purposes of this Section 3.11) or in which Enova or any
of its subsidiaries or joint ventures operates (for
purposes of Section 4.11). (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.
SECTION 3.12. Regulation as a Utility.
Pacific Sub is regulated as a public utility by the State
of California and by no other state. Except as set forth
in Section 3.12 of the Pacific Disclosure Schedule,
neither Pacific nor any "subsidiary company" or
"affiliate" of Pacific is subject to regulation as a
public utility or public service company (or similar
designation) by any other state in the United States or
any foreign country. As used in this Section 3.12 and in
Section 4.12, the terms "subsidiary company" and
"affiliate" shall have the respective meanings ascribed to
them in the 1935 Act. Pacific is an exempt holding
company under Section 3(a)(1) of the 1935 Act. Section
3.12 of the Pacific Disclosure Schedule sets forth each
"affiliate" and each "subsidiary company" of Pacific which
may be deemed to be a "public utility company" or a
"holding company" within the meaning of the 1935 Act.
SECTION 3.13. Vote Required. The approval
of the Pacific Merger by the affirmative vote of (i) a
majority of the votes entitled to be cast by all holders
of Pacific Common Stock and (ii) a majority of the votes
entitled to be cast by all holders of Pacific Common Stock
and Pacific Preferred Stock, voting together as a single
class (the "Pacific Shareholders' Approval"), are the only
votes of the holders of any class or series of the capital
stock of Pacific required to approve this Agreement, the
Mergers and the other transactions contemplated hereby.
No vote of shareholders of Pacific is required to approve
the Energy Marketing Joint Venture Agreement.
SECTION 3.14. Accounting Matters. Neither
Pacific nor, to its best knowledge, any of its affiliates
has taken or agreed to take any action that would prevent
the Company from accounting for the transactions to be
effected pursuant to Articles I and II of this Agreement
as a pooling of interests in accordance with GAAP and
applicable SEC regulations.
SECTION 3.15. Opinions of Financial
Advisors. Pacific has received the opinion of each of
▇▇▇▇ ▇▇▇▇▇▇ & Co. Incorporated ("▇▇▇▇ ▇▇▇▇▇▇") and ▇▇▇▇▇▇▇
Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ("▇▇▇▇▇▇▇
▇▇▇▇▇"), dated October 11, 1996, to the effect that, as of
such date, the Pacific Ratio is fair from a financial
point of view to the holders of Pacific Common Stock.
SECTION 3.16. Insurance. Except as set
forth on Section 3.16 of the Pacific Disclosure Schedule,
each of Pacific and its subsidiaries is, and has been
continuously since January 1, 1993, insured with
financially responsible insurers in such amounts and
against such risks and losses as are customary for
companies conducting the business as conducted by Pacific
and its subsidiaries during such time period. Except as
set forth on Schedule 3.16 of the Pacific Disclosure
Schedule, neither Pacific nor its subsidiaries has
received any notice of cancellation or termination with
respect to any material insurance policy of Pacific or its
subsidiaries. The insurance policies of Pacific and each
of its subsidiaries are valid and enforceable policies in
all material respects.
SECTION 3.17. Pacific Rights Agreement.
Pacific has delivered to Enova a true and complete copy of
the Pacific Rights Agreement as in effect on the date
hereof. Pacific has taken all necessary action to amend
the Pacific Rights Agreement so that neither the execution
of this Agreement nor the consummation of the Mergers will
(a) cause the Pacific Rights to become exercisable, (b)
cause Enova or the Company to become an Acquiring Person
(as such term is defined in the Pacific Rights Agreement)
or (c) give rise to a Distribution Date, a Stock
Acquisition Date, a Section 7(a)(iii) Event or a Section
13 Event (as each term is defined in the Pacific Rights
Agreement).
SECTION 3.18. Brokers. No broker, finder or investment
banker (other than ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇) is
entitled to any brokerage, finder's or other fee or
commission in connection with the Mergers based upon
arrangements made by or on behalf of Pacific. Pacific has
heretofore furnished to Enova a complete and correct copy
of all agreements between Pacific and ▇▇▇▇▇▇▇ ▇▇▇▇▇ or
▇▇▇▇ ▇▇▇▇▇▇ pursuant to which such firm would be entitled
to any payment relating to the Mergers.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ENOVA
Enova represents and warrants to Pacific as
follows:
SECTION 4.01. Organization and
Qualification. Each of Enova and its subsidiaries is a
corporation duly organized, validly existing and in good
standing under the laws of its state of incorporation, has
all requisite power and authority, and has been duly
authorized by all necessary 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
operations, properties, assets, financial condition or the
results of operations of Enova and its subsidiaries taken
as a whole or on the consummation of the transactions
contemplated by this Agreement (any such material adverse
effect being hereinafter referred to as a "Enova Material
Adverse Effect") or a Joint Venture Material Adverse
Effect.
SECTION 4.02. Subsidiaries. Section 4.02
of the Enova Disclosure Schedule sets forth a description
as of the date hereof of all subsidiaries and joint
ventures of Enova, including the name of each such entity
and Enova's interest therein, and, as to each subsidiary
or joint venture identified as a "Material Enova Entity"
in Section 4.02 of the Enova Disclosure Schedule, a brief
description of the principal line or lines of business
conducted by each such entity. Except as set forth in
Section 4.02 of the Enova 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, or a "public utility" within the meaning of
Section 201(e) of the Power Act. Except as set forth in
Section 4.02 of the Enova Disclosure Schedule, all of the
issued and outstanding shares of capital stock of each
subsidiary of Enova are validly issued, fully paid,
nonassessable and free of preemptive rights, are owned
directly or indirectly by Enova free and clear of any
Encumbrances 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.
SECTION 4.03. Capitalization.
(a)Enova. The authorized capital stock of
Enova consists of 300,000,000 shares of Enova Common Stock
and 30,000,000 shares of Preferred Stock, no par value, of
Enova ("Enova Preferred Stock"). As of the close of
business on September 30, 1996, (i) 116,583,358 shares of
Enova Common Stock and (ii) no shares of Enova Preferred
Stock were issued and outstanding. All of the issued and
outstanding shares of the capital stock of Enova are
validly issued, fully paid, nonassessable and free of
preemptive rights. Except as set forth in Section 4.03(a)
of the Enova 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 Enova or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of the capital stock of Enova
or obligating Enova or any of its subsidiaries to grant,
extend or enter into any such agreement or commitment.
(b)Enova Sub. The authorized capital stock
of Enova Sub consists of (i) 255,000,000 shares of common
stock, no par value, of Enova Sub ("Enova Sub Common
Stock"), (ii) 1,375,000 shares of preferred stock, par
value $20 per share, of Enova Sub (the "Enova Sub Par
Value $20 Preferred Stock"), and (iii) 10,000,000 shares
of preference stock, no par value, of Enova Sub (the
"Enova Sub No Par Preference Stock"). As of the close of
business on September 30, 1996, there were issued and
outstanding (i) 116,583,358 shares of Enova Sub Common
Stock, (ii) 1,373,770 shares of Enova Sub Par Value $20
Preferred Stock consisting of 375,000 shares of the 5%
Series, 300,000 shares of the 4.50% Series, 325,000 shares
of the 4.40% Series and 373,770 shares of the 4.60%
Series, 1995, and (iii) 3,190,000 shares of Enova Sub No
Par Preference Stock consisting of 150,000 shares of the
$7.20 Series, 1,400,000 shares of the $1.70 Series,
640,000 shares of the $1.82 Series and 1,000,000 shares of
the $1.7625 Series. All of the issued and outstanding
shares of the capital stock of Enova Sub are validly
issued, fully paid, nonassessable and free of preemptive
rights. Except as set forth in Section 4.03(b) of the
Enova 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 Enova or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered
or sold, the capital stock of Enova Sub or obligating
Enova or any of its subsidiaries to grant, extend or enter
into any such agreement or commitment.
SECTION 4.04.
Authority; Non-Contravention; Statutory Approvals;
Compliance.
(a)Authority. Enova has all requisite
power and authority to enter into this Agreement and the
Energy Marketing Joint Venture Agreement and, subject to
the applicable Enova Shareholders' Approval and the
applicable Enova Required Statutory Approvals, to
consummate the transactions contemplated hereby or
thereby. The execution and delivery of this Agreement and
the Energy Marketing Joint Venture Agreement and the
consummation by Enova of the transactions contemplated
hereby and thereby have been duly authorized by all
necessary corporate action on the part of Enova, subject
in the case of this Agreement to obtaining of the
applicable Enova Shareholders' Approval. This Agreement
has been, and the Energy Marketing Joint Venture Agreement
upon execution and delivery will be, duly and validly
executed and delivered by Enova and, assuming the due
authorization, execution and delivery hereof and thereof
by Pacific, the Company, Newco Enova Sub and Newco Pacific
Sub, as the case may be, constitutes or will constitute
the valid and binding obligation of Enova enforceable
against it in accordance with its terms.
(b)Non-Contravention. Except as set forth
in Section 4.04(b) of the Enova Disclosure Schedule, the
execution and delivery of this Agreement and the Energy
Marketing Joint Venture Agreement by Enova do not, and the
consummation of the transactions contemplated hereby or
thereby will not (with or without notice or lapse of time
or both), violate, conflict with, or result in a breach of
any provision of, or constitute a default under, or result
in any Violation by Enova or any of its subsidiaries or
joint ventures pursuant to any provisions of (i) the
articles of incorporation or by-laws or similar governing
documents of Enova or any of its subsidiaries or joint
ventures, (ii) subject to obtaining the Enova Required
Statutory Approvals and the receipt of the Enova
Shareholders' Approval, any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ,
permit or license of any Governmental Authority applicable
to Enova 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 set forth in
Section 4.04(b) of the Enova Disclosure Schedule (the
"Enova 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 Enova or any
of its subsidiaries or joint ventures is now a party or by
which it or any of its properties or assets may be bound
or affected, excluding from the foregoing clauses (ii) and
(iii) such Violations that would not, in the aggregate,
have a Enova Material Adverse Effect or a Joint Venture
Material Adverse Effect.
(c)Statutory Approvals. Except as set
forth in Section 4.04(c) of the Enova Disclosure Schedule,
no declaration, filing or registration with, or notice to
or authorization, consent or approval of, any Governmental
Authority is necessary for (i) the execution and delivery
of this Agreement or the Energy Marketing Joint Venture
Agreement by Enova or the consummation by Enova of the
transactions contemplated hereby or thereby, the failure
to obtain, make or give which would have, in the
aggregate, a Enova Material Adverse Effect or a Joint
Venture Material Adverse Effect, and (ii) the execution
and delivery of this Agreement by the Company or the
consummation by the Company of the transactions
contemplated hereby, the failure to obtain, make or give
which would have, in the aggregate, a material adverse
effect on the operations, properties, assets, financial
condition or the results of operations of the Company and
its prospective subsidiaries taken as a whole or on the
consummation of the transactions contemplated by this
Agreement (collectively, the "Enova Required Statutory
Approvals", it being understood that references in this
Agreement to "obtaining" such Enova 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 set forth in
Section 4.04(d) of the Enova Disclosure Schedule or in
Section 4.11 of the Enova Disclosure Schedule or as
disclosed in the Enova SEC Reports, neither Enova nor any
of its subsidiaries nor, to the knowledge of Enova, any of
its joint ventures, is in violation of or is 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 law,
ordinance or regulation) of any Governmental Authority,
except for violations which, in the aggregate do not, and
could not reasonably be expected to have a Enova Material
Adverse Effect or a Joint Venture Material Adverse Effect.
Except as set forth in Section 4.04(d) of the Enova
Disclosure Schedule or in Section 4.11 of the Enova
Disclosure Schedule, Enova and each of its subsidiaries
and joint ventures have all permits, licenses, franchises
and other governmental authorizations, consents and
approvals necessary to conduct their businesses as
presently conducted, except those which the failure to
obtain would not, in the aggregate, have a Enova Material
Adverse Effect or a Joint Venture Material Adverse Effect.
SECTION 4.05. Reports and Financial
Statements. The filings required to be made by Enova and
its subsidiaries under the Securities Act, the Exchange
Act, the California Public Utilities Act, the Power Act,
the Gas Act, the Atomic Energy Act of 1954, as amended
(the "Atomic Energy Act"), or the 1935 Act have been filed
with the SEC, the CPUC, the Nuclear Regulatory Commission
(the "NRC") or the FERC, as the case may be, including all
forms, statements, reports, agreements (oral or written)
and all documents, exhibits, amendments and supplements
appertaining thereto, and Enova has complied in all
material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder.
Enova has made available to Pacific a true and complete
copy of each report, schedule, registration statement and
definitive proxy statement filed by Enova with the SEC
since January 1, 1994 (as such documents have since the
time of their filing been amended, the "Enova SEC
Reports"). As of their respective dates, the Enova SEC
Reports did 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 Enova included in the Enova SEC Reports
(collectively, the "Enova Financial Statements") have been
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
of the SEC) and fairly present the financial position of
Enova as of the dates thereof and the results of its
operations and cash flows for the periods then ended,
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 Enova as in effect on the date
hereof, are included (or incorporated by reference) in the
Enova SEC Reports.
SECTION 4.06. Absence of Certain Changes
or Events; Absence of Undisclosed Liabilities. (a)
Except as set forth in the Enova SEC Reports or Section
4.06 of the Enova Disclosure Schedule, from January 1,
1996 through the date hereof each of Enova and its
subsidiaries and joint ventures has conducted its business
only in the ordinary course of business consistent with
past practice and there has not been, and no fact or
condition exists which could reasonably be expected to
have, a Enova Material Adverse Effect or a Joint Venture
Material Adverse Effect.
(b)Neither Enova nor any of its
subsidiaries has any liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of a nature
required by GAAP to be reflected in a consolidated
corporate balance sheet, except liabilities, obligations
or contingencies that are accrued or reserved against in
the consolidated financial statements of Enova or
reflected in the notes thereto for the year ended December
31, 1995, or which were incurred after December 31, 1995
in the ordinary course of business and would not, in the
aggregate, have a Enova Material Adverse Effect or a Joint
Venture Material Adverse Effect.
