RBG-37-988, Application for Amend to License NPF-47,requesting NRC Consent for Gsu to Become Wholly Owned Subsidiary of Newly Formed Holding Company Called Entergy Corp

Application for Amend to License NPF-47,requesting NRC Consent for Gsu to Become Wholly Owned Subsidiary of Newly Formed Holding Company Called Entergy Corp

ML20127C953
Person / Time
Site:	River Bend
Issue date:	01/13/1993
From:	Graham P GULF STATES UTILITIES CO.
To:	NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
RBEXEC-93-034, RBEXEC-93-34, RBG-37-988, NUDOCS 9301150041
Download: ML20127C953 (96)

Text

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GULF STATES UTILITIES COMPANY H I V L 8 4 11 C N D 9 T A T I O N 5405 11 's HIGHWAY F 1 POGT 0 42 F 1 C (~ MOX 22G . %T F (4 A N C t S V 1 t 1 f:, t O tf f *31 A N A 7 0 7 7 t.

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January 13,1993 RBG-37,988 File Nos. G9.5, G9.42 _

RBEXEC-93-034 U.S. Nuclear Regulatory Commission Document Control Desk Washington, D.C. 20555 Gentlemen:

River Bend Station - Unit 1 Docket No. 50-458 Gulf States Utilities Company (GSU) hereby files this application seeking consent, pursuant to 10CFR 6 50.80, of an effective change in control over GSU, and, purst. ant to 10CFR 5 50.90, for a license amendment to the River Bend Station -Unit 1 Facility Operating License NPF-47, to reflect such consent. This applicatiori is filed to request NRC's consent for GSU to become a wholly owned subsidiary of a newly formed holding company to be called Entergy Corporation.

Attachment I t c isa letter provides the justifications for the requested actions.

Attachment 7 i .his letter discusses the three standards set forth in 10CFR 6 50.92 and co..atudes that the requested actions involve no significant hazards consideration. The proposed revision to the Oper1 ting License is found in Attachment 3.

GSU and Entergy Corporation have agreed, subject to receiving all necessary approvals, to combine tl.e businesses of treir campaiies. Upon consummation of the proposed merger, GSU would bcNme a wholly owned subsidiary of a newly formed holding company to be called Enturgy Corporation.

This license amendment application was reviewed and approved by the River Bend Facility Review Committee on December 23, 1992, and by the Nuclear Review Board on January 5,1993.

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i Page 2 of 2 RBG-37,988 January 13, 1993 RBEXEC-93-034 Contemporaneously herewith, a separate application is being filed with the Nuclear Regulatory Commission requesting approval for Entergy Operations, Inc., a wholly owned nuclear management company of Entergy, to be included as a licensee of River Bend with authority to operate the facility on behalf of its owners.

Should you have any questions, please contact hir. L. A. England of my staff at 504/381-4145.

Sincerely, h$& 0 0 m~

P.D.fGraham Attachments cc: U.S. Nuclear Regulatory Commission 611 Ryan Plaza Drive, Suite 400 Arlington, TX 76011 NRC Resident Inspector P.O. Box 1051 St. Francisville, LA 70775 hir. E. T. Baker hi/S OWFN 13-H 15 U.S. Nuclear Regulatory Commission l 11555 Rockville Pike l Rockville, hiD 20852 Department of Environmental Quality Radiation Protection Division L P.O. Box 82135 Batoa Rouge, LA 70884-2135 l

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UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION STATE OF LOUISIANA )

PARISH OF WEST FELICIANA )

Docket No. 50-458 In the Matter of )

GULF STATES UTILITIES COMPANY )

(River Bend Station - Unit 1)

AFFIDAVIT P. D. Graham, being duly sworn, states that he is a Vice President of Gulf Statns Utilities Company;-that he is' authorized' on the part of said company to sign and file with the Nuclear.

Regulatory Commission the documents attached hereto; and that all such documents are true and correct to-the best of his kncwledge,

-information and belief.

P. D'. Graham subscribed'and sworn-to before me, a Notary Public in and for thq - State and Parish above named, this / $ day of.

g'j/')swonU , 1903 My Commission expires ~with Life.

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OlaucLwJ. Nwtat Claudia F. Hu'rst Notary Public in and for

. West Feliciana Parish, Louisiana i.

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GULF STATES UTILITIES COMPANY RIVER BEND STATION DOCKET 50-458/ LICENSE NO. NPF-47 (Change in Ownership of Licensee)

LICENSING DOCUMENT INVOLVED: OPERATING LICENSE NO. NPF-47 Gulf States Utilities Company (" Gulf States") and Cajun Electric Power Cooperative, Inc. (" Cajun") are the holders of Facility Operating License No. NPF-47 ( " License " ) for River Bend Station, Unit 1 (" River Bend"). This application requests the consent of the Nuclear Regulatory Commission ("NRC"), pursuant to 10 C.F.R. 5 50.80, for Gulf States to combine its business with that of Entergy Corporation ( " Entergy") , which business combination will result in Gulf States becoming a wholly owned subsidiary company of a newly formed holding company which, upon consummation of the merger, will be called Entergy Corporation (the "new" Entergy Corporation). This application also requests an amendment to the License, pursuant to 10 C.F.R. 5 50.90, to reflect the change in ownership of Gulf States that will result from the business combination As explained in detail below, in June 1992, Gulf States and Entergy entered into an agreement p!?oviding for the combination of the businesses of their companied In accordance with the merger plan, Gulf States, following the merger, will continue to operate as a utility, but as a subsidiary of the new Entergy Corporation, with its electric operations fully integrated into those of the Entergy System.

Under the proposed arrangement, ownership of River Bend will remain unchanged, with Gulf States retaining its 70% undivided ownership interest in the facility and Cajun retaining its 30%

undivided ownership interest. Likewise, Gulf States' and Cajun's ownership of and entitlement to capacity and energy from River I

Contemporaneously herewith, Gulf States filed an application with the NRC requesting that the NRC amend the License to include as a Licensee thereunder Entergy Operations, Inc. ("EOI"), and to authorize EOI, as agent for the owners, to use and operate River Bend. The Operating License presently authorizes Gulf States and Cajun to possess River Bend as joint owners, and authorizes Gulf States to use and operate River Bend in accordance with the terms and conditions of the License. Upon consummation of the proposed business combination and subject to the receipt of all necessary approvals, EOI, on behalf of the owners, would assume operational and managerial responsibility for River Bend. However, this Application deals only with the change in ownership of Gulf States, and does not address issues raised in Gulf States' separate application dealing with the operation of River Bend by EOI.

P00-0206.P29 Bend will not be affected by the proposed business combination.

This application requests, to the extent deemed necessary by the NRC, that the License be amended to reflect the NRC's consent to the change in ownership control of the Licensee, GSU.

What will change following the combination is the common equity ownership of Gulf States. Gulf States is currently a publicly traded company, the common stock of which is widely held. Following consummation of the proposed business combination, the new Entergy Corporation will be the sole holder of Gulf States' common stock, with Gulf Stated current common shareholders receiving cash or common stock of the new holding company in exchange for their Gulf States common stock.

Accordingly, Gulf States hereby requests that the NRC give timely consent, pursuant to 10 C.F.R. 5 50.80, to the merger and combination of Gulf States with Entergy, and amend the License, pursuant to 10 C.F.R. 5 50.90, to reflect such consent.

DISCUSSION:

I. Introduction Gulf States is a Texas corporation engaged principally in the business of generating electric energy and transmitting, distributing and retailing such energy in a 28,000 square mile area in southeastern Texas and southern Louisiana, primarily adjacent to the Gulf of Mexico. Gulf States was organized under the laws of the state of Texas in 1925. In addition to its principal electric business, Gulf States produces and sells steam to a large industrial customer and purchases and distributes natural gas at retail to customers in the Baton Rouge, Louisiana, area.

River Bend is a nuclear powered electric generating facility that has been constructed and is being operated by Gulf States on behalf of itself and Cajun pursuant to a Joint Ownership Participation and Operating Agreement, dated August 28, 1979, as amended (the " Joint Ownership Agreement"), and in accordance with the River Bend Operating License and certain other permits and licenses. Under the Joint Ownership Agreement, Gulf States acts as agent for Cajun and has exclusive responsibility and control over the construction, operation and maintenance of River Bend. Gulf States owns a 70% ownership share of River Bend, and Cajun owns the remaining 30% ownership share.

Entergy is a public utility holding company organized under the laws of the State of Florida. Through its four operating subsidiaries, Arkansas Power & Light Company, Louisiana Power &

Light Company, Mississippi Power & Light Company and New Orleans Public Service Inc. (collectively the " Operating Companies"),

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P00 0206 P29 Entergy is engaged principally in the generation, transmission, distribution and sale of electricity at retail and wholesale to more than 1.7 million customers in parts of Arkansas, Louisiana and Mississippi.- Entergy's-subsidiary EOI is engaged in the operation of nuclear power plants.

Entergy and Gulf States entered into an AgreeWent and Plan of Reorganization, dated as of June 5, 1992 (the " Reorganization Agreement"), providing for the combination of the businesses of Entergy and Gulf States. A copy of the Reorganization Agreement is attached as Exhibit 1 to this Attachment 1. Pure"nnt to the Reorganization Agreement, three new corporations haz aeen or-will be created in connection with the business comba.ation.

These companies, and the procedures by which the business combination will take place, are discussed in detail in Section II of this Application.

II. The Business Combination one new corporation-has been and two additional corporations will be created in connection with the combination of Entergy and Gulf States. Entergy-GSU Holdings, Inc. (" Holdings"), a Delaware corporation, has been created to accomplish the combination of Entergy and Gulf States, as described below. Two other corporations, ETR Merger Corp. and GSU Merger Corp.,_will also-be created in connection with the merger. ETR Merger Corp.

and GSU Merger Corp. will be wholly owned subsidiaries of Holdings.

Holdings is a newly formed corporation whose sole function until the time the business combination is consummated is to effect the business combination. Holdings was incorporated under the laws of the- State of Delaware on : August 19,-1992. Entergy and Gulf States each currently owns one-half-of the presently _

outstanding shares of Holdings common stock and, as such,:there-will be no established public trading market.for Holdings stock prior to the time the-business combination is effected. Prior to that time, Holdings will not have conducted any business 7ther than transactions in connection with the business combina,, ion, will have assets consisting solely of the outstanding shares of ETR Merger Corp, common stock and GSU Merger Corp. common stock

-and cash contributed by Entergy and-Gulf States-in payment for-the outstanding shares of Holdings common stock issued to them- .

Holdings is not expected to incur liabilities except in connection with the consummation of the business: combination.-

Holdings currently has no employees.

As mentioned above, ETR Merger Corp. and GSU Merger Corp.

l Will be wholly owned subsidiaries of Holdings. As part of the business combination, ETR Merger Corp. Will be-merged, pursuant 3 of 17 L

I P00-0206F29 to an Entergy Merger Agreement among Holdings, Entergy and ETR Merger Corp., with and into Entergy (the "Entergy Merger") , with Entergy being the surviving corporation, and GSU Merger Corp.

will be merged pursuant to a Gulf States Merger Agreement among Gulf States, Holdings and GSU Merger Corp., with and into Gulf States (the " Gulf States Merger"), with Gulf States being the surviving corporation.

At the time the business corebination becomes ef fe~tive (the

" Effective Time") each share of Gulf States common stock issued and outstanding shall, by virtue of the Gulf States Merger, be converted into the right to receive either an amount of cash or a number of shares of Holdings common stock in accordance with the election and allocation procedures set forth in the Gulf States Merger Agreement. Furthermore, each share of Entergy common stock outstanding at the Effective Time shall, by virtue of the Entergy Merger, be converted into one share of Holdings common stock. As a result, the holders of Gulf States and Entergy common stock at the Effective Time will become the holders of Holdings common stock, and Holdings will own all the issued and outstanding shares of Entergy and Gulf States.

Immediately after the Entergy Merger and Gulf States Merger take place (when Holdings is the holder of all of the outstanding common stock of both Entergy and Gulf States), Entergy will, pursuant to the provisions of an Upstream Merger Agreement between Entergy and Holdings, merge with and into Holdings with Holdings being the surviving corporation (" Upstream Merger").

As a result, the separate corporate existence of Entergy will cease, and Holdings will have, pursuant to the Upstream Merger, succeeded to all of the assets, liabilities, rights and obligations of Entergy. In connection therewith, Holdings will be renamed Entergy Corporation, with the end result being that Holdings, renamed Entergy Corporation, will directly own all of the outstanding stock of Gulf States and the existing Entergy subsidiaries. A diagram illustrating this merger procedure (hereinafter referred to as the " Primary Reorganization") is attached to this Attachment 1 as Exhibit 2.

As an alternative to the Primary Reorganization, the Reorganization Agreement provides for an alternative reorganization to be effected in the event that Entergy and Gulf States do not receive a ruling from the Internal Revenue Service that the Primary Reorganization described above will be treated as a tax free reorganization. In the event that the parties fail to secure such a ruling from the Internal Revenue Service, the Upstream Merger will not be effected, but the parties will consummate the Entergy Merger and the Gulf States Merger. In this event, Entergy would not merge with and into Holdings but would continue its separate corporate exictence. Holdings would 4 of 17 I

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P004206.P29 own all the outstanding Gulf States common stock and Entergy common stock. It is expected that-Entergy would change-its name, since Holdings would still be renamed Entergy Corporation. A diagram illustrating the Alternate Reorganization is attached to this Attachment 1 as Exhibit 3.

The proposed business combination of Entergy_and Gulf _ States will not affect the ownership of River Bend or Facility Operating License No. NPF-47. That is, immediately before the business combination, Gulf States and Cajun will be the owners and Licensees of River Bend, just as they will immediately after the-business combination. There will be no assignment of.the License to another person or entity. However, the ownership of Gulf States itself will be affected. Immediately prior to the business combination, Gulf States will be owned by the holders of its approximately 115 million shares of outstanding common stock.

Immediately after the business combination, all of Gulf States

outstanding common stock will be owned by Holdings (renamed Entergy Corporation), which in turn will be owned by the current holders of Entergy common stock and-the holders of Gulf States common stock who elect to exchange their Gulf States stock for Holdings common stock.

With the possible exception listed below, the only change to Gulf States as a result of the proposed business combination is that, following the business combination, Gulf States will befa wholly owned subsidiary-of the new Entergy Corporation, which in turn will be owned by the current shareholders of Entergy and-by-those shareholders of Gulf States who elect to receive Holdings common stock in exchange for their Gulf States common stock. The retention of Gulf States following the merger of its retail gas business and certain non-utility operations is a matter that is to be resolved by the Securities and Exchange Commission

("SEC"). Further details of the proposed business combination are set forth at length in'the Reorganization Agreement.

Proxy materials were distributed to the shareholders of Entergy and Gulf States and filed with the SEC in November 1992.

l On December 17, 1992, the shareholders of Entergy and Gulf States j approved the merger.

In addition to those before this Commission, merger-related reviews or proceedings are being conducted by the SEC, the Federal Energy Regulatory Commission ("FERC") , _ the Louisiana-Public Service Commission and the Public Utility Commission of-Texas.2 .The proposed merger is also subject to the expiration-2 Copies of the filings with the various commissions will be provided to the NRC staff upon request.

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roo42o6f29 of the applicable waiting period under the Hart-Scott-Rodino Antitrust "mprovements Act of 1976, as amended.  !

Set forth immediately below is the information required to be included in an application for transfer of control of a Licensee pursuant to 10 C.F.R. 5 50.80, and in an application to amend the License pursuant to 10 C.F.R. 5 50.90.3 This information demonstrates that the requested consent is consistent with applicable provisions of law, NRC regulations, and orders issued by the NRC pursuant thereto. Antitrust information is set forth in Section V below.

III. Requested Consent:

The merger described in this application does not require any change in the design or operation of the River Bend plant.

Nor does it require any change in the terms of the technical ,

specifications for the unit. However, it does effect the change in ownership of Gulf States. Accordingly, this request is for consent, under 10 C.F.R. 5 50.80, to the effective change in ownership of Gulf States, and, under 10 C.F.R. 5 50.90, for a license amendment to reflect such consent by inserting the '

following footnote after the words " Gulf States Utilities Company" in i 1.A. of NPF-47:

Gulf States Utilities Company, which owns a 70% undivided interest in River Bend, has merged with a wholly owned subsidiary of Entergy Corporation. Gulf States Utilities .'

Company was the surviving company in the merger.

A copy of i 1.A. of NPF-47, as proposed.to be amended, is found in Attachment 3.

IV. General Information Concerning the Licensee:

A. Name of Licensee: Gulf States Utilities Company Since Gulf States will remain the owner of a 70% share in River Bend following the business combination, and since Gulf States will continue to exist as a. separate corporate entity, no license amendment would seem necessary. However, given recent NRC precedent, this application proposes to-the extent necessary an amendment to reflect in the License the NRC's consent to the combination and change in ownership of the shares of common. stock of Gulf States to the new Entergy Corporation.

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i P00-0206.P29 Address of Licensee: 350 Pine Street Beaumont, Texas 77701 Description of Business or Occupation of Licensee:

Following the business combination, Gulf States will be a wholly owned subsidiary of the new Entergy Corporation. Its purpose will remain the same as it is now, which is to engage principally in the generation, transmission, distribution and sale of electricity at retail and wholesale to approximately 583,000 customers across southern Louisiana and southeastern Texas.

B. Organization and Management of Licensee:

Gulf States is and will remain a corporation organized under the laws of the State of Texas. Its principal office is and will remain in Beaumont, Texas.

The officers of Gulf States, who are all citizens of the United States and can be reached at 350 Pine Street, Beaumont, Texas 77701, are as follows:

HAME OFFICE Joseph L. Donnelly Chairman of the Board, President and Chief l Executive Officer l

! Edward M. Loggins Senior Executive Vice President James C. Deddens Senior'Vice President-Special Projects Calvin J. Herbert Senior Vice President-Division Operations.

, Jack L. Schenck Senior Vice President and Chief Financial Officer William E. Barksdale .Vice President-Engineering and Technical. Services

,. Steven K. Burton Vice President and Treasurer Amery J. Champagne Vice President-Energy Resources 7 of 17

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' Ronald W. Ciesiel Vice President-Computer Applications Donald M. Clements Vice President- l Strategic Projects l Leslie D. Cobb Vice Presi%snt and Corporate-Secretary I John W. Conley Division Vice President-Western Division Philip D. Graham Vice President-River Bend Nuclear Group Charles D. Glass Vice President-Operations-William J. Jefferson Vice President-Rates and Regulatory Affairs f

Cecil L. Johnson Vice President-Legal Services Arden D. Loughmiller Division Vice President-Southeast Texas Division Clyde W. McBride Vice President-Strategic Planning Ronald M. McKenzie Division Vice President-Information Services

, Julius T. Meinscher Division Vice President-Lake Charles Division J. Lee Miller Vice President-Human Resources

' James E. Moss Vice President-Marketing L

James D. Watkins Division Vice President-l Baton Rouge Division 8 of 17

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Bobby J. Willis Vice President and Controller Jasper W. Worthy Vice President-General Services The directors of Gulf States, who are all citizens of the United States and can be reached at 350 Pine Street, Beaumont, Texas 77701, are as follows:

Paul W. Murrill Monroe J. Rathbone, Jr., M.D.

Robert H. Barrow Joseph L. Donnelly Frank W. Harrison, Jr.

Willian F. Klausing Eugene H. Owen M. Bookman Peters Sam F. Segnar Bismark A. Steinhagen James E. Taussig, II The Reorganization Agreement provides that at the time the business combination of.Entergy and. Gulf States becomes effective, the Board of Directors of Holdings will be comprised of the members of the Entergy Board of Directors, three-members of Gulf States' Board of Directors immediately prior to the time-the business combination becomes effective, and Joseph L. Donnelly, if Mr. Donnelly is then Chief Executive-Officer of Gulf States. .The adoption and approval of'the Reorganization Agreement by the stockholders of Entergy and Gulf States on December 17, 1992, constitutes such stockholders' ratification of the' election to the Board of Directors of Holdings of those persons designated by Entergy and Gulf States in the-Joint' Proxy Statement.

These individuals, who are all citizens of the' United States and can be reached at the addresses set-forth:

below, are as follows:

t W. Frank Blount, 225 Baronne St., New Orleans, LA 70112 John A. Cooper, Jr., 225 Baronne St., New j Orleans, LA 70112 Joseph L. Donnelly, 350 Pine St., Beaumont, TX 77701 l

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Brooke H.-Duncan,.225 Baronne St.,--New l Orleans, LA 70112

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Lucie J. Fjeldstad, 225 Baronne St., New -

Orleans, LA 70112 Kaneaster Hodges, Jr.,-225 Baronne St., New Orleans, LA 70112 Robert V. D. Luft, 225-Baronne St., New Orleans, LA 70112 Edwin Lupberger, 225 Baronne St., New  ;

Orleans, LA 70112 Admiral Kinnaird R. McKee, 225 Baronne St.,

New Orleans, LA 70112 Paul W. Murrill, 350 Pine St., Beaumont, TX 77701 James R. Nichols,-225 Baronne St., New l Orleans, LA 70112 l i

Eugene H. Owen, 350 Pine St., Beaumont, TX 77701 John N. Palmer, Sr., 225 Baronne St., New Orleans, LA 70112 Robert D. Pugh, 225 Baronne St., New Orleans, LA 70112 H. Duke Shackelford, 225 Baronne St., New Orleans, LA 70112 William Clifford Smith, 225 Baronne St.,.New-Orleans, LA 70112 Bismark A. Steinhagen, 350 Pine St.,

Beaumont,-TX 70112 Dr. Walter Washington, 225 Baronne St., New Orleans,-LA 70112-d The Reorganization Agreement provides further that, as-of the time the business combination of Entergy and GulfcStates'~becomes effective, the Gulf States Board of Directors pill consist of four members designated by-Entergy as well as all(of the members of Gulf: States' 1

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1 P004206 P29 Board of Directors immediately prior to the time the business combination becomes effective.

Following the proposed business combination and transfer, Gulf States will not be owned, controlled or dominated by an alien, a foreign corporation or a foreign government. Gulf States is not acting as agent or representative of any other person in filing this Application.

C. Technical Aspects:

This application does not involve a request for any change in the design or operation of River Bend, nor any change in the terms and conditions of the existing License or technical specifications. Following the business combination of Entergy and Gulf States, Gulf States and Cajun, the present owners of River Bend and the holders of the License, will remain the owners and Licensees of the facility. This amendment involves no change to either the organizations or personnel.

responsible for operation of the facility. A separate amendment request, however, would change the entity.

authorized to operate the River Bend Station.

D. Financial Aspects:

This application does not in any way alter Gulf States' ability to obtain the funds necessary to cover its.

share of costs for the operation, maintenance, repair, decontamination and decommissioning of River Bond.

Gulf States and Cajun will remain severally liable for such costs on a pro rata basis, under the terms of the Joint Ownership Agreement and for their obligationsL under 10 C.F.R. Part 140 and 10 C.F.R. 5 50.54(W).

Gulf States and Cajun are committed under the Joint ownership Agreement to provide on a pro rata basis in.

accordance_with their respective ownership percentage all funds necessary for safe operation and decommissioning of River Bend, in conformance with NRC' regulations. Gulf States' financial responsibility for its share of River Bend and its1 sources 1of funds to support the-facility will' remain _the same following the change in ownership of Gulf States. Gulf States.also recognizes'that it remains obligated to provide the funds being accumulated for its share of the decommissioning of River Bend.

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Because all costs _ associated with operating River-Bend =

will be borne on a pro rata basis in accordance with their respective ownership percentages by Gulf States and Cajun, just as is currently the case,'a full financial qualifications review is not necessary as a result of the approval requested in this application.

Those financial qualifications will remain unchanged.

Accordingly, the information required under 10 C.F.R.

E 50.33 (f) regarding the financial qualifications of the Licensees to carry out the activities described in this application is not necessary.

E. Restricted Data:

This application does not contain any restricted data or other classified defense information, and it is not expected that any such information will become involved. However, Gulf States' agreement to safeguard restricted data is already in place and is unaffected ,

by either the proposed business combination or the -!

proposed NRC licensing action.

V. Antitrust Considerations:

The proposed License amendment and the related request for consent relate to the change in ownership of Gulf States._ This-change in ownership is subject to separate reviews of antitrust considerations by the Department of Justice, the Federal Trade Commission, the FERC and the SEC. Moreover, the License for River Bend contains conditions relating to antitrust issues that are applicable only to Gulf States and not to Cajun. (See Operating-License NPF-47, Appendix C.) These conditions will be unchanged and will remain applicable to Gulf States.

Accordingly, the NRC need not conduct an extensive antitrust review of the' application and can conclude that the proposal _will not result in a "significant change" in the Licensees' 1

activities.'

A. Separate Antitrust Reviews:

Specifically, the potential effect of_the business combination of Entergy and Gulf States on competition is among the-issues that will be considered in proceedings before the FERC and theLSEC in connection-with proceedings before those agencies seeking approval of the business combination and by the Department of-Justice and the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

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P00-0206.P29 A summary of the applicant's e asition on some of the antitrust issues being addressed by these agencies is included in Section V(B) below to assist the NRC in determining that no "significant change" has occurred or will result from the proposed business combination.

Gulf States will keep the NRC fully informed of the development of these issues, and on request will provide copics of testimony before and decisions by those regulatory agencies, and will promptly supply other additional data, as requested by the Staff of the NRC.

The NRC's deferral to agencies having primary jurisdiction in these proceedings is entirely consistent with Regulatory Guide 9.3, Reculatory Staff Position Statement on Antitrust Matters, which states, in part, as follows:

In general, reliance would be placed on the exercise of

[FERC) and state agency jurisdiction regarding the specific terms and conditions of the sale of power, rates for transmission services and such other matters as may be within the scope of their jurisdiction.

These issues will be among the issues addressed by the other administrative agencies from which approval of or consent to the business combination is being sought, and the NRC's reliance on these proceedings would be reasonable and proper.