SECTION 4.07. Litigation. Except as
disclosed in the Enova SEC Reports or as set forth in
Section 4.11 of the Enova Disclosure Schedule or in
Section 4.07 of the Enova Disclosure Schedule, (i) there
are as of the date hereof no claims, suits, actions or
proceedings, pending or, to the knowledge of Enova,
threatened, nor are there, to the knowledge of Enova, any
investigations or reviews pending or threatened against,
relating to or affecting Enova or any of its subsidiaries
or joint ventures, (ii) there have not been any
developments since June 30, 1996 with respect to such
disclosed claims, suits, actions, proceedings,
investigations or reviews and (iii) there are no
judgments, decrees, injunctions, rules or orders of any
court, governmental department, commission, agency,
instrumentality or authority or any arbitrator applicable
to Enova or any of its subsidiaries or joint ventures,
which, when taken together with any other nondisclosures
described in clause (i), (ii) or (iii), could reasonably
be expected to have a Enova Material Adverse Effect or a
Joint Venture Material Adverse Effect .
SECTION 4.08. Registration Statement and
Proxy Statement. None of the information supplied or to
be supplied by or on behalf of Enova for inclusion or
incorporation by reference in (i) the Registration
Statement will, at the time the Registration Statement is
filed with the SEC and at the time it 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 Proxy
Statement will, at the date mailed to shareholders of
Pacific and Enova and at the times of the meetings of such
shareholders to be held in connection with the Mergers,
contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they are made, not
misleading. The Registration Statement and the Proxy
Statement will comply as to form in all material respects
with the provisions of the Securities Act and the Exchange
Act, respectively, and the rules and regulations
thereunder.
SECTION 4.09. Tax Matters.
(a)Filing of Timely Tax Returns. Enova and
each of its subsidiaries have filed (or there has been
filed on their behalf) all Tax Returns required to be
filed by each of them under applicable law. All Tax
Returns were in all material respects (and, as to Tax
Returns not filed as of the date hereof, will be) true,
complete and correct and filed on a timely basis.
(b)Payment of Taxes. Enova 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 Reserves. Enova and its
subsidiaries have established (and until the Closing Date
will maintain) on their books and records reserves
adequate to pay all Taxes, all deficiencies in Taxes
asserted or proposed against Enova or its subsidiaries and
reserves for deferred income taxes in accordance with
GAAP.
(d) Tax Liens. There are no Tax liens upon
the assets of Enova or any of its subsidiaries except
liens for Taxes not yet due.
(e)Withholding Taxes. Enova and each of
its subsidiaries have complied (and until the Closing Date
will comply) in all respects with the provisions of the
Code relating to the payment and withholding of Taxes,
including, without limitation, the withholding and
reporting requirements under Sections 1441 through 1464,
3401 through 3406, and 6041 and 6049 of the Code, 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.
(f)Extensions of Time for Filing Tax
Returns. Except as set forth in Section 4.09(f) of the
Enova Disclosure Schedule, neither Enova 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.
(g)Waivers of Statute
of Limitations. Except as set forth in Section 4.09(g) of
the Enova Disclosure Schedule, neither Enova 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.
(h)Expiration of Statute of Limitations.
Except as set forth in Section 4.09(h) of the Enova
Disclosure Schedule, the statute of limitations for the
assessment of all federal income and California franchise
Taxes has expired for all related Tax Returns of Enova and
each of its subsidiaries or those Tax Returns have been
examined by the appropriate taxing authorities for all
periods through the date hereof, and no deficiency for any
such Taxes has been proposed, asserted or assessed against
Enova or any of its subsidiaries that has not been
resolved and paid in full.
(i)Audit, Administrative and Court
Proceedings. Except as set forth in Section 4.09(i) of
the Enova Disclosure Schedule, no audits or other
administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns
of Enova or any of its subsidiaries, and neither Enova nor
any of its subsidiaries has any knowledge of any
threatened action, audit or administrative or court
proceeding with respect to any such Taxes or Tax Returns.
(j)Powers of Attorney. Except as set forth
in Section 4.09(j) of the Enova Disclosure Schedule, no
power of attorney currently in force has been granted by
Enova or any of its subsidiaries concerning any Tax
matter.
(k)Tax Rulings. Except as set forth in
Section 4.09(k) of the Enova Disclosure Schedule, neither
Enova nor any of its subsidiaries has received a Tax
Ruling or entered into a Closing Agreement with any taxing
authority that would have a continuing adverse effect
after the Closing Date.
(l)Availability of Tax Returns. Enova and
its subsidiaries have made available to Pacific complete
and accurate copies of (i) all Tax Returns, and any
amendments thereto, filed by Enova or any of its
subsidiaries, (ii) all audit reports received from any
taxing authority relating to any Tax Return filed by Enova
or any of its subsidiaries and (iii) any Closing
Agreements entered into by Enova or any of its
subsidiaries with any taxing authority.
(m)Tax Sharing Agreements. Except as set
forth in Section 4.09(m) of the Enova Disclosure Schedule,
no agreements relating to allocating or sharing of Taxes
exist between or among Enova and any of its subsidiaries.
(n)Code Section 341(f). Neither Enova nor
any of its subsidiaries has filed (or will file prior to
the Closing) a consent pursuant to Section 341(f) of the
Code or has agreed to have Section 341(f)(2) of the Code
apply to any disposition of a subsection (f) asset (as
that term is defined in Section 341(f)(4) of the Code)
owned by Enova or any of its subsidiaries.
(o)Code Section 168. No property of Enova
or any of its subsidiaries is property that Enova or any
such subsidiary or any party to this transaction is or
will be required to treat as being owned by another person
pursuant to the provisions of Section 168(f)(8) of the
Code (as in effect prior to its amendment by the Tax
Reform Act of 1986) or is "tax-exempt use property" within
the meaning of Section 168 of the Code.
(p)Code Section 481 Adjustments. Other
than adjustments that in the aggregate could not
reasonably be expected to have a Enova Material Adverse
Effect, neither Enova nor any of its subsidiaries is
required to include in income any adjustment pursuant to
Section 481(a) of the Code by reason of a voluntary change
in accounting method initiated by Enova or any of its
subsidiaries, and to the best of the knowledge of Enova,
the IRS has not proposed any such adjustment or change in
accounting method.
(q)Code Sections 6661 and 6662. All
transactions that could give rise to an understatement of
federal income tax (within the meaning of Section 6661 of
the Code for Tax Returns the due date for which was on or
before December 31, 1989, and within the meaning of
Section 6662 of the Code for Tax Returns the due date for
which was after December 31, 1989) that could reasonably
be expected to result in a Enova Material Adverse Effect
have been adequately disclosed (or, with respect to Tax
Returns filed following the Closing, will be adequately
disclosed) on the Tax Returns of Enova and its
subsidiaries in accordance with Section 6661(b)(2)(B) of
the Code for Tax Returns the due date for which was on or
before December 31, 1989, and in accordance with Section
6662(d)(2)(B) of the Code for Tax Returns the due date for
which was after December 31, 1989.
(r)NOLs. As of the date hereof, Enova and
its subsidiaries had net operating loss carryovers
available to offset future income as set forth in Section
4.09(r) of the Enova Disclosure Schedule. Section 4.09(r)
of the Enova Disclosure Schedule sets forth the amount of
and year of expiration of each company's net operating
loss carryovers.
(s) Credit Carryover. As of the date
hereof, Enova and its subsidiaries had tax credit
carryovers available to offset future tax liability as set
forth in Section 4.09(s) of the Enova Disclosure Schedule.
Section 4.09(s) of the Enova Disclosure Schedule sets
forth the amount and year of expiration of each company's
tax credit carryovers.
(t)Code Section 338 Elections. Except as
set forth in Section 4.09(t) of the Enova Disclosure
Schedule, no election under Section 338 of the Code (or
any predecessor provision) has been made by or with
respect to Enova or any of its subsidiaries or any of
their respective assets or properties.
(u)Acquisition Indebtedness. Except as set
forth in Section 4.09(u) of the Enova Disclosure Schedule,
no indebtedness of Enova or any of its subsidiaries is
"corporate acquisition indebtedness" within the meaning of
Section 279(b) of the Code.
(v)Intercompany Transactions. Except as
set forth in Section 4.09(v) of the Enova Disclosure
Schedule, neither Enova nor any of its subsidiaries has
engaged in any intercompany transactions within the
meaning of Section 1.1502-13 of the Treasury Regulations
for which any income remains unrecognized as of the close
of the last taxable year prior to the Closing Date.
(w)Code Section 280G. Except as set forth
in Section 4.09(w) of the Enova Disclosure Schedule,
neither Enova nor any of its subsidiaries is a party to
any agreement, contract, or arrangement that could result,
on account of the transactions contemplated hereunder,
separately or in the aggregate, in the payment of any
"excess parachute payments" within the meaning of the
Section 280G of the Code.
SECTION 4.10. Employee Matters; ERISA.
(a)Benefit Plans. Section 4.10(a) of the
Enova Disclosure Schedule contains a true and complete
list of each material employee benefit plan, program or
arrangement currently sponsored, maintained or contributed
to by Enova or any of its subsidiaries for the benefit of
employees, former employees or directors and their
beneficiaries in respect of services provided to any such
entity, including, but not limited to, any employee
benefit plans within the meaning of Section 3(3) of ERISA
and any material employment, consulting, non-compete,
severance or change in control agreement (collectively,
the "Enova Benefit Plans"). For the purposes of this
Section 4.10, the term "Enova" shall be deemed to include
predecessors thereof.
(b)Contributions. Except as set forth in
Section 4.10(b) of the Enova Disclosure Schedule, all
material contributions and other payments required to be
made by Enova or any of its subsidiaries to any Enova
Benefit Plan (or to any person pursuant to the terms
thereof) have been made or the amount of such payment or
contribution obligation has been reflected in the Enova
Financial Statements.
(c)Qualification; Compliance. Each of the
Enova Benefit Plans intended to be "qualified" within the
meaning of Section 401(a) of the Code has been determined
by the IRS to be so qualified, and, to the best knowledge
of Enova, no circumstances exist that are reasonably
expected by Enova to result in the revocation of any such
determination. Enova is in compliance in all material
respects with, and each Enova Benefit Plan is and has been
operated in all material respects in compliance with, all
applicable laws, rules and regulations governing such
plan, including, without limitation, ERISA and the Code.
Each Enova Benefit Plan intended to provide for the
deferral of income, the reduction of salary or other
compensation or to afford other income tax benefits
complies with the requirements of the applicable
provisions of the Code or other laws, rules and
regulations required to provide such income tax benefits.
(d)Liabilities. With respect to the Enova
Benefit Plans individually and in the aggregate, no event
has occurred, and, to the best knowledge of Enova, there
exists no condition or set of circumstances that could
subject Enova or any of its subsidiaries to any liability
arising under the Code, ERISA or any other applicable law
(including, without limitation, any liability to any such
plan or the PBGC), or under any indemnity agreement to
which Enova is a party, which liability, excluding
liability for benefit claims, PBGC premiums and funding
obligations payable in the ordinary course could
reasonably be expected to have a Enova Material Adverse
Effect.
(e)Welfare Plans. Except as set forth in
Section 4.10(e) of the Enova Disclosure Schedule, none of
the Enova Benefit Plans that are "welfare plans", within
the meaning of Section 3(1) of ERISA, provides for any
retiree benefits other than coverage mandated by
applicable law or benefits the full cost of which is borne
by the retiree.
(f)Documents Made Available. Enova has
made available to Pacific a true and correct copy of each
collective bargaining agreement to which Enova or any of
its subsidiaries is a party or under which Enova or any of
its subsidiaries has obligations, and with respect to each
Enova Benefit Plan, (i) such plan and summary plan
description, (ii) the most recent annual report filed with
the IRS, (iii) each related trust agreement, insurance
contract, service provider or investment management
agreement (including all amendments to each such
document), (iv) the most recent determination of the IRS
with respect to the qualified status of such plan, and (v)
the most recent actuarial report or valuation.
(g)Payments Resulting from Mergers. Except
as set forth in Section 4.10(g) of the Enova Disclosure
Schedule or specifically provided for herein, neither
Enova nor any of its subsidiaries is a party to any plan,
agreement or arrangement pursuant to the terms of which
the consummation or announcement of any transaction
contemplated by this Agreement will (either alone or in
connection with the occurrence of any additional or
further acts or events) result in any (A) payment (whether
of severance pay or otherwise) becoming due from Enova or
any of its subsidiaries to any officer, employee, former
employee or director thereof or to a trustee under any
"rabbi trust" or similar arrangement, or (B) benefit under
any Enova Benefit Plan being established or becoming
accelerated, or immediately vested or payable.
(h)Labor Agreements. As of the date
hereof, except as set forth in Section 4.10(h) of the
Enova Disclosure Schedule, neither Enova nor any of its
subsidiaries is a party to any collective bargaining
agreement or other labor agreement with any union or labor
organization. To the best knowledge of Enova, as of the
date hereof, there is no current union representation
question involving employees of Enova or any of its
subsidiaries, nor does Enova know of any activity or
proceeding of any labor organization (or representative
thereof) or employee group to organize any such employees.
Except as set forth in the Enova SEC Reports or in Section
4.10(h) of the Enova Disclosure Schedule, (i) there is no
unfair labor practice, employment discrimination or other
complaint against Enova pending, or to the best knowledge
of Enova, threatened, which has or could reasonably be
expected to have a Enova Material Adverse Effect, (ii)
there is no strike, dispute, slowdown, work stoppage or
lockout pending, or, to the best knowledge of Enova,
threatened, against or involving Enova or any of its
subsidiaries which has or could reasonably be expected to
have, a Enova Material Adverse Effect and (iii) there is
no proceeding, claim, suit, action or governmental
investigation pending or, to the best knowledge of Enova,
threatened, in respect of which any director, officer,
employee or agent of Enova or any of its subsidiaries is
or may be entitled to claim indemnification from Enova
pursuant to their respective articles of incorporation or
by-laws or as provided in the Indemnification Agreements
listed in Section 4.10(h) of the Enova Disclosure
Schedule.