In any event, the proposed business combination of Entergy and Gulf States will not result in a significant change in the competitive environment in which River Bend operates. The firm and non-firm open access transmission tariffs approved by FERC in orders issued early in 1992,4 the existence of many power 4

In 1991 Entergy System companies submitted to the FERC proposed tariffs that would provide electric utilities "open access" to the System's integrated transmission system. In March and August 1992, the FERC issued orders approving the open accecs tariffs. The Entergy System now offers a consolidated transmission service tariff that provides for wheeling on a System-wide basis for a single charge - that is, capacity or 13 of 17

P00-0206 P29 suppliers in the region, and an absence of transmission constraints ensure that the business combination.will not have a significant adverse effect on competition in the relevant markets. Entergy and Gulf States have filed testimony before the FERC and the-SEC setting-forth their position that following the business combination, all utilities in the region will have the same or better opportunities to purchase power from wholesale power suppliers throughout the region than they have at preser t. Additionally, Gulf States is presently bound by certain antitrust conditions relating to River Bond, and will remain subject to .'

those conditior; following the business contbination (See Operating Licen,te NPF-47; Appendix C).

B. Summary of Antitrust Aspects Testimony has been presented to the FERC concerning the possible effect on corapetition of the proposed merger of Gulf States and Entergy. The facts demonstrate that the combination of Entergy and Gulf States will not create enhanced market power in any relevant market.

The primary effect of the combination will be to extend Entergy's commitment to open transmission access indefinitely, and expand that commitment to encompass the Gulf States system. In the open access post-merger system, utilities located within or adjacent to the combined Entergy-Gulf States area will be able to deal with more than a dozen other utilities over a multi-state area for only a single, relatively low wheeling charge. The direct effect of the combination will be to assure all area _ utilities that the open access commitment will remain in place for the long run and to make transactions more economic between utilities in Gulf States' area and utilities located within or adjacent to Entergy.

Furthermore, although both Entergy and Gulf _ States have surplus capacity currently-available for sale which will come under common control after the combinationi the combined' company will be in no position to dom 3 e short-run capacity sales. A detailed examination ot the-market reveals that, in the next five years, relatively few utilities in the area will be seeking capacity while a large number of suppliers, including enorgy can be moved across the transmission systems of two or more of the System operating companies without incurring-any

" pancaked" charges.

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IM0206.P29 the combined company, will have surplus capacity to sell. Moreover, in most cases, the combination actually should expand the options available to the utilities needing capacity by creating a vider market l accessible for a single wheeling charge. In the longer ,

run, new capacity construction will serve as an additional competitive check in the capacity sales  ;

market.

Under the proposed arrangements, Gulf States would becomo a party to the agreement among the operating Companies and Entergy Services, Inc. (" System Agreement") by which the Operating Companics engage in the coordinated planning, construction and c: ' ration of their generation and transmission facilities. Other than with respect to the System Agreement, the change in ownership of Gulf States discussed in this Application will not impact any contract for the purchase, sale, transmission or interchange of-electric energy, or any existing contracts with equipment and fuel suppliers or other business entities or individuals. Furthermore, the change in ownership of Gulf States would not change in any way the ownership or contractual allocation of the output of River Bend.

The change should not impact Gulf Statos' wholesale customers or result in the transfer of one rate schedule to another company, and will not impact the Licensee's service area.

The testimony filed with the FERC demonstrates that the combination will not create or increase control over any key inputs needed for new capacity development and marketing. Accordingly, the combined company will not have market power in long-run capacity sales markets.

The evidence demonstrates that the combined company will not control transmission access, scarce generating plant sites, fuel supplies or transportation facilities. By utilizing Entergy's open access tariff, buyers in the area will be able to reach numerous utilities (including Entergy) that independently have constructed substantial generation capacity..in the.

past, as well as any non-utility supplier that locates anywhere within the expanded Entergy system area. The data filed with the applicable regulators also clearly-indicates that the combined company will not have market ~ power over nonfirm energy-sales. Competition among nonfirm energy sellers takes place throughout a broad market in the central and southeastern part of the United States. Based on 1990-91 data, the combined 15 of 17

-- . - - - - - . . - -- ~,- ..- _ -. ~.-

1%0206.P29 company's share of total nonfirm energy _ sales in this broad market is estimated to be less than 10 percent.

The proposed Entergy-Gulf States combination should also have no substantial effect on retail competition.

Fringe or border area competition between the two combining entities has not been significant nor does it seem likely to become so, given the limited and largely rural area in which Entergy's and Gulf States' facilities are in close proximity. As for industrial location competition, ir. a few cases where electric rates play a major role in industrial location decisions, the competition can be expected to take place over a wide area and pit a large number of utilities against one another. Eliminating Gulf Statbo as an independent entity is not expected to diminish tnat competition significantly.

For the reasons stated above, the NRC should find that the proposed business combination of Gulf States and Entergy will not cause a significant change in the competitive environment with respect to activities under_the River Bend License and that an antitrust review is unnecessary.

If the NRC Staff needs additional data to make its determination that no "significant change" will occur as a result of the proposed business combination, such information and data will be supplied. Gulf States will keep the NRC Staff informed of the development of-these issues and any other issues that surface during the approval process before other regulatory agencies.

VI. Effective Date L The b;.siness combination requires the approval of other regulatory agencies in addition to the NRC, including'the SEC, the FERC, the Louisiana Public Service-Commission and the Public l Utility Commission of Texas. The proposed merger is also subject i to the expiration of the applicable waiting periodLunder the:

Hart-Scott-Rodino_ Antitrust _ Improvements Act of 1976, as amended.

Gulf States and Entergy intend that the business combination will take place'as soon as possible-after all-regulatory approvals have been obtained,.and in any event prior to January-1, 1994.

They are therefore seeking-to obtain all necessary approvals prior to that time. Gulf States requests that the NRC review i this request on a schedule that will permit final action on it_as

! promptly as possible and in any event before October 1, 1993, 16 f 17 l

~

b No o206.r29 ,

conditioning the effectiveness of this action as-it deems necessary upon the consummation of the business _ combination and-the receipt of other'necessary regulatory approvals. Gulf States will keep the NRC Staff informed as to the status of the other necessary regulatory approvals and of any changes in the estimated date for consummation of the business combination.

VII. Environmental Considerations The proposed license amendment will not result in any change in the types, or any increase in the amounts, of any effluents that may be released offsite, and there will be no increase in individual or cumulative occupational radiation exposure.

Accordingly, pursuant to 10 C.F.R. Section 51. 22 (c) (9) , the proposed action is excluded from the need for an environmental assessment or-an environmental impact statement, and special circumstances do not exist to otherwise require such an assessment or statement. Alternatively, the applicant herein requests that the NRC issue and publish a finding of no '

significant environmental impact pursuant to 10 C.F.R. Sections 51.32 and 51.35.

VIII. Request for NRC Action Gulf States requests for the reasons stated above, that the NRC consent to the change in ownership of Gulf States from a publicly owned company to a wholly owned subsidiary of the new

Entergy Corporation, another publicly owned company, as being i consistent with the applicable provisions of law, regulations and the orders issued by the NRC pursuant thereto, and that it do so as promptly as possible. Gulf States further requests that, to the extent necessary, the NRC issue an amendment to the River Bend Operating License to reflect the change in ownership of Gulf l States.

l-l l

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17 of 17

- - - --- ----------------,.,--------------.-__----.-.7- .-_ - . , -- - - - - - - - . - - .- ---, --_ --- -------, -- -_. ,-- -,_.-.

See EXHIBIT 1 TO ATTACHMENT 1 REORGANIZATION AGREEMENT

'e

-, j-AGREEh1ENT AND PLAN OF REORGANIZATION dated as of June 5,1992 between Entergy Corporation and Gulf States Utilities Company l'

W

(~.-.

TABLE OF CONTENTS Page 1.

FORMATION 1.1 OF llOLDING COMPANY AND MERGER SUBSIDIARIES B.1 . . . . . . . .. . . . .

1.2 Organization of Ilolding Company . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . B.1 ......

Directors and Oflicers of Holding Company . . . . . . . . . . . . . . . . . . . .

1.3 B.1 Organization of Merger Subsi:liaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.4 . . . . . . .. . .- . . . . B2 Actions of Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.5 B.2 Actions of Entergy and Gulf States . . . . . . . . . . . . . . . . . . . .

B.2

11. - TII E M ERO E RS; CLOS I NG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.1 ..................... B.2 The M e rg ers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.2 B.2 Alterna tive Reorganiza tion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -. . .

111.

2.3 Closing.,............................................................... . . . . . . . . . .. . . . . . . .

B-3 B.4 REPRESENTATIONS 3.1 AND WARRANTIES OF ENTERGY . . . . . . B-4 ....... . . . . ". . . . . . .

3.2 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B-4.

Capitalization . . . . . . . . . ............. ...

3.3 B-5 S u bsid i a ri es . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. ... .. .. .. .. .. .. .. ... .. .. .. .. . . . . . . . . . . . . . . . . . . .

3.4 B.5

'_ Authority; Non-Contravention; Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. .. .. . .

3.5 B-5 3.6 Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B.7 3.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-7. . .

Li t i g a t ion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B.7 .........

3.8 Registration Statement and Proxy Statement. .

3.9 Permits; No Violation of Law . . . . . . . . ................................. B.8 3.10 Taxes.................................................................

B.8 B.8 -

3.11 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . . . . . . . . .

B.9 --

3.12 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.13 Environmental Protection - . . , . . . . . . . . . . . . . . . . . . . . . . . .. . . . B.10 3.14 Insurance....,..................<..................................... B.10 3.15 Regulation as a Utility . . . . . . . .... ........ ......................... B.12 3.16 ................................. .. B.12 Compliance wit h A greemen ts . , , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B.12 . -

3.17 Vo t e R eq u i red . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.12 .........

3.18 Additional Representations . . . .

3.19 .. ................................

Absence of Undisclosed Liabilities , . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. ... .... .. . . . . . . . . -B.12 IV. B.13 -

REPRESENTATIONS 4.1 Organization and Qualification AND WARRANTIES OF GULF STATES . . . B.13 4.2 Ca pi tali za t ion . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.13 4.3 S u bid ia ries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . B-14 4.4 . . .. . .. . . . . . . . . . . . . . .. . . . . . . . B.15 Authority; Non. Contravention; Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. . . . B.15 ....

4.5 Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B.16 .......

4.6 4.7

- Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.17J ....... ..

Li t iga ti on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.8 Registration Statement and Proxy Statement. .. . .. . . .. . .. . . . . . . . .. . . .. . . - B.17 4.9 Permits; No Violation of Law ... . . . . . . . . . . .. . . . . . . . . . . . .. . . . b.17 -

4.10 Ta x es ' . . . . . . . . . . . . . . ...... .................... .............. B.17 4.11. Employee Benefit Plans; ERISA . ... . . . . . . . . . . . . .. . . . . . . . . . . . . . B.18 4.12 Opinion of Financial Advisor . . . .. ......,... ..... . . .. ... ...., ............. .. B-18

........ . . . . . . . .. . . . . . , B.19 4.13 Environmental Protection . . . . . . . . . . .... ..... ... .

4.14 Insurance... ................ B-19 4.15 Regulation as a Utility . . . . . . . . . . . . . ............... B-20 4.16 Compliance with Agreements ... .

. . . . . . . . . . . . . . . . . . . . B-21:

.... ...... . ..... . U.211 4.17 Vote Required . . . . . . . . . . . . . . . . . , .

4.18 . . . . . . . . . . . .. . . . . . . B.21 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . .. . . B 211 M

---__--------u.-

~ Page V. CONDUCT OF BUSINESS PENDING Tile MERGER. . . . . . . . . . ... .... ......... B.21 5.1 Conduct of Business by Gulf States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.21 5.2 No Solicitation by G ulf Stat es . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.23 5.3 Conduct of Business by Entergy . . . . . . . ....................... ........... B-24 5.4 No Solleitation by Entergy. . . . . . . . . . . . ...... .... ........ .......... B 24 5.5 Conduct of Business by Holding Company and the Merger Subsidiaries Pending the M erg er . . . . . . . . . . . . . . . . . ... ............. ..... ...... .. ..... ,. .. B.25 5.6 Certain Information Relating to Industrial Customers . . . . . . . . . . . . . . . . . . . . . . . B.25 VI. ADDITIONAL AGREEMENTS . ... .. ..... . . . ..... . .......... .... . B.25 6.1 Preferred Stock Arrearages . . .... . ... . . .. .............. . . B.25 6.2 Access to Information . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.25 6.3 Registration Statement and Proxy Statement. ..... . . ................... . B.26 '

6.4 Approval of Gulf States Shareholders; Approval of Entergy Shareholders . . . . . . . . . . B.27 -

6.5 Consents and A pprovals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , B.27 6.6 Compliance with the Securities Act .. . . ... .... ..... ................ B.28 6.7 Excbange I isting . . . . . . . . . . . . . . . . . . . . . . . . . .......... ......... ...... B.28 6.8 Public Statements . . . . . . . . . . . . . . ......... . .. ............. .......... B.29 6.9 Gulf States Employees and Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B 29 6.10 Post. Merger Operations . .. . ... ................... . .... ....... . ... B.31 6.11 Directors' and OHicers* Indemnification . . . . . . . . . . .............. ... .... B.32 6.12 Reasonable Best Efforts . . ... .. ........ ... . ....................... B.33 6.13 Certain Ta x M a t ters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . ...... ..... B.33 6.14 Continua tion of Standstill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B 34 6.15 Supplemental Disclosure . . . . . . . ..... .......,........... ...........,. B 34 6.16 Delivery of Certain Certificates . . . . . . . . . . . . . . . . .. . . ............ . B.34 Vll. CON DITIONS . . . . . . . . . . , , , .... ...... .... ...

... .......... ........ B-35 7.1 Conditions to Each Party's Obligation to Effect the Mergers . . ... .......... .. B 35 7.2 Conditions to Obligation of Gulf States . . .... . .. . .. . ..... . . . . . . . . . . B.36 7.3 Conditions to Obligation of Entergy . . . . . . . . . . . .

.... ....... ... .... B.36 Vill. TERMINATION, AMENDMENT AND WAIVER ,. . . ....... . . . . . . . . . . B.37-8.1 Termination . . . . . . . . .. .... ...... . ... . .... ....... . ............ B-37 8.2 Effect of Termination . , ............. . . . .... ... . .. ,, . . . . . . . . . B.41 8.3 Amendment . . . . . . ....... .... .. .......... ... ....... ... . .. ..... B-43 8.4 Waiver . . . . . . . . . . . . . . ........ .. .. ... . ...., , , ......... . - B.43 8.5 Limitation on Actions ...... .. .. . . ........... .... . . . . . . .. . . . . . . B-43 IX. GENERAL PROVISIONS. . . . . .............. .. ....... ... ....... ..... ..... B.43 -

9.1 B rok ers . . . . . . . . . . . . . . . . . . . . . . . . . .. ... ............ B-43 9.2 -

9.3 Notices.............................................................

Interpretation . . . . . . . .

. . . . . . . B.43

... .... ... .. .... ..... . ... ... ...... . B.45 9.4 Miscellaneous . .. . ,. .. . . .. . . . .. . ......... .... B45 9.5 Parties in Interest . . .. . .. .. .. , ,

. . ..... . . . . B-4 5 9.6 Specific Performance. . ... .. .. . . .. . .. . . . . B45 9.7 Goserning Law . . .. . . ... ... .. ..

. . . . .. . . ... . B-45 9.8 Counterparts . . . . .. . . .. . . . . . . . . . B 45 9.9 Assignment . . .

- B.45 :

9.10 Severability .. . . .

B.45 u m - - - -

____c___..______..________m_ _ _ _ _ _ _ __-___.c______ ______.___m-_____-._a

l 1

1 AGREEhlENT AND PLAN OF REORGANIZATION AGREEMENT AND PLAN OF REORGANIZATION, dated as of June 5,1992, by and between Entergy Corporation, a Florida corporation ("Entergy"), and Gulf States Utilities Company, a Texl '

corporation ("Outf States") (the parties hereto are hereinafter sometimes referred to individually

" Company" and collectively as the " Companies").

WilEREAS, the Boards of Directors of the Companies have approved, and deem it advisable best interests of their respective Companies and stockholders to consummate the reorganiz

" Primary Reorganization") provided for herein, pursuant to which the Companies will foIl company ("liolding Company"), which will acquire all of the common stock of each of the Comp '

through the merger of two subsidiaries of Ilolding Company with and into the Compani thereafter Entergy will merge with and into liolding Compary ard, as a result of the Primary R ,

the respective common shareholders of the Companies will own all of the outstanding shares o stock of llolding Company, and each share of any other class of capital stock of the Companies sh  :

unatTected by the Primary Reorganization and shall remain outstanding.

WilEREAS, the Boards of Directors of the Companies have approved, and deem it advisable a best interests of their respective Companies and stockholders to consummate, but only in the set forth in Section 2.2 and then in lieu of the Primary Reorganization, the reorganization pursua the Companies will form lloiding Company, which will acquire all of the common stock of each Companies, though the merger of two subsidiaries of liolding Company with and into the C contemplated by the Primary Reorganization, but thereafter Entergy will not merge with and Company

" Reorganization"). (the " Alternative Reorganization," and together with the Primary Reorganization, t NOW, TIIEREFORE, in consideration of the premises and the representations, warranties, cove and agreements contained herein, the parties hereto, intending to be legally buund hereby, agree ARTICLE I FORhlATION OF llOLDING COh!PANY AND hlERGER SUBSIDIARIES SECTION 1.1 Organi allon ofHolding Company. As p omptly as practicable following the exec this Agreement and receipt of any required approvals, the Companies shall cause llolding Co Company shall be in such forms as shall be determined by En consent shall not be unreasonably withheld, as soon as practicable following the execution of thi The authorized capital stock of Ilolding Company shall consist initially of 500 million shares of stock, 50.01 par value (the " Holding Company Common Stock"), of which 100 shares shall be iss

- Entergy and 100 shares shall be issued to Gulf States at a price of 51.00 per share.

StcTioN 1.2 Directorsand Oficers ofHolding Company (a) Upon formation ofIloiding Compa

-Companies shall cause individuals designated by Entergy to' be elected as (i) oard Chairman and of the B Director and (ii) Treasurer, and individuals designated by Gulf States to be elected as (1) Pres Director elected. and (2) Secretary. Each such officer and director shall remain in ollice until their succ (b) Prior to the Effective Time, each of Entergy and Gulf States, as the case may be may the place of any director designated by it, another director of such Company (with the consent e other -

Company which shall not be unreasonably withheld or delayed), and, in the place of a by it, another omccr of such Company (with the consent of the other Company which shal unreasonably withheld or delayed). -

t I

(c) As of the Effective Time, the Companies shall cause (i) the Board of Directors of Holding Company to consist of the persons who then constitute the Board of Directors of Entergy and three persons who are Directors of Gulf States and who are designated by Gulf States to serve as directors and the Chief Executive Odicer of Gulf States and (ii) the omcers of liolding Company to consist of the persons who then occupy such positions with Entergy, in each case to remain in omcc until their successors are elected.

StcrION 1.3 Organization of Aferger Subsidiaries. As promptly as practicable following the execution of this Agreement, the Companies shall cause the following companies (the " Merger Subsidiaries") to be organized:

(a) ETR Merger Corp., a corporation organized under the laws of the State of I'lorida (" Merger i Sub A"). The Articles ofIncorporation and By laws of Merger Sub A shall be in such forms as shall be determined by Entergy with the consent of _ Gulf States, which consent shall not be unreasonably withheld, as soon as practicable following the execution of this Agreement The authorized capital stock of Merger Sub A shall initially consist of 100 shares of common stock, without par value, which shall be issued to liolding Company at a price of $1.00 per share.

(b) GSU Merger Corp., a corporation organized under the laws of the State of Texas (" Merger Sub B"). The Articles of Incorporation and By laws of Merger Sub B shall be in such ferma as shall be determined by Gulf States with the consent of Entergy, which consent shall not be unreasonably withheld, as soon as practicable following the execution of this Agreement. The authorized capital stock of Merger Sub B shallinitially consist of 100 shares of common stock, without par value, which shall be issued to Holding Company at a price of $1.00 per share.

SECMON 1.4 Actions of strectors and Oficers. As promptly as practicable following the execution of this Agreement, Entergy and Gulf States shall designate the directors and omccrs of Merger Sub A and Merger Sub B, respectively, and shall cause (i) llolding Company to elect the directors of the Merger Subsidiaries, (ii) the directors of Merger Sub A and Merger Sub B to elect their respective omcers, (iii) the directors ofIloiding Company to ratify and approve this Agreement and to approve the forms of the Merger Agreements and the Upstream Merger Agreement (each as defmed in Section 2.1)..(iv) the Merger Agreements and the Upstream Merger Agreement to be executed on behalf of the parties thereto.' and (v) the directors and omcers of the Merger Subsidiaries to take such steps as may be necessary or appropriate to complete the organization of the Merger Subsidiaries and to approve the Merger Agreements and the Upstream Merger Agreement.

l SECT'3N 1.5 Actions ofEntery and GulfStates. As promptly as practicable following the execution of this Agreement, Entergy and Gulf States, as the holders of all of the outstanding shares of capital stock of Holding Company, shall cause Holding Company to approve and execute this Agreement, and shall cause Holding Company, as the sole shareholder of each of the Merger Subsidiaries, to adopt the Merger Agreements and the Upstream Merger Agreement. Each of Entergy and Gulf States shall cause IfoldinF Company and the Merger Subsidiaries to perform their respective obligations under this Agreement and the Merger Agreements and the Upstream Merger Agreement.

ARTICLE H TIIE MERGERS; CLOSING SrcTiON 2.1 The 3/cegers. Pursuant to Plans of Merger, the forms of which are attached hereto as Exhibits A, B and C (sometimes hereinafter referred to individually.as the "Entergy Merger Agreement,"

the " Gulf States Merger Agreement" and the " Upstream Merger Agreement". respecthely, and the Entergy Merger Agreement and the Gulf States Merger Agreement are referred to collectisely as the " Merger Agreements"), upon the terms and subject to the conditions set forth in this Agreement and in the Merger- .

Agreements and the Upstream Merger Agreement:

B-2

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K q-a (a) Merger Sub A shall be merged with and into Entergy (the "Entergy Merger") in accordance with the applicable provisions of the laws of the State of Florida. Entergy shall be the surviving i corporation in the Entergy Merger and shall continue its coiporate existence under the laws of the State of Florida. As a result of the Entergy Merger, Entergy shall become a subsidiary ofIloiding Company.

The clTects and consequences of the Entergy Merger shall be as set forth in the Entergy Merger Agreement.

(b) Merger Sub D will be merged with and into Gulf States (the " Gulf States Merger"), in accordance with the applicabic provisions of the laws of the State of Texas. Gulf States shall be the

}

surviving corporation in the Gulf States Merger and shall continue its corporate existence under the laws

{

of the State of Texas. As a result of the Gulf States Merger, Gulf States shall become a subsidiary of Ilolding Company. The etTects and consequences of the Gulf States Merger shall be as set forth in the Gulf States Merger Agreement.

(c) Immediately after the consummation of the Entergy Merger and the Gulf States Merger, -

Entergy shall be merged with and into IIolding Company (the " Upstream Merger" and, collectively with the Entergy Merger and the Gulf States Merger, the " Mergers") in accordance with the applicable provisions of the laws of the States of Florida and Delaware. IIolding Company shall be the surviving corporation in the Upstream Merger and shall continue its enrporate existence under the laws of the i State of Delaware. The elTects and consequences of the Upstream Merger shall be as set forth in the Upstream Merger Agreement, i

(d) In the event the Alternative Reorganization is to be consummated, the term " Mergers" shall, in lieu of the defmition set forth in (c) above, mean the Entergy Merger and the Gulf States Merger, (e) The term " Effective Time" shall mean the time and date which is the later of(i) the fding of the articles of merger relating to the Entergy Merger by the Florida Department of State (or such other date - ,

and time as may be specified in such articles as may be permitted by Florida law) and (li) the issuance of a certificate of merger by the Secretary of State of the State of Texas with respect to the Gulf Stata Merger (or such other date and time as may be specified in such articles as may be permitted by Teus law).

SEcTtoN '2.2 Alternative Reorganization. (a) In the event that there is a failure to satisfy the conditions set fo:1h in Section 7.2(d) and Section 7.3(d) or Entergy and Gulf States determine pursuant to Section 6,13 that such conditions are unlikely to be satisfied, Section 7.2(d) and Section 7,3(d) shall be deemed ameaded to read as set forth in (b) below, and the Companies agree to consummate the Alternative Reorganization as set forth in this Section 2.2 in lieu of the Primary Reorganization.

(b) Section 7.2(d) shall be deemed amended to read in its entirety as follows:

" Gulf States shall have received (i) an opinion of Fried, Frant, IIarris, Shriver & Jacobson, in form and substance reasonably satisfactory to Gulf States, dated the date of the Effective Time (ii) a ruling from -

the IRS, in form and substance reasonably satisfactory to Gulf States, or (iii) a combination of the items referred to in clauses (i) and (ii) that the Alternative Reorganization will qualify as a tax 4ree transaction described in sections 151 and/or 368 of the Code and that no gain or loss will be recognized ,

by Gulf .

States and Entergy shareholders that exchange shares of Gulf States and Einergy stock solely.jfor shates of IIolding Company stock in such transaction."

Section 7.3(d) shall be deemed amended to read in its entirety as follows:

"Entergy shall have received (i) an opinion of Skadden, Arpt, State, Meagher & Flom, in form and substance reasonably satisfactory to Entergy, dated the date of the EtTective Time, (ii) a ruling from the IRS, in form and substance reasonably satisfactory to Entergy, or (iii) s combination of the items referre to in clauses-(i) and (ii) that the Alternative Rcorganization will qualify as a tax free transaction described in sections ~3$1 and/or 368 of the Code and that no gain or loss will be recognized by Gulf II.3

.l

--__ - - - . - - _ - . - - - --- - - _~.- - _ -- ---. _ -

States and Entergy shareholders that exchange shares of Gulf States and Entergy stock solely for shares  ;

of Ilolding Company Stock in such transaction."

) (c) The Alternative Reorganization shall consist of the transactions conternplated by Article I and j Section 2.1, and as promptly as practicable following the determination that the Alternative Reorganization will be consummancd, the Upstream Merger Agreement shall be terminated and the Upstream Merger contemplated by Section 2.l(c) shall not be consummated.

3 (d) In the event the parties determine that the Alternative Reorganization will be consummated, the parties shall execute an amendment to this Agreement to ref'ect the modifications set forth in this Section 2.2.  ;

SrcTioN 2.3 Closing. The clo*ing (the " Closing") of the transactions contemplated by this Agreement and the Merger Agreements shall take place at the ollices of Skadden Arps State, Meagher & Flom at 10.00 t A.M., local time, on the second business day immediately following the date on which the last of the i

Pns set forth in Article VII hereof is satisfied or waived, or at such other time and place as Entergy u.. ' " i States shall agree (the " Closing Date").

ARTICLE 111 REl'RESENTATIONS AND WARRANTIES OF ENTERGY '

Entergy represents and warrants to Gulf States as follows:

StrrioN 3.1 Organ /:arion and Qual (/leation. (a) Entergy and each direct or indirect subsidiary (as #

defined in Section 3.3 hereof) of Entergy is a corporation or partnership duly organized or formed, validly ,

existing and in good standing under the laws of the jurisdiction ofits incorporation or formation and has the '

requisite power und authority to own, lease and operate its assets and properties it now owns, leases and operates and to carry on its business as it is now being conducted, except where the failure to have such power and authority would not individually or in the aggregate have an Entergy Material Adverse Effect (as defined below) Entergy and each of its subsidiaries is qualified or licensed to do business and is in good standing in each jurisdiction in which the properties owned, leased or operated by it or the nature of the businesses conducted by it makes such qualification or licensing necessary, except where the failure to be so -

qualified or licensed and in good standing will not, when taken together with all other such failures, have an Entergy Material Adverse Effect. For the purpose of this Agre ment, an "Entergy Material Adverse Effect" shall mean a material adverse effect on the business, operatto. 5, properties, assets, condition (financial or other) or results of operations of Entergy and its subsidiaries taken as a whole;provided however, that an-Entergy Material Adserse Effect shall not include any general economic and market changes including, without limitation, (i) any general suspension of trading in, or limitation on prices for, securities on The New York Stock Eachange, Inc. (the "NYSE"), or a material change in prices of securities generally on the NYSE:

(ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United l States;(iii) the commer"ement or continuation of a war, armed hostilities or other international or national calamity directly or O Nectly involving the United States; (iv) any limitation (whether or not mandatory) by any United States purnmental authority or agency on the extension of credit by banks or other financial institutions; (v) any ger,eral decline in economic conditions in the electric utility industry as a whole or in general economic conditions in any geographic region of the United States (vi) the establishment of accruals for deferred Taxes (as defined below) required under FASI196 or FASH 109; and (sii)in the case of any of the events desenbed in the foregoing clauses (i) through (v), a material acceleration or worsening thereof-l (collectively. " General Changes").

(b) True, accurate and complete copies of the Articles of incorporation and By laws of Entergy and -

each of EntergyT corporate subsidiaries, as in etTect on the date hereof, have heretofore been delivered to Gulf States.

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! i StcmON 3.2 Capitalitallon. (a) The authorized capital stock of Entergy consists of 500,000,000 shares of Common Stock, par value $$.00 per share (the "EnterFy Common Stock"). As of the date of tPs l

Agreement, 177,044,492 shares of Entergy Common Stock were issued and outstanding. All of the issued and outstanding shares of Entergy Common Stock are validly issued and are fully paid, nonassessable and free of preemptive rights.

(b) Except as set forth on Schedule 3.2 of Entergy's Disclosure Schedule (the "Entergy Disclosure -;

Schedule") hereto, as of the date hereof, there are no outstanding subscriptions, options, calls, contracts, commitments, understandings, restrictions, arrangements, rights or warrants, including any right of conversion or exchange under any outstanding security, instrument or other agrectnent obl; gating Entergy any subsidiary of Entergy to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of Entergy < r obligating Entergy or any subsidiary of Entergy to grant, estend or enter into any such agreement or commitment. Except as set forth on Schedule 3.2 of the Entergy Disclosure Schedule hereto, there are no voting trusts, proxies or other agreements or understandings to which Entergy o subsidiary of Entergy is a party or by which Entergy or any subsidiary of Entergy is bound with respect to the voting of any shares of capital stock of Entergy.

5 crl0N 3.3 Subsidiarles As used in this Agreement, a subsidiary of Entergy or Gulf States, as the case may be, means (a) any corporation of which Entergy or Gulf States, as the case may be, or any other subsidiary of Entergy or Gulf States, as the case may be, is entitled by virtue ofits ownenhip of more than 50% of the outstandirig securities having ordinary voting power, or otherwise, to elect a majority of the directors or (b) any partnenhip, joint venture or other entity which Entergy or Gulf States, as the case m be, or any other subddiary of Entergy or Gulf States, as the case may be, controls by virtue ofits ow of more than 50% of the equity or otherwise. Except as set forth on Schedule 3,3 of the Entergy Disclosur Schedule hereto, all subsidiaries of Entergy are set forth on Exhibit 22 to Entergy's Annual Report on Form 10 K for the fiscal year ended December 31,19914 Except as set forth on Schedule 3.3 of the Enterg Disclosure Schedule hereto, all of the outstanding shares of capital stock of each of Entergy's corporate subsidiaries are validly issued, fully paid, nonassessable and free of preemptive rights, and the outsta shares of capital stock and partnenhip or other ownership interests in each subsidiary owned directly or '

indirectly by Entergy are owned free and clear of any liens, claims, encumbrances, security interests, e charges and options of any nature whatsoever. Except as set forth on Schedule 3.3 of the Entergy Disclosure Schedule hereto, Entergy owns directly or indirectly all of the issued and outstanding shares of the capita Stock and partnership or other ownership interests in each of its subsidiaries; Except as set forth on Schedule 3.3 of the Entergy Disclosure Schedule hereto, there are no subscriptions, options, warrants, rights, calls, contracts, voting trusts, proxies or other commitments, understandings, restrictions or arrangements relat to the issuance, sale, voting, transfer, ownership or other rights atTecting any shares of capital stock or

' partnership or other ownership interests in any subsidiary of Entergy, including any right of conversion or exchange under any outstanding security, instrument or agreement. Prior to the date hereof. Entergy h delivered to Gulf States a list of all material corporations. partnerships, joint ventures and other business entities in which Entergy or any ofits subsidiaries directly or indirectly owns an interest and Entergy's an such subsidiaries

• direct and indirect share, partnership or other ownership interest in each such ent Except as set forth on Schedule 3.3 of the Entergy Disclosure Schedule hereto, no entity in which En owns, directly or indirectly, an ownership interest is a "public utility company," and no such entity is a

" holding company," a " subsidiary company" or an "amliate" of any public utility company within tbc meaning of Section 2(a)($),2(a)(7),2(a)(8) or 2(a)(ll) of the Public Utility llolding Company Act of 1935, as amended (the "Itoldmg Company Act").

SrcTioN 3.4 Authorityt Non Contravention: Approvals (a) Entergy has full corporate power and:

authority to enter into this Agreement, the Entergy Merger Agreement and the Upstream Merger Agreem (collectively, the "Entergy Transaction Agreements") and, subject to the Entergy Shareholders' Appro (as defmed in Section 6.4), to consummate the transactions contemplated hereby cnd thereby, other than the Mergers which are aho subject to the Entergy Required Statutory Approvals (as defmed below). The 11 5

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4 execution and delivery of this Agreement and the Entergy Transaction Agreements and the consummation by Entergy of the transactions contemplated hereby and thereby have been duly authorized by the lloard of Directors of Entergy, and no other corporate proceedings on the part of Entergy are necessary to authorire the execution and delivery of this Agreement and the Entergy Transaction Agreements and the

• consumrnation by Entergy of the transactions contemplated hereby and thereby, except for the Entergy Shareholders' Apptovat This Agreement has been, and the Entergy Transaction Agreements will be, duly '

and validly executed and delivered by Entergy and, assuming that this Agreement constitutes and the Entergy  ;

Transaction Agreements will constitute a valid and binding agreement of Gulf States and floiding Company, as the case may be, subject to the receipt of the Entergy Required Statutory Approvals, this Agreement constitutes, and each of the Entergy Transaction Agreements will constitute, a valid and binding agreement of Entergy enforceable against Entergy in accordance with its terms, except that such enforceability may bc  ;

limited by applicable bankruptcy, insolvency, moratorium or other similar laws affecting or relating to -

enforcement of creditors' rights generally or general principles of equity.-

(b) Except as set forth on Schedule 3.4(b) of the Entergy Disclosure Schedule hereto and other than '

obtaining the Entergy Required Statutory Approvals, the execution and delivery of this Agreement by Entergy does not, and the execution and delivery of the Entergy Transaction Agreements and the consummation by Entergy of the transactions contemplated hereby and thereby will not, violate, conflict with -

or result in a breach of any provision of, or constitute a default (or any event which, with notice or lapse of -

time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation of any lien, securhy interest, charge or encumbrance upon any of the properties or assets of Entergy or any of its subsidiaries under any of the terms, conditiont or provisions of (i) subject to the receipt of the Entergy a Shareholded Approval, the Articles of incorpotation or Dy laws of Entergy or any of its subsidiaries,(ii)

• subject to the receipt of the Entergy Shareholders' Approval, any statute, law, ordinance, rule, regulation, -.i judgment, decree, order, injunction, writ, franchise, permit or license of any court, federal, state or local governmental authority or municipality applicable to Ent 3y or any of its subsidiaries or any of their  ;

respective properties or assets, or (iii) any note, bond, mortgage, indenture, deed of trust, license, franchise, permit, concession, contract, lease or other instrument, obligation or agreement of any Lind to which Entergy or any ofits subsidiaries is now a party or by which Entergy or any ofits subsidiaries or any of their respective properties or assets may be bound or affected, excluding from the foregoing clauses (ii) and (iii) such violations, conflicts, breaches, defaults, terminations, accelerations or creations of liens, security interestsc charges or encumbrances that would not, in the aggregate, have an Entergy Material Adverse Effect or materially adversely affect the ability of Entergy to consummate the transactions contemplated hereby and by the Entergy Transaction Agreements.

(c) Except as set forth on Schedule 3.4(b) of the Entergy Disclosure Schedule above and except for (i) any required approvals under the Federal Power Act of 1935 (the " Federal Power Act"), (ii)(A) notice by Entergy to and an order by the Public Utilities Commission of Texas (the "PUCT") to the effect that the transactions contemplated by this Agreement are in the public interest and (D) the approval, if required, of rnunicipalities or other local governmental bodies in the State of Texas, in the case of each of(A) and (D),

pursuant to the Public Utility Regulatory Act of Texas (the "PURAT"), (iii) the approval of the Louisiana Public Service Commission (the "LPSC"), (iv) the approval, if requiredc of the Nuclear Regulatory Commission (the "NRC") pursuant to the Atomic Energy Act of 1954, as amended (t_he " Atomic Energy 1 Act"),-(v) the approval, if required, of the EEC pursuant to the lloiding Company Act, bi) the filing of the Joint Proxy Statement / Prospectus (as defined in Section 3.8 below) with the Securities and Exchange Commission (the "SEC") pursuant to the lloiding Company Act and the Securities Exchange Act of 1934, as amended (the " Exchange Act"),(vii) the filings by Entergy and Gulf States required by Title 11 of the llart Scott Rodino Antitrust Improvements Act of 1976, as amended (the "IISR Act"),(viii) the filing of the Registration Statement (as defined in Section 3.8) with the SEC pursuant to the Securities Act of 1933, as-amended (the " Securities Act"), and the declaration of the etiectiseness thereof by the SEC and filings with j the various blue sky authorities pursuant to applicable state securities laws, (ix) the filings required pursuant D-6

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, t to Article 1 and Article 11 hereofin connection with the organization ofllolding Company and the Merger Subsidiaries, (x) the filing of articles of merger with the Secretary of State of the State of Florida in accordance with the Florida Dusiness Corporation Act and the Secretary of State of the State of Delaware in accordance with the Delaware General Corporation 1.aw in connection with the Entergy Merger and the Upstream Merger and (xi) the fihng by or on behalf ofllolding Company of a notice of registration and a registration statement with the SEC under the llolding Company Act (the filings and approvals referred to in clauses (i) through (vi) are collectively referred to as the "Entergy Required Regulatory Approvals" and the filings and i approvals referred to in clauses (i) through (xi) are collectively referred to as the "Entergy Required Statutory Approvals"), no declaration, filing or registration with, or notice to, or authorization, consent or approu of any governmental or regulatory body or authority is necessary for the consummation by Entergy of the transactions contemplated hereby and by the Entergy Transaction Agreements, other than such filings, registrations, authorizations. consents or approvals which, if not obtained 9 made, will not, in the aggregate, have an Entergy Material Adverse Effect or materially adversely affect the abihty of Entergy to consummate the transactions contemplated hereby and by the Entergy Transaction Agreements.

t SterlON 3.$ Rrports and [ inane /01 Statements. Since December 31, 1988. Entergy and each of its subsidiaries required to make filings under the Securities Act, the Exchange Act, the applicable State public utility laws, the Atomic Energy Act, the Federal Power Act or the Holding Company Act have filed with the

' SEC, the applicable state or local utility commissions or regulatory bodies, the NRC or the Federal Energy ,

Regulatory Commission ("FERC"), as the case may be, t.li material forms, statements, reports and '

documents (including all exhibits, amendments and supplements thereto) required to be filed by them under each of the Securities Act, the Exchange Act, the applicable State public utility laws, the Atomic Energy I

Act, the Federal Power Act and the lloiding Company Act and the respective rules and regulations thereunder, all of which complied in all matuial respects with all applicable requirements of the appropriate act and the rules and regulations thereunder in effect on the date such report was filed. Entergy has pseviously delivered to Gulf States copies of each report, schedule, registration statement and definitive proxy statement '

fil+d by Entergy or any ofits subsidiaries with the SEC since December 31,1988 pursuant to the Securities Act or the Exchange Act (collectively, the "Entergy SEC Reports"). As of their respective dates, the Entergy 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 fmancial statements and unaudited consolidated interim financial statements of Eatergy included in such reports (the "Entergy Financial Statements") have been prepared in accordance with generally accepted accounting principles applied on a consistent basis - ,

(except as may be indicated therein or in the notes thereto) and fairly present the financial position of Entergy and its subsidiaries as of the dates thereof and the results of their operations and changes in fmancial position for the periods then ended, subject, in the' case of the unaudited consolidated interim financial statements, to normal year-end audit adjustments and any other adjustments described therein.

• StcrtoN 3.6 Absence of Certain Changes or Events. Except as set forth on Schedule 3.6 of the Entergy Disclosure Schedule hereto or as set forth in the Entergy SEC Reports, since December 31,1991. Entergy has operated its businesses in the ordinary course consistent with past practice and there has not been any ' <

Entergy Material Adverse Effect nor any development that would result in an Entergy Material Adverse Etiect, 3

SterioN 3.7 Litigarlon. Except as set forth on Schedule 3.7 of th' e Entergy Disclosure Schedule hereto or in the Entergy SEC Reports, there are no claims, suits, actions or proceedings pending or, to the best knowledge of Entergy, threatened, nor, to the knowledge of Entergy, are there any investigations or resiews-pending or threatened, against, relating to or atTecting Entergy or any of its subsidiaries, which, if adversely determined, would have an Entergy Material Adverse Effect. Except as contemplated by the Entergy Required Statutory Approvals or as set forth on Schedule 3,7 of the Entergy Disclosure Schedule or in the Entergy'SEC Reports, neither Entergy nor any of its subsidiaries is subject to any judgment, ~ decree, injunction r l, u e or order (other than rate orders and rate proceedings) of any court, governmental department, .

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I commission, agency, instrumentality or authority or any arbitrator which would hase an Entergy hiaterial Adverse ElIect.

i StrilON 3.8 Registrarlon Storement and frmy Storement. None of the information to be supplied by Entergy or its subsidiaries for inclusion in (a) the Registration Statement on Form S 4 (the "Registratiort Statement") to be fded under the Securities Act with the SEC by Entergy in connection with the issuance of the llolding Company Common Stock pursuant to the transactions contemplated by this Agreement, the Gulf States Merger Agreement or the Entergy Transaction Agreements (collectively, the " Transaction l

Agreements") or (b) thejoint proxy statement to be distnbuted in connection with Gulf States' and Entergy's >

meetings of their respectise shareholders to vote upon this Agreement and the transactions contemplated hereby and by the Transaction Agreements (the " Proxy Statement", and together with the prospectus r included in the Registration Statement, the " Joint Proxy Statement / Prospectus") will, in the case of the '

Proxy Statement or any amendments thereof or supplements thereto, at the time of the mailing of the Proxy i Statement and any amendments or supplements thereto, and at the time of the meetings of shareholders of '

Gulf States and Entetgy to be held in cont ection with the transactions contemplated by this Agreement and by the Transaction Agreements or, in the case of the Registration Statement as amended or supplemented, at t the time it is filed or it becomes effective, 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 Joint

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Proxy Statement / Prospectus will cornply as to form ir all material respects with all applicable laws, including the provisions of the Securities Act, the Exchange Act rond the slolding Company Act and the applicable  !

j rules and regulations promulgated thereunder, except that no representation is made by Entergy with respect to information supplied by Gulf States or its subsidiaries specifically for inclusion therein.

StcTION 3.9 Termirst No Piolation of Law. Entergy and its subsidiaries have all material permits, licenses, franchises and other governmental authorizations, consents and approvals (collectively, " Permits")

necessary to conduct their businesses as presently conducted, except where the failure to have such Permits does not hase an Entergy Material Adverse Effect. Except as set forth on Schedule 3.9 of the Entergy Disclosure Schedule hereto, Entergy has not received any written notification that it or any subsidiary is in violation of any such Permit, or any law, statute, order, rule, regulation, ordinance or judgment of any governmental or regulatory body or authority applicable to Entergy or its subsidianes except for notifications of violations which,in the aggregate, would not have an Entergy Material Adverse Efrect. Entergy and its subsidiaries are in compliance with all Permits, laws, statutes, orders, rules, regulations, ordinances, or judgments of any governmental or regulatory body or authority applicable to Entergy and its subsidiaries, except for violations which,in the aggregate, do not base an Entergy Material Adserse Effect.

' SrrrioN 3.10 Tases. Except as set forth on Schedule 3.10 of the Entergy Disclosure Schedule hereto -

or as to any failures to so file or pay that would not, individually or in the aggregate, bas e an Entergy Material Adverse Effect, Entergy and each ofits subsidiaries has (a) filed all material federal, state, local and foreign income and other tax returns or reports (including declara: ions of estimated tax) required to be filed by it.

(b) paid all taxes of any nature whatsoever (together with any related penalties and interest) (any of the foregoing being referred to herein as a " Tax"), that are shown on such Tax returns as due and payable on or i

before the date hereof, and (c) paid all Taxes otherwise required to be paid. Except as set forth on Schedule 3.10 of the Entergy Disclosure Schedule hereto, there are no claims or assessments pendmg against Entergy or any ofits subsidiaries for any alleged deficiency in Tax, and Entergy does not know of any threatened Tax claims or assessments against Entergy or any of its subsidiaries, which if upheld could base an Entergy Material Adverse Effect. Entergy has established adequate accruals for Taxes and for any hability for deferred

< -i Taxes in the Entergy Financial Statements in _accordance with generally accepted accounting principles  ;

provided, that accruals for deferred tax reserves have not been set up for certain book to-tax timing differences for which accruals are not required to be established in accordance with utility commission orders, rules and i

practices and that accruals for deferred taxes required under FAstl 96 and FAS11 109 have not been established, 48 v-,ew-s i-r- o- ww- v ---v--w w - a v-

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i Si c11oN 3.11 Employee Benefit Mant.' ER/SA. (a) Each " employee benefit plan," as dermed in Section 3(3) of the Employee Retirement income Security Act of 1974, as amended ("ERISA"), and each other i employee or director benefit or compensation plan, program or arrangement maintained by Entergy or any trade or business, whether or not incorporated (for purposes of this Section 3.11, an "Entergy Related

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j Person"), that together with Entergy would be deemed a single employer pursuant to Section 414(b), (c) or >

(m) of the Internal Revenue Code of 1986, as amended (the " Code") (the "Entergy Plans"), complies with J all applicable requi*ements oflaw, except where the failure to so comply would not have an Entergy hlaterial Adverse Etiect, and no " reportable event" or " prohibited transaction"(as such terms are defined in ERISA) l or termination has occurred with respect to any Entergy Plan under circumstances which present a risk of liabihty of Entergy and its subsidiarin to any governmental entity or other person, which liability would '

hase an Entergy Material Adverse Effect. The Entergy Plans are listed on Schedule 3.ll(a) of the Entergy Disclosure Schedule hereto and copies or descriptions of all of the Entergy Plans previous!y base been provided to Gulf States. r i

' (b) Each Entergy Plan intended to qualify under Section 401(a) of the Code is so qualilled and, escept as disclosed on Schedule 3.ll(b) of the Entergy Disclosure Schedule hereto, a determination letter has been '

.I

' issued by the Internal Revenue Service with respect to the qualification of each Entergy Plan and any related trust, and no circumstances exist which would adversely affect such qualification, except as would not have

-I an Entergy Material Adverse Effect. Except as disclosed on Schedule 3.ll(b) of the Entergy Disclosure

' Schedule hereto, no Entergy Plan wblch is subject to Part 3 of Subtitle 11 of Title I of ERISA or Section 412 L

of the Code has incurred any " accumulated funding deficiency"(as defined in Section 412 of the Code and t Section 302 of ERISA), whether or not waived Neither Entergy not any ofits subsidiaries has sought or receised a waiver ofits funding requirements with respect to any Entergy Plan. Since September 25,1980,  ;

' neither Entergy nor any ofits subsidiaries has contributed or been required to contribute to a "multiemployer plan," within the meaning of Section 3(37) of ERISA or a " multiple ernployer plan," within the meaning of Section 4063 of ERISA.

'(c) Except as disclosed on Schedule 3.ll(c) of the Entergy Disclosure Schedule hereto or in the Entergy SEC Reports, neither the execution or delivery of this Agreement, nor the consummation of the transactions '

contemplated hereby and by the Entergy Transaction Agreements (either alone or together with any additional or subsequent events), shall constitute an event under any Entergy Plan,' loan or other agreement that may result in any payment (whether of severance pay or otherwise), restriction or limitation upon the assets of any Entergy Plan, forgiveness of bdebtedness, acceleration of payment or funding, vesting, or ,

increase in benefits or compensation with respect to any current or former employee of Entergy or any ofits subsidiaries, except as would not have an Entergy Material Adverse Effect, (d) Except as required by applicable law or as set forth on Schedule 3.il(d) of the Entergy Disclosure ,

Schedule hereto, neither Entergy nor any of its subsidianes (i) provides any health, welfare or Efe insurance benefits to any of their former or retired employees, which benefits would be material either individually or in the aggregate to Entergy or (ii) has promised in oral or written form to provide any health, welfare or life insurance benefits to any of their employees individually or as a group upon their termination of employment or retirement, except for benefits which do not, individually or in the aggregate, hase an Entergy Material Adverse Ettect.

(c) Except as disclosed on Schedule 3.ll(c) of the Entergy Disclosure Schedule or in the Entergy SEC ..

Reports, ao payment or benefit which will or may be made by Entergy or any of its subsidiaries will be i characterized as an " excess parachute payment," within the meaning of Section 250G(b)(1) of the Codec (1) Full payment has been timely made of all amounts which Entergy and/or any ofits subsidiaries are required as of the date of this Agreement to have paid as a contribution to any Entergy Plan under applicable law, or the terms of such Entergy Plan or any collective bargaining agreement.

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(g) Neither Entergy, nor its subsidiaries, nor any Entergy Related Person has incurred, nor reasonably -

expects to incur, any liability in respect of any Entergy Plan under Section 4069 of ERISA which would hase an Entergy histerial Adverse Effect.

(h) Entergy and its subsidiaries have paid all premiums (and interest charges and penalties for late payment,if any) c'ue to the Pension llenefit Guaranty Corporation with rcspect to the Entergy Plans, except where the failure to pay would not have an Entergy hinterial Adverse Etrect. '

(i) Entergy and its subsidiaries are in compliance with all reporting and disclosure obligations under  ;

ERISA and the Code with respect to the Entergy Plans, including, without limitation, the requirements under Section 49801) of the Code with respect to employees coscred under any " group health plan" within the meaning of Section $000(b)(1) of the Code (the "COllRA" requirements), except where the failure to be in '

cornpliance does not,indisidually or in the aggregate, have an Eatergy hiaterial Adverse Effect.

St CTION 3.12 Opinion of Mnancia/ Adrisor. Entergy has received the opinion of Salomon litothers inc, dated the date hereof, to the effect that, as of the date hereof, the consideration to be paid pursuant to the provisions of this Agreement, the Entergy hierger Agreement and the Gulf States hierger Agreement for shares of Entergy Common Stock and Gulf States Common Stock (as dermed in Section 4.2)in the Mergers (the "hierger Consideration")is fair from a financial point of view to the shareholders of Entergy, and a copy of such opinion has been delivered to Gulf States.

St.cTioN 3.13 Enrimnmental Pmrection. (a) Except as previously disclosed in writing by Entergy, to

• the knowledge of Entergy no real property at any time owned, operated, used, or controlled by Entergy or its "

subsidiaries is currently listed on the National Priorities List or the Comprehensive Environmental Response, '

Compensation, and Liability Information System ("CERCLIS"), both promulgated under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (" CERCLA"), or on any comparable state hst, and neither Entergy nor its subsidiaries have received any written notification of potential or actualliability or a written request for information from any person or agency under or relating to CERCLA or any comparable state or local law.