SECTION 4.11. Environmental Protection.
(a)Compliance. Except as set forth in the
Enova SEC Reports, except as set forth in Section 4.11(a)
of the Enova Disclosure Schedule and except where the
failure to be in compliance could not reasonably be
expected to have a Enova Material Adverse Effect, (i) each
of Enova and its subsidiaries is in compliance with all
applicable Environmental Laws, and (ii) neither Enova nor
any of its subsidiaries has received any written
communication from any person or Governmental Authority
that alleges that Enova or any of its subsidiaries is not
in such compliance with applicable Environmental Laws.
(b)Environmental Permits. Except as set
forth in the Enova SEC Reports or as set forth in Section
4.11(b) of the Enova Disclosure Schedule, each of Enova
and its subsidiaries has obtained or has applied for all
Environmental Permits necessary for the construction of
their facilities or the conduct of their operations, and
all such permits are in good standing or, where
applicable, a renewal application has been timely filed
and is pending agency approval, and Enova and its
subsidiaries are in material compliance with all terms and
conditions of the Environmental Permits, except where the
failure to obtain or be in compliance with the
Environmental Permit could not reasonably be expected to
have a Enova Material Adverse Effect.
(c)Environmental Claims. Except as set
forth in the Enova SEC Reports or as set forth in Section
4.11(c) of the Enova Disclosure Schedule, to the best
knowledge of Enova, there is no Environmental Claim
pending (i) against Enova or any of its subsidiaries or
joint ventures, (ii) against any person or entity whose
liability for any Environmental Claim Enova or any of its
subsidiaries or joint ventures has retained or assumed
contractually, or (iii) against any real or personal
property or operations which Enova or any of its
subsidiaries or joint ventures owns, leases or manages, in
whole or in part, which if adversely determined, could
reasonably be expected to have in the aggregate a Enova
Material Adverse Effect.
(d)Releases. Except as
set forth in the Enova SEC Reports or as set forth in
Section 4.11(c) or Section 4.11(d) of the Enova Disclosure
Schedule, Enova has no knowledge of any Releases of any
Hazardous Material that would be reasonably likely to form
the basis of any Environmental Claim against Enova or any
of its subsidiaries or joint ventures, or against any
person or entity whose liability for any Environmental
Claim Enova or any of its subsidiaries or joint ventures
has retained or assumed contractually, which could
reasonably be expected to have, in the aggregate, a Enova
Material Adverse Effect.
(e)Predecessors. Except as set forth in
the Enova SEC Reports or as set forth in Section 4.11(e)
of the Enova Disclosure Schedule, Enova has no knowledge,
with respect to any predecessor of Enova or any subsidiary
or joint venture of Enova, of any Environmental Claim
pending or threatened, or of any Release of Hazardous
Materials that would be reasonably likely to form the
basis of any Environmental Claim, which could reasonably
be expected to have a Enova Material Adverse Effect.
(f)Disclosure. To Enova's best knowledge,
Enova has disclosed to Pacific all material facts which
Enova reasonably believes form the basis of a Enova
Material Adverse Effect arising from (i) the cost of Enova
pollution control equipment currently required or known to
be required in the future; (ii) current Enova remediation
costs or Enova remediation costs known to be required in
the future; or (iii) any other environmental matter
affecting Enova.
(g)Cost Estimates. To Enova's best
knowledge, no environmental matter set forth in the Enova
SEC Reports or the Enova Disclosure Schedule could be
reasonably expected to exceed the cost estimates provided
in the Enova SEC Reports by an amount that individually or
in the aggregate could reasonably be expected to have a
Enova Material Adverse Effect.
SECTION 4.12. Regulation as a Utility.
Enova Sub is regulated as a public utility by the State of
California and by no other state. Except as set forth in
Section 4.12 of the Enova Disclosure Schedule, neither
Enova nor any "subsidiary company" or "affiliate" of Enova
is subject to regulation as a public utility or public
service company (or similar designation) by any other
state in the United States or any foreign country. Enova
is an exempt holding company under Section 3(a)(1) of the
1935 Act. Section 4.12 of the Enova Disclosure Schedule
sets forth each "affiliate" and each "subsidiary company"
of Enova which may be deemed to be a "public utility
company" or a "holding company" within the meaning of the
1935 Act.
SECTION 4.13. Nuclear Operations. Except
as set forth in Section 4.13 of the Enova Disclosure
Schedule, to the best knowledge of Enova, the operations
of the San ▇▇▇▇▇▇ Nuclear Generating Stations ("SONGS")
are and have at all times been conducted in material
compliance with applicable health, safety, regulatory and
other legal requirements. To the best knowledge of Enova,
SONGS maintains emergency plans designed to respond to an
unplanned release therefrom of radioactive materials into
the environment and liability insurance to the extent
required by law, which is consistent with Enova's view of
the risks inherent in the operation of a nuclear power
facility. To the best knowledge of Enova, plans for the
decommissioning of each of the SONGS facilities and for
the short-term storage of spent nuclear fuel conform with
the requirements of applicable regulatory or other legal
requirement, and such plans have at all times been funded
to the extent required by law, which is consistent with
Enova's reasonable budget projections for such plans.
SECTION 4.14. Vote Required. The approval
of the Enova Merger by the affirmative vote of a majority
of the votes entitled to be cast by all holders of Enova
Common Stock (the "Enova Shareholders' Approval") is the
only vote of the holders of any class or series of the
capital stock of Enova required to approve this Agreement,
the Mergers and the other transactions contemplated
hereby. No vote of shareholders of Enova is required to
approve the Energy Marketing Joint Venture Agreement.
SECTION 4.15. Accounting Matters. Neither
Enova nor, to its best knowledge, any of its affiliates
has taken or agreed to take any action that would prevent
the Company from accounting for the transactions to be
effected pursuant to Articles I and II of this Agreement
as a pooling of interests in accordance with GAAP and
applicable SEC regulations.
SECTION 4.16. Opinion of Financial
Advisor. Enova has received the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& Co. Incorporated ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇"), dated October 12,
1996, to the effect that, as of such date the Enova
Exchange Ratio is fair to the holders of Enova Common
Stock.
SECTION 4.17. Insurance. Except as set
forth on Section 4.17 of the Enova Disclosure Schedule,
each of Enova and its subsidiaries is, and has been
continuously since January 1, 1993, insured with
financially responsible insurers in such amounts and
against such risks and losses as are customary for
companies conducting the business as conducted by Enova
and its subsidiaries during such time period. Except as
set forth on Schedule 4.17 of the Enova Disclosure
Schedule, neither Enova nor its subsidiaries has received
any notice of cancellation or termination with respect to
any material insurance policy of Enova or its
subsidiaries. The insurance policies of Enova and each of
its subsidiaries are valid and enforceable policies in all
material respects.
SECTION 4.18. Ownership of Pacific Common
Stock. Enova does not "beneficially own" (as such term is
defined in the Pacific Rights Agreement) any shares of
Pacific Common Stock.
SECTION 4.19. Brokers. No broker, finder
or investment banker (other than ▇▇▇▇▇▇ ▇▇▇▇▇▇▇) is
entitled to any brokerage, finder's or other fee or
commission in connection with the Mergers based upon
arrangements made by or on behalf of Enova. Enova has
heretofore furnished to Pacific a complete and correct
copy of all agreements between Enova and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
pursuant to which such firm would be entitled to any
payment relating to the Mergers.
SECTION 4.20. Tax-Exempt Status. Except
as described in Section 4.20(a) of the Enova Disclosure
Schedule, the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby
will not jeopardize the tax-exempt status of the
outstanding revenue bonds of Enova or its subsidiaries
used to finance electric facilities under Section 142(a)
of the Code or under Section 103(b)(4)(E) of the Internal
Revenue Code of 1954, as amended, prior to the Tax Reform
Act of 1986 (the "Bonds"). Except as described in Section
4.20(b) of the Enova Disclosure Schedule, the execution
and delivery of the Energy Marketing Joint Venture
Agreement and the consummation of the transactions
contemplated thereby will not jeopardize the tax-exempt
status of the Bonds. As of the date hereof, except as set
forth in Section 4.20(c) of the Enova Disclosure Schedule,
Enova is not aware of any pending or enacted law, rule,
regulation, administrative order or court decision that
upon its implementation would jeopardize such tax-exempt
status.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGERS
SECTION 5.01. Conduct of Business Pending
the Mergers. Pacific and Enova have each determined to
enter into the transactions contemplated hereby in order
to compete as aggressively as possible in the rapidly
evolving energy marketplace. Consistent with their mutual
objectives Pacific and Enova each intend to pursue,
jointly or independently, strategic opportunities that may
arise between the date of this Agreement and the Effective
Time in accordance with the terms of this Article V.
Consistent with the foregoing, but for the purpose of
assuring that strategic opportunities are pursued that are
consistent with each party's objectives, after the date
hereof and prior to the Effective Time or earlier
termination of this Agreement, Pacific and Enova each
agrees as to itself and its subsidiaries, except (x) as
expressly contemplated or permitted in this Agreement or
the Energy Marketing Joint Venture Agreement, (y) to the
extent required by rule, regulation statute or other law
in connection with California Assembly ▇▇▇▇ 1890 (Public
Utilities: electrical restructuring) or in connection
with the CPUC and the FERC industry restructuring
proceedings, and (z) to the extent the other parties
hereto shall otherwise consent in writing, to the
following:
(a)Ordinary Course of Business. Each party
hereto shall, and shall cause its respective subsidiaries
to, carry on their respective businesses in the usual,
regular and ordinary course in substantially the same
manner as heretofore conducted and use all commercially
reasonable efforts to preserve intact their present
business organizations and goodwill, preserve the goodwill
and relationships with customers, suppliers and others
having business dealings with them and, subject to prudent
management of workforce needs and ongoing programs
currently in force, keep available the services of their
present officers and employees. Except as set forth in
Section 5.01(a) of the Pacific Disclosure Schedule or the
Enova Disclosure Schedule, respectively, no party shall,
nor shall any party permit any of its subsidiaries to,
enter into a new line of business, or make any change in
the line of business it engages in as of the date hereof
involving any material investment of assets or resources
or any material exposure to liability or loss, in the case
of Pacific, to Pacific and its subsidiaries taken as a
whole, and in the case of Enova, to Enova and its
subsidiaries taken as a whole.
(b)Dividends. No party shall, nor shall
any party 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 to such
party or its wholly-owned subsidiaries and other than
dividends required to be paid on any series of Pacific
Preferred Stock, Pacific Sub Preferred Stock, Enova Sub
Preferred Stock or Califia Company preferred stock in
accordance with the respective terms thereof, regular
quarterly dividends on Pacific Common Stock with usual
record and payment dates not during any fiscal year in
excess of 110% of the dividends for the prior fiscal year
and regular quarterly dividends on Enova Common Stock with
usual record and payment dates not during any fiscal year
in excess of 110% of the dividends for the prior fiscal
year; (ii) split, combine or reclassify any of their
capital stock 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,
except as otherwise provided in this Section 5.01; or
(iii) redeem, repurchase or otherwise acquire any shares
of their capital stock, other than (A) redemptions,
purchases or acquisitions required by the respective terms
of any series of Pacific Preferred Stock, Pacific Sub
Preferred Stock or Enova Sub Preferred Stock, (B) in
connection with refunding of Pacific Preferred Stock,
Pacific Sub Preferred Stock or Enova Sub Preferred Stock
with preferred stock or debt at a lower cost of funds or
in connection with intercompany purchases of capital
stock, (C) in connection with employee benefit plans, (D)
by Pacific, subject to paragraph (l) below, the repurchase
of up to 4,250,000 shares of Pacific Common Stock and the
expenditure of up to $50,000,000 for the redemption,
repurchase or other acquisition of shares of Pacific
Preferred Stock and Pacific Sub Preferred Stock and (E) by
Enova, subject to paragraph (1) below, the repurchase of
up to 4,250,000 shares of Enova Common Stock and the
expenditure of up to $50,000,000 for the redemption,
repurchase or other acquisition of shares of Enova Sub
Preferred Stock or Califia preferred stock. The last
record date of each of Pacific and Enova on or prior to
the Effective Time which relates to a regular quarterly
dividend on Pacific Common Stock or Enova Common Stock, as
the case may be, shall be the same date and be other than
the Effective Time.
(c)Issuance of Securities. No party shall,
nor shall any party permit any of its subsidiaries to,
issue, agree to issue, deliver or sell, or authorize or
propose the issuance, delivery or sale of, any shares of
their capital stock of any class or any securities
convertible into or exchangeable for, or any rights,
warrants or options to acquire, any such shares or
convertible or exchangeable securities, other than: (i)
intercompany issuances of capital stock, (ii) issuances in
connection with transactions contemplated by paragraph (e)
or paragraph (h) below, (iii) in the case of Pacific and
its subsidiaries (x) of Pacific Rights issued pursuant to
the Pacific Rights Agreement in form and substance
reasonably satisfactory to Enova, provided that the
Pacific Rights Agreement will be amended to provide that
the consummation of the transactions contemplated by this
Agreement will not result in the triggering of any rights
or entitlements of Pacific shareholders under such Pacific
Rights Agreement; (y) in connection with refunding
existing Pacific Preferred Stock and Pacific Sub Preferred
Stock (or Pacific Preferred Stock and Pacific Sub
Preferred Stock retired after January 1, 1996 and prior to
the date hereof and not subsequently refunded) with
preferred stock or preference stock or debt at a lower
cost of funds; and (z) subject to Section 5.01(i), shares
of Pacific Common Stock to be issued pursuant to employee
benefit plants, stock option and other incentive
compensation plans, director plans and stock purchase and
dividend reinvestment plans; (iv) in the case of Enova and
its subsidiaries (x) in connection with refunding of
existing Enova Sub Preferred Stock (or Enova Sub Preferred
Stock retired after January 1, 1996 and prior to the date
hereof and not subsequently refunded) with preferred stock
or debt at a lower cost of funds; (y) subject to Section
5.01(i), shares of Enova Common Stock pursuant to employee
benefit plans, stock option and other incentive
compensation plans, director plans and stock purchase and
dividend reinvestment plans or (z) rights issued pursuant
to a shareholders rights plan of Enova (if the provisions
of such rights plan comport with terms analogous to those
of Section 3.17 (substituting Pacific for Enova therein)
and are customary for shareholder rights plans); and (v)
the issuance of capital stock under the Pacific Rights
Agreement if required by the respective terms thereof.