(b) Except as previously disclosed in writing by Entergy, to the knowledge of Entergy. Entergy and its subsidiaries are and have been in compliance with all applicable Environmental Laws (as hereinafter defir.ed),

except where the failure to be in compliance would not have an Entergy hinterial Adverse Effect. Except as previously disclosed in writing by Entergy, Entergy and its subsidiaries have not received any communication from a gosernmental or regulatory authority or agency, employee (including a former employee) or citizen group that alleges that Entergy or any ofits subsidiaries is not in compliance with applicable Environmental Laws, except where the failure to be in compliance would not have an Entergy hiaterial Adserse Effect.

(c) Except as previously disclosed in writing by Entergy, there is no Environmental Claim (as ht reinafter defmed) pending or, to the knowledge of Entergy and its subsidiaries, threatened against Entergy or any of its subsidiaries or joint ventures or, to the knowledge of Entergy and its subsidiaries, any person or entity whose liability for any Environmental Claim Entergy or any ofits subsidiaries or joint s entures has retained or assumed either contractually or by operation of law (including by merger or consolidation) which, if adversely determined, individually or in the aggregate, would hase an Entergy h1aterial Adscrse Effect.

Except as previously dischised in writing by Entergy, no off4ite location at which Entergy has disposed or '

arranged for the disposal of any waste is listed on the National Priorities List, or on any comparable state list, and neither Entergy nor its subsidiaries have received, with respect to any offaite location, any written notification of potential or actual liability or a written request for information from any person or agency under or relating to CERCLA or any comparable state or local law.

(d)(i) Entergy has previously provided Gulf States with estimates made by or on behalf of Entergy of future costs of compliance with, and environmental cleanup and response under, Ensironmental Laws.

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f Except with respect to those matters previously described to Gulf States, the costs of compliance and i environmental cleanup and response under Environmental Laws. in the aggregate, are not reasonably expected to have an Entergy Material Adverse Effect.

t (ii) Except as previously disclosed in w riting by Entergy, there are no past or present actions, activities. I events, conditions or circumstances of any kind or type that would reasonably be expected to prevent i compliance by Entergy or its subsidiaries with Environmental Laws or require Entergy or its subsidiaries to incur costs of response or cleanup under Environmental Laws in the future, except for such noncomplian or costs of response or cleanup as in the aggregate will not have an Entergy Material Adverse Effect.

(iii) Without in any way limiting the generality of the foregoing,(w) to the knowledge of Entergy and its subsidiaries, all on site kications where Entergy or its subsidiaries have stored, disposed or arranged f the disposal of hazardous wastes (as defined under federal or state law), asbestos, waste oil, and batteries,i

' and all locations at w hich Entergy or its subsidiaries had a comtruction landfill (including any such landfill's yean of operation), hase been previously disclosed in bwritin6 y Entergy. (x) all underground storage tanks, and the capacity and contents of such tanks, located on property owned, operated or leased by Entergy or i subsidiaries have been previously disclosed in writing by Entergy, (y) except as previously disclosed in by Entergy, to the knowledge of Entergy and its subsidiaries there is no asbestos contained in or form i of any building, building component, structure or office space owned, operated or leased by Entergy or subsidiaries that is friable or in need of replacement or repair, where such replacement or repair would reasonably be expected to cost more than 5500.000 and (z) except as previously disclosed in writing b Entergy, no PClis base been or are stored for disposal except in compliance with all applicable laws or have been disposed of on property owned, operated or leased by Entergy or its subsidiaries.

(c) Entergy and its subsidiaries have, and are in substantial compliance with, all required permits, ,

authoritations and registrations relating to or used in connection with the operation of Entergy and its subsidiaries pursuant to applicable Environmental Laws.

(f) As used in this Section 3.13 and in Section 4.13:

(i) " Environmental Claim" means any and all administrative or judicial actions, suits, demands, demand letters, directives, claims, liens or notices of noncompliance or violation by any person or e alleging that potential liability to pay removal, response, remediation or cleanup costs, damages or penalties (including, without limitation, potential liability for investigating costs, clean up costs, governmental or other response costs, property damage, personal injuries or penalties) or to undertake compliance actions arises out of(a) the Release or threatened Release (as hereinafter dermed)into the -

environment of any llazardous Materials (as hereinafter dermed); or (b) circumstances forming the basis of an alleged violation of any Environmental Law; or (c) any and all claims by any third party seek-damages, contribution, indemnification, cost recovery, compensation or injunctive relief arising out o the Release or threatened Release of any liarardous Materials.

' -(ii) " Environmental Laws" means any and all federal, state and k) cal statutes and regulations relating to llazardous Materials or llazardous Materials waste management, pollution control, or imestigation and cleanup of flazardous Materials in the environment, including without limitation the Clean Air Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation, and Liability Act, the Atomic Energy Act, and state Environmental Laws, all as amended.

i-(iii) "flazardous Marcrials" means (a) any petroleum or petroleum products, radioactive materials, l asbestos in any form that is friable, and PCDs, PCD Articles, PCD article containers PCD containers, PCD contaminated electricalequipment, PCD equipment PCD items, PCD transformers, and PCD i wastes as defmed by applicable federal and state law (collectively, "PCDs"h and (b) any chemicalsi '

materials or substances which are now defined as or included in the dermition of" hazardous substances;

" hazardous wastes," "harardous materials," " extremely hazardous wastes," " restricted hazardous c D-Il '

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i wastes," " toxic substances," or " toxic pollutants" under any Environmental Lawt and (e) any other  :

chemical, material, substance or waste, discharge of which or exposure to which is prohibited, limited or l

regulated by any gosernmental authority in a jurisdiction in which Entergy or its subsidiaries operate i or, for purposes of Section 4.13, in which Gulf States or its subsidiaries operate.

(iv) " Release" means any release, spill, emission, leaking, injection, deposit, disposal, discharge, dispersal, leaching or migration into atmosphere, soil, surface water, ground water or property.

(v) " Knowledge" includes the knowledge, after due inquiry, of managers and supervisors with  ;

responsibility for operations and compliance with Environmental Laws. '

SECTION 3.14 Insurance. Except as set forth on Schedule 3.14 of the Entergy Disclosure Schedule hereto, each of Entergy and its subsidiaries is, and has been continuously since at least January 1,1986, insured with fmancially responsible insurers in such amounts and against such risks and losses as are customary for companies conducting the business as conducted by Entergy and its subsidiaries during such time period. Schedule 3.14 of the Entergy Disclosure Schedule hereto sets forth a description of the insurance policies or contracts currently maintained by Entergy or its subsidiaries (collectively, the "Entergy Insurance Policies"), including the name of the insurer, and the types of coverages. Except as set forth on Schedule 3.14 of the Entergy Disclosure Schedule hereto, neither Entergy nor its subsidiaries has received any notice of cancellation or termination with respect to any material Entergy Insurance Policy. The Entergy Insurance Policies are valid and enforceable policies.

St.crtos 3.15 Regulation as a Utility. Entergy is a public utility holding company registered under the llolding Company Act. Except as set forth on Schedule 3.15 of the Entergy Disclosure Schedule hereto, neither Entergy nor any ofits subsidiaries is subject to regulation as a poblic utility or public service company _

(or similar designation) by the United States, any State of the United States, any foreign country or any municipality or any political subdivision of the foregoing.

SterioN 3.16 Compliance with Agreements Except as set forth on Schedule 3.16 of the Entergy Disclosure Schedule hereto and except as disclosed in the Entergy SEC Reports, as of the date hereof, Entergy '

and its subsidiaries are not in breach or violation of or in default in the performance or observance of any term or provision of, and no event has occurred which, with lapse of time or action by a third party, would result in a default under, (i) the Articles of Incorporation or Dy laws or timilar governing documents of Entergy or its subsidiaries or (ii) any contract, commitment, agreement, indenture, mortgage, loan agreement, note, lease, bond, license, approval or other instrument to which Entergy or its subsidiaries is a party or by _

which any of them is bound or to which any of their property is subject, except for breaches, violations and defaults which, in the case of the foregoing clauses (i) and (ii), would not, in the aggregate, have an Entergy Material Adverse EtTect.

Socrtos 3.17 Vote Required. (a) The approval of a majority of the votes of the Entergy Common Stock outstanding and entitled to vote on the Reorganization is the only vote of the holders of any class or series of j

the capital stock of Entergy required to approve the Reorganisation.

- (b) The shareholders of Entergy are not entitled to appraisal rights under the 1:DCA as a result of the transactions contemplated by this Agreement.

SrcTioN 3.18 Additionc/ Representationt In the event - the Alternatine Reorganization -is to be consummated, Entergy will represent that it does not have any plan or intention to cause lloiding Company -

after the Effective Time to (a) liquidate either Gulf States or Entergy or merge or consolidate either Gulf States or Entergy.with and into any other corporation (including llolding Company), (b) sell, transfer or otherwise dispose of any of its shares of the stock of either Gulf States or Entergy except for transfers or B 12 r

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6 dispositions to corporations controlled by llolding Company (within the meaning of Section 368(c) of the Code) or (c) issue stock in exchange for the performance of services in excess of 20% of the shares of any class of Iloiding Company stock (collectively, the "Section 3.18 Actions"). Notwithstanding anything to the contrary contained in this Agreement, the failure of Entergy to provide the representation contemplated by Section 3.18 or to comply with the provisions of Section 6.13(d) solely because of the imposition by any governmental or regulatory body of any condition to its approval of the Alternative Reorganization which is inconsistent with such representation or compliance shall not be deemed a breach of this Agreement. If the condition in Section 7.2(d)is satisfied and the Mergers consummated and any representation made by E ,

to cause such condition to be satisfed is inconsistent with the agreements in the first Iwo sentences of Section '

6.13(b), actions by Entergy after the Effective Time which are consistent with the representations so given  ;

shall not be deemed a breach of this Agreement.

Stenow 3.19 Absence of Undisclosed Liabilities. Except as specifically contemplated by this Agreement or as set forth in Schedule 3.19 of the Entergy Disclosure Schedule hereto, neither Entergy nor its subsidiaries j has incurred liabilitie s or obligations of any kind, whether absolute, accrued, asserted or unasserted, contingent or otherwise, which would have been required to be disclosed on a balance sheet prepared in

' accordance with generally accepted accounting principles consistently applied, except liabilities, obligations or contingencies which are accrued or reserved against in the consolidated balance sheet of Entergy as of December 31, 1991 contained in the Annual Report on Form 10-K of Entergy for the fiscal year ended December 31,1991, o. reflected in the notes thereto or which were incurred after the date of such balance sheet in the ordinary course of business and consistent with the past practices.

5 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF GULF STATES Gulf States represer;ts and warrants to Entergy as fo!!ows:

4-SrcrioN 4.1 Organnation and Quahfcation. (a) Gulf States and each direct or indirect subsidiary of -

Gulf States is a corporation or partnership duly organized or formed, validly existing and in good standin ,

under the laws of thejurisdiction ofits incorporation or formation and has the requisite power and authorit to own, lease and operate its assets and properties it now owns, leases and operates and to carry on its busine as it is now being conducted, except where the failure to have such power and authority would not individually or in th e aFgregate have a Gulf States Material Adverse Effect (as defined below). Gulf States and each ofits subsidiaries is qualified or licensed to do business and is in good standing in each jurisdiction in which the properties owned, leased or operated by it or the nature of the businesses conducted by it ma such qualification or licensing necessary, except where the failure to be so_ qualified or licensed and in g standing will not when taken together with all other such failures, have a Gulf States Material Adverse Effect.

For the purpose of this Agreement, a_" Gulf States Material Adverse Effect" shall mean a material adverse effect on the business, operations, properties, assets, condition (financial or other) or results of operations o Gulf States and its subsidiaries taken as a whole;provided, however, that a Gulf States Material Adverse Effe shall not include (i) any General Changes, (ii) the transactions contemplated by the Settlement ' Agre between Gulf States Utilities Company, Alabama Power Company, Georgia Power Company, Gulf Power .

Company, Mississippi Power Company and Southern Company Services, Inc., dated December 21,199

" Southern Company Settlement") which was consummated on November 7,1991, (iii) the compro settlement, adjudication or other resolution of any pending FERC proceedings between Cajun Electric Coorcrative, Inc. (the " Cajun Cooperative") and Gulf States and the suit filed by the Cajun Cooperat Jefferson Davis Electric Cooperative Inc. in' the United States District Court for the Western' District of Louisiaha, Lake Charles Division (Docket No. 89 2294) and any appeals or remands related suits or proceedings, (iv) any write-offs or write downs, or reserves therefor, or agreements or un ibl3 4 . -

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4 to take write offs or write-downs, or reser3es therefor (collectisely " Write Downs") w hich (A) do not reduce Gulf States' regulatory rate base as in effect from time to time and (11) do not reduce the book value of Gulf States' Louisiana deregulated asset plan; provided, that, notwithstanding (A) and (D) above, any Write Down or similar charge resulting from resolution of the GTE deferred tax issue or the El Paso expense issue as previously described to Entergy or the appeal of the deferred revenue requirement not included in rates in Louisiana Phase 2 case shall not be included in determining Gulf States Material Adscrse Effect. (v) any changes in rates or any rate cases or proceedings and rel,aed appeals or remands which result from the repurchase, refinancing or retirement of debt or equity securities of Gulf States prior to the date of this Agreement or prior to the Closing, (vi) the compromise, settlement, adjudication or other resolution of any rate cases or proceedings previously desenbed in writing by Gulf States to Entergy but only to the extent desenbed in such wnHng, (vii)(A) the compromise, settlement, adjudication or other resolution against Gulf States of the Cajun Litigation (as dermed in Section 8.l(i)) and (D) any judicial rulings, discoscries of facts or circumstances, changes in status or other developments after the date hereof with respect to the Cajun Litigation, or (viii) the suspension of dividend or sinking fund payments with respect to any of Gulf States * -

capital stock by reason of the occurrence of any of the events set forth in clauses (i) through (vii) above, With respect to the compromise, settlement, adjudication or resolution of any claims, actions or proceedings against Gud States or its subsidiaries, the term " Net Cost" shall mean the cost to Gulf States of such settlement or other resolution (including teasonable expenses (including reasor,able attorneys' fees)) and after taxes and net of insurar.cc and any property or property or contract rights receised or receivable by I

Gulf States pursuant to such settlement or resolution and any recovery through rates reflected in an order of I

a regulatory body applicable to Gulf States which has become final (even if subject to appeal) in cash, property, services or exchange in kind (valued at fair market value). If Gulf States and Entergy do not agree as to the Net Cost of any compromise, settlement, adjudication or other resolution of any action, suit or proceeding against Gulf States or any of its subsidiaries, the issue shall be submitted to an arbitrator ,

determined by mutual agreement between Gulf States and Entergy, or if Gulf States and Entergy are unable to agree, to an arbitrator selected by the American Arbitration Association, for resolution in accordance with i the rules of the American Arbitration Association and the decision of the arbitrator shall be final and binding; provided, that such arbitrator shall not make any determination as to any recovery through rates if an order of a regulatory body applicable to Gulf States has not been issued and become final; and, provided further, that with respect to a final order issued, such arbitrator shall only resche questions of interpretation of the order and shall not resche or determine the effect of any possible appeal, remand or modification thereof.

(b) True, accurate and complete copies of the Articles of Incorporation and Dy-laws of Gulf States and each of Gulf States' corporate subsidiaries, as in effect on the date hereof, have heretofore been delivered to Entergy.

StrtioN 4.2 Capitalization. (a) The authorired capital stock of Gulf States consists of 200,000,000 -

shares of Common Stock, without par value (the " Gulf States Common Stock"),6,000,000 shares of Preferred Stock, $100 par value (the " Gulf States $100 Preferred Stock"), 10,000,000 shares of Preferred Stock, without par value (the " Gulf States No Par Value Preferred Stock" and, together with the Gulf States $100 Preferred Stock, the " Gulf States Preferred Stock") and 20,000,000 shares of Preference Stock, without par value (the

" Gulf States Preference Stoek"). As of the date of this Agreement, 114.0$5,065 shares of Gulf States Common Stock, and as of March 31,1992 such number of shares of Gulf States 5100 Preferred Stock and Gulf States -

Preference Stock set forth on Schedule 4.2(a), and no shares of Gulf States No Par Value Preferred Stock were issued and outstanding. All of the issued and outstanding shares of Gulf States Common Stock, Gulf States $100 Preferred Stock and Gulf States Preference Stock are validly issued and are fully paid, .

nonassessable and free of preemptis rights.

(b) Except as set forth on Schedule 4.2(b) of_ Gulf States' Disclosure Schedule (the " Gulf States Disclosure Schedule") hereto, as of the date hereof, there are no outstanding subscriptions, options, calls, contincts, commitments, understandings, restrictions, arrangements, rights or warrants, includmg any right D 14

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_ __ _. -_ - _ . _ _ _ _. _ __~ _ __ _ _ - - - _ __ _ _

of conversion or exchange under any outstanding security, instrument or other agreement obligating Gulf r

States or any subsidiary o Gulf States to issue, deliver or sell, or cause to be issued, delivered or sold,

i additional shares of the capital stock of Gulf States or obligating Gulf States or any subsidiary of Gulf States j to grant, estend or enter into any such agrectnent or commitment, except for Gulf States' Dividend Reinsestment Plan, Thnft Plan, and Stock Ownership Plan. Except as set forth on Schedule 4.2(b) of the i

Gulf States Disclosure Schedule hereto, there are no voting trusts, proxies or other aFreements or understandings to which Gulf States or any subsidiary of Gulf States is a party or is bound with respect to

, the voting of any shares of capital stock of Gulf States.

St.cTtoN 4.3 Subsidiaries. Escept as set forth on Schedule 4.3 of the Gulf States Disclosure Schedule hereto, all subsidiaries of Gulf States are set forth on Exhibit 22 to Gulf States' Annual Report on Fcrm 10 K for the facal year ended December 31,1991. Execpt as set forth on Schedule 4.3 of the Gulf States Disclosure Schedule hereto, all of the outstanding shares of capital stock of each corporate subsidiary are validly issued, fully paid, nonassessable and free of preemptive rights, and th: outstanding shares of capital stock and partnership or other ownership interests in each subsidiary owned directly or indirectly by Gulf States are owned free and clear of any liens, claims, encumbrances, security interests, equities, charges and options of any nature whatsoever. Except as set forth on Schedule 4.3 of the Gulf States Disclosure Schedule hereto, Gulf States owns directly or indirectly all of the issued and outstanding shares of the capital stock and pannership or other ownership interests in each ofits subsidiaries. Except as set forth on Schedule 4.3 of the Gulf States Disclosure Schedule hereto, there are no subscriptions, optiore, warrants, rights, calls, contracts, voting trusts, proxies or other commitments, understandings, restrictions or arrangements relating to the issuance, sale, voting, transfer, ownership or other rights affecting any shares of capital stock or partnership

' or other ownership interests in any subsidiary of Gulf States, including any right of conversion or eschange under any outstanding security, instrument or agreement. Prior to the date hereof, Gulf States has delivered -

to Entergy a list of all material corporations, partnerships, joint ventures and other business entities in which - '

Gulf States or any of its subsidiaries directly or indirectly owns an interest and Gulf States' and such subsidiaries' direct and indirect share, partnership or other ownership interest in each such entity. Except as set forth on Schedule 4.3 of the Gulf States Disclosure Schedule hereto, no entity in which Gulf States owns, directly or indirectly, an ownership interest is a "public utility company," and no such entity is a " holding company," a " subsidiary company" or an " affiliate" of any public utility company within the meaning of Section 2(a)($),2(a)(7),2(a)(8) or 2(a)(ll) of the liolding Company Act.

SirrtoN 4.4 Authority; Non Contravention; Approvals. (a) Gulf States has full corporate power and authority to enter into this Agreement and the Gulf States hierger Agreement and, subject to the Gulf States Shareholders' Approval (as defined in Section 6.4), to consummate the transactions contemplated hereby and thereby, other than the hiergers which are also subject to the Gulf States Required Statutory Approvals (as defined below). The execution and delivery of this Agreement and the Gulf States hierger Agreement and the consummation by Gulf States of the transactions contemplated hereby and thereby have been duly authorized by Gulf States' Iloard of Directors and no other corporate proceedings on the part of Gulf States are necessary to authorize the execution and delivery of this Agreement and the Gulf States hierger Agreement and the consummation by Gulf States of the transactions contemplated hereby arid thereby, except for the Gulf States Shareholders' Approval. This Agreement has been, and the Gulf States hierger Agreement will be, duly and validly executed and delivered by Gulf States and, assuming that this Agreement constitutes, and the Gulf States hierger Agreement will constitute, a validn and bi ding agicement of Entergy and IIolding Company, as the case may be, subject to the receipt of Gulf States Required Statutory Approvals, this Agreement constitutes, and the Gulf States hierger Agreement will constitute, a valid and binding Lgreement of Gulf States enforceable against Gulf States in accordance with its terms, except that such enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other similar law s affecting or relating to enforcement of creditors' rights generally or general principles of equity.

(b) Except as set forth on Schedule 4.4(b) of the Gulf States Disclosure Schedule hereto and other than the Gulf States Required Statutory Approvals, the execution and delisery of this Agreement by Gulf States 13 15

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does not, and the execution and dehsery of the Gulf States Merger Agreemert and the consummation by Gulf States of the transactions contemplated hereby and thereby will not, violate, conflict with or result in a breach of any provision of, or constitute a default for any esent which, with nctice or lapse of tir,'e or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or umleration under, or result in the creatior. of any lien, security interest, charge or encumbrance upon any of the properties or assets of Gulf States or any ofits subsidiaries under,

' any of the terms, conditions or prosisions of (i) subject to the receipt of the Gulf States Shareholders' Approval, the Articles of Incorporation or Ily laws of Gulf States or any ofits subsidiaries,(ii) subject to the receipt of the Gulf States Shareholders' Approval, any statute, law, ordinance, rule, regulation, judgment, decree, order, injunction, writ, franchise, permit or license of any court, fede al, state or local gosernmental authority or municipality applicable to Gulf States or any of its subsidiaries or any of their respective properties or assets, or (iii) any note, bond, mortgage, indenture, deed of Irust, license, franchise, permit, concession, contract, lease or other instrument, obligation or agretment of a1y Lind to which Gulf States or any ofits subsidiaries is now a party or by w hich Gulf States or any ofits subs. diaries or any of their respective properties or assets may be bound or affected, excludmg from the foregoing clauses (ii) and (iii) such i

violations, conflicts, breaches, defaults, terrninations, accelerations or creations of liens, security interests, charges or encumbrances that would not, in the aFgregate, have a Gulf States Material Adverse Effect or materially adversely affect the ability of Gulf States to consummate the transactions ,ontemplated hereby and by the Gulf States Merger Agreement.

(c) Except as set forth on Schedule 4.4(b) of the Gulf States Disclosure Schedule above and except for  ;

4 (i) any required approvals under the Federal Power Act,(ii)(A) notice by Gulf States to and an order by the i PUCT to the effect that the transactions contemplated under this Agreement are in the public interest and  !

(13) the approval, if required, of municipalities or othet local governmental bodies in the State of Texas, in the case of each of(A) and (11), pursuant to the PURAT,(iii) the approval of the LPSC,(iv) the approval,if required, of the NRC pursuant to the Atomic Energy Act,(v) the approval,if required, of the SEC pursuant to the llolding Company Act,(vi) the filing of the Joint Proxy Statement / Prospectus with the SEC pursuant to the lloiding Company Act and Exchange Act (vii) the filings by Gulf States and Entergy required by Title 11 of the llSR Act,(sili) the filing of the Registration Statement with the SEC pursuant to the Securities Act and the declaration of the effectiseness thereof by the SEC and filings with the various blue sky authorities pursuant to applicable state securities laws,(ix) the filings required pursuant to Article I and Article 11 hereof in connection with the organization ofIloiding Company and the Merger Subsidiaries,(x) the filing of articles of merger with the Secretary of State of Texas in accordance with the Texas Business Corporation Act '

' ("TilCA") in connection with the Gulf States Merger and (xi) the filing by or on behalf of the lloiding Company of a ratice of registration and a registration statement with the SEC under the llolding Company Act (the filings and approvals referred to in clauses (i) through (vi) are collectisely referred to as the " Gulf States Required Regulatory Approvals" and the filings and approvals referred to in clauses (i) through (xi)  ;

are collectively referred to as th; " Gulf States Required Statutory Approvals"), no declaration, filing or registration with, or notice to, or authorization, consent or approval of any governmental or regulatory body or authority is necessary for the consummation by Gulf States of the transactions contemplated hereby and by the Gulf States Merger Agreement, other than such filings, registrations, authorizations, consents or approvals which, if not obtained or made, will not, in the aggregate, ha$e a Gulf States Material Adverse Effect or materially adversely affect the ability of Gulf States to consummate the transactions contemplated hereby and by the Gulf States Merger Agreement.

SrrrioN 4.5 Rc; orts and FinancialStatements. Since December 31,1988, Gulf States and each ofits subsidiaries required to make filings under the Securities Act, the Exchange Act, the PURAT, the applicable provisions of the constitution and statutes of the State of Louisiana and orders of the LPSC (the " Louisiana Statutes"), the Atomic Energy Act, the Federal Power Act or the lloiding Company Act hase filed with the SEC, the PUCT, the LPSC, the NRC or the FERC, as the case may be, alHaterial forms, statements, reports and documents (including all exhibits, amendments and supplements thereto) required to be filed by them under each of the Securities Act, the Exchange Act, the PURAT, the Louisiana Statutes, the Atomic Energy B 16

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Act, the Federal Power Act and the llolding Company Act and the respective rules and regulations

' thereunder, all of which complied in all material respects with all applicable requirements af the appropriate act and the rules and regulations thereunder in effect on the date such report was filed. Gulf States has previously delivered to Entergy copies of each report, schedule, registration statement and ermitive proxy statement fded by Gulf States or nny ofits subsidiaries with the SEC since December 31,1988 pursuant to s the Securities Act or the Exchange Act (collectively, the " Gulf States SEC Reports"). As of their respective dates, the Gulf States 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 rnisleading. The audited consolidated fmancial statements and unaudited consolidated interim financial statements of Gulf States included in such reports (the " Gulf States Financial Statements") have been prepared in accordance with generally accepted accounting principles applied on a consistent basis (except as may be indicated therein or in the notes thereto) and fairly present the fmancial position of Gulf States and its subsidiaries as of the dates thereof and the results of their operations and changes in fmancial position for the periods then ended, subject,in the case of the unaudited consolidated interim financial statements, to normal year-end audit adjustments and any other adjustments desenbed therein.

StcIION 4.6. AhJence of Certain Changes or Erents. Except as set forth on Schedule 4.6 of the Gulf States Disclosure Schedule hereto or as set forth in the Gulf States SEC Reports, since December 31,1991, Gulf States has operated its businesses in the ordinary course consistent with past practice and there has not '

3 been any Gulf States Material Adverse Effect nor any development that would result in a Gulf States Material Adverse Effect.

o 1.

l StenoN 4.7 Litigation. Except as set forth on Schedule 4.7 of the Gulf States Disclosure Schedule hereto or in the Gulf States SEC Reports, there are no claims, suits, actions or proceedings pending or, to the knowledge of Gulf States, threatened, nor, to the best knowledge of Gulf States, are there any investigations or reviews pending or threatened, against, relating to or afTecting Gulf States or any ofits subsidiaries, which, if adversely determined, would have a Gulf States Material Adverse Effect. Except as conteraplated by the Gulf States Required Statutory Approvals or as set forth on Schedule 4.7 of the Gulf States Disclosure Schedule hereto or in the Gulf States SEC Reports, neither Gulf States nor any ofits subsidiaries is subject to any judgment, decree, injunction, ruie or order (other than rate orders and rate proceedings) of any court,__

governmental department, commission, agency, instrumentality or authority or any arbitrator which would hase a Gulf States Material Adverse Effect.

Stenos 4.8 Registration Statement and Proxy Statcment. None of the information to be supplied by Gulf States or its subsidiaries for inclusion in (a) the Registration Statement or (b) the Proxy Statement will, in the case of the Proxy Statement or any amendments thereof or supplements thereto, at the time of the mailing of the Proxy Statement and any amendments or supplements thereto, and at the time of the meetings of shareholders of Gulf States and Entergy to be held in connection with the transactions contemplated by this Agreement and the Transaction Agreements or,in the case of the Registration Statement as amended or -

supplemented, at the time it is filed or becomes effective 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 w hich they are made, not misleading. The. Registration Statement and the Joint Proxy Statement / Prospectus will comply as to form in all material respects with all applicable laws, including the provisions of the Securities Act, the Exchange Act and the lloiding Company Act_ and

~

the applicable rules and regulations promulgated thereunder, except that no representation is made by Gulf States with respect to informstion supplied by Entergy or its subsidiaries specifically for inclusion therein.

SrcnoN 4.9 Permits: No Violation of Lam Gulf States and its subsidiaries have all Permits necessary to conduct their businesses as presently conducted, except where the failure to have such Permits does not have a Gulf Staten Material Adserse Effect. Except as set forth on Schedule 4.9 of the Gulf States Disclosure Schedule hereto, Gulf States has not received any written notification that it or any subsidiary is in violation 4

11 17

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i 1

of any such Permit, or any law, statute, order, rule, regulation, ordinance or judgment of any gosernmental or regulatory body or authority applicable to Gulf States and its subsidiaries, except for notifications of violations which would not, in the aggregate, base a Gulf States Material Adverse Effect. Gulf States and its l

subsidiaries are in compliance with all Permits, laws, statutes, orders, rules, regulations, ordinances, or judgments of any gosernmental or regulatory body or authority applicable to Gulf States and its subsidiaries ,

except for violations which, in the aggregate, do not have a Gulf States Material Adverse Effect.

StcTioN 4.10 Ta.tes. Except as set forth on Schedule 4.10 of the Gulf States Disclosure Schedule hereto or as to any failures to so 61e or pay that would not, individually or in the aggregate, base a Gulf States Material Adverse Effect, Gulf States and each ofits subsidiaries has (a) filed all material federal, state, local and foreign income and other Tax returns or reports (including declarations of estimated Tax) required to be filed by it,(b) paid all Taxes that are shown on such Tax returns as due and payable on or before the date hereof, and (c) paid all Taxes otherwise required to be paid. Except as set forth on Schedule 4.10 of the Gulf States Discle Schedule hereto, there are no claims or adessments pending against Gulf States or any of its subsidiaries nor any alleged deficiency in Tax, and Gulf States does not know of any threatened Tax claims or assessments against Gulf States or any ofits subsidiaries, which if upheld could have a Gulf States Material Adscrse EITect. Gulf States has established adequate accruals for Taxes and for any liability for deferred Taxes in the Gulf States Financial Stateme"ts in accordance with generally accepted accountinB principles, pro that accruals for deferred tax reserves have not been set up for certain book.to. tax timing differences for which accruals are not required to be established in accordance with utility commission orders, rules and practices and that accruals for deferred taxes required under FASLI 96 and FASil 109 have not been established.

StrTION 4.11 Employce Benefit Plans! ER/S4 (a) Each " employee benefit plan," as defined in Section 3(3) of ERISA, and each other employee or director benefit or compensation plan, program or arrangemen maintained by Gulf States or any trade or business, whether or not incorporated (for purposes of this Section 4.11, a " Gulf States Related Person"), that together with Gulf States wonid be deemed a single emplo pursuant to Sections 414(b), (c) or (m) of the Code (the " Gulf States Plans") complies with all applicable requirements oflaw, except where the failure to so cornply would not have a Gulf States Material Adverse Effect, and no " reportable esent" or " prohibited transaction" (as such terms arc defined in ERISA) or termination has occurred with respect to any Gulf States Plan under circumstances which present a risk of liability of Gulf States and its subsidiaries to any governmental entity or other person, which liability would have a Gulf States Material Adverse Effect. The Gulf States Plans are listed on Schedule 4.ll(

States Disclosure Schedule hereto and copies or descriptions of all of the Gulf States Plans previously hase been provided to Entergy.

(b) Each Gulf States Plan intended to qualify under Section 40)(a) of the Code is so qualified and, excep as disclosed on Schedule 4.ll(b) of the Gulf States Disclosure Schedule hereto, a determination letter has been issued by the Internal Revenue Service with respect to the qualification of each Gulf States Plan and any related trus', and no circumstances exist which woulJ adversely affect such qualification, except as would not have a Gulf States Material Adverse Effect. Except as disclosed on Schedule 4.ll(b) of the Gulf States Disclosure Schedule hereto, no Gulf States Plan which is subject to Part 3 of Subtitle 11 of Title I of ERISA or Section 412 of the Code has incurred any " accumulated funding deficiency"(as defined in Section 412 of the Code and Section 302 of ERISA), whether or not waived. Neither Gulf States nor any ofits subsidiaries has sought or receised a waiser of its funding requirements with respect to any Gulf States Plan. Since September 25, 1980, neither Gulf States nor any of its subsidiaries has contributed or been required to contribute to a "multiemployer plan," within the meaning of Section 3(37) of ERISA or a " multiple employe plan," within the meaning of Section 4063 of ERISA.

(c) Except as disclosed on Schedule 4.ll(c) of the Gulf States Disclosure Schedule hereto or in the Gulf States SEC Reports, neither the execution or deinery of this Agreement, nor the consummation of the transactions contemplated hereby and by the Gulf States Merger Agreement (either alone or together with any additional subsequent eventsh shall mnstitute an esent under any Gulf States Plan, loan or other agreement that may result in any payment (whether of severance pay or otherwise), restnetion or limitation 11- 1 8

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vesting, or increase in benefits or compensation with respect to any current or former employee of Gulf States or any ofits subsidiaries, except as would not have a Gulf States Material Adverse Effect.

(d) Except as required by applicable law or as set forth on Schedule 4.ll(d) of the Gulf States Disclosure  ;

Schedule hereto, neither Gulf States not any ofits subsidiaries (i) provides any health, welfare or life insurance benefits to any of their former or retired employees, which benefits would be material either individually or in the aggregate to Gulf States or (ii) has promised in oral or written form to provide any health, welfare or - . ,

life insurance benefits to any of their employees individually or as a group upon their termination of

' employment or retirement, except for benefits which do not, individually or in the aggregate, have a Gulf .

States Material Adverse Effect.

(e) Except as disclosed on Schedule 4 ll(e) of the Gulf States Disclosure Schedule hereto or in the Gulf '

States SEC Reports, no payment or benefit which will or inay be made by Gulf States or any ofits subsidiaries  ;

will be characterized as an " excess parachute payment " within the meaning of Section 280G(b)(1) of the Code.

6 (f) Full payment has been timely made of all amounts which Gulf States and/or any ofits subsidiaries are required as of the date of this Agreement to have paid as a contribution to any Gulf States Plan under applicable law, or the terms of such Gulf States Plan or any collective bargaining agreement.

(g) Neither Gulf States, nor its subsidiaries, nor any Related Perr.on has incurred, nor reasonably expects to incur, any liability in respect of any Gulf States Plan under Section 4069 of ERISA which would have a Gulf States Material Adverse Effect.

(h) Gulf States and its subsidiaries have paid all premiums (and interest charges and penalties for late ,

payment, if any) due to the Pension Denefit Guaranty Corporation with respect to the Gulf States Plans, except where the failure to pay would not have a Gulf States Material Adverse Effect.

(i) Gulf States and its subsidiaries are in compliance with all reporting and disclosure obligations under ERISA and the Code with respect to the Gulf States Plans, including, without limitation, the CODRA requirements, except where the failure to be in compliance does not, individually or in the aggregate, have a Gulf States Material Adverse Effect.

SocitoN 4.12 Opinion offinanelal Advisor Gulf States has received the opinion of Goldman, Sachs & ,

Co., dated the date hereof, to the effect that, as of the date hereof, the Merger Consideration is fair from a

, fmancial point of view to the holders of Gulf States Common Stock and a copy of such opinion has been delivered to Entergy, SECTION 4.13 Environmentaltrorcetion. (a) Except as previously disclosed in writing by Gulf States, to the knowledge of Gulf States no real property at any time owned, operated, used, or controlled by Gulf States or its subsidiaries is currently listed on the National Priorities List or CERCLIS, both promulgated under CERCLA, or on any comparable state list, and neither Gulf States nor its subsidiaries have received any written notification of potential or actual liability or a. written request for information from any person or agency under or relating to CERCLA or any comparable state or local law.

~ (b) Except as previously disclosed in writing by Gulf States lto the knodledge of Gulf States Gulf States and its subsidiaries are and have been in compliance with all applicable Environmental Laws, except where the failure to be in compliance would not have a Gulf States Material Adverse Effect. Except as previously -

disclosed in writing by Gulf States, Gulf States and its subsidiaries have not received any communication from a governmental or regulatory authority or agency, employee (including a former employec) or citizen group that alleges tbst Gulf States or 'any of its subsidiaries is not in compliance withiapplicable ' ,

Environmental Laws, except where the failure to be in compliance would not have a Gulf States Material Adverse Effect.-

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i (c) Except as previously disclosed in writing by Gulf States, there is no Environmental Claim pending or, to the knowledge of Gulf States and its subsidiaries, threatened against Gulf States or any ofits subsidiaries or joint ventures or, to the knowledge of Gulf States and its subsidiaries. any person or entity whose liability for any Environmental Claim Gulf States or its subsidiaries orjoint ventures has retained or assumed either contractually or by operation of law (including by merger or consolidation) which, if adversely determined, individually or in the aggregate would have a Gulf States Material Adverse Effect. Except as previously 4 disclosed in writing by Gulf States, no oft site location at w hich Gulf States has disposed or arranged for the disposal of any waste is listed on the National Priorities List, or on any comparable state list, and neither Gulf States nor its subsidiaries have received, with respect to any c.T site location, any written notification of potential or actual liability or a written request for infortration from any person or agency under or relating to CERCLA or any comparable etate or local law.

L (d)(i) Gulf States has previously provided Entergy with estimates made by or on behalf of Gulf States of future costs of compliance with, and environmental cleanup and response under, Environmental Laws.

Except with respect to those matters previously desenbed to Entergy, the costs of compliance and environmental cleanup and response under Environmental Laws, in the aggregate, are not reasonably expected to base a Gulf States Material Adverse Ettect.

(ii) Except as previously disclosed in writing by Gulf States, there are no past or present actions, activities, esents, conditions or circumstances of any kind or type that would reasonably be fxpected to prevent compliance by Gulf States or its subsidiaries with Environmental Laws or require Gulf States or its subsidiaries to incur costs of response or cleanup under Environmental Laws in the future, except for such noncornpliance or costs of response or cleanup as in the aggregate will not have a Gulf States Material-Adverse Effect.

(iii) Without in any way limiting the generality of the foregoing, (w) to the knowled Ee of Gulf States and its subsidiaries, all on site locations w here Gulf States or its subsidiaries have stored, disposed or arranged for the disposal of harardous wastes (as defined under federal or state law), asbestos, waste oil, and batteries, and all locations at which Gulf States or its subsidiaries had a construction landfdl (including any such i landfill's years of operation), have been previously disclosed in writing by Gulf States, (x) all underground storage tanks, and the capacity and contents of such tanks, located on property owned, operated or leased by Gulf States or its subsidiaries have been previously disclosed in writing by Gulf States,(y) except as pesiously '

disclosed in writing by Gulf States, to the knowledge of Gulf States and its subsidiaries there is no asbestos contained in or forming part of any building, building component, structure or office space owned, operated or leased by Gulf States or its subsidiaries tha* is friable or in need of replacement or repair, where such replacement or repair would reasonably be expected to cost more than $500,000, und (z) except as previously disclosed in writing by Gulf States, no PCDs have been or are stored for disposal except in compliance with all applicable laws or have been disposed of on property owned, operated or leased by Gulf States or its.

subsidiaries. ,

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(e) Gulf States and its subsidories have, and are in substantial compliance with, all required permits, authorizations and registrations relating to.or used in connection with the operation of Gulf States and its subsidiaries pursuant to applicable Environmental 1.aws.

Stritos 4.14 Inamnce. Except as set forth on Schedule 4.14 of the Gulf States Disclosure Schedule hereto, each of Gulf States and its subsidiaries is, and has been continuously since at least January 1,1986, insured with financially responsible insurers in such amounts and against such risks and losses u are customary for companies conducting the business conducted by Gulf States and its subsidiaries during such time period Schedule 4.14 of the Gulf States Disclosure Schedule hereto sets forth a description ofinsurance policies or contracts currently maintained by Gulf States or its subsidiaries (collectisely, the " Gulf States insurance Policies"), including the name of the insurer and the types of coserages: Except as set fo<th on t Schedule 4.14 of the Gulf States Disclosure Schedule hereto, neither Gulf States nor its subsidiaries hase '

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'Ihe Gulf States insurance Policies are valid and enforceable policies.

StuloN 4.15 Regulation as a Utilliy, Gulf States operates and is regulated as a public utility only in the States of Texas and Louisiana. Except as set forth on Schedule 4,15 of the Gulf States Disclosure Schedule '

heteto, neither Gulf States nor any ofits subsidiaries is subject Io regulation as a public utility or public service company (or similar designation) by the United States, any State of the United States or any foreign country !

or any municipality or any political subdivision of the foregoing.

i SCTras 4.16 Compliance with Agreements. Except as set forth on Schedule 4.16 of the Gulf States Disclosure Schedule hereto and except as disclosed in the Gulf States SEC Reports, as of the date hereof, Gulf States and its subsidianes are not in breach or violation of or in default in the performance or obs,ervance '

of any term or provision of, and no event has occurred which, with lapse of time or action by a third party, would result in a default under,(i) the Articles of incorporation or fly laws or similar governing documents of Gulf States or its subsidiaries or (ii) any contract, commitment, agreement, indenture, mortgage, loan agreement, note, lease, bond, license, approval or other instrument to w hich Gulf States or its subsidiaries is a party or by which any of them is bound or to which any of their property is subject, except fo* breaches, violations or defauhs which, in the case of the foregoing clauses (i) and (ii) would not,in the aggregate, have a Gulf States Material Adverse Effect.

9 SLcTioN 4.17 Voir Required. (a) The approval of two thirds of the votes of tLe Gulf States Common ,

Stock outstanding and entitled to vote on the Reorganization is the only vote of the holders of any class or t series of the capital stock of Gulf States required to approve the Reorganization.

(b) The shareholders of Gulf States are not entitled to appraisal rights under the TilCA as a resuh of the transactions contemplated by this Agreement.

Sin 10N 4.18 Ahsence of Undisclosed Llobilitics. Except as specifically contemplated by this Agreement or as set forth on Schedule 4.18 of the Gulf States Disclosure Schedule hereto, neither Gulf States not its .

subsidiaries has incurred liabilities or obligations of any kind, whether absolute, accrued, asserted or unasserted, contingent or otherwise, which would have been required to be disclosed on a balance sheet prepared in accordance with generally accepted accounting principles consistently applied, except liabilities. .;

obligations or contingencies which are accrued or reserved against in the consolidated balance sheet of Gulf States as of December 31,1991 contained in the Annual Report on Form 10-K of Gulf States as of December 31,1991, or reflected in the notes thereto or which were incurred after the date of such balance sheet in the ordinary course of business and consistent with past practices.

ARTICLE V CONDUCT OF llUSINESS PENDING Tile MERGER Stc11oN 5.1 Conduct of Business by Gulf States. Except as set forth on Schedule A hereto or as -

otherwise contemplated by this Agreement (including, without limitation, the provf 7 to this Section and Section 5.2), after the date hereof and prior to the Effective Time or earlier termination of this Agreem unless Entergy shall otherwise consent in writing (which consent shall not unreasonably be withheld), G States shall, and shall cause each ofits subsidiaries to:

(a) conduct their respective businesses in the ordinary and usual course of business in a manner consistent with past practice and sound utility practice and in which an independent public comp wou'd conduct its business and operations; ,

q(b) usertheir reasonable best efforts to preserve intact their respectise business organizations and .

goodwill, keep available the services of their respective present officers and key employees, and preserv

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the goodwill and business relationships with suppliers, distributors, customers, and others having '

business relationships with them; (c) maintain with fmancially responsible insurance companies insurance in such amounts and -

agairst such risks and losses as are customary for companies engaged in the electrie utility industry and employing methods of generating electric power and fuel sources similar to those rnethods employed

• and fuels used by Gulf States:

(d) use all reasonab4 efforts to maintain in effect all existing Permits pursuant to which Gulf States and its subsidiaries operate in their service terntories: .

(c) not arnend or propose to amend their respective Articles of Incorporation or Dy laws (except I with respect to the amendment of Dy laws to reflect the routine retirement of, or change in, the number of directors, consistent with past practice);

j (f) not declare, set aside or pay any dividend or distribution payable in cash, stock, property or otherwise except for (A) the required per share quarterly dividend and required or optional sinking fund payment on each series of Gulf States Preferred Stock, Gulf States Preference Stock and any class or i series of capital stock (other than common stock) issued by Gulf States as permitted pursuant to this Artiste V and the payment of any arrears thereon,(D) the payment of all sinking fund obligations as due on Gulf States Preferred Stock, Gulf States Preference Stock and any class or series of capital stock (other than common stock) issued by Gulf States as permitted pursuant to this Artic!c V. (C) the payment of dividends or distributions by wholly owned subsidiaries of Gulf States solely to Gulf States or another wholly owned subsidiary of Gulf States av.d (D) the declaration and payment of regular quarterly cash dividends on Gulf States Common Stock not to exceed the following: (i) before January 1, 1994, 50 % of net income available to Gulf States Common Stock (excluding non recurring items);

and (ii) after December 31,1993,70% of net income available to Gulf States Common Stock (excluding non recurring items);porided, that the payment of dividends as conternplated by clause (D) shall reduce the consideration to be paid to the holders of Gulf States Common Stock as contemplated by Section 2.2(b) of the Gulf States Merger Agreement; (g) not issue, sell, pledge or dispose of, or agree to issue, sell, pledge or dispose of, any additional shares of, or any options, warrants, calls, commitments or rights of any kind to acquire any shares of, Gulf States Common Stock or any debt or equity securities convertible into or exchangeabic for Gulf States Common Stock, except as permitted pursuant to the provisos to this Section 5,1 or as permitted under Schedule A; (h) not redeem, purchase, acquire, reclassify or recapitalize or offer to purchase, acquire, reclassify or recapitalire any shares ofits capital stock, other than (i) as permitted or required by the governing terms of such securities (including any sinking fund obligations in respect of the Gulf States $100 Preferred Stock), (ii) as permitted pursuant to the provisos to this Section 5.1 or Schedule A (iii)in connection with the grant or purchase of shares under Gulf States' dividend reinvestment plan Employee '

Thrift Plan or Employee Stock Ownership Plan, as currently in effect, or (iv) as permitted or required pursuant to Section 6.1; (i) not commenee actual construction of any new generating units, except for the projects permitted under Schedule A; (j) except for transactions pursuant to contracts or commitments in etTect as of the date hereof, not engage in any single transaction or series of transactions with the sarne party for the wholesale bulk sale of capacity in excess of 200 megawatts in the aggregate for periods in excess of 5 years, without p6or

• consultation with Entergy; (k) not engage in any activity whkh would cause a change in the status of Gulf States, or that of

- its subsidiaries, under the lloiding Jompany Act, provided that Gulf States may acquire a new subsidiary to own and operate or lease a rail spur to serve an existing generating facility and may acquire joint ownershi i tp n erests in facilities and equity interests in projects as contemplated in paragraph 14 of Schedule A, so lor.; as, in each case, any such acquisi? ion would not be prohibited under the standards D 22 g- - -y te-- --e-ymp wy- y sem9a w -w -- gi, --e r v wgo zw =+wa- e- w r- g- -

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of the lloiding Compsny Act that would be applicable to Gulf States as a subsidiary of a registered holding company; (1) except in the ordinary course of business consistent with past practice, not enter into, ado termbate or amind any bonus, pro'il sharing, compensatior,, sescrance, termination, pension. >

g retiremera deferred compensatinn, employment, severance, collective bargaining or other e

' twefit agreements, for the bruJi: or welfare of any director, omeer or employee, or increase

mpmer the cornpensation or eenefits of any director, omeer or employee or pay any benefit not by eny exis".ng plan and atrat.gernent (including, whhout limitation, the granting of stock options appreciaticw r%, hts, shaw cf restricted stock or performance unite oth tr than increases in the course of btnium (m) operate within 6e capital, operation and maintenance budgets 6tacted in the document titled "GSU Operating and Capital Iludgets", pieviously prosided to Entergy, subject to exceptions noted i Schedule A, Jtem (2;

( ,) as promptly as practicable after the Approval Date, permit a senior staff member of Enterg

- be assigned to River llend as a liaison person only to monitor operations and afford such repre the sam: treatment as would be afforded a senior member of the River llend staff; (o) crafer on a regular and frequent basis with one or more representatives of Entergy to discuss matters of materiality and the general status of ongoing operations; and (p) not enter into any contract, agreement, commitment or arrangement, whether written or ora with respect to (x) any of the transactions set forth in the foregoing paragraphs (6 through (o) whi

, are not permitted in the foregoing paragraphs (a) through (o) or (y) any transactions of the type whlc

' are permitted bv Schedole A, if the actions taken or to be taken exceed the parameters permitted Schedule A:

provided, however, that notwithstanding anything to the contrary herein, Gulf States shall be permitt take any action whether or not per:nitted or prohibited by Section 5.1 or Schedule A (other tha

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that would breach any of the covenants of Gulf States set forth in Section 5,1(c), (f), (g), (h),

or any covenant contained in any Section of this Agreement other than Section 5.1), and the taking o such action by Gulf States (x) shall not constitute a breach of ths Agreement, but shall give rise t

right of Entergy set forth in Sections 8.l(h) and 8.2(b)(i)(II) and (y) shall not give rise to the paym or expenses by Entergy pursuant to Section 8.2(b)(iv) or Section 8.2(b)(vi)if such actions would violate the provisions of Section 5.1 or suct; actions are of the type specified in Schedule A which exceed the permitted by Schedule A, which actions materially adversely affect the ability of either Entergy or Gu to satisfy the condition set forth in Section 7,1(f). The taking of any action that would not b the covenants Section 5.1, contained in Sections 5.l(e), (f), (g). (h), (i), (k), (1) or (n) shall be considered a-Any violation of the provisions of Section $.1 or the taking of any action of the type specified in A which exceeds the p,.rameters of Schedule A shall be considered in determining whether the a Gulf States Material Adserse Effect.

SIcTioN 5.2 No Solicitation by Cul/Starcs. Except as exprenly permitted by this Agreem without limitation, Section 5.1 and Schedule A, Gulf States and its subsidiaries will not, and w l.