The parties shall promptly furnish to each other such
information as may be reasonably requested including
financial information and take such action as may be
reasonably necessary and otherwise fully cooperate with
each other in the preparation of any registration
statement under the Securities Act and other documents
necessary in connection with issuance of securities as
contemplated by this Section 5.01(c), subject to obtaining
customary indemnities.
(d)Charter Documents. Except as set forth
in Section 5.01(d) of the Pacific Disclosure Schedule or
the Enova Disclosure Schedule, no party shall amend or
propose to amend its respective articles of incorporation
or by-laws, except as contemplated herein.
(e)No Acquisitions. Except as set forth in
Section 5.01(e) of the Pacific Disclosure Schedule or the
Enova Disclosure Schedule, and except for acquisitions by
a party and its subsidiaries of less than $10 million in
any transaction or series of related transactions, no
party shall, nor shall any party permit any of its
subsidiaries to, acquire, or publicly propose to acquire,
or agree to acquire, by merger or consolidation with, or
by purchase or otherwise, a substantial equity interest in
or a substantial portion of the assets of, any business or
any corporation, partnership, association or other
business organization or division thereof or otherwise
acquire or agree to acquire a material amount of assets,
other than in the ordinary course of business consistent
with past practice.
(f)Capital Expenditures (including Emission
Allowances). Except as set forth in Section 5.01(f) of
the Pacific Disclosure Schedule or the Enova Disclosure
Schedule or as required by law, no party shall, nor shall
any party permit any of its subsidiaries to, (i) make
capital expenditures in excess of $20 million over the
amount budgeted by such party for capital expenditures on
the date hereof (as reflected on the capital expenditure
budgets previously provided by such party to the other)
through the Effective Time or (ii) enter into written
commitments with respect to sulfur dioxide emission
allowances as provided for by the Clean Air Act Amendments
of 1990, in excess of $100,000.
(g)No Dispositions. Except (i) as set
forth in Section 5.01(g) of the Pacific Disclosure
Schedule or the Enova Disclosure Schedule and (ii) for
dispositions by a party and its affiliates of less than
$10 million in any transaction or series of related
transactions, no party shall, nor shall any party permit
any of its subsidiaries to, sell, lease, license, encumber
or otherwise dispose of, any of its assets, other than
dispositions in the ordinary course of their business
consistent with past practice.
(h)Indebtedness. Except (i) as set forth
in Section 5.01(h) of the Basalt Disclosure Schedule or
the Granite Disclosure Schedule, (ii) as contemplated by
this Agreement, (iii) as budgeted by Enova Financial, Inc.
on the date hereof through December 31, 1997 or (iv) as
required by any order, law or regulation of any
Governmental Authority, no party shall, nor shall any
party 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 (u) guarantees in favor
of wholly owned subsidiaries of Pacific or Enova in
connection with the conduct of the business of such wholly
owned subsidiaries; (v) short-term indebtedness in the
ordinary course of business consistent with past practice
(such as the issuance of commercial paper or the use of
existing credit facilities); (w) long-term indebtedness
not aggregating more than $100,000,000 in the case of
either party and its subsidiaries; (x) in connection with
the refunding of Pacific Preferred Stock, Pacific Sub
Preferred Stock or Enova Sub Preferred Stock as permitted
in Section 5.01(b); (y) in connection with the refunding
of existing indebtedness at maturity or at a lower cost of
funds or indebtedness retired after January 1, 1996 and
prior to the date hereof and not subsequently refunded; or
(z) refinancing of industrial development bonds for which
Enova is unable to obtain an opinion of outside counsel as
to the continuing tax-exempt status of such industrial
development bonds.
(i)Compensation, Benefits. Except (i) as
set forth in Section 5.01(i) of the Pacific Disclosure
Schedule or the Enova Disclosure Schedule, (ii) as may be
required by applicable law or (iii) as expressly
contemplated by this Agreement, no party shall, nor shall
any party permit any of its subsidiaries to, (A) enter
into, adopt or amend or increase the amount or accelerate
the payment or vesting of any benefit or amount payable,
or grant any discretionary awards or benefits, under, any
employee benefit plan or other contract, agreement,
commitment, arrangement, plan or policy maintained by,
contributed to or entered into by such party 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 such party or any of its subsidiaries, except
for normal promotion and compensation increases, hiring
and discretionary award grants 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 such party or any of
its subsidiaries or (B) 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 other than in the ordinary course of business
consistent with past practice.
(j)1935 Act. No party shall, nor shall any
party permit any of its subsidiaries, except as required
or contemplated by this Agreement, to engage in any
activities which would cause a change in its status, or
that of its subsidiaries, under the 1935 Act, or that
would impair the ability of Pacific or Enova,
respectively, to claim an exemption as of right under Rule
2 of the 1935 Act prior to the Mergers, or that would
impair the ability of the Company to claim an exemption as
of right under Rule 2 of the 1935 Act following the
Mergers, other than the application to the SEC under the
1935 Act contemplated by this Agreement for approval to
the extent required of the transactions contemplated
hereby.
(k)Accounting. No party shall, nor shall
any party permit any of its subsidiaries to, make any
changes in their accounting methods, except as required by
law,
rule, regulation or GAAP.
(l)Pooling. No party shall, nor shall any
party permit any of its subsidiaries to, take any actions
which would, or would be reasonably likely to, prevent the
Company from accounting for the transactions to be
effected pursuant to Articles I and II of this Agreement
as a pooling of interests in accordance with GAAP and
applicable SEC regulations.
(m)Tax-Free Status. No party shall, nor
shall any party permit any of its subsidiaries to, take
any actions which would, or would be reasonably likely to,
adversely affect the status of the Mergers as tax-free
transactions (except as to dissenters' rights and
fractional shares) under Sections 351 of the Code.
(n)Affiliate Transactions. Except as set
forth in Section 5.01(n) of the Pacific Disclosure
Schedule or the Enova Disclosure Schedule and except with
respect to agreements or arrangements entered into between
a party and its wholly owned subsidiaries or between
wholly owned subsidiaries of a party (it being agreed
that, for purposes of this Section 5.01(n), Pacific Sub
shall be deemed to be a wholly owned subsidiary of Pacific
and Enova Sub shall be deemed to be a wholly owned
subsidiary of Enova), no party shall, nor shall any party
permit any of its subsidiaries to, enter into any
agreement or arrangement with any of their respective
affiliates on terms to such party or its subsidiaries
materially less favorable than could reasonably be
expected to have been obtained with an unaffiliated third
party on an arm's length basis.
(o)Cooperation, Notification. Each party shall, and
shall cause its subsidiaries to, (i) confer on a regular
and frequent basis with one or more representatives of the
other party to discuss material operational matters and
the general status of its ongoing operations (including,
without limitation, the status of the matters set forth in
Section 5.01(e) of the Pacific Disclosure Schedule and the
Enova Disclosure Schedule); (ii) promptly notify the other
party of any significant changes in its properties,
assets, financial condition or results of operations;
(iii) advise the other party of any change or event which
has had or, could reasonably be expected to result in, a
Pacific Material Adverse Effect or a Enova Material
Adverse Effect, as the case may be, or a Joint Venture
Material Adverse Effect; and (iv) promptly provide the
other party with copies of all material filings made by
such party 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.
(p)Regulatory Matters. Except as set forth
in Section 5.01(p) of the Pacific Disclosure Schedule or
the Enova Disclosure Schedule, except with regard to those
specific geographic regions where the parties provide
overlapping service, and except for filings contemplated
by the applications filed in FERC Docket Nos. EC96-19-000,
EL96-48- 000 and ER96-1663-000 and CPUC A.▇▇-▇▇-▇▇▇, each
party shall, and shall cause its subsidiaries to, discuss
with the other party any material changes in its or its
subsidiaries' material rates or charges (other than pass-
through fuel and gas rates or charges), standards of
service or accounting from those in effect on the date
hereof and consult with the other party prior to making
any filing (or any amendment thereto), or effecting any
agreement, commitment, arrangement or consent, whether
written or oral, formal or informal, with respect thereto.
(q)Third-Party Consents. Pacific shall,
and shall cause its subsidiaries to, use all commercially
reasonable efforts to obtain all Pacific Required
Consents. Pacific shall promptly notify Enova of any
failure or prospective failure to obtain any such consents
and, if requested by Enova, shall provide copies of all
Pacific Required Consents obtained by Pacific to Enova.
Enova shall, and shall cause its subsidiaries to, use all
commercially reasonable efforts to obtain all Enova
Required Consents. Enova shall promptly notify Pacific of
any failure or prospective failure to obtain any such
consents and, if requested by Pacific, shall provide
copies of all Enova Required Consents obtained by Enova to
Pacific.
(r)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.
(s)Company Actions. Enova and Pacific
shall cause the Company to take only those actions, from
the date hereof until the Effective Time, that are
required or contemplated by this Agreement to be so taken
by the Company, including, without limitation, the
declaration, filing or registration with, or notice to or
authorization, consent or approval of, any Governmental
Authority, as set forth in Section 3.04(b) of the Pacific
Disclosure Schedule, Section 3.04(c) of the Pacific
Disclosure Schedule, Section 4.04(b) of the Enova
Disclosure Schedule and Section 4.04(c) of the Enova
Disclosure Schedule.
SECTION 5.02. Transition and Strategic
Opportunity Committees. (a) Transition Committee. A
committee comprised of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President and
Chief Executive Officer of Enova, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
President and Chief Executive Officer of Enova Sub,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief Operating Officer
of Pacific, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President of Pacific Sub
(the "Transition Committee") has been established as of
the date of this Agreement to examine various alternatives
regarding the manner in which to best organize, manage and
integrate the business of the Company after the Effective
Time. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, the President and Chief Executive
Officer of Enova, shall chair the Transition Committee and
coordinate the day-to-day activities of the Transition
Committee with the concurrence of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the
President and Chief Operating Officer of Pacific. From
time to time, the Transition Committee shall report its
findings to the Board of Directors of each of Pacific and
Enova. After the date that each of the Pacific
Shareholders' Approval and the Enova Shareholders'
Approval has been obtained and prior to the Effective
Time, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief Operating
Officer of Pacific, shall attend meetings of Enova's Board
of Directors and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President and Chief
Executive Officer of Enova, shall attend meetings of
Pacific's Board of Directors as they deem appropriate in
consultation with each other and to the extent permitted
by applicable law.
(b)Strategic Opportunity Committee. A
committee comprised of ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., the Chairman
and Chief Executive Officer of Pacific, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
the President and Chief Operating Officer of Pacific,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, the President and Chief Executive Officer
of Enova, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, the Chief Executive
Officer of Enova Sub, (the "Strategic Opportunity
Committee") also has been established to facilitate the
parties' ability to pursue strategic opportunities that
would otherwise violate Sections 5.01 (a), (c), (e), (f),
(g), (h) or (k) (a "New Opportunity") in a manner
consistent with both the objectives of this Agreement and
the parties' desires to compete as aggressively as
possible in the rapidly evolving energy marketplace. If
the Strategic Opportunity Committee unanimously approves
the pursuit of a New Opportunity by Pacific or Enova or
the two parties acting jointly (no member of the Strategic
Opportunity Committee to unreasonably withhold such
approval), then the pursuit of such New Opportunity shall
not be deemed a breach of such party's or parties'
obligations under Section 5.01. The approval of the
pursuit of a New Opportunity by the Strategic Opportunity
Committee as provided herein shall be evidenced in
writing.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Access to
Information; Confidentiality. (a) Upon reasonable notice
and subject to restrictions contained in confidentiality
agreements to which such party is subject (from which such
party shall use reasonable efforts to be released),
Pacific and Enova each shall (and shall cause each of
their subsidiaries to) afford to the officers, employees,
accountants, counsel, financial advisors and other
representatives of the other (collectively,
"Representatives"), reasonable access, during the period
prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such
period, Pacific and Enova each shall (and shall cause each
of their subsidiaries to) furnish promptly to the other
(i) all information concerning its business, properties,
directors, subsidiaries, officers, shareholders, personnel
and such other matters as such other party may reasonably
request and (ii) a copy of each material report, schedule
and other document filed or received by it or any of its
subsidiaries pursuant to the requirements of the FERC or
the CPUC and 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
Department of Justice, the Federal Trade Commission, the
NRC, or any other federal, state or local regulatory
agency or commission, and each party shall make available
to the other party the appropriate individuals (including
attorneys, accountants and other professionals) for
discussion of such party's business, properties, tax
situation and personnel as the other party may reasonably
request.
(b)Each party shall, and shall cause its
subsidiaries and Representatives to, keep such information
confidential in accordance with the terms of the
Confidentiality Agreement, dated April 4, 1996, between
Pacific and Enova (the "Confidentiality Agreement").
SECTION 6.02. Registration Statement;
Joint Proxy Statement.