_ best efforts to cause their respectise directors, omcers, employees, representatises, im I

or amliates not to, directly or indirectly (a) initiate contact with, solicit or encourage su inquiries, proposals or offers by, or (b) participate in any discuuions or negotiation information concerning Gulf States of any ofits subsidiaries to, or afford any access to the ,

or records any agreementof Gulf States or any ofits subsidiaries to, or otherwise auist, facilitate or encourage, or or, understanding .with, any person (other than Entergy, its amliates, agents and l representatives) in connection with any ponible proposal (a " Gulf States Proposal") regarding a sa Il-23

1 acquisition of any of the capital stock or any other eviity interest in Gulf States or any ofits subsidiaries I (other than in the ordmary course of business or as permitted in Section 5.1 or Schedule A),j consolidation or business combination invohing Gulf States or any of its subsidiaries, or the liquidatil!

reorganization of Gulf States or its subsidiaries, or a sale of all or (other than in the ordinary course '

business or as otherwise permitted pursuant to Section $.1 or Schedule A) any portion of the asset States or any ofits subsidiaries or any matenal sirnilar transaction (a " Gulf States Acquisition Tr Gulf States will immediately cease any and all existmg activities, discussions or negotiations w conducted heretofore with respect to any of the foregoing restricted actisities. Notwithstanding th prict to the obtaining of the Gulf States Shareholders' Approval and the Entergy Shareholders' Gulf States may, to the extent required by its fiduciary duties under applicable law (as determin faith by tia floard of Directors of Gulf States based on the advice of outside counsel), participat discussions or negotiatio-s with, furnish information to, and afford access to the properties, books and '

4 of Gulf States and its subsidiaries to, any person (including without limitation any person with whom discussions or negotiations have previously been conducted) in connection with a possible Gulf Sta Proposal by such person. Gulf States will notify Entergy immediately if any inquiry or proposal is ma any such information or access is requested in connection with a Gulf States Proposal or potential Gulf S Proposal and, except and only to the extent limited by the provisions of a confidentiality agreement w access. party in effect on the date of this Agreement, promptly provide the details of such inquiry, p third StatoN 5.3 Conduct of Busincss by Entergy. Except as set forth on Schedule 5.3 of the Enter Disclosure Schedule hereto or as otherwise contemplated by this Agreement, after the date to the Effectisc Time or earlier termination of this Agreement, unless Gulf States shall otherwise conse w riting (w hich consent shall not unreasonably be withheld), Entergy and its subsidiaries shall not set aside or pay any extraordinary or special dividend or distribution on any of the capital stock o or (b) make or agree to make extraordinary acquisitions of any capital stock of Entergy, except pursu stock repurchase program, to the extent not prohibited by the SEC under the lloiding Company A provided that Entergy shall not repurchase stock within sixty (60) days price to the Effective Tirne.

SrcTtoN 5.4 No Solicitation by Entery. Except as expressly permitted by this Agreement, Enterg its subsidiaries will not, and will use their best efforts to cause their respective directors, otlicers, representatives, investment bankers, agents or affiliates not to, directly or indirectly,(a) initiate contact wit sohcit or encourage submission of any inquiries, proposals or offers by, or (b) participate in any disc

, or negotiations with, or disclose any information concerning Entergy or any of its subsidiaries to, or attord

any access to the properties, books or records of Entergy or any of its subsidiaries to, or otherwise assist, facilitate or encourage, or enter into any agreement or understanding with, any person (other than Gulf States, its affiliates, agents and representatives) in connection with any possible proposal (a "E -

Proposal") regarding a sale or acquisition of any of the capital stock or any other equity interes or any of its subsidiaries (other than in the ordinary course of business), or a merger or consolidation of Entergy or any ofits subsidiaries, or the liquidation or reorganization of Entergy or its subsidiaries, or of all or (other than in the ordinary course of business or in conjunction with a sale leaseback, pollution control fmancing or other similar transaction) any material portion of the assets of Entergy or any of its subsidiaries or any similar transaction; provided that nothing contained in this Section 5.4 shall restrict the taking of any action which would not (i) hase an Entergy Matenal Adserse EITeet or (ii) materially atTect (including by materially adsersely affecting the regulatory approval process) the abihty of Ent consummate the transactions contemplated hereby and by the Entergy Transaction Agreements. Enter immediately cease any and all existing activities, discussions or negotiations with any panies conduc heretofore with respect to any of the foregoing restricted actisities. Notwithstanding the foregoin the C Mining of the Gulf States Shareholders' Approsal and the Entergy Shareholders' Appro may, to the estent required by its fiduciary duties under applicable law (as determined in good faith b Doard of Directors of Entergy based ou the advice of outside counsel), participate in discussions or negotiations with, furnish information to, and arToid access to the properties, books and records

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i and its subsidiaries to, any person in connection with a possible Entergy Proposal by such person. Entergy will notify Gulf States immediately if any inquiry or proposal is made or any such information or access is ,

requested in connection with an Entergy Proposal or potential Entergy Proposal and, except and only to the i estent limited by the provisions of a confidentiality agreement with a third party in efTect on the date of this Agreement, promptly provide the details of such inquiry, proposal or access.

t I Sicitos 5.5 Conduct of flusines.t by lividing Company ana the oferger Subsidiaries l'ending the 3/erger. Prior to the EEcetise Time and subject to the Entergy Required Statutory Approvals and the Gulf States Required Statutory Approvals, Entergy and Gulf States shall cause lloiding Company and the Me Subsidiaries to (a) perform their respective obligations hereunder and under the Transaction Agreements in accordance with the terms hereof and thereof and take all other actions necessary or appropriate for the consummation of the transactions contemplated hereby and thereby, (b) not incur directly or indirectly any liabilities or obligations except those incurred in connection with the consummation of this Agreement andi the Transaction Agreements and the transactions contemplated hereby and thereby;(c) not engage or indirectly in any business or activities of any type or kind whatsoever and not enter into any agreements or arrangements with any person or entity, or be subject to or be bound by any obligation or undertaking I which is not contemplated by this Agreement or the Transaction Agreements and (d) not create, grant or sulTer to exist any lien upon their respective properties or assets which would attach to any properties or assets of Gulf States or Entergy after the EEective Time.

SLcitan 5.6 Certain Information Relating to industrial Customers. After the date hereof and prior to the EITective Tirne, neither Gulf States nor Entergy, nor any of their respective subsidiaries shall(without the written consent of the other party) use any Evaluation Material (as defined in the Confidentiality Agreements dated May 9,1991 between Entergy and Gulf States)in connection with any solicitation, inquiry, proposal, arrangernent, understanding or agreement with any person eclating to the provision of electric or gas utility service by Entergy or any of!ts subsidiaries, on the one hand, or Gulf States or any ofits subsidiaries, on the other hand, to industrial customers in the sersice territory of the other party.

ARTICLE VI ADDITIONAL AGREEMENTS SLCTION 6.1 PreferredStock Arrearages. Entergy agrees to take all reasonable action necessary to cause Gulf States _to pay, at the EEective Time or as prongly as practicable and as permitted by applicable laws and regulations thereafter, any dividends in arrears and unsatisfied sinking fund obligations on Gulf States -

Preferred Stock which arise after the date hereof and result from Gulf States' failure to make such paym or satisfy such obligations on account of write ofTs by Gulf States prior to the EfTective Time.

StcTioN 6.2 Access to Information. (a) Gulf States and its subsidiaries shall afTord to Entergy and its J

accountants, i counsel, environmental consultants, financial advisors and other representatives (the "Entergy Representat ves") reasonable access during normal business hours upon reasonable notice throughout the period prior to the EfTective Time to all of their respectise facilities, properties, books, contracts, commitments and records and, during such period,(A) permit Entergy Representatives to make reasonable inspections and investigations, and to take other reasonable acts, as they deem necessary or desirable to determine and evaluate the presence, absence or threat of release of liaiardous Materials, and (11) furnish promptly to Entergy (i) a copy of each report, schedule and other document filed or received by any of tnem pursuant to the requirements of federal or state securities laws or filed by any of them with the SEC, PUCT, LPSC, NRC or FERC and (ii) any other information concerning their respective businesses, properties

. personnel as Entergy may reasonably request;provided that no insestigation pursuant to this Section 6.2(a) made by Entergy or any Entergy Representatives shall atreet any representations or warranties made herein by Gulf States or cause a condition to the obligations of the respective parties to consummate the transactions contemplated hereby and by the. Transaction Ageements to be deemed to be satisfied or waived. if, in the l

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absence of such investigation, such condition would not have been otherwise satisfied or waised. All information furnished to or obtained by Entergy and the Entergy Representatises pursuant to this Section 6.2(a) shall be subject to the provisions of the Confidentiality Agreement dated May 9,1991 between Entergy and Gulf States (the " Gulf States Confidentiality Agreement") and shall be tret,ed as Evaluation Material (as defmed in such agreement).

(b) Entergy and its subsidiaries shall afford to Gulf States and its accountants, counsel, environmental consultants, financial advisors and other representatives (the " Gulf States Representatives") reasonable access during normal business hours upon reasonable notiec throughout the period prior to the Effective Time to all of their respective facilities, properties, books, contracts, commitments and records and, durmg such period.

(A) permit Gulf States Representatives to make reasonable inspections and investigations, and take other reasonable acts, as they deem necessary or desirable to determine and evaluate the presence, absence or threat of release of flatardous Materials, and (D) furnish promptly to Gulf States (i) a copy of each report, schedule and other document filed or received by any of them pursuant to the requirements of federal or state securities laws or fded by any of them with the SEC, applicable state utility commissions, NRC or FERC and (ii) any other information concerning their respective businesses, properties and personnel as Gulf States may reasonably requestt provided that no investigation pursuant to this Section 6.2(b) made by Gulf States or any Gulf States Representatives shall affect any representations or warranties made herein by Entergy or cause a -

condition to the obligations of the respective parties to consummate the transactions contemplated heteby and by the Transaction Agreements to be deemed to be satisfied or waited, if, in the absence of such investigation, such condition would not have been otherwise satisfied or waived. All information furnished to or obtained by Gulf States and the Gulf States Representatives pursuant to this Section 6.2(b) shall be subject to the provisions of the Confiden:iality Agreement dated May 9,1991 between Gulf States and Entergy (together with Gulf States Confidentiality Agreement, the " Confidentiality Agreements") and shall be treated  ;

as Evaluation Material (as dermed in such agreement).

StritoN 6.3 Registration Statement and Proxy Statement. (a) Entergy and Gulf States shall, and shall cause liolding Company to, prepare and file with the SEC as soon as is reasonably practicable after the date hereof the Joint Proxy Statement / Prospectus and shall use all reasonable efforts to respond promptly to any comments of the SEC relating to the Joint Proxy Statement / Prospectus, to cause the definitive Proxy Statement to be mailed to their respectise shareholders at the earliest practicable date, and to have the Registration Statement declared effective by the SEC as promptly as practiccble. Entergy and Gulf States shall, and shall cause llolding Company to, take any action required to be taken under applicable state blue sky or securities laws in connection with the issuance of liolding Company Common Stock in the Mergen.

Entergy and Gulf States shall promptly furnish to each other all information, and take such other actions, as may reasonably be requested in connection with any action by any of them in connection with the preceding-sentence. The information provided and to be provided by Entergy and Gulf States, respectively, for use in the Joint Proxy Statement / Prospectus shall be true and correct in all material respects wit$ out omission of any material fact which is required to make such information not false or misleading.

(b) It shall be a condition to the mailing of the Joint Proxy Statement / Prospectus to the shareholders of Entergy and Gulf States that (i) Entergy shall have received (A) an opinion of Salomon Drmhers inc, dated the mailing date of the Joint Proxy Statement / Prospectus, to the effect that, as of the date thereof, the Merger Consideration is fair from a fmancial point of view to the shareholders of Entergy and (D) an opinion of Coopers & l.ybrand, certified public accountants for Gulf States, dated the mailing date of the Joint Proxy Statement / Prospectus, with respect to the financial statements of Gulf States meluded in the Joint Proxy Statement / Prospectus, addressing such matters as is customary for transactions similar to those contemplated by this Agreement and in a form reasonably acceptable to the parties hereto, and (ii) Gulf States shall hase received (A) an opinion of Goldman, Sachs & Co., dated the mailing date of the Joint Proxy Statement / Prospectus, to the effect that, as of the date thereof, the Merger Consideration is fair from a financial point Of view to the holders' of Gulf States Common Stock and (D) an opinion of Deloitte & Touche, certified public accountants for Entergy, dated the mailing date of the Joint Proxy Statement / Prospectus, D-26

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I I

with respect to the fmancial statements of Entergy included in the Joint Proxy Statemem/ Prospectus,  !

addressing such matters as is customary for transactions similar to those contemplated by this Agreement and in a form reasonably a ceptable to the parties hereto.

SicTson 6.4 Approval of Gulf States Shareholders: Approval of Entergy Shareholders. (a) Gulf States '

shall (i) take all steps necessary duly to call, give notice of, consene and hold a special meeting of its shareholders (the " Gulf States Special Meeting") and cause a shareholder vote to occur within 150 days

$ the date of this Agreement or, if Gulf States is unable to cause the Gulf States Special Meeting to be held !j within such period, at the earlier practicable date thereafter, for the purpose of(A) approving this Agreement, the Gulf States Merger Agreement and the transactions contemplated hereby and thereby (the " Gulf States Shareholders' Approval") and (D) such other purposes as may be necessary or desirable,(ii) distnbute to its .

shareholders the Joint Proxy Statement / Prospectus in accordance with applicable federal and state law and - ,

with its Restated Artichts of Incorporation and Dy. Laws, (iii) subject to the fiduciary duties of the Board of Directors of Gulf States in connection with a Gulf States Proposal, recommend to its shareholders the approval of the transactions contemplated hereby and by the Gulf States Merger Agreement and such other i matters as may be submitted to its shareholders in connectim with this Agreement and the Gulf States Merger Agreement and (iv) cooperate and consult with Entergy with respect to each of the foregoing matte

-i (b) Entergy shall as soon as reasonably practicabic (i) take all steps necessary to call, give notice of, convene and hold a special meeting of its shareholders (the "Entergy Special Meeting") and cause a  !

shareholder vote to occur within 150 days after the date of this Agreement or, if Entergy is unable to cause '

the Entergy Special Meeting to be held within such period, at the earliest practicable date thereafter, for the i

purpose of (A) approving this Agreement, the Entergy Transaction Agreements and the transactions i contemplated hereby and thereby (the "Entergy Shareholders' Approval"), and (D) such other purposes as may be necessary or desirable, (ii) distribute to its shareholders the Joint Prosy Statement / Prospectus in accordance with applicable federal and state law and its Articles of incorporation and Dy Laws,(iii) subject to the fiduciary duties of the Board of Directors of Entergy in connection with a Entergy Proposal, recommend to its shareholders the approval of the transactions contemplated hereby and by the Entergy '

Transaction Agreements and such other matters as may be submitted to its sharenolders in connection with this Agreement and the Entergy Transaction Agreements and fiv) cooperate and consult with Gulf States with respect to each of the foregoing matters.

(c) Entergy and Gulf States shall consult and cooperate with each other in order to cause the Entergy Special practicable.

Meeting and Gulf States Special Meeting to be held as close together in time as shall be reas i

StcTioN 6.5 Consents and Approvals. (a) Entergy and Gulf States shall each file or cause to be filed with the Federal Trade Commission and the United States Department of Justice any notifications req to be filed under the llSR Act and the rules and regulations promulgated thereunder with respect to the transactions contemplated hereby. The parties shall consult with each other as to the appropriate time of filing such notifications and shall use their best efrorts to make such filings at the agreed upon time, to resp promptly to any requests for additionalinformation made by either of such agencies, and to cause the waitin periods under the IISR Act to terminate or expire at the earliest possible date after the date of filing.

(b) Entergy, Gulf States and llolding Company shall coopera'e with each other and (i) promptly prepare and file all necessary documentation (ii) effect all necessary applications, notices, petitions and filings and execute all agreements and documents, (iii) use all reasonable etTorts to obtain all necewary permits, consents, approvals and authorizations of all governmental bodies and (iv) use 'll reasonable efforts to obtain all necessary Permits, consents, approvals and authorizations of all other parties, in the case of each of the foregoing clauses (i), (ii), (iii) and (iv), necessary or advisable to consummate the transactions contempla'

, by this Agreement and the Transaction Agreements (including, without limitation, the Entergy Reqe red Statutory Approvals and the Gulf States Required Statutory Approvals)or required by the terms of any note) bond, mortgage, indenture, deediof trust, license, franchise, permit, concession, contract, lease or other

• D-27

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Instrument to which Entergy Gulf States oc any of their respective subsidiaries is a party or by which any of thern is bound. Entergy shall base the right to review and approse in advance all characternations of the o

information relating to Entergy; Gulf States shall have the right to review and approse in advance all l

characterizations of(i) the information relating to Gulf Sta'es and (ii) any information relating to Gulf States' River llend nuclear generating facility or the presem or fuiore financial, accounting or rate treatment thereof or any raie proceedings, appeals or litigation relating thereto, which information is incorporated in a ,

characteritation of Entergy or the Combined Companies; and each of Entergy and Gulf States shall have the right to review and approve in advance all characterirations of the information relating to the transactions contemplated by this Agreement and the Merger Agreements, in each case which appear in any filing (including, without limitation, the Joint Proxy Statement / prospectus and all filings with regulatory and l gasernmental bodies to obtain the consents and approvals required under Section 7.1(f)) made in connection with the transactions contemplated hereby and by the Merger Agreements. The Cornpanies agree that they will consult with each other with respect to the obtaining of all such necessary Permits, consents, approvals and authorizations of all third parties and governmental bodies. Entergy shall designate lead counsel with respect to all applications, notices, petitions and filings (joint or otherwise) relating to this Agreement and the transactions contemplated hereby (including but not limited to the Gulf States Required Statutory Approvals) on behalf of Entergy Gulf States and llolding Company with all governmental bodies;provided, j

however, that Gulf States may, as its option, designate its own separate legal counsel of record to represent Gulf States in coordination with Entergy in connection with all such applications, notices, petitions and filings, in the event that Gulf States designates its own counsel of record with respect to regulatory filings to be made by Gulf States, subject to applicable rules of the regulatory body and applicable ethical standards, Gulf States shall cause counsel designated by Entergy as lead counsel to act as co counsel of recoro with respect to such filings. Any actions taken by either party pursuant to this paragraph shall not be deemed a waiser of any actual confilet that may esist with respect to the participation of any such counsel.

(c) Entergy shall consult with Gulf States (and any separate legal counsel designated t>y Gulf States as provided above) prior to proposing or entering into any stipulation or agreement with any federal, state or local governmental authority or agency or any third party in connection with any federal, state or local governmental consents and approvals legally required for the consummation of the Mergers and shall not propose or enter into any such stipulation or agreement whleh would have a material etTect on Gulf States, without Gulf States' prior written consent, which Gulf States may, in its sole discretion, withhold. Gulf States agrees that it shall not withhold its consent to any stipulation required by the SEC under the llolding Company Act which is applicable to Gulf States only after the EITective Time. Entergy agrees that any -

requirement of the SEC that Gulf States divest its gas operations shall not constitute a Gulf States Material Adverse Effect or a Regulatory Material Adserse Effect (as defined in Section 7 l(f)).

(d) Entergy has previously prosided to Gulf States an outline of the regulatory plans to be submitted by Entergy and Gulf States to the LPSC and PUCT in connection with the transactions contemplated hereby, SECTION 6.6 Comp / lance with the 8erkrill(J (ICf. Prior to the Closing, Gulf States sha!! deliver to Entergy, and Entergy shall deliser to Gulf States, a letter identifying all persons who may be deemed, at the time this Agreement is submitted for approval to such party's stockholders "alliliates" of such party for purposes of Rule 145 under the Securities Act. Each of Gulf States and Entergy shall use all reasonable efforts to cause each person named in the letter it delivers to the other to deliser at or prior to the Efreetise Time a written agreement with respect to sales of sceurities issued in the Mergers, containing prosisions as are customary for transactions similar to those contemplated by this Agreement and in a form reasonably acceptable to the parties hereto-Si citos 6.7 uchange Lining. T he Companies shall cause llolding Company to use its best etTorts to l etiect, at or before the Effective Time, authoritation for hsting on the NYSE, Pacific and Midwest Stock Exchanges, upon official notice ofissuance, of the shares of Iloiding Company Common Stock to be issued pursuant to the Mergers. ,

11 28 i .

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! StenoN 6.8 Public Statements. The parties shall consult with each other prior to issuing any public announcement, statement or other disclosure with respect to this Agreement, the Transaction Agreements or i the transactions contemplated hereby and thereby and shall not issue any such public announcement or }

statement prior to such consultation, except as may be required by law or any listing agreement with a national securities exchange and except that the parties rnay make public announcements, statements or othe ,

disclosures with respect to this Agreement, the Transaction Agreements and the transactions contemp; hereby and thereby to the extent and under the circumstances in which the parties are expressly pe; the Confidentiality Agreements to make disclosures of " Evaluation Material" (as defined in the Confidentiality Agreements). i StcTtoN 6.9 Gu(f States Emp/cyecs and Emplorre Benc/iti (a) (i) As of the Effectise Time, Gulf States, as the surviving corporation in the Gulf States Merger (the " Surviving Corporation"), and its subsidiaries, will continue to employ all current non. bargaining unit employees of Gulf States and its subsidiaries (" Employees") at the same salaries and wages (including bonus, commission and incentive programs) and on substantially the same terms and conditions as those in effect immediately prior to the EfTective Time and to barFain in good faith with Local 2286 of the International llrotherhood of Electrical

- Workers AFL-CIO (the "! DEW") over all issues as stated in the collective bargaining agreement in effect at the Effective Time.

(ii) For a period of three years following the Effective Time, (A) any reductions in working force in 6 respect of non. bargaining unit Employees shall (1) be made on a fair and equitable basis, in light of the circumstances and the objectives to ha schieved, giving consideration to previous work history, job exp and qualifications, without regard to whether employment was with Entergy or its subsidiaries or Gulf States or its subsidiaries, and any non-bargaining unit Employees whose employment is terminated or jobs are eliminated by the Surviving Corporation or any ofits subsidiaries or by Entergy or any of its subsidiaries dunng such period shall be entitled to participate on a fair and equitable basis in the job opportunity and employment placement programs offered by Entergy or any of its subsidiaries and shall be entitled to the same preferential status as Entergy's and its subsidiaries' employees in accordance with the terms of the most -

favorable job opportunity programs offered by Entergy or any of its subsidiaries and (2) not exceed the number of job positions eliminated at Gulf States, plus the number of persons terminated (voluntarily or involuntarily) under Gulf States' Executive Continuity Plan, plus the number of Employees acceptin!

transfers to Entergy or one ofits subsidiaries, and (II) any non bargaining unit Employees who are relocated ,

from service areas of the Surviving Corporation and its subsidiaries after the Effective Time will be entitled to participate in Entergy's and its subsidiaries' relocation assistance plans.

{iii) From and after the Effective Tirne, the Surviving Corporation will honor, without modification, set-off, counterclaim or recoupment, perform all acts and pay all benefits and other amounts required or due unde or with respect to all Gulf States Plans and all agreements or plans set forth on Schedule 6.9(a) of the Gulf States Disclosure Schedule hereto which relate to any Employee or former employee, director or former director of Gulf States and its subsidiaries, which are carned or accrued through the Effective Time and ear or accrued thereafter in the ordinary course. Entergy, Gulf States and llolding Company hereby ack that the consummation of the GulfStates Merge 7nstitutes a " change in control" of Gulf States for pu of any Gulf States Plan, or any agreement or 4 o" Schedule hereto which relates to any Employ- Schedule 6.9(a) of the Gulf States Disclosure c gloyee, director or former director of Gulf Sistes and its subsidiaries which contains changi cause the Surviving Corporation to honor sions, and, accordingly, llolding Company shall er such Gulf States Plans and any agreements or plans set forth on Schedule 63(a) of the G re Schedule relating to a change in control.

(iv) From and after the Effective Tim floiding Company agree that employees of the Surviving Corporation and its subsidiaries shah ofIloiding Company, Entergy and their subsid so participate on the same basis as onher employees

.I job training, career development and educational '

programs of Ilolding Company and its subsidim

.a shall be entitled to fair and equitable consideration together with other employees of Ilolding Company and its subsidiaries in connection with any man or esecutive job opportunities with lloiding Company and its subsidiaries.

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(b) (i) For a period of three years following the Eticctise Time, there shall be no (A) termination of the  !

Gulf States Trusteed Retirement Plan (the " Retirement Plan");(11) transfer of anets or liabilities between the  :

Retirement Plan and any other " employee benefit plan" within the meaning of Section 3(3) of ERISA (an

" Employee tienefit Plan"), other than transfers in any plan > ear involving in the aggregate less than 1% of the L fair market value of the Retirement Plan's assets as of the beginning of such year; (C) merger or consolidation ;

of tne Retirement Plan with any other Employee llencht Plan or (D) change in the funding method or p ,

interest rate, mortality tables or other actuarial assumptions used with respect to the Retirement Plan which '

would base the effect of reducing contnbutions or the rate of contributions to the Retirement Plan, unless and to the extent required by law;provided, however, that notwithstanding the foregoing,if agreed to in writin by Gulf States (through action by a majority of the directors of Gulf States who were directors of Gulf States prior to the Effectise Time (the " Continuing Directors"); prosided, that if no Continuing Directors shall still be serving on such Board, a decision required to be made by Continuing Directors pursuant to this Agreem shall be made by a majority of the entire lloard unless the reason there are no Continuing Directors is that .'

they were removed without cause or were not renominated) and Entergy, the Surviving Corporation ma transfer the participation of Employees from the Retirement Plan to a dermed benefit plan of Entergy spec by Gulf States and Entergy subject to the requirements of subparagraph (ii) and may take any of the actions described in (A) through (D) in accordance with applicable law, so long as all accrued benefits as of the date of such transfer for all participants in the Plan are preserved from and after such transfer.

' (ii) Subject to the provisions of subparagraph (b)(i) above, the Surviving Corporation shall maintain, for >

a period of at least three years following the Effective Time, each Gulf States Plan as in c!Tect immediately prior to the Etiective Time, without any reduction in benefit levels or reward opponunities, or any increase in cost to participants (other than normal premium increases) and shall give credit under such Plan to Employees for all service prior to the Effective Time with Gulf States and its subsidiaries, or any predecessor employer (to the extent such credit was given by Gulf States or any of its subsidiaries) and for all senice with the Surviving Corporation and its affiliates after the Effective Time determined in accordance with the practices and procedures of Gulf States prior to the Effective Time; providcd, however, that the Surviving Corporation may replace one or more Gulf States Plans (other than the Retirement Plan) with substitute plans on sangemerts which, in the aggregate, provide substantially equivalent or better benefits or reward opportunities to participants with no increase in cost to participants (other than normal premium increases).

With respect to non bargaining unit Employees, if any Employee of Gulf States and its subsidiaries becomes a participant in any Entergy Plan or any plan which is a substitute or replacement for a Gulf States Plan, the Surviving Corporation shall give credit under such plan to Employees for all service prior to the Effectise Time with Golf States and its subsidiaries, or any predecessor employer (to the extent such credit was gisen by Gulf States or any ofits subsidiaries) and all service with the Surviving Corporation and its afliliates after the Effective Time determined in accordance with the practices and procedures of Gulf States prior to the .

Efrective Time for all purposes for which such service was taken into account or recognited by Gulf States or -

its subsidiaries, Employees represented by the IDEW will have benefits,if any, under the terms and conditions -

of their cellective bargaining agreement then in etTect.

(iii) The Suniving Corporation will pay a cash payment to each Employee who is a participant in the ,

Gulf States incemise Compensation Program (the "Incentise Plan") immediately preceding the Effectise Time (A) whose employment is terminated by the Survising Corporation (other than for gross misconduct) prior to December 31 of the year in which the Etiectise Time occurs or (D) who is in the employ of the Surviving Corporation on December 31 of the year in which the Effectise Time occurs. Entergy and llo Company agree that the cash payment shall be equal to the greater of(l) the amount paid under the incentise Plan to each such Employee for the last plan year ended prior to the EtTective Time and (11) the target aw ,

for the plan year in.which the EfTectise Time occurs (the "Ilonus"); provided howerce, that the amount of the Bonus to be paid to each Employee pursuant to clause (A) of the preceding sentence shall be mulupli by a fraction the numerator of which shall be the number of calendar days from and including the first day of the plan year in which the Employee's employrnent is terminated through the date the Employce's -

employment is terminated and ,the denominator of which shall be 365.

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(c) Severance and Vest /ng Under Plant Without limiting the generality of the foregoing, the Surviving Corporation shall provide sescrance pay and other benefits to any non. bargaining unit Err.ployee whose ernployment is terminated (other than forjust cause related tojob performance) by the Survising Corp or any subsidiary within three years following the Effective Time w hich are no ! css favorable to the E ,

than the schedule of severance pay and benefit entitlements set forth on Schedule 6.9(c) of the Gulf States Dhclosure Schedule, plus an augmented early retirement benefit taking into account the Employee's ,

years of service (instead of credited service) substantially equivalent to such benefit offered by Gulf St3tes in '

its 1990 Severance package.

(d) lloiding Company agrees that, as of the Efrective Time, the collective bargaining agreement between Gulf States and the lilEW and all responsibilities and obligations that arise thereunder with respect to employees of Gulf States covered thereby then in elTect shall continue to be applicable to the Survi Corporation.

(c) Entergy and fluiding Company unconditionally agree that on and after the Effective Time they wi cause the Surviving Corporation io continue in effect for the lloatd of Directors of the Surviving Corpora

- Gulf States' deferred compensation plan and retirement plan for Gulf States' directors as in effect at the Effective Time, until such time as terminated by the lloard of Directots of tbe Surviving Corporatio '

action by a majority of the Continuing Directors).

t (f) The lloiding Company shall cause the Surviving Corporation to maintain and honor in the same form as in eticct on the date of this Agreement the Gulf States Executive Income Security Plan and the Gu States Executive Continuity Plan. Gulf States agrees that it will not amend such Plans nor provide benefits under such Plans to any person not a participant under such Plans on the date hereof, except that the mimbe t

of participants under any such Plans may increase by up to 10% to add persons who are designated States to fill a position vacated by an existing participant and designated by the lloard of Directors of Gulf States to be eligible to participate in such Plan.

SLcitoN 6.10 Pmrdferger Operations (a) At the Effective Time. Entergy and Gulf States shall cause the lloard of Directors of Iloiding Company to be comprised of the persons designated by Entergy and G States pursuant to Section 1.2 hereof. Entergy and llolding Company agree to nominate the individuals designated by Gulf States pursuant to Section 1.2 to initially serve as directors of Iloiding Company for a  ;

period of at least three years following the Etrective Time (the "Three Year Period"). ,

.(b) If, during the Three Year Period, any rnember of the lloard of Directors of Iloiding Company designated by Gulf States in accordance with Section 6.10(a)(other than Joseph L Donnelly) shall be unable ' '

or unwilling to so serve as a director ofIlolding Company, the Ch. airman of the lloard ofliolding Comp shall designate another individual to serve on the lloard of Directors ofIlolding Company, appointed fro the members comprising the lloard of Directors of Gulf States immediately prior to the Effectise Time.  ;

(c) At the Effective Time and during the Three Year Period (unless he shall earlier retire), Joseph L' Donnelly shall be Vice Chairman and a Director er the lloard of Iloiding Company and until age 65 y Chairman of the floard of Directors and Chief Executise Officer of the Surviving Corporation.

(d) During the Three Year Period, the Surviving Corporation shall operate the businen formerly conducted by Gulf States as a direct or indirect subsidiary of flolding Company to be headquartered in the city of lleaumont, Texas. The Surviving Corporation shall be known for at lent fwe years fol!owing .t Effective Time as " Gulf States Utilities Company."

(c) At the Effective Time, lloiding Company shall cause the floard of Directors of the Survising Corporation to be comprised of(i) four persons designated by Entergy, and (ii) all of the members of Gulf States' Iloard of Directors immediately prior to the Etrective Time, subject to such changes in compos may be required by llo! ding Company from time to time. Gulf States' retirement policy for directors as in effect on the date hereof shall continue in effect during the Three Year Period.'

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(f) During the Three Year Period, llolding Company shall cause to the extent practicable and consistent with past practices of Entergy, supplies and services for the Surviving Corporation to continue to be purchased from vendors located in the ervice areas of Gulf States, as long as goods and services available and prices and fees charged by such vendors are reasonably competitive with alternative vendors outside such: i

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5ervice areas and the quality of such supplies and services is reasonably comparable to that of such alternative sendors, (g) During the Three Year Period, lloiding Company shall cause the Surviving Corporation and its '

subsidiaries to provide charitable contributions and community support within the service areas of Gulf States and its subsidiaries at levels substantiaHy comparable to the levels of charitable contributions and community support provided by Entergy and its subsidiaries within their service areas during such period.

SrcTtos 6.11 Direcron'and Oficers'Indann(/ication. (a) llolding Company shall cause the Articles of incorporation and By-Laws of the Surviving Corporation to contain provisions no less favorable with respect to indemnification of directen. officers, employees and agents than the provisions set forth in the Restated Articles of Incorporation aad Dy Laws of Gulf States (except to conform such provisions to the most favorable provisions then permitted by applicable law) which provisions shall not be amended, repealed or otherwise modified for a period of ten years from the Effective Time in any manner that would adversely affect the rights thereunder of individuals who at or prior to the Effective Time were directors, officers, employees or agents of Gulf States, or who are directors, omeers, employees or agents of the Surviving Corporation after the Effective Time, unless such modification is required by law.

(b) lloiding Company agrees to cause the Surviving Corporation to honor all of the terms of the letter agreements between Gulf States and its present or former directors and officers set forth on Schedule 6.11 of the Gulf States Disclosure Schedule (collectively, the " Indemnification Letter Agreements").

(c) (i) lloiding Cempany shall cause the Surviving Corporation to maintain in efTect for six years from

' the Effective Time the current policies of diiectors' and omcers' liability insurance maintained by Gulf States (provided that the Surviving Corporation may substitute therefor policies of at least the same coverage containing terms and conditions (including with respect to limits of coverage and deductible amounts) which are no less advantageous) covering directors and officers of Gulf States serving at or prior to the Effective Time with respect to claims arising from occurrences prior to the Effective Time.

(ii) liolding Company shall cause the Surviving Corporation to maintain for a period of at least six years .

following the Effective Time policies of directors' and officers' liability insurance covering the individuals w ho are directors and/or officers of the Surviving Corporation at any time during such period, which policies shall, at all times, contain terms and conditions which are at least as favorable as those contained in the most '

favorable directors' and officers' liability insurance policies provided by llolding Company, Entergy or any -

of their subsidiaries.

(iii) lloiding Company shall cause to be maintained for a period of at least six years following the Effective Time policies of directors' and omcers' liability insurance covering the individuals designated by -

Gulf States who are directors and/or o$cers ofIloiding Company, which policies shall at all times contain terms and conditions which are at least as favorable as those covering other directors and officers of Iloiding Company.

(d) After the Efrective Time, lloiding Company shall, to the fullest extent permitted under applicable law,indemmfy and hold harmless, each present and former director and officer of Gulf States or any o' fits ^

subsidiaries set forth on Schedule 6 ll(d) of the Gulf States Disclosure Schedule, and any successor to any director or officer on the date of this Agreement (each an " Indemnified Party" and collectively, the

" Indemnified Parties") against any costs or expenses (including attorneys' fees), judgments, fines, losses, claims, damages,-liabilities and ame mts paid in settlement (collectively, " Liabilities")in connection with any claim, action, suit, proceeding or investigation, whether civil, enminal, administrative or investigative, arising '

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s out of, telating to or in connection with any action or omission occurring prior to the Effectisc Time in connection with such persons'ser ing as an officer or director of Gulf States or any of its subsidiaries or arising out of or pertaining to the transactions contemplated by this Agreement. llolding Company shal be required to provide such indemnification except to the extent an Indemnified Party has sought and fail to obtain indemnification from (i) any insurance which may be available to cover such Liability and (i Surviving Corporation pursuant to any obligation of the Surviving Corporation to provide indemnification In the event an Indemnified Party seeks indemnification as contemplated by clauses (i) and (ii) above unsuccessful in obtaining indemnification within 90 days of seeking such indemnification and confirms s facts in writing to the llolding Company, the fielding Company will deem the Indemnified Party to hav satisfied his obligation to seek indemnification as contemplated by clauses (i) and (ii) above. An Indem Party shall use his best efforts to subrogate the l{olding Company to any rights he may have to recove amounts paid by the lloiding Company pursuant to this paragraph (d) from any third party, and an Indemnified Party shall not be entitled to indemnification pursuant to this Agreement or any other with the lloiding Company or the Surviving Corporation for the cost or amount of any Liability for which he has received reimbursement or an indemnification payment from some other source or for w reason, he suffers no loss or liability. The foregoing indemnity shall apply irrespective of the negligen (whether sole, concurrent or contributory) of the Indemnified Party; provided, that such indemnity will n apply in the event of gross negligence or willful misconduct of the Indemnified Party. In the event o such claim, action, suit, proceeding or investigation (whether arising before or after the EtTective lloiding Company shall pay the reasonable fees and expenses of counsel selected by the Indemnifie which counsel shall be reasonably satisfactory to lloiding Company, promptly after statements therefor a received and (ii) llolding Company shall cooperate in the defense of any such mattert provided, however, l fielding Company shall not be liable for any settlement etrected without its written consent (which conse t

shall not be unreasonably withheld). The indemnification provided by this clause (d) shall be in addition to the rights of the Indemnified Parties under the Indemnification Letter Agreements and the other provi of this Section 6.11.

(e) In the event the Surviving Corporation or lloiding Company or any of their successors or assign consolidates with or merges into any other person and shall not be the continuing or surviving corporati or entity of such consolidation or merger or (ii) transfers all or substantially all ofits properties and assets to any person, then and in each such case, proper provision shall be made so that the successors and assigns the Survi >ing Corporation or lloiding Company, as the case may be, shall assume the obligations set forth in this Section 6.11.

St.rmoN 6.12 ReasonaMe Best Egorts. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use reasonable best etTorts to take, or cause to be taken, all action, and to do, ur c to be done, all things reasonably necessary, proper or advisable under applicable laws and regulations to consummate and make etrectise the transactions contemplated by this Agreement and the Transaction i Agreements. Both parties shall consult on a reasonable and frequent basis regarding matters relating operating of Gulf States prior to Closing. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement and the Transaction Agreements, Gulf States and/or Entergy shall cause the proper officers and directors of each party hereto to take all suc SecTtoN 6.13 Certain Tax Matters. (a) As soon as practicable after the date hereof. Entergy and Gulf Stat;s shall request from the IRS a letter ruling to the effect that the Primary Reorganization will be treate as a transaction described in sections 351 and/or 368 of the Code and that no gain or low will be recognized by Gulf States and Entergy shareholders that exchange shares of Gulf States and Entergy stock s shares of Iloiding Company stock in sueb transaction. Gulf States and Entergy shall use all reasonable er to determine as soon as practicable whether the IRS is likely to issue the letter ruling desenbed in the immediately precedmg sentence. In the event that Entergy and Gulf States determine that the IRS i to issue such letter ruling. Entergy and Gulf States shall, at the election of either Entergy or Gulf States request from the IRS a letter ruling to the effect that the Alternative Reorganization will be treated as a H 33

. - ..- - . --- . . -- - .- - - - . - -- - -- - - .. - . ~_ .-

transaction described in sections 351 and/or 368 of the Code and that no gain _or loss will be recognized by Gulf States and Entergy shareholders that exchangt shares of Gulf States and Entergy *tock solely for shares of Iloiding Company stock in such transaction.

(to Prior to, at and after the EEective Time, neither Entergy, Gulf States, nor lloiding Company shall take er fail to take any action which could adversely affect the characterization of the exchanges of stock pursuant to this Agreement as tax free exchanges under the Code. Without limiting the generality of the foregoing, in the event the Alternative Reorganization is to be consummated, for a period of at least three years following the Effectise Time, Entergy and Guir States shall cause lloiding Company not to, and IIolding Company shall not, liquidate either Gulf States or Entergy or merge or consolidate either Gulf States or Entergy with and into any other corporation (includmg llolding Company). Notwithstanding the foregoing, llolding Company, Gulf States or Entergy (as the case may be) may take any of the actions prohibited by either of the two preceding sentences ifIloiding Company, Gulf States or Entergy (as is appropriate) shall have first received an unqualified opinion of Skadden, Arps, State, Meagher & Flom or other nationally recognized, independent-United States tax counsel or an IRS ruling that such action will not cause either or both of the Mergers to fail to qualify as exchanges under Section 351(a) and/or 368, as appropriate, of the Code; and (c) Entergy and Gulf States will cause lloiding Company to, and llolding Company will, and after the Effective Time liolding Company will cause Gulf States, Entergy and llolding Company's other subsidiaries (direct and indirect) to, file its and their federal income tax returns for all periods beginning after or including the EEcctive Time on a basis consistent with the treatment d the exchanges of stock pursuant to the Mergers as tax free exchanges under Section 35 t(a) and/or 368, as appropriate, of the Code.

(d) Entergy agrees that, if the Alternative Reorganization is to be consummated, Entergy as of the Closing will not have any plan or intention to cause Ifolding Company after the EKective Time to take any of the Section 3.18 Actions and will provide representations to that effect to the attorneys furnishing the opinions provided in Section 7.2(d).

StcTioN 6.14 Continuation of Standstill. Notwithstanding anything contained in the Confidentiality Agreements to the contrary, except as expressly permitted by the terms of a written waiver executed by Gulf States, the standstill provisions contained in the sixth paragraph of the Confidentiality Agreements shall continue in effect until the later of(i) the termination of this Agreement pursuant to Article Vill hereof and (ii) the date of termination of such provisions as set forth in the Confidentiality Agreements.

StcTtoN 6.15 Supplemental Diselmure. (a) Entergy shall have a continuing obligation to notify Gulf States, and Gulf States shall have a continuing obligation _to notify Entergy, of events, circumstances or discoveries which would result in any of the representations and_ warranties in Section 3.6 or Section 4.6, respectively, being materially inaccurate or incomplete in any material respect, The parties shall provide the notification contemplated by this Section as promptly as practicable after a determination is made that -

notification is or may be required. Any amendments or supplements to the representation and warranty contained in Section 3.6 and in Section 4.6 shall be referred to herein as " Supplemental Disclosure."

(b) Any such Supplemental Disclosure shall not be deemed to amend, or be included in, the Entergy Disclosure Schedule or the Gulf States Disclosure Schedule.

StcTioN 6.16 Delivery of Certain Certificates (a) Gulf States agrees that it shall, as promptly as practicable after receipt of a written request by Entergy delivered from time to time on or before the Closing, but in no event more than ten days after receipt of such request, state in a certificate executed by its Chief Executive Ollieer and Chief Finan. ial Officer and delivered to Entergy as to whether there shall have occurred and be continuing,in the aggregate, a Gulf States Material Adverse Effect or a Cajun Material Adverse EEeet (as heremafter defined) or ifit is unable to make such a conclusion, without conceding that such an Effect has occurred, the facts and circumstances that it has relied upon 'in determining that it is unable to make 4 such a conclusion. Entergy shall not request such a certificate more than once every 90 days.

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(b) Entergy agrees that it shall, as'promptly as practicable after receipt of a written request by_ Gulf States delivered from time to time on or before the Closing, but in no event more than ten days after receipt of such request, state in a certificate executed by its Chief Executive Omcer and Chief Financial Omcer and delivered to Gulf States as to whether there shall have occurred and be continuing, in the aggregate, an Entergy Material Adverse Effect or if it is unable to make such a conclusion, the facts and circumstances that it has relied upon in determining that it is unable to make such a conclusion. Gulf States shall not req such a certificate more than once every 90 days.

ARTICLE VII CONDITIONS Struos 7.1 Conditions to Each Party's Obligation to Efect the Mergers. The respective obligations of the Companies to effect the transactions contemplated by this Agreement and the Transaction Agreements (but not the respective obligations under Section 8.2) shall be subject to the fulfillment at or prior to the .

Effective Time of the following conditions:

(a) This Agreement, the Transaction Agreements and the transactions contemplated hereby and thereby shall have been approved and adopted by the requisite vote of the shareholders of Gulf States

, and Entergy under applicable law and their respective Articles of incorporation; (b) The lloiding Company Common Stock issuable in the Mergers shall have been authorized for listing on the NYSE upon omeial notice ofissuance; (c) The waiting period applicable to the consummation of the Mergers under the !!SR Act shall .

have expired or been terminated; (d) 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; .

(c) No preliminary or permanent injunction or other order or decree by any federal or state court which prevents the consummation of the Mergers shall have been issued and remain in effect (each pa agreeing to use its reasonable best efforts to have any such injunction, order or decree lifted) and no -

s tatute, rule or regulation shall have been enacted by any state or federal government or governmental agency in the United States which prohibits the consummation of the Mergers; (f) (i) All federal, state and local governmental consents and approvals required for the consummation of the Mergers including, without limitation, the Gulf States Required Statutory Approvals and the Entergy Required Statutory Approvals, shall have been obtained and_ be in effect at ^

. the Effective Time (other than any such consents and approvals the failure to obtain which (a) would not have a material adverse effect on the business, operations, properties, assets,' condition (fmancial or -

other), rates or results of operations ofilolding Company and the Companies and their subsidiaries taken -

as a whole, and (b), in the case of the state and local government approvals, would not have a material adverse effect on the business, operations, properties, assets. condition (financial or other), rates or results of operations of Gulf States and Entergy's electric public utility divisions, subsidiaries and amliates operating in the State of Louisiana (the "Dase Line Companies")(taking into account the actual consent or order of such regulatory authority as compared to the desired regulatory treatment based on the outline of the regulatory plans referred to in Section 6.5(d)) (either (a) or (b), a " Regulatory Material Adverse Effect")), and (ii) the Gulf States Required Regulatory Approvals and Entergy Required Regulatory Approvals shall have become Final Orders (a " Final Order" means a final order after all .

opportunities for rehearing are exhausted (whether or not any appeal thereofis pending)) and shall not be subject to-terms and conditions which,-in the aggregate, would result in a Regulatory Material?

Adverse Effect. For purposes of this Section 7.l(f), (A) a FERC order which contains no ." retail B45

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- whccling" condition which would be likely to result in a significant uncompensated economic loss to Entergy and Gulf States taken as a whole and which contains conditions not substantially more onerous than those imposed in recent FERC orders with respect to mergers involving electrie utility companies shall not be deemed to result in a Regulatory Af aterial Adverse Effect, and (II)in determining whether a Regulatory blaterial Adverse Effect has occurred, there shall be excluded any matter excluded from the definition of a Gulf States hiaterial Adverse EfTect under Section 4.l(a)(iii) to the extent of the FER proceedings and 4.l(a)(iv), (v) and (vi),

(g) All consents and approvals required under the terms of any note, bond, mortgage, indenture, contract or other agreement to which Entergy, Gulf States or any of their respective subsidiaries is a party for the consummation of the hiergers shall have been obtained, other than those which, if not obtained, would not, in the aggregate, hase an Entergy hfaterial Adverse EfTect, in the case of consents and approvals required for any note, bond, mortgage, indenture, contract or other agreement of Entergy or any of its subsidiaries, or a Gulf States hiaterial Adserse Effect, in the case of consents and approvals required for any note, bond, mortgage, indenture, contract or other agreement of Gulf States or any of its subsidiaries; and (h) The shares of IIolding Company Common Stock to be issued to holders of Gulf States Common Stock in the Gulf States hierger and holders of Entergy Common Stock in the Entergy Merger shall be validly issued, fully paid, nonassessable, free of preemptive rights and free and clear of any liens. aims, encumbrances, security interests, equities, charges and options of any nature whatsoever.

SirrlON 7.2 Conditions to Obligation of Gulf States. The obligation of Gulf States to etTect the transactions contemplated by this Agreement and the Gulf States Merger Agreement (but not the obligations under Section 8.2) shall be subject to the fulfillment at or prior to the Effective Time of the following additional conditions:

(a) Entergy shall base performed in all material respects its covenants and agreements contained in this Agreement required to be performed at or prior to the Effective Time:

(b) There shall not have occurred and be continuing, in the aggregate, an Entergy Material Adverse EtTect;

-(c) Gulf States shall have received a certificate from the Chief Executive Officer and the Chief Financial Ollicer of Entergy, dated the Closing Date, to the effect that to the best of such officers' knowledge, the conditions set forth in Sections 7.2(a) and (b) have been satisfied; (d) Gulf States shall have received a ruling from the IRS, in form and substance reasonably satisfactory to Gulf States, that the Primary Reorganization will be treated as a transaction described in Sections 351 and/or 368 of the Code and that no gain or loss will be recognized by Gulf States and Entergy shareholders that exchange shares of Gulf States and Entergy stock solely for shares ofIloiding Company stock in such transaction.

StcTroN 73 Conditions to Obligation of Entergy. The obligation of Entergy to effect the transactions contemplated by this Agreement and the Entergy Transaction Agreements (but not the obligations under Section 8.2) shall be subject to the fulfillment at or prior to the EITective Time of the following additional conditions:

(a) Gulf States shall hase performed in all material respects its covenants and agreements contamed -

in this Agreement (other than those contained in Section 5.1 (other than Sections 5.l(e),(f),(g),(h),(i),

(k), (1) and (n)) unless a Gulf States Material Adverse EfTect has resulted therefrom and is continuing) required to be performed at or prior to the Effective Time:

- (b) There shall not have occurred and be continuing, in the aggregate, a Gulf States Mater al Adserse Effect; 11-3 6

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(c) Entergy shall have received a certificate from the Chief Executive Omcer and the Chief Financial Omcer of Gulf States, dated the Closing Date, to the effect that, to the best of such omcers' knowledge, the conditions set forth in Sections 7,3(a) and (b) have been satisfied; (d) Entergy shall have received a ruling from the IRS, in form and substance reasonably satisfactory to Entergy that the Primary Reorganization will be treated as a transaction described in sections 351 and/or 368 of the Code and that no gain or loss will be recognized by Gulf States and Entergy shareholders that exchange shares of Gulf States and Entergy stock solely for shares of liolding Company stock in such transaction; and (c) Gulf States shall not, without the prior written consent of Entergy, have entered into any compromise, settlement, adjudication or other resolution with respect to, or be the subject of any compromise, settlement, adjudication or other resolution with respect to, or have offered to compromise,

' settle or otherwise resolve, any claim, action, suit or proceeding against Gulf States or its subsidiaries (i) relating to the Cajun Litigation, for an aggregate Net Cost which would have a Cajun Material Adverse Effect (as such term is defined in Section 8,1(i) hereoO or (ii) relating to any other claim, action, suit or proceeding, for an aggregate Net Cost which, in the aggregate, would have a Gulf States Material

' Adverse Effect, and Entergy shall have received a certificate from the Chief Executive Omcer and Chief financial Omcer of Gulf States, dated the date of the Closing Date, to such effect.

ARTICLE Vill TERMINAllON, AMENDMENT AND WAIVER Stenos 8.1 Termination.

(a) This Agreement and the Transaction Agreements may be terminated at any time prior to the Effective Time, whether before or after approval by the shareholders of Gulf States or Entergy, by mutual consent of Gulf States and Entergy, (b) This Agreement and the Transaction Agreements may be terminated by either Entergy or Gulf States if (i) the Mergers shall not have been consummated on or before 18 months from the dat'e of this Agreement (the " Initial Termination Date"); provided that the right to terminate this Agreement and the Transaction Agreements under this Section 8 l(b) shall not be available to any party whose failure to fulfill any obligation urider this Agreement or the Transaction Agreements has been the cause of, or resulted in, the failure of the Effective Time to occur on or before such date; and provided, further, that the Initial-Termination Date shall automatically be extended to 24 months from the date of this" Agreement (the

" Alternative Termination Date"), if on the Initial Termination Date the condition set forth in Section 7.l(f) has not been satisfied or waived and the other conditions to the consummation of the transa contemplated hereby are then capable of being satisfied, and the approvals required by Section 7.!(f) which have not yet been obtained are being pursued with diligence or (ii) the Gulf States Required Regulato Approvals and the Entergy Required Regulatory Approvals shall have become Final Orders, the conditions set forth in Article Vil hereof (other than Section 7.l(0) have been satisfied or waived or are then capable being satisfied by action of the other party, and the other party fails or refuses to consummate the Merg within sixty (60) days after the later of(A) the date the conditions set forth in Article VII hereof (other than Section 7,1(0) have been satisfied or waived or are then capable of being satisfied by action of the o and (B) receipt of the last of such Final Orders for any reason, including but not hmited to its assertion that the Final Orders do not satisfy the condition set forth in Section 7.l(0; and provided, further, that the-Alternative Termination Date shall automatically be extended to 30 months from the date of this Agre if(x) on the Alternatise Termination Date the condition set forth in Section 7.l(0 ha waived, (y)(i) the other conditions to the consummation of the transactions con.emplated hereby are th capable of being satisfied, and (ii) none of the approvals required by Section 7,1(O hase been form by the administratise or regulatory body ultimately responsible for granting or denying such appr the approvals required by Section,7.l(O which have not yet been obtained are being pursued w B.37 i

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and (z) Entergy, on or before the Alternative Termination Date, advises Gulf States in writing that it wishes to extend the Alternative Termination Date as contemplated by this proviso.