(a)Preparation and Filing. The parties
will prepare and file with the SEC as soon as reasonably
practicable after the date hereof the Registration
Statement and the Proxy Statement (together, the "Joint
Proxy/Registration Statement"). The parties hereto shall
each use reasonable efforts to cause the Registration
Statement to be declared effective under the Securities
Act as promptly as practicable after such filing. Each
party hereto shall also take such action as may be
reasonably required to cause the shares of Company Common
Stock issuable in connection with the Mergers to be
registered or to obtain an exemption from registration
under applicable state "blue sky" or securities laws;
provided, however, that no party shall be required to
register or qualify as a foreign corporation or to take
other action which would subject it to service of process
in any jurisdiction where it will not be, following the
Mergers, so subject. Each of the parties hereto shall
furnish all information concerning itself which is
required or customary for inclusion in the Joint
Proxy/Registration Statement. The parties shall use their
best efforts to cause the shares of Company Common Stock
issuable in the Mergers to be approved for listing on the
NYSE upon official notice of issuance. The information
provided by any party hereto for use in the Joint
Proxy/Registration Statement shall be true and correct in
all material respects without omission of any material
fact which is required to make such information not false
or misleading. No representation, covenant or agreement
is made by any party hereto with respect to information
supplied by any other party for inclusion in the Joint
Proxy Statement/Registration Statement.
(b)Amendments and Supplements. No
amendment or supplement to the Proxy Statement or the
Registration Statement will be made without the approval
of all parties. Each party will advise the others,
promptly after it receives notice thereof, of the time
when the Registration Statement has become effective or
any supplement or amendment has been filed, the issuance
of any stop order, the suspension, if applicable, of the
qualification of such party's common stock for sale in any
jurisdiction, or any request by the SEC for amendment of
the Proxy Statement or the Registration Statement or
comments thereon and responses thereto or requests by the
SEC for additional information.
(c)Letter of Enova's Accountants. Enova
shall use best efforts to cause to be delivered to the
Company, Pacific, Newco Enova Sub and Newco Pacific Sub a
letter of Deloitte Touche LLP, dated a date within two
business days before the date of the Joint
Proxy/Registration Statement, and addressed to the
Company, Pacific, Newco Enova Sub and Newco Pacific Sub,
in form and substance reasonably satisfactory to the
Company and Pacific and customary in scope and substance
for "cold comfort" letters delivered by independent public
accountants in connection with registration statements on
Form S-4.
(d)Letter of Pacific's Accountants.
Pacific shall use best efforts to cause to be delivered to
the Company, Enova, Newco Enova Sub and Newco Pacific Sub
a letter of Deloitte Touche LLP, dated a date within two
business days before the date of the Joint
Proxy/Registration Statement, and addressed to the
Company, Enova, Newco Enova Sub and Newco Pacific Sub in
form and substance satisfactory to the Company and Enova
and customary in scope and substance for "cold comfort"
letters delivered by independent public accountants in
connection with registration statements on Form S-4.
SECTION 6.03. Regulatory Matters.
(a)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"
companies under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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 commercially reasonable efforts to
make such filings promptly and to respond promptly to any
requests for additional information made by either of such
agencies.
(b)Other Regulatory Approvals. Each party
hereto shall cooperate and use its best efforts to
promptly prepare and file all necessary documentation, to
effect all necessary applications, notices, petitions,
filings and other documents, and to use all commercially
reasonable efforts to obtain all necessary permits,
consents, approvals and authorizations of all Governmental
Authorities necessary or advisable to (i) consummate the
transactions contemplated by this Agreement, including,
without limitation, the Enova Required Statutory Approvals
and the Pacific Required Statutory Approvals; and (ii)
allow the Energy Marketing Joint Venture and, at and after
the Effective Time, the Company's subsidiaries, to market
and sell electricity and natural gas and related products
and services as contemplated by the Summary of Terms
attached as Exhibit A or, after the execution thereof, the
Energy Marketing Joint Venture Agreement (the "Energy
Marketing Required Statutory Approvals"), such
commercially reasonable efforts to include, in the case of
Pacific, the filing of a notice of cancellation of any
rate schedule or tariffs applicable to sales of
electricity by Pacific, or by any affiliate of Pacific,
that are subject to the jurisdiction of the FERC under the
Power Act, provided that such notice of cancellation shall
be filed concurrently with, and the cancellation requested
therein shall be subject to the grant of, the request for
approval of the Energy Marketing Required Statutory
Approvals. Enova shall have the right to review and
approve in advance all characterizations of the
information relating to Enova, on the one hand, and
Pacific shall have the right to review and approve in
advance all characterizations of the information relating
to Pacific, on the other hand, in either case, which
appear in any filing made in connection with the
transactions contemplated by this Agreement or the
Mergers. Enova and Pacific agree that they will consult
with each other with respect to the obtaining of all such
necessary permits, consents, approvals and authorizations
of Governmental Authorities. Pacific and Enova shall
jointly assist the Company in its efforts to obtain any
necessary approvals from any Governmental Authority.
SECTION 6.04. Shareholder Approvals.
(a)Approval of Pacific Shareholders.
Subject to the terms of Section 6.04(d), Pacific shall, as
soon as reasonably practicable after the date hereof, (i)
take all steps necessary duly to call, give notice of,
convene and hold a special meeting of its shareholders
(the "Pacific Special Meeting") for the purpose of
securing the Pacific 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 by-laws, (iii)
subject to the fiduciary duties of its board of directors,
recommend to its shareholders the approval of the Pacific
Merger, this Agreement and the transactions contemplated
hereby and (iv) cooperate and consult with Enova with
respect to each of the foregoing matters.
(b)Approval of Enova Shareholders. Subject
to the terms of Section 6.04(d), Enova shall, as soon as
reasonably practicable after the date hereof, (i) take all
steps necessary to call, give notice of, convene and hold
a special meeting of its shareholders (the "Enova Special
Meeting" and, together with the Pacific Special Meeting,
the "Special Meeting") for the purpose of securing the
Enova Shareholders' Approval, (ii) distribute to its
shareholders the Joint Proxy Statement in accordance with
applicable Federal and state law and its articles of
incorporation, (iii) subject to the fiduciary duties of
the board of directors of Enova, recommend to its
shareholders the approval of the Enova Merger, this
Agreement and the transactions contemplated hereby and
(iv) cooperate and consult with Pacific with respect to
each of the foregoing matters.
(c)Meeting Dates. Pacific and Enova shall
use their reasonable best efforts to hold the Special
Meetings on the same date and at the same time on such
date.
(d)Fairness Opinions. It shall be a
condition to Pacific's obligation to distribute the Joint
Proxy/Registration Statement to its shareholders and to
hold the Pacific Special Meeting that the opinions of ▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ referred to in Section 3.15 shall
have been reaffirmed as of the date of the Joint
Proxy/Registration Statement and shall not have been
withdrawn on or prior to the date of the Pacific Special
Meeting. It shall be a condition to Enova's obligation to
distribute the Joint Proxy/Registration Statement to its
shareholders and to hold the Enova Special Meeting that
the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ referred to in Section 4.16
shall have been reaffirmed as of the date of the Joint
Proxy/Registration Statement and shall not have been
withdrawn on or prior to the date of the Enova Special
Meeting.
SECTION 6.05. 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 each person who is now, or has been at any time
prior to the date hereof, or who becomes prior to the
Effective Time, an officer or director of any of the
parties hereto or any of their subsidiaries (each an
"Indemnified Party" and collectively, the "Indemnified
Parties") against all losses, expenses (including
reasonable attorney's fees), claims, damages or
liabilities or, subject to the proviso of the next
succeeding sentence, amounts paid in settlement arising
out of actions or omissions occurring at or prior to the
Effective Time (whether or not asserted or claimed prior
to, at or after the Effective Time) that are in whole or
in part based on, or arising out of the fact that such
person is or was a director or officer of such party or
based on or arising out of or pertaining to the
transactions contemplated by this Agreement. In the event
of any such loss, expense, claim, damage or liability
(whether or not arising before the Effective Time), (i)
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, promptly
after statements therefor are received and otherwise
advance to such Indemnified Party upon request
reimbursement of documented expenses reasonably incurred,
in either case to the extent not prohibited by California
Law (which consent shall not be unreasonably withheld),
(ii) the Company will cooperate in the defense of any such
matter and (iii) any determination required to be made
with respect to whether an Indemnified Party's conduct
complies with the standards set forth under California law
and the Company's Articles of Incorporation or By-Laws
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). The
Indemnified Parties as a group may retain only one law
firm 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.
(b)Insurance. For a period of six years
after the Effective Time, the Company shall cause to be
maintained in effect the policies of directors' and
officers' liability insurance maintained by Pacific and
Enova; provided, however, that in no event shall the
Company be required to expend in any one year an amount in
excess of 200% of the annual premiums currently paid by
Enova and Pacific for such insurance; and provided further
that if the annual premiums of such insurance coverage
exceed such amount, the Company shall be obligated to
obtain a policy with the greatest coverage available for a
cost not exceeding such amount.
(c)Successors. Neither the Company nor any
of its successors or assigns shall (i) consolidate with or
merge into any other person so as not to be the continuing
or surviving corporation or entity of such consolidation
or merger or (ii) transfer all or substantially all of its
properties and assets to any person unless, in either such
case, proper provisions shall be made so that the
successors and assigns of the Company shall assume the
obligations set forth in this Section 6.05.
(d)Survival of Indemnification. To the
fullest extent not prohibited by law, from and after the
Effective Time, all rights to indemnification as of the
date hereof in favor of the employees, agents, directors
or officers of Pacific, Enova and their respective
subsidiaries with respect to their activities as such
prior to the Effective Time, as provided in their
respective Articles of Incorporation or By-laws, in effect
on the date thereof 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.
(e)Indemnification Agreements. Enova,
Pacific and the Company shall honor and fulfill in all
respects the obligations of Enova and Pacific pursuant to
indemnification agreements with Enova's and Pacific's
officers and directors existing at the Effective Time.
SECTION 6.06. Disclosure Schedules. On or
before the date hereof, (i) Pacific shall deliver to Enova
a schedule (the "Pacific Disclosure Schedule"), which
shall be accompanied by a certificate signed by the chief
financial officer of Pacific stating the Disclosure
Schedule is being delivered pursuant to this Section
6.06(i) and (ii) Enova shall deliver to Pacific a schedule
(the "Enova Disclosure Schedule"), which shall be
accompanied by a certificate signed by the chief financial
officer of Enova stating the Enova Disclosure Schedule is
being delivered pursuant to this Section 6.06(ii). The
Pacific Disclosure Schedule and the Enova Disclosure
Schedule are collectively referred to herein as the
"Disclosure Schedules". The Disclosure Schedules, when so
delivered, shall be deemed to constitute an integral part
of this Agreement and to 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 to the Disclosure Schedules. Anything to
the contrary contained herein or in the Disclosure
Schedules notwithstanding, any and all statements,
representations, warranties or disclosures set forth in
the Disclosure Schedules delivered on or before the date
hereof shall be deemed to have been made on and as of the
date hereof. From time to time prior to the Closing, the
parties shall promptly supplement or amend the Disclosure
Schedules with respect to any matter, condition or
occurrence hereafter arising which, if existing or
occurring at the date of this Agreement, would have been
required to be set forth or described in the Disclosure
Schedules. No supplement or amendment shall be deemed to
cure any breach of any representation or warranty made in
this Agreement or have any effect for the purpose of
determining satisfaction of the conditions set forth in
Section 7.02(b) or Section 7.03(b).
SECTION 6.07. Public Announcements.
Subject to each party's disclosure obligations imposed by
law, Enova and Pacific will 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 shall not issue any such public announcement or
statement without the consent of the other party (which
consent shall not be unreasonably withheld).
SECTION 6.08. Rule 145 Affiliates.
Pacific shall identify in a letter to Enova, and Enova
shall identify in a letter to Pacific, all persons who
are, at the Closing Date, "affiliates" of Pacific and
Enova, respectively, as such term is used in Rule 145
under the Securities Act. Pacific and Enova shall use
their respective best efforts to cause their respective
affiliates to deliver to the Company on or prior to the
Closing Date a written agreement substantially in the form
attached as Exhibit 6.08 (each, an "Affiliate Agreement").
SECTION 6.09. Employee Agreements and
Workforce Matters.
(a)Certain Employee Agreements. Subject to
Section 6.10 and Section 6.15, the Company and its
subsidiaries shall honor, without modification, all
contracts, agreements, collective bargaining agreements
and commitments of the parties prior to the date hereof
which apply to any current or former employee or current
or former director of the parties hereto; provided,
however, that this undertaking is not intended to prevent
the Company from enforcing such contracts, agreements,
collective bargaining agreements and commitments in
accordance with their terms, including, without
limitation, any reserved right to amend, modify, suspend,
revoke or terminate any such contract, agreement,
collective bargaining agreement or commitment.
(b)Workforce Matters. Subject to the terms
of any applicable collective bargaining agreements, for a
period of three years following the Effective Time, any
reductions in workforce in respect of employees of the
Company shall be made on a fair and equitable basis, in
light of the circumstances and the objectives to be
achieved, giving consideration to previous work history,
job experience, and qualifications, without regard to
whether employment was with Pacific or its subsidiaries or
Enova or its subsidiaries, and any employees whose
employment is terminated or jobs are eliminated by the
Company or any of its subsidiaries during such period
shall be entitled to participate on a fair and equitable
basis in the job opportunity and employment placement
programs offered by the Company or any of its
subsidiaries.
SECTION 6.10. Employee Benefit Plans.
(a)Maintenance of Pacific and Enova Benefit
Plans. Each of the Pacific Benefit Plans and Enova
Benefit Plans in effect as of the Effective Time, except
as provided in Section 6.10(b) and Section 6.11, shall be
maintained in effect with respect to the employees or
former employees of Pacific and any of its subsidiaries,
on the one hand, and of Enova and any of its subsidiaries,
on the other hand, respectively, who are covered by any
such benefit plan immediately prior to the Closing Date
until the Company otherwise determines after the Effective
Time; provided, however, that nothing herein contained
shall limit any reserved right contained in any such
Pacific Benefit Plan or Enova Benefit Plan to amend,
modify, suspend, revoke or terminate any such plan. Any
person hired by the Company or any of its subsidiaries
after the Closing Date who was not employed by any party
hereto or its subsidiaries immediately prior to the
Closing Date shall be eligible to participate in such
benefit plans maintained, or contributed to, by the
subsidiary, division or operation by which such person is
employed, provided that such person meets the eligibility
requirements of the applicable plan.
(b)Incentive Compensation Plans. Prior to
the Effective Time, a committee will be formed for the
purposes of developing short- and long-term incentive
compensation arrangements for the Company which are to be
implemented after the Effective Time and making the
appropriate adjustments, if any, to the performance goals,
target awards and any other relevant criteria under the
incentive compensation plans of Pacific and Enova that are
in effect as of the Effective Time to take the Mergers
into account. In addition, such committee shall conduct a
review of Enova's and Pacific's respective benefit plans
following the signing of this Agreement in order to
coordinate the provision of benefits after the Effective
Time and to eliminate duplicative benefits, including,
without limitation, through the establishment by the
Company of replacement benefit plans (the "Company
Replacement Plans"). Each participant in any Pacific
Benefit Plan or Enova Benefit Plan that is replaced by a
Company Replacement Plan shall receive credit for purposes
of eligibility to participate, vesting, benefit accrual
and eligibility to receive benefits under any Company
Replacement Plan for service credited for the
corresponding purpose under such benefit plan; provided,
however, that such crediting of service shall not operate
to duplicate any benefit to any such participant or the
funding for any such benefit.
(c)Separate Plans. Pacific and Enova each
agrees that even in the event that the Pacific and Pacific
Sub pension plan shares a common or master trust with the
Enova and Enova Sub pension plan and even if Enova and
Pacific provide identical benefits the plans shall remain
legally separate whereby the assets of one plan cannot be
applied to the liabilities of the other plan.
SECTION 6.11. Stock Option and Other Stock
Plans.
(a) Amendment of Stock Option Plans and
Agreements. (i) Prior to the Effective Time, Pacific
shall use its reasonable best efforts to cause each
individual award agreement entered into under the Pacific
Employee Stock Option Plan, the Pacific Stock Incentive
Plan and the Pacific 1979 Stock Option Plan to be amended
so as to eliminate the rights of the award recipients
thereunder to receive cash in exchange for such award upon
a Change in Control (as such term is defined in such
plans) that are triggered, directly or indirectly, in
whole or in part, by the Mergers or any transaction or
event consummated or occurring in connection therewith.
(ii)Effective as of the Effective Time,
Pacific shall amend the Pacific Employee Stock Option
Plan, the Pacific Stock Incentive Plan and the Pacific
1979 Stock Option Plan and Enova shall amend the 1986
Long-Term Incentive Plan (as amended and restated
effective April 25, 1995) and each of Pacific and Enova
shall amend each underlying award agreement to provide
that each outstanding award with respect to shares of
Pacific Common Stock and Enova Common Stock, respectively
(each, a "Stock Award"), along with any tandem stock
appreciation right, shall constitute an award with respect
shares of Company Common Stock, on the same terms and
conditions as were applicable under such Stock Award,
based on the same number of shares of the Company Common
Stock as the holder of such Stock Award would have been
entitled to receive pursuant to the Mergers in accordance
with Article II had such holder exercised such award in
full immediately prior to the Effective Time. The number
of shares, the award price, and the terms and conditions
of exercise of such award, shall be determined in a manner
that preserves both (i) the aggregate gain (or loss) on
the Stock Award immediately prior to the Effective Time
and (ii) the ratio of the exercise price per share subject
to the Stock Award to the fair market value (determined
immediately prior to the Effective Time) per share subject
to such award; provided, however, that in the case of any
option to which Section 421 of the Code applies by reason
of its qualification under any of Sections 422-424 of the
Code, option price, the number of shares purchasable
pursuant to such option and the terms and conditions of
exercise of such option shall be determined in order to
comply with Section 424(a) of the Code. Prior to the
Effective Time, each of Pacific and Enova shall take such
actions, including using its reasonable best efforts to
obtain the consent of the awardees, as may be necessary to
carry out the substitution and exchange contemplated in
this Section 6.11(a). At the Effective Time, the Company
shall assume each award agreement relating to a Stock
Award, each as amended as previously provided. As soon as
practicable after the Effective Time, the Company shall
deliver to the holders of Stock Awards appropriate notices
setting forth such holders' rights pursuant to the Company
stock incentive plan and each underlying award agreement,
each as assumed by the Company.
(b)Company Action. With respect to any
other Pacific Benefit Plan, Enova Benefit Plan or benefit
plan of the Company under which the delivery of Pacific
Common Stock, Enova Common Stock or Company Common Stock,
as the case may be, 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) obtain shareholder
approval with respect to such plan to the extent such
approval is required for purposes of the Code or other
applicable law, or to enable such plan to comply with Rule
16b-3 promulgated under the Exchange Act, (ii) 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 plan and (iii) as soon as practicable
after the Effective Time, file registration statements on
Form S-3 or Form S-8, as the case may be (or any successor
or other appropriate forms), with respect to the shares of
Company Common Stock subject to such plan to the extent
such registration statement is required under applicable
law, and the Company shall use its best efforts to
maintain the effectiveness of such registration statements
(and 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 6.12. No Solicitations. No party
hereto shall, and each such party shall cause its
subsidiaries not to, permit any of its Representatives to,
and shall use its best efforts to cause such persons not
to, directly or indirectly: initiate, solicit or
encourage, or take any action to facilitate the making of
any offer or proposal which constitutes or is reasonably
likely to lead to any Acquisition Proposal (as defined
below), or, in the event of an unsolicited Acquisition
Proposal, except prior to the receipt of the Enova
Shareholders' Approval and of the Pacific Shareholders'
Approval to the extent the Board of Directors of the party
receiving such unsolicited Acquisition Proposal determines
in good faith after consultation with outside counsel that
such action is reasonably necessary for such Board of
Directors to act in a manner consistent with its fiduciary
duties under applicable law, engage in negotiations or
provide any confidential information or data to any person
relating to any Acquisition Proposal. Each party hereto
shall notify the other party orally and in writing of any
such inquiries, offers or proposals, within 48 hours of
the receipt thereof, shall keep the other party informed
of the status of any such inquiry, offer or proposal, and
shall give the other party three days' advance notice of
any agreement to be entered into with or any information
to be supplied to any person making such inquiry, offer or
proposal. Each party hereto shall immediately cease and
cause to be terminated all existing discussions and
negotiations, if any, with any parties conducted
heretofore with respect to any Acquisition Proposal. As
used in this Section 6.12, "Acquisition Proposal" shall
mean any tender or exchange offer, proposal for a merger,
consolidation or other business combination involving any
party or any of its material subsidiaries, or any proposal
or offer (in each case, whether or not in writing and
whether or not delivered to the shareholders of a party
generally) to acquire in any manner, directly or
indirectly, a substantial equity interest in, or a
substantial portion of the assets of any party or any of
its material subsidiaries, other than any of the foregoing
transactions among the parties hereto or pursuant to the
transactions contemplated by this Agreement. Nothing
contained herein shall prohibit a party from taking and
disclosing to its shareholders a position contemplated by
Rule 14e-2(a) under the Exchange Act with respect to a
Acquisition Proposal by means of a tender offer.
SECTION 6.13. Company Board of Directors.
Enova's and Pacific's Boards of Directors will take such
action as may be necessary to cause the Board of Directors
of the Company at the Effective Time to be constituted of
an equal number of directors designated by each of Enova
and Pacific. Among the directors of the Company at the
Effective Time shall be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and
Chief Operating Officer of Pacific, who shall be
designated by Pacific, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President and
Chief Executive Officer of Enova, who shall be designated
by Enova. Neither Pacific nor Enova shall designate any
other officer as a director of the Company at the
Effective Time. The initial designation of such directors
among the three classes of the Board of Directors of the
Company shall be agreed among the parties, the designees
of each party to be divided as equally as is feasible
among such classes; provided, however, that if, prior to
the Effective Time, any of such designees shall decline or
be unable to serve, the party which designated such person
shall designate another person to serve in such person's
stead. Enova's and Pacific's Boards of Directors will
also take such action as may be necessary to cause the
committees of the Board of Directors of the Company at the
Effective Time to be constituted of an equal number of
directors of the Company designated by Enova and Pacific.
SECTION 6.14. Company Officers. At the
Effective Time, pursuant to and in accordance with the
terms hereof and of the employment contracts referred to
in Section 6.15, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief
Operating Officer of Pacific, shall become Chairman of the
Board and Chief Executive Officer of the Company, and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President and Chief Executive Officer of
Enova, shall become Vice-Chairman, President and Chief
Operating Officer of the Company. If either of such
persons is unable or unwilling to hold such offices for
the period set forth in his employment contract, his
successor shall be selected by the Board of Directors of
the Company in accordance with its Bylaws. The Chairman
of the Board and Chief Executive Officer and the President
and Chief Operating Officer of the Company shall comprise
the Office of the Chairman of the Company to which all
other officers of the Company and, after the Effective
Time, the Chief Executive Officers of Pacific, Pacific
Sub, Enova and Enova Sub shall report. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
President and Chief Operating Officer of Pacific, and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President and Chief Executive Officer of
Enova, shall unanimously recommend to the Board of
Directors of the Company candidates to serve as the
officers of the Company who are not otherwise designated
by this Agreement. Such officers shall be appointed by
the Board of Directors of the Company in accordance with
its By-Laws.
SECTION 6.15. Employment Contracts. The
Company shall on the date hereof enter into four
employment contracts in the forms set forth in Exhibit
6.15.
SECTION 6.16. Post-Merger Operations.
Following the Effective Time, the Company shall conduct
its operations in accordance with the following:
(a)Principal Corporate
Offices. The Company and Enova Sub shall maintain their
principal corporate offices in San Diego and Pacific Sub
shall maintain its principal corporate offices in Los
Angeles.
(b)Maintenance of Enova Sub and Pacific
Sub. Pacific Sub, on the one hand, and Enova Sub, on the
other hand, shall continue their separate corporate
existences, operating under the names of "Southern
California Gas Company" and "San Diego Gas & Electric",
respectively.
(c)Charities. After the Effective Time,
the Company shall provide charitable contributions and
community support within the service areas of the parties
and each of their respective subsidiaries at levels
substantially comparable to the levels of charitable
contributions and community support provided by the
parties and their respective subsidiaries within their
service areas within the two-year period immediately prior
to the Effective Time.
SECTION 6.17. Expenses. Subject to
Section 8.03, all costs and expenses incurred in
connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring
such expenses, except that those expenses incurred in
connection with printing the Joint Proxy Statement and the
Registration Statement, as well as the filing fees
relating thereto, and any such filing fees for
applications to the FERC, the CPUC, the NRC or the SEC
shall be shared equally by Enova, on the one hand, and
Pacific, on the other.
SECTION 6.18. Energy Marketing Joint
Venture. As promptly as practicable following the date
hereof, each of Pacific and Enova shall use their best
efforts to negotiate the terms of, and enter into, the
Energy Marketing Joint Venture Agreement, which agreement
shall contain substantially the terms contemplated by the
Summary of Terms attached as Exhibit A.
ARTICLE VII
CONDITIONS TO THE MERGERS
SECTION 7.01. Conditions to the
Obligations of Each Party. The respective obligations of
each party to effect the Mergers shall be subject to the
satisfaction on or prior to the Closing Date of the
following conditions, except, to the extent permitted by
applicable law, that such conditions may be waived in
writing pursuant to Section 9.05 by the joint action of
the parties hereto:
(a)Shareholder Approvals. The Pacific
Shareholders' Approval and the Enova Shareholders'
Approval shall have been obtained.
(b)No Injunction. No
temporary restraining order or preliminary or permanent
injunction or other order by any federal or state court
preventing consummation 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.
(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 Enova Required
Statutory Approvals and the Pacific Required Statutory
Approvals shall have been obtained at or prior to the
Effective Time, such approvals shall have become Final
Orders and neither such Final Orders nor any order, law or
regulation of any Governmental Authority imposes terms or
conditions which, in the aggregate, could reasonably be
expected to have a material adverse effect on (i) the
ability of the Energy Marketing Joint Venture to achieve
the business objectives contemplated by the Summary of
Terms attached as Exhibit A or (ii) the operations,
properties, assets or financial condition or results of
operations of the Company and its prospective subsidiaries
taken as a whole or which would be materially inconsistent
with the agreements of the parties contained herein. A
"Final Order" means action by the relevant regulatory
authority which 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.
(f)HSR Act. All applicable waiting periods
under the HSR Act shall have
expired.
(g)Pooling. Each of Enova and Pacific
shall have received a letter of its independent public
accountants, dated the Closing Date, in form and substance
reasonably satisfactory to Pacific and Enova, stating that
the transactions effected pursuant to Articles I and II of
this Agreement will qualify as a pooling of interests
transaction under GAAP and applicable SEC regulations.
SECTION 7.02. Conditions to the
Obligations of Pacific. The obligation of Pacific to
effect the Pacific 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 Pacific
in writing pursuant to Section 9.05:
(a)Performance of Obligations of Enova. Enova will 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.
(b)Representations and Warranties. The
representations and warranties of Enova set forth in this
Agreement shall be true and correct in all material
respects as of the date hereof (representations and
warranties made as of a specified date which shall be true
and correct as of such date) and as of the Closing Date as
if made on and as of the Closing Date, except as otherwise
contemplated by this Agreement.
(c)Closing Certificates. Pacific shall
have received a certificate signed by an executive officer
of Enova, dated the Closing Date, to the effect that, to
the best of each such officer's knowledge, the conditions
set forth in Section 7.02(a) and Section 7.02(b) have been
satisfied.
(d)Enova Material Adverse Effect. No Enova
Material Adverse Effect shall have occurred and there
shall exist no fact or circumstance which could reasonably
be expected to have a material adverse effect on the
operations, properties, assets, financial condition,
results of operations or prospects of Enova and its
subsidiaries taken as a whole or on the consummation of
the transactions contemplated by this Agreement or the
ability of the Energy Marketing Joint Venture to achieve
the business objectives contemplated by the Summary of
Terms attached as Exhibit A.
(e)Tax Opinion. Pacific shall have
received an opinion of Skadden, Arps, Slate, ▇▇▇▇▇▇▇ &
▇▇▇▇, in form and substance satisfactory to Pacific, dated
the Closing Date, to the effect that the Enova Merger,
taken together with the Pacific Merger, will be treated as
an exchange under Section 351 of the Code.
(f)Enova Required Consents. The Enova
Required Consents the failure of which to obtain would
have a Enova Material Adverse Effect or a Joint Venture
Material Adverse Effect shall have been obtained.
SECTION 7.03. Conditions to the
Obligations of Enova. The obligations of Enova to effect
the Enova Merger shall be further subject to the
satisfaction, prior to the Closing Date, of the following
conditions, except as may be waived by Enova in writing
pursuant to Section 9.05:
(a)Performance of Obligations of Pacific.
Pacific will have performed in all material respects its
agreements and covenants contained in or contemplated by
this Agreement required to be performed at or prior to the
Effective Time.
(b)Representations and Warranties. The
representations and warranties of Pacific set forth in
this Agreement shall be true and correct in all material
respects as of the date hereof (representations and
warranties made as of a specified date which shall be true
and correct as of such date) and as of the Closing Date as
if made on and as of the Closing Date, except as otherwise
contemplated by this Agreement.
(c)Closing Certificates. Enova shall have
received certificates signed by the chief executive
officer and chief financial officer of Pacific, dated the
Closing Date, to the effect that, to the best of such
officer's knowledge, the conditions set forth in Section
7.03(a) and Section 7.03(b) have been satisfied.
(d)Pacific Material Adverse Effect. No
Pacific Material Adverse Effect shall have occurred and
there shall exist no fact or circumstance which could
reasonably be expected to have a material adverse effect
on the operations, properties, assets, financial
condition, results of operations or prospects of Pacific
and its subsidiaries taken as a whole or on the
consummation of the transactions contemplated by this
Agreement or the ability of the Energy Marketing Joint
Venture to achieve the business objectives contemplated by
the Summary of Terms attached as Exhibit A.
(e)Tax Opinion. Enova shall have received
an opinion of Shearman & Sterling, in form and substance
satisfactory to Enova, dated the Closing Date, to the
effect that the Enova Merger, taken together with the
Pacific Merger, will be treated as an exchange under
Section 351 of the Code.
(f)Pacific Required Consents. The Pacific
Required Consents the failure of which to obtain would
have a Pacific Material Adverse Effect or a Joint Venture
Material Adverse Effect shall have been obtained.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. 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 the Boards
of Directors of Enova and Pacific;
(b)by Pacific or Enova, by written notice
to the other, if the Effective Time shall not have
occurred on or before April 30, 1998; provided, however,
that the right to terminate the Agreement under this
Section 8.01(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 this date;
(c)by Pacific or Enova, by written
notice to the other, if, either the Enova Shareholders'
Approval or the Pacific Shareholders' Approval, or both,
shall not have been obtained on or before June 30, 1997;
provided, however, the right to terminate this Agreement
under this Section 8.01(c) shall not be available to any
party whose failure to fulfill any obligations under this
Agreement has been the cause of, or resulted in, the
failure of either of such approvals to have been obtained
on or before such date;
(d)by Pacific or Enova, if any state or
federal law, order, rule or regulation is adopted or
issued, which has the effect, as supported by the written
opinion of outside counsel for such party, of prohibiting
the Pacific Merger or the Enova Merger, or by any party
hereto, if any court of competent jurisdiction in the
United States or any State shall have issued an order,
judgement or decree permanently restraining, enjoining or
otherwise prohibiting the Pacific Merger or the Enova
Merger, and such order, judgement or decree shall have
become final and nonappealable;
(e)by Enova, by written notice to Pacific,
if there shall have been any material breach of any
material representation or warranty, or any material
breach of any covenant or agreement of Pacific hereunder
and such breach shall not have been remedied within 60
days after receipt by Pacific of notice in writing from
Enova, specifying the nature of such breach and requesting
that it be remedied;
(f)by Pacific, by written notice to Enova,
if there shall have been any material breach of any
material representation or warranty, or any material
breach of any covenant or agreement of Enova hereunder and
such breach shall not have been remedied within 60 days
after receipt by Enova of notice in writing from Pacific,
specifying the nature of such breach and requesting that
it be remedied;
(g)by Enova, by written notice to Pacific,
if, prior to the Pacific Special Meeting, the Board of
Directors of Pacific or any committee thereof (i) shall
withdraw or modify in any manner adverse to Enova its
approval or recommendation of this Agreement or the
Pacific Merger, (ii) shall approve or recommend any
Acquisition Proposal by a party other than Enova or any of
its affiliates, or (iii) shall resolve to take any of the
actions specified in clause (i) or (ii);
(h)by Pacific, by written notice to Enova,
if, prior to the Enova Special Meeting, the Board of
Directors of Enova or any committee thereof (i) shall
withdraw or modify in any manner adverse to Pacific its
approval or recommendation of this Agreement or the Enova
Merger, (ii) shall approve or recommend any Acquisition
Proposal by a party other than Pacific or any of its
affiliates, or (iii) shall resolve to take any of the
actions specified in clause (i) or (ii);
(i)by Enova at any time prior to the Enova
Special Meeting, upon two days' prior notice to Pacific,
if, as a result of an Acquisition Proposal by a party
other than Pacific or any of its affiliates, the Board of
Directors of Enova determines in good faith after
consultation with outside counsel (and after giving effect
to all concessions which may be offered by Pacific
pursuant to the proviso set forth below) that acceptance
of the Acquisition Proposal is reasonably necessary for
such Board of Directors to act in a manner consistent with
its fiduciary duties under applicable law; provided,
however, prior to any such termination, Enova shall, and
shall cause its respective financial and legal advisors
to, negotiate with Pacific to make such adjustments in the
terms and conditions of this Agreement as would enable
Enova to proceed with the transactions contemplated herein
on such adjusted terms; or
(j)by Pacific at any time prior to the
Pacific Special Meeting, upon two days' prior notice to
Pacific, if, as a result of an Acquisition Proposal by a
party other than Enova or any of its affiliates, the Board
of Directors of Pacific determines in good faith after
consultation with outside counsel (and after giving effect
to all concessions which may be offered by Enova pursuant
to the proviso set forth below) that acceptance of the
Acquisition Proposal is reasonably necessary for such
Board of Directors to act in a manner consistent with its
fiduciary duties under applicable law; provided, however,
prior to any such termination, Pacific shall, and shall
cause its respective financial and legal advisors to,
negotiate with Enova to make such adjustments in the terms
and conditions of this Agreement as would enable Pacific
to proceed with the transactions contemplated herein on
such adjusted terms.
SECTION 8.02. Effect of Termination. In
the event of termination of this Agreement by either Enova
or Pacific pursuant to Section 8.01, there shall be no
liability on the part of either Enova or Pacific or their
respective officers or directors hereunder, except (a)
Sections 6.01(b), 6.17 and 8.03 shall survive the
termination and (b) nothing herein shall relieve any party
from liability for any willful breach hereof.
SECTION 8.03. Fees and Expenses.
(a)Expense Reimbursement by Enova. If this
Agreement is terminated pursuant to (i) Section 8.01(c) as
a result of the Enova Shareholders' Approval not being
obtained and on or prior to the date of the Enova Special
Meeting Enova has been the subject of a publicly announced
Acquisition Proposal, (ii) Section 8.01(f), (iii) Section
8.01(h) or (iv) Section 8.01(i), then Enova, shall
promptly (but not later than five business days after
receipt or delivery of notice of such termination, as
applicable) pay to Pacific cash in an amount equal to the
greater of (x) $3 million or (y) the lesser of (A) all
documented out-of- pocket expenses and fees incurred by
Pacific (including, without limitation, fees and expenses
payable to all legal, accounting, financial, public
relations and other professional advisers) arising out of,
in connection with or related to this Agreement and the
Energy Marketing Joint Venture Agreement and the
transactions contemplated herein and therein and (B) $5
million, in the case of termination on or before February
12, 1997, or $10 million in the case of termination after
February 12, 1997 (the "Pacific Out-of-Pocket Expenses");
provided, however, that if this Agreement is terminated by
Pacific pursuant to Section 8.01(f) as a result of a
willful breach by Enova, Pacific may pursue any remedies
available to it at law or in equity and shall, in addition
to the Pacific Out-of-Pocket Expenses, be entitled to
retain such additional amounts as Pacific may be entitled
to receive at law or in equity.
(b)Expense Reimbursement by Pacific. If
this Agreement is terminated pursuant to (i) Section
8.01(c) as a result of the Pacific Shareholders' Approval
not being obtained and on or prior to the date of the
Pacific Special Meeting Pacific has been the subject of a
publicly announced Acquisition Proposal, (ii) Section
8.01(e), (iii) Section 8.01(g) or (iv) Section 8.01(j),
then Pacific, shall promptly (but not later than five
business days after receipt or delivery of notice of such
termination, as applicable), pay to Enova cash in an
amount equal to the greater of (x) $3 million or (y) the
lesser of (A) all documented out-of-pocket expenses and
fees incurred by Enova (including, without limitation,
fees and expenses payable to all legal, accounting,
financial, public relations and other professional
advisers) arising out of, in connection with or related to
this Agreement and the Energy Marketing Joint Venture
Agreement and the transactions contemplated herein and
therein and (B) $5 million in the case of termination on
or before February 12, 1997, or $10 million in the case of
termination after February 12, 1997 (the "Enova Out-of-
Pocket Expenses"); provided, however, that if this
Agreement is terminated by Enova pursuant to Section
8.01(e) as a result of a willful breach by Pacific, Enova
may pursue any remedies available to it at law or in
equity and shall, in addition to the Enova Out-of-Pocket
Expenses, be entitled to retain such additional amounts as
Enova may be entitled to receive at law or in equity.
(c)Enova Termination Fee. If (i) this
Agreement is terminated pursuant to (1) Section 8.01(c) as
a result of the Enova Shareholders' Approval not being
obtained and on or prior to the date of the Enova Special
Meeting Enova has been the subject of a publicly announced
Acquisition Proposal, (2) Section 8.01(h) or (3) Section
8.01(i) and (ii) within one year of any such termination
described in clause (i) above, Enova or any of its
material subsidiaries accepts a written offer to
consummate or consummates an Acquisition Proposal, then
Enova, will, upon the earlier of such acceptance or
consummation, pay to Pacific a termination fee equal to
$72 million in cash.
(d)Pacific Termination Fee. If (i) this
Agreement is terminated pursuant to (1) Section 8.01(c) as
a result of the Pacific Shareholders' Approval not being
obtained and on or prior to the date of the Pacific
Special Meeting Pacific has been the subject of a publicly
announced Acquisition Proposal, (2) Section 8.01(g) or (3)
Section 8.01(j) and (ii) within one year of any such
termination described in clause (i) above, Pacific or any
of its material subsidiaries accepts a written offer to
consummate or consummates an Acquisition Proposal, then
Pacific, will, upon the earlier of such acceptance or
consummation, pay to Enova a termination fee equal to $72
million in cash.
(e)Expenses. The parties agree that the
agreements contained in this Section 8.03 are an integral
part of the transactions contemplated by the Agreement and
constitute liquidated damages and not a penalty. If one
party fails to promptly pay to the other any fee due
hereunder, the defaulting party shall pay the costs and
expenses (including legal fees and expenses) in connection
with any action, including the filing of any lawsuit or
other legal action, taken to collect payment, together
with interest on the amount of any unpaid fee from the
date such fee was required to be paid at a rate per annum
equal at all times to 2% per annum above the rate per
annum that is the publicly announced prime rate of
Citibank, N.A.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of
Representations, Warranties and Agreements. Except as
otherwise provided in this Section 9.01, the
representations, warranties and agreements of each party
hereto shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such
party or any of their officers or directors, whether prior
to or after the execution of this Agreement. The
representations, warranties and agreements in this
Agreement shall terminate at the Effective Time or upon
the termination of this Agreement pursuant to Section
8.01, as the case may be, except that the agreements set
forth in Articles I and II and Sections 6.05, 6.09, 6.10,
6.11, 6.13, 6.14, 6.15 and 6.16 shall survive the
Effective Time indefinitely.
SECTION 9.02. Notices. All notices and
other communications given or made pursuant hereto shall
be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted,
and shall be effective upon receipt, if delivered
personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties
at the following addresses (or at such other address for a
party as shall be specified by like change of address) or
sent by electronic transmission, with confirmation
received, to the telecopy number specified below:
(a)If to Enova:
Enova Corporation
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
With copies to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
and
Shearman & Sterling
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Attention:▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(b)If to Pacific:
Pacific Enterprises
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With copies to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
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Attention:▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
SECTION 9.03. Certain Definitions. For
purposes of this Agreement, the term:
(a)"affiliates" means a person that
directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person;
including, without limitation, any partnership or joint
venture in which the person (either alone, or through or
together with any other subsidiary) has, directly or
indirectly, an interest of 5% or more;
(b)"beneficial owner" with respect to any
shares, means a person who shall be deemed to be the
beneficial owner of such shares (i) which such person or
any of its affiliates or associates beneficially owns,
directly or indirectly, (ii) which such person or any of
its affiliates or associates (as such term is defined in
Rule 12b-2 of the Exchange Act) has, directly or
indirectly, (A) the right to acquire (whether such right
is exercisable immediately or subject only to the passage
of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of consideration
rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding or (iii) which are
beneficially owned, directly or indirectly, by any other
persons with whom such person or any of its affiliates or
person with whom such person or any of its affiliates or
associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing
of any shares;
(c)"business day" means any day other than
a day on which banks in San Diego or Los Angeles are
required or authorized to be closed;
(d)"control" (including the terms
"controlled by" and "under common control with") means the
possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of
the management or policies of a person, whether through
the ownership of stock, as trustee or executor, by
contract or credit arrangement or otherwise;
(e)"joint venture" of a person means any
corporation or other entity (including partnerships and
other business associations and joint ventures) in which
such person 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 or equity, other than
equity interests held for passive investment purposes
which are less than 5% of any class of the outstanding
voting securities or equity of any such entity;
(f)"knowledge" of any person means the
actual knowledge of the executive officers of such person
and each subsidiary of such person.
(g)"person" means an individual,
corporation, partnership, association, trust,
unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act); and
(h)"subsidiary" or "subsidiaries" of any
person means any corporation, partnership, joint venture
or other legal entity of which such person (either alone
or through or together with any other subsidiary) owns,
directly or indirectly, more than 50% of the stock or
other equity interests the holders of which are generally
entitled to vote for the election of the board of
directors or other governing body of such corporation or
other legal entity.
SECTION 9.04. Amendment. This Agreement
may be amended by the parties hereto by action taken by or
on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that,
after approval hereof by the shareholders of Enova and
Pacific, no amendment may be made which by law requires
further approval by such shareholders. This Agreement may
not be amended except by an instrument in writing signed
by the parties hereto.
SECTION 9.05. Waiver. At any time prior
to the Effective Time, any party 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 such extension or
waiver shall be valid if set forth in an instrument in
writing signed by the party or parties to be bound
thereby.
SECTION 9.06. Headings. The headings
contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.07. Severability. If any term
or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely
as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the
extent possible.
SECTION 9.08. Entire Agreement. This
Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement and
supersedes all prior agreements and undertakings (other
than the Confidentiality Agreement), both written and
oral, among the parties, or any of them, with respect to
the subject matter hereof and, except as otherwise
expressly provided herein, is not intended to confer upon
any other person any rights or remedies hereunder.
SECTION 9.09. Assignment. This Agreement
shall not be assigned by operation of law or otherwise.
SECTION 9.10. Parties in Interest. This
Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall
confer upon any other person any right, benefit or remedy
of any nature whatsoever under or by reason of this
Agreement, other than Section 6.05 (which is intended to
be for the benefit of the Indemnified Parties and may be
enforced by such Indemnified Parties). Notwithstanding
the foregoing and any other provision of this Agreement,
and in addition to any other required action of the Board
of Directors of the Company (a) a majority of the
directors (or their successors) serving on the Board of
Directors of the Company who are designated by Pacific
pursuant to Section 6.13 shall be entitled during the
three year period commencing at the Effective Time (the
"Three Year Period") to enforce the provision of Sections
6.05, 6.09, 6.10, 6.11, 6.13, 6.14, 6.15 and 6.16 on
behalf of the Pacific officers, directors and employees,
as the case may be, and (b) a majority of the directors
(or their successors) serving on the Board of Directors of
the Company who are designated by Enova pursuant to
Section 6.13 shall be entitled during the Three Year
Period to enforce the provisions of Sections 6.05, 6.09,
6.10, 6.11, 6.13, 6.14, 6.15 and 6.16 on behalf of the
Enova officers, directors and employees, as the case may
be. Such directors' right and remedies under the
preceding sentence are cumulative and are in addition to
any other rights and remedies they may have at law or in
equity, but in no event shall this Section 9.10 be deemed
to impose any additional duties on any such directors.
The Company shall pay, at the time they are incurred, all
costs, fees and expenses of such directors incurred in
connection with the assertion of any rights on behalf of
the persons set forth above pursuant to this Section.
SECTION 9.11. Failure or Indulgence Not
Waiver; Remedies Cumulative. No failure or delay on the
part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall
any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right.
All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 9.12. Governing Law. This
Agreement shall governed by, and construed in accordance
with, the laws of the State of California.
SECTION 9.13. Counterparts. This
Agreement may be executed in one or more counterparts, and
by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an
original but all of which taken together shall constitute
one and the same agreement.
SECTION 9.14. WAIVER OF JURY TRIAL. EACH
OF Enova, Pacific, THE COMPANY, NEWCO Enova SUB AND NEWCO
Pacific SUB HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED
UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 9.15. Further Assurances. Each
party will execute such further documents and instruments
and take such further actions as may reasonably be
requested by any other party in order to consummate the
transactions contemplated by this Agreement and the Energy
Marketing Joint Venture Agreement in accordance with the
terms hereof and thereof.
IN WITNESS WHEREOF, Enova, Pacific, the
Company, Newco Enova Sub and Newco Pacific Sub have caused
this Agreement to be executed as of the date first written
above by their respective officers thereunto duly
authorized.
ENOVA CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President & Chief Executive Officer
PACIFIC ENTERPRISES
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title:Chairman & Chief Executive Officer
MINERAL ENERGY COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:President
G MINERAL ENERGY SUB
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
B MINERAL ENERGY SUB
By:/s/ ▇▇▇▇ ▇▇▇▇
-----------------
Name: ▇▇▇▇ ▇▇▇▇
Title: President
TABLE OF CONTENTS
ARTICLE I
THE MERGERS
SECTION 1.01. The Mergers 2
SECTION 1.02. Effective Time of the Mergers; Closing 2
SECTION 1.03. Effects of the Mergers 3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities 4
SECTION 2.02. Exchange of Certificates 5
SECTION 2.03. Dissenting Shares 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PACIFIC
SECTION 3.01. Organization and Qualification 8
SECTION 3.02. Subsidiaries 9
SECTION 3.03. Capitalization 9
SECTION 3.04. Authority; Non-Contravention;
Statutory Approvals; Compliance 10
SECTION 3.05. Reports and Financial Statements 12
SECTION 3.06. Absence of Certain Changes or Events;
Absence of Undisclosed Liabilities 12
SECTION 3.07. Litigation 13
SECTION 3.08. Registration Statement and
Proxy Statement 13
SECTION 3.09. Tax Matters 14
SECTION 3.10. Employee Matters; ERISA 17
SECTION 3.11. Environmental Protection 19
SECTION 3.12. Regulation as a Utility 21
SECTION 3.13. Vote Required 22
SECTION 3.14. Accounting Matters 22
SECTION 3.15. Opinions of Financial Advisors 22
SECTION 3.16. Insurance 22
SECTION 3.17. Pacific Rights Agreement 22
SECTION 3.18. Brokers 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ENOVA
SECTION 4.01. Organization and Qualification 23
SECTION 4.02. Subsidiaries 23
SECTION 4.03. Capitalization 24
SECTION 4.04. Authority; Non-Contravention;
Statutory Approvals; Compliance 25
SECTION 4.05. Reports and Financial Statements 26
SECTION 4.06. Absence of Certain Changes
or Events; Absence of Undisclosed Liabilities 27
SECTION 4.07. Litigation 27
SECTION 4.08. Registration
Statement and Proxy Statement 27
SECTION 4.09. Tax Matters 28
SECTION 4.10. Employee Matters; ERISA 31
SECTION 4.11. Environmental Protection 33
SECTION 4.12. Regulation as a Utility 34
SECTION 4.13. Nuclear Operations 34
SECTION 4.14. Vote Required 35
SECTION 4.15. Accounting Matters 35
SECTION 4.16. Opinion of Financial Advisor 35
SECTION 4.17. Insurance 35
SECTION 4.18. Ownership of Pacific Common
Stock 35
SECTION 4.19. Brokers 35
SECTION 4.20. Tax-Exempt Status 36
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGERS
SECTION 5.01. Conduct of Business Pending the Mergers 36
SECTION 5.02. Transition and Strategic Opportunity Committees
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Access to Information; Confidentiality 43
SECTION 6.02. Registration Statement; Joint Proxy
Statement 43
SECTION 6.03. Regulatory Matters 44
SECTION 6.04. Shareholder Approvals 45
SECTION 6.05. Directors' and Officers' Indemnification 46
SECTION 6.06. Disclosure Schedules 47
SECTION 6.07. Public Announcements 48
SECTION 6.08. Rule 145 Affiliates 48
SECTION 6.09. Employee Agreements
and Workforce Matters 48
SECTION 6.10. Employee Benefit Plans 49
SECTION 6.11. Stock Option and Other
Stock Plans 50
SECTION 6.12. No Solicitations 51
SECTION 6.13. Company Board of Directors 52
SECTION 6.14. Company Officers 52
SECTION 6.15. Employment Contracts 52
SECTION 6.16. Post-Merger Operations 52
SECTION 6.17. Expenses 53
SECTION 6.18. Energy Marketing Joint Venture 53
ARTICLE VII
CONDITIONS TO THE MERGERS
SECTION 7.01. Conditions to the Obligations
of Each Party 53
SECTION 7.02. Conditions to the
Obligations of Pacific 54
SECTION 7.03. Conditions to
the Obligations of Enova 55
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination 56
SECTION 8.03. Fees and Expenses 58
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of Representations,
Warranties and Agreements 60
SECTION 9.02. Notices 60
SECTION 9.03. Certain Definitions 61
SECTION 9.04. Amendment 62
SECTION 9.05. Waiver 62
SECTION 9.06. Headings 63
SECTION 9.07. Severability 63
SECTION 9.08. Entire Agreement 63
SECTION 9.09. Assignment 63
SECTION 9.10. Parties in Interest 63
SECTION 9.11. Failure or Indulgence Not Waiver;
Remedies Cumulative 64
SECTION 9.12. Governing Law 64
SECTION 9.13. Counterparts 64
SECTION 9.14. WAIVER OF JURY TRIAL 64
SECTION 9.15. Further Assurances 64
EXHIBITS
Exhibit A Summary of Terms of Energy Marketing Joint
Venture
Exhibit 1.02(a)(i)Enova Merger Agreement
Exhibit 1.02(a)(ii)Pacific Merger Agreement
Exhibit 6.08 Form of Affiliate Agreement
Exhibit 6.15 Form of Employment Contracts
INDEX OF DEFINED TERMS
Term Page
1935 Act 9
Acquisition Proposal 53
affiliate 22
Affiliate Agreement 50
affiliates 64
Agreement 1
Atomic Energy Act 27
▇▇▇▇ ▇▇▇▇▇▇ 23
beneficial owner 64
Bonds 37
business day 64
California Law 1
Certificates 5
Closing Agreement 16
Closing 3
Closing Date 3
Code 2
Company 1
Company Common Stock 4
Company Replacement Plans 51
Company Shares 6
Confidentiality Agreement 45
control 64
controlled by 64
Converted Shares 6
CPUC 12
Disclosure Schedules 49
Dissenting Shares 8
Effective Time 3
Encumbrances 9
Energy Marketing Joint Venture 1
Energy Marketing Joint Venture Agreement 1
Energy Marketing Required Statutory Approvals 46
Enova 1
Enova Benefit Plans 32
Enova Common Stock 4
Enova Disclosure Schedule 49
Enova Dissenting Shares 8
Enova Effective Time 3
Enova Financial Statements 28
Enova Material Adverse Effect 24
Enova Merger 1, 2
Enova Merger Agreement 2
Enova Out-of-Pocket Expenses 61
Enova Preferred Stock 25
Enova Ratio 4
Enova Required Consents 26
Enova Required Statutory Approvals 27
Enova SEC Reports 28
Enova Shareholders' Approval 36
Enova Special Meeting 47
Enova Sub 1
Enova Sub Common Stock 25
Enova Sub Par Value $20 Preferred Stock 25
Enova Sub No Par Preference Stock 25
Environmental Claim 21
Environmental Laws 22
Environmental Permits 20
ERISA 18
Excess Shares 7
Exchange 5
FERC 12
Final Order 56
GAAP 2
Gas Act 12
Governmental Authority 12
Hazardous Materials 22
HSR Act 46
Indemnified Parties 48
Indemnified Party 48
IRS 17
Joint Proxy/Registration Statement 45
joint venture 64
Joint Venture Material Adverse Effect 9
knowledge 65
Merger Consideration 6
Mergers 1
▇▇▇▇▇▇▇ ▇▇▇▇▇ 23
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 37
New Opportunity 44
Newco Enova Sub 1
Newco Pacific Sub 1
NRC 27
NYSE 7
Pacific 1
Pacific Benefit Plans 18
Pacific Class A Preferred Stock 5
Pacific Common Stock 4
Pacific Disclosure Schedule 49
Pacific Dissenting Shares 8
Pacific Effective Time 3
Pacific Financial Statements 13
Pacific Material Adverse Effect 9
Pacific Merger 1, 2
Pacific Merger Agreement 3
Pacific Out-of-Pocket Expenses 61
Pacific Preferred Stock 5
Pacific Ratio 5
Pacific Required Consents 11
Pacific Required Statutory Approvals 12
Pacific Right 4
Pacific Rights Agreement 4
Pacific SEC Reports 13
Pacific Shareholders' Approval 23
Pacific Special Meeting 47
Pacific Sub 10
Pacific Sub Common Stock 10
Pacific Sub Preference Stock 10
Pacific Sub Preferred Stock 10
Pacific Sub Series A Preferred 10
Pacific Sub Series Preferred 10
Pacific Sub $25 Preferred 10
PBGC 19
PCBs 22
person 65
Power Act 12
Proxy Statement 14
Registration Statement 14
Release 22
Representatives 44
SEC 12
Securities Act 12
Shares Trust 7
SONGS 36
Special Meeting 47
Stock Award 52
Stock Plans 52
Strategic Opportunity Committee 44
subsidiary or subsidiaries 65
subsidiary company 22
Tax Return 14
Tax Ruling 16
Taxes 14
Three Year Period 66
Transition Committee 44
under common control with 64
Violation 11