(c) This Agreement and the Transaction Agreements may be terminated by either Entergy or Gulf States if(i) the Gulf States Shareholders' Approval shall not have been obtained at the Gulf States Special Meeting or any adjournments thereof (ii) the Entergy Shareholders' Approval shall not have been obtained at the Entergy 2 Special Meeting or any adjournments thereof, (iii) any governmental or regulatory body, the consent of which is a condition to the obligations of Entergy and Gulf States to consummate the transactions contemplated hereby, shall have determined not to grant its consent and all appeals of such determination shall have been taken and have been unsuccessful, or (iv) any court of competent jurisdiction in the United States or any State shall hase issued an order, judgment or decree permanently restraining, enjoining or otherwise prohibiting the Mergers and such order, judgment or decree shall have become final and nonappealable.

(d) This Agreement and the Transaction Agreements may be terminated by Gulf States within 10 days after the later of (i) the date of the Gulf States Shareholders' Approval and (ii) the date of the Entergy Shareholders' Approval (the later of(i) and (ii), the " Approval Date"), if the representations and warranties l of Entergy set forth in Article til hereof shall not have been true and correct in all material respects on and l as of the date of this Agreement, or,in the case of any representation or warranty made as of a specified date, i on and as of the specified date or if Entergy shall not have delivered to Gulf States a certificate signed by its Chief Executive Oflicer and Chief Financial Officer, and dated the Approval Date, to that effect within two business days after the Approval Date.

(e) This Agreement and the Transaction Agreements may be terminated by Entergy within 10 days after the Approval Date,if the representations and warranties of Gulf States set forth in Article IV hereof shall not have been true and correct in all material respects on and as of the date of this Agreement, or,in the case of any representation or warranty made as of a specified date, on and as of the specified date or if Gulf States shall not have delivered to Entergy a certificate signed by its Chief Executive Omcer, and dated the Approval Date, to that etTect within two business days after the Approval Date, (f) This Agreement and the Transaction Agreements may be terminated by Gulf States at any time prior to the Approval Date in order for Gulf States to enter into a binding agreement to consummate a transaction which the Board of Directors of Gulf States believes, in good faith and in accordance with its fiduciary duties after consultation with Gulf States' financial advisors, is more favorable directly or indirectly to Gulf States' shareholders than the transactions contemplated by this Apreement.

(g) If, at any time prior to the Effective Time there shall have occurred and be continuing an event or events (including judicial and nonjudicial developments in Entergy's business or operations occurring since-the date of this Agreement) which, in the aggregate, (x) have or are likely to have an Entergy Material Adverse Effect or (y) other than as a result of actions taken by Gulf States, have or are likely to have a material adierse effect on the ability of the parties to consurnmate the transactions contemplated'hereby, which event or events continue sixty days after written notice from Gulf States to Entergy requesting that Entergy take such actions as are necessary such that such events do not exist (or are continuing at Closing if the Closing is to occur less than sixty days after such notice is given), this Agreement and the' Transaction Agreements may be terminated by Gulf States within twenty business days after the expiration of such sixty day period (or at the Closing if the Closing is to occur prior to the expiration of such sixty day period) if _

such event or events are then continuing; provided that Gulf States shall be deemed to have waised any such right to terminate with respect to such event or esents unless, within such twenty day period, Gulf States (A) exercises its right of termination in respect thereof or (B) in the case of an esent or esents arising from a breach of this Agreement, commences litigation against Entergy seeking to require Entergy to remedy such breach, in which case such 20 day period shall continue until 10 days after such litigation is resolsed.

(h) If, at any time prior to the EITeetise Time there shall hase occurred and be continuing an event or cients (including judicial and nonjudicial developments in Gulf States' business or operations occurring since B48

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the date of this Agreement) which, in the aggregate, (x) have or are likely to have a Gulf States Material Adserse Effect or (y) other than as a result of actions taken by Entergy, have or are likely to have a material adverse effect on the ability of the parties to consummate the transactions contemplated hereby, which or events continue sixty days after written notice from Entergy to Gulf States requesting that Gulf States take such actions as are necessary such that such events do not exist (or are continuing at the Clos Closing is to occur less than sixty days after such notice is given), this Agreement and the Transaction "

3_

Agreements may be terminated by Entergy within twenty business days after the expiration of such period (or at the Closing if the Closing is to occur prior to the expiration of such sixty day period)if suc 3 event or events are then continuing; provided that Entergy shall be deemed to have waived any such right to terminate with respect to such event or esents unless, within such twenty day period, Entergy (A) exerci its right of termination in respect thereof or (D), in the case of an event or events arising from a breach this Agreement, commences litigation against Gulf States seeking to require Gulf States to remed breach, in which case such 20 day period shall continue until 10 days after such litigation is resolved.

(i) In the event that (A) the Cajun Litigation has been completely settled or otherwise resolved prio the Effective Time for an aggregate Net Cost to Gulf States which gives rise to a material adverse effect the business, operations, properties, assets, condition (financial or other) or results of operations of Gulf S and its subsidiaries taken as a whole (a " Cajun Material Adverse Effect") or (B) the Cajun Litigation has no been completely settled or resolved prior to Closing and (i) in the period from the date hereof throug date all conditions to Closing (other than those within the control of Gulf States) are satisfied or waive l " Cajun Determination Date") there have been significant judicial rulings, discoveries of facts or .

circumstances, changes in the status of the Cajun Litigation or other developments in the Cajun Litiga the aggregate of which Entergy has knowledge as a result of which the total liability of the Cajun Litig to Gulf States has materially increased and (ii) there is a reasonable probability that the Cajun Litigation wi i

(when added to Cajun Litigation with respect to which a compromise, settlement, adjudication or other resolution has been made or entered against Gulf States) be settled, compromised or otherwise resolved

} against Gulf States for an aggregate Net Cost which would have a Cajun Material Adverse Effect, then,in the case of (A), within thirty business days after such settlement or resolution (subject to extension mutual written agreement of the parties), Entergy may terminate this Agreement and the Transaction Agreements and, in the case of(B), within ninety business days after the occurrence of both (B)(i) and (subject to extension upon mutual written agreement of the parties).- Entergy may terminate this Agree and the Transaction Agreements.

5 For purposes of this Agreement, " Cajun Litigation" shall mean any currently pending litigation or agency proceeding (other than the suits and proceedings referred to in Section 4.l(a)(iii) and other than the ~

" service water" litigation) with the Cajun Cooperative and any existing or future litigation, claim, cause of action or proceeding in a court oflaw or before any governmental or regulatory body related to of out of essentially the same operative facts or issues as in such currently peading litigation or agency proceeding with the Cajun Cooperative (other than the litigation set forth in Section 4.l(a)(iii) and the

" service water" litigation).

'l I (j) This Agreement and the Transaction Agreements may be terminated by Gulf States at any time to the Closing, if an'y of the following events shall have occurred:(i) acquisition of Entergy by merger or otherwise by any person other than any person who is an affiliate of Entergy as of the date of this Agreem (a " Third Party");(ii) acquisition by a Third Party of more than 50fo of the total assets of Entergy and its consoadated subsidiaries, taken as a whole; (iii) acquisition by a Third Party of more than 507, of the -

outstanding voting power of all equity securities of Entergy; or (iv) adoption or implementation by Ente of a plan ofliquidation<

j (k) This Agreement and the Transaction Agreements may be terminated by Entergy at Closing if the -

if condition set forth in Section 7J(e) shall not be satisfied or may be terminated by Entergy at any time p to Closing if, as a-result of actions taken by Gulf States or otherwise, such condition is incapable of be satisfied at Closing.

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.. s (1) In the event of a breach of the covenant and agreement of Gulf States set forth in Section 6.16(a) which continues 20 days after written notice from Entergy to Gulf States requesting that Gulf States remedy such breach, then this Agreement and the Transaction Agreements may be terminated by Entergy within 10 business days after the expiration of such 20 day period if such breach is continuing; provided that Entergy shall be deemed to have waived any such breach pursuant to this clause (1) unless, in such 20 business day period Entergy (A) exercises its right of termination in respect thereof or (D) commences litigation against Gulf States seeking to require Gulf States to deliver such certificate, (m) In the event of a breach of the covenant and agreement of Entergy set forth in Section 6.16(b) which continues 20 days after written notice from Gulf States to Entergy requesting that Entergy remedy such breach, then this Agreement and the Transaction Agreements may be terminated by Gulf States within 10 business days after the expiration of such 20 day period if such breach is continuing; provided, that Gulf States shall be deemed to have waived any such breach pursuant to this clause (m) unless, in such 20 business day period, Gulf States (A) exercises its right of termination in respect thereof or (D) commences litigation against Entergy seeking to require Entergy to deliver such certificate.

(n) in the event that at the time the parties hereto would otherwise mail the Joint Proxy Statement / Prospectus to their respective shareholders Gulf States shall have requested and shall not have received the items set forth in Section 6.3(b)(ii), then, within ten business days after such date, Entergy or Gulf States may terminate this Agreement and the Transaction Agreements.

(o) In the event that at the time the parties hereto would otherwise mail . the Joint Proxy Statement / Prospectus to their respective shareholders Entergy shall have requested and shall not have received the items set forth in Section 6.3(b)(i), then, within ten business days after such date, Entergy or Gulf States may terminate this Agreement and the Transaction Agreements.

(p) In the event of a breach of any of the covenants of Gulf States set forth in Sections 5.l(e) (f),(g),

(h),(i),(k), (1) or (n)in any material respect which continues for 20 days after written notice from Entergy to Gulf States requesting that Gulf States remedy such breach, this Agreement and the Transaction Agreements may be terminated by Entergy within 30 business days after the expiration of said 20 day period if such breach is then continuing; provided, that Entergy shall be deemed to have waived any such breach pursuant to this clause (p) unless within such 30 business day period Entergy exercises its right of termination in respect thereof.

(q) This Agreement and the Transaction Agreements may be terminated by Gulf States (a)if Entergy takes any action without the consent of Gulf States which requires or in the reasonable judgment of Gulf-States or its independent accountants will or will likely require Gulf States to effect a write off, write-down

~

or create a reserve with respect to the River Bend generating facility prior to the Effective Time when in such judgment such a write-off, write down or reserve would not otherwise be required at that time and (b) such write off, write-down or reserve, when aggregated with all other write-offs, write-downs or reserves taken after

' the date of this Agreement, would result in a substantial likelihood of an interruption in the declaration of dividends on Gulf States Preferred Stock; provided, however, that Gulf States shall not .be entitled to terminate this Agreement under this paragraph (q)if, at the time of such action by Entergy (i) Entergy shall have waived all conditions to its obligation to consummate the transactions contemplated hereby and (ii) all other conditions to consummation of the transactions contemplated hereby are then capable of being satisfiedi and, provided further, that Gulf States shall be deemed to have waived any such right to terminate pursuant to this clause (q) unless, within 20 business days (or such later date as the parties may agree in writing) after .

it makes a determination that it has the right to terminate this Agreement and the Transaction Agreements .

pursuant to this clause (q), it so terminates this Agreement and the Transaction Agreements. In the event-that Gulf States terminates this Agreement and the Transaction Agreements pursuant to this clause (q), and,-

mithin twelve months of such termination, enters into, approves or authorizes the entering into, or publicly announces an intention or plan to enter into.-an agreement providing for a Gulf States Acquisition Transaction (excluding for this purpose sales of assets, in one or a series of transactions, constituting, in the B-40

l aggregate, less than all or substantially all of the assets of Gulf States), Gulf States shall promptly pay to Entergy in cash the sum of $45,000,000 plus an amount equal to the Entergy Expenses.

(r) If this Agreement and the Transaction Agreements are terminated by Gulf States pursuant to the provisions of this Section 8.1, Entergy agrees that, if requested in writing by Gulf States, it will promptly withdraw its application under the llolding Company Act seeking SEC approvals with respect to this Agreement.

SEcTtoN 8.2 Efect of Termination. (a) The representations, warranties and agreements in this Agreement and the Transaction Agreements shall terminate at the Effective Time or the termination of this Agreement pursuarit to Section 8.1, as the case may be, except that the representations, warranties and agreements set forth in Sections 9.1,9.2,9.3,9.4,9.5,9.6,9.7 and 9.10 of this Agreement and Article !! of the Merger Agreements shall survive the Effective Time indefmitely, those set forth in Sections 6.9,6.10 and 6.11 of this Agreement shall survive the Effective Time for the periods contemplated therein, those set forth in Section 6.14 of this Agreement shall survive the Effective Time until the expiration of the applicable statutes of limitations, and those set forth in the last sentence of Section 4.l(a) and Sections 8.2,8.4,9.1,9.2,.

93, 9.4, 9.5 and 9.7 and the last sentence of Sections 6.2(a) and 6.2(b) of this Agreement shall sunive termination indefinitely.

(b)(i) If this Agreement and the Transaction Agreements are terminated (A) by Entergy or Gulf States pursuant to Section 8.l(c)(i), or (B) by Entergy pursuant to Section 8.l(c), (h) or (1) or (C) by Entergy or Gulf States pursuant to Section 8.l(n), then (except as otherwise provided in Section 8.5) Gulf States shall promptly pay to Entergy in cash an amount equal to the documented out-of pocket fees and expenses incurred by Entergy (including without limitation, fees and expenses payable to investment banking firms, accountants, consultants, legal advisors and other persons and their respective agents and counsel) in connection with this Agreement, the Transaction ' Agreements and the transactions contemplated hereby and thereby, up to a maximum of $15,000,000 (the "Entergy Expenses").

(ii) If this Agreement and the Transaction Agreements are terminated (A) by Entergy or Gulf States pursuant to Section 8.l(c)(ii), or (B) by Gulf States pursuant to Section 8.l(d), (g) or (m) or (C) by Entergy or Gulf States pursuant to Section 8.l(o), then (except as otherwise provided in Section 8.5) Entergy shall promptly pay to Gulf States in cash an amount equal to the documented out of-pocket fees and expenses i

incurred by Gulf States (including without limitation, fees and expenses payable to investment banking firms, j accountants, consultants, legal advisors and other persons and their respective agents and counsel) in connection with this Agreement, the Transaction Agreements and th: transactions contemplated hereby and thereby, up to a maximum of $15,000,000 (the " Gulf States Expenses").

(iii) If this Agreement and the Transaction Agreements are terminated by Gulf States pursuant to Section 8.l(f), Gulf States shall promptly pay to Entergy. in cash the sum of $25,000,000 plus an araount

- equal to the Entergy Expenses.

(iv) If this Agreement and the Transaction Agreements are terminated (A) by Entergy or _ Gulf States pursuant to Section 8.i(b)(i) solely by reason of the condition set forth in Section 7.l(f) not having been satisfied or waived or by Gulf States pursuant to Section 8.l(b)(ii), except for terminations in whole or part (x) arising from an action of Gulf States pursuant to Section 6.5(c) with respect to a stipulation'or agreement effectise

=,- only at or after the Effective Time or (y) resulting from the failure to obtain SEC approval under the llolding Company Act for the Alternative Reorganization or (z) arising from actions of Gulf States that would violate-8 the provisions of Section 5.1 or arising from actions of Gulf States of the type specified in Schedule A which exceed the parameters permitted by Schedule A, which actions have materially adversely atiected the ability of -

either Entergy or Gulf States to satisfy the condition set forth in Section 7.l(f)((x), (y), and (z), collectively, the " Regulatory Fee Exceptions"), or (B) by Entergy or Gulf States pursuant to Section 8.l(c)(iii), except for terminations ansing in whole or part from the Regulatory Fee Exceptions, in each such case, Entergy shall promptly pay to Gulf States in cash t' sum of $50,000,000, plus an amount equal to the Gulf States Expenses.

fl 41 e

(v) If this Agreement and the Transaction Agreements are terminated by Entergy or Gulf States pursuant to Section 8.l(b) solely by reason of the condition set forth in Section 7.l(f) not having been sa

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or waived, or solely pursuant to Section 8.l(c)(iii), in either case arising solely from the failure to obta approval under the Holding Company Act for the Alternative Reorganization (which, for purposes clause (v), shall be deemed to include the imposition by the SEC of conditions to its approva llolding Company Act of the Alternative Reorganization as a result of which the conditio cannot be satisfied),

the Gulf States Expenses. then in such case Entergy shall promptly pay to Gulf States in cash an am (vi) In the event this Agreement and the Transaction Agreements are terminated by Enterg States pursuant to Section 8.1(c)(iv), (i) if the order, injunction or decree enjoins, sets aside or unavailable or ineffective a Final Order and does not otherwise enjoin or otherwise restrict the parties to consummate the transactions contemplated by this Agreement then, except where injunction or decree arises in whole or part from a Regulatory Fee Exception, Entergy sha 1 Gulf States in cash the sum of $50,000,000 plus an amount equal to the Gulf States Expenses order, injunction or decree does not relate to such matters, then in such case Entergy shall

. Gulf States in cash an amount equal to the Gulf States Expenses. s (vii) If this Agreement and the Transaction Agreements are terminated by Gulf States pursu Section 8.l(q), except as provided in the last sentence of Section 8.l(q), neither party shall pay expenses to the other party on account of such termination.

(viii) If this Agreement and the Transaction Agreements are terminated by Entergy pursuant to Se 8.l(i)(B),

the Entergy Gulf States shall promptly pay to Gulf States in cash the sum of $25,000,000 plus an am Expenses.

(ix) If this Agreement and the Transaction Agreements are terminated by Entergy pursuant to Se 8.l(i)(A), neither party shall pay a fee or expenses to the other party on account of such termination.

(x) If Entergy shall elect to extend the Alternative Termination Date as provided in the last prov Section 8.l(b) and the Mergers are not consummated for any reason, then upon the final Alternative Termination Date, Entergy shall pay to Gulf States the sum of $10,000,000 in addition to any other a payable under Section 8.2, if any, including but not limited to the amounts, if any, payable under Sect 8.2(b)(iv) or (vi).

(c) All costs and expenses incurred in connection with the preparation, printing and distribution o Joint Proxy Statement / Prospectus (including without limitation, the filing fees related thereto) equally by Gulf States and Entergy, except as otherwise provided in Section 8.2(b). Except as s preceding sentence or as otheruise provided in this Section 8.2, whether or not the Merger all costs and expenses incurred in connection with this Agreement, the Transaction Agreem transactions contemplated hereby and thereby shall be paid by the party incurring such e agree that the rights and remedies of the parties expressly set forth in Sections 8.2 and 8.5 con and exclusive rights and remedies of the parties upon 'a termination of this Agreement pursu 8.1, and, except as provided in Sections 8.2 and 8.5, upon a termination of this Agreement 8.1, no party hereto shall have any liability or obligation to any other party to this Agreem agree that the rights and remedies under Section 8.2(b) are alternative and not cumu the two preceding sentences, Entergy agrees that, in the event of a termination of this Ag States in accordance with Section 8.1 hereof, provided that Gulf States shall have paid to Entergy by reason of such termination pursuant to this Section 8.2, none of Entergy its subsid atliliates will (i) assert or pursue in any manner, directly or indirectly, any claim or cause of action whole or part upon alleged tortious or other interference with their rights under this Agreeme entity or person submitting to Gulf States a Gulf States Proposal or (ii) assert or pursue in any m directly or indirectly, any claim or cause of action against Gulf States or any ofits ollicers or directors b B 42

in whole or part upon its or their receipt, consideration, recommendation, or approval of a Gulf States Proposal or exercise of the right of termination under Section 8.l(f).

SEcTioN 8.3 Amendment. This Agreement and the Transaction Agreements may be amended by the parties hereto end thereto at any time before or after approval by the shareholders of Gulf States or Entergy, but, after any such approval, no amendment shall be made to this Agreement or the Transaction Agreements  !

which (a) changes Article 11 of the Gulf States Merger Agreement in any manner adverse to the holders of Gulf States Common Stock, (b) otherwise in any way materially adversely affects the rights of holders of Gulf States Common Stock, (c)in any way materially adversely affects the rights of holders of Gulf States i 5100 Preferred Stock or any other class or series of the outstanding capital stock of Gulf States (other than Gulf States Common Stock),(d) changes Article 11 of the Entergy Merger Agreement in any manner adverse to the holders of Entergy Common Stock, or (e)in any way materially adversely affects the rights of holders of Entergy Common Stock, in each case, without the further approval of such shareholders. This Agreement and the Transaction Agreements may not be amended except by an instrument in writing signed on behalf of each of the parties hereto and,in the case of an amendment to either of the Transaction Agreements, by an instrument in writing signed on behalf of each of the parties thereto and approved in writing by the parties

. hereto.

SECTloN 8.4 WO/Fer. At any time prior to the Effective Time, the parties hereto may (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid if set forth in an instrument in writing signed on behalf of such party.

SECTION 8.$ Limitation 04 Actions. Except for the payrnent of fees and expenses as expressly provided in Section 8.1 and Section 8.2, no party shall be liable for damages to the other party or any third person as a

result of a breach or termination of this Agreement, except that if a party willfully and in bad faith breaches any provision of this Agreement (other than the covenants in Section 5.1 or on Schedule A), the other party shall be entitled to seek damages resulting from such willful, bad faith breach, but in no event shall a party be liable for consequential or punitive damages. Neither party shall have any liability to the other with respect to Section 6.16 hereof, except as otherwise provided in Section 9.6 hereof.

ARTICLE IX

, GENERAL PROVISIONS StcTios 9.1 Brokers Gulf States represents and warrants that, except for the fees payable to Goldman,

Sachs & Co. which have been disclosed to Entergy prior to the date hereof, no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with_ the transactions contemplated by this Agreement and the Merger Agreements based upon arrangements made by or on behalf of Gulf States. Entergy represents and warrants that, except for the fees payable. to Salomon Brothers Inc which have been disclosed to Gulf States prior to the date hereof, no finder or investment b,nke, is entitled to any brokerage, finder's or other fee or cornmission in connection with the transactons contemplated by this Agreement and the Merger Agreements based upon arrangements made by or on behalf of Entergy.

SECTION 9.2 Notices. All notices and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person (including by courier),

by cable, telegram or telex, by registered or certified mail (postage prepaid, return receipt requested), by r overnight couricr or by facsimile to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

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(a) If to Entergy or llolding Company, to:

Entergy Corporation 225 Baronne Stseet New Orleans, Louisiana 70112 Attention: Don llunter with a copy to:

Skadden, Arps, Slate, Meagher & Flom 919 Third Avenue -

New York, New York 10022 Attention: . Peter Allan Atkins, Esq.

and with a copy to:

Reid & Priest 40 West 57th Street New York, New York 10019 '

Attention: Thomas J. Igoe, Jr., Esq.

(b) If to Gulf States, to:

Gulf States Utilities Company P.O. Box 2951 Beaumont. Texas 77704 Attention: Cecil Johnson, Esq. '

with a copy to:

Fried, Frank,-Ilarris, Shriver & Jacobson One New York Plaza New York, New York 10004 Attention: Arthur Fleischer, Jr., Esq.

and with 'a copy to:

Orgain, Bell & Tucker 470 Orleans Street Beaumont, Texas 77701

= Attention: Benny 11. liughes, Jr., Esq.

and with a copy tm LeBoeuf, Lamb, Leiby & MacRae

. 520 Madison Avenue New York, New York 10022 Attentiom Douglas W. Ilawes, Esq.

Any notice which is addressed and mailed in the manner herein provided or delivered by telegram sh be conclusively presumed to have been duly given to the party to which it is addressed at the close of local time of the recipient, on the third day after it is placed in the mail. Any notice which is sent courier shall be conclusively presumed to have been received on the next business day. Any notice whic sent by_ cable, telex or facsimile shall be conclusively presumed to have been received on dispatch notice shall be confirmed by mail.

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SrcrioN 9.3 Interpretation. 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 9.4 Miscellaneous. This Agreement (including the documents and instruments referred to herein), the Merger Agreements and the Confidentiality Agreements constitute the entire agreement and supersede all other prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof.

SECrioN 9.5 Parties in Interest. Except for the provisions of Sections 2.1, 2.2 and 2.3 of the Merger Agreements and Sections 6.9(e) and (f),6.10(a), (b), (c) and (c) and 6.11 of this Agreement, which shall be enforceable by the beneficiaries of such provisions (only after the Effective Time, in the case of Sections 2.1.

2.2 and 2.3 of the Merger Agreements), this Agreement and the Merger Agreements shall be binding upon and inure solely to the benefit of each party hereto and thereto and their respective successors and assigns and are not intended to confer upon any other person any rights or remedies.

StcrioN 9.6 Spec (fic Performance. The parties hereto acknowledge and agree that a violation of any of the terms or provisions of Sections 5.6,6.9(e) and (0,6.10(a), (b), (c) and (c),6.11 and 6.16 will cause the persons to whom such terms and provisions relate irreparable injury for w hich adequate remedy at law is not available. Therefore, the parties agree that the beneficiaries of such terms and provisions shall be entitled to an injunction restraining the breaching party from committing any violation of the covenants and obligations set forth therein..The foregoing rights and remedies are cumulative and are in addition to any other rights and remedies available at law or in equity.

SECTION 9.7 Governing Law. This Agreement shall be governed in all respects, including validity, interpretation and effect, by the laws of the State of New York (without giving effect to the provisions thereof relating to conflicts of law).

SEcrioN 9.8 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

SEcrioN 9.9 Assignment. Neither this Agreement (including the documents and instruments referred to herein), the Transaction Agreements, nor any of the rights, interests or obligations hereunder, shall be assigned by any of the parties hereto, including by operation of law, without the prior written consent of the other parties.

SEcrioN 9.10 Severability. If any term, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, such provision is to be intended to be ineffective only to the most limited extent possible and the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

B-45

e IN WITNESS WilERLOF, Entergy and Gulf States have caused this Agreement to be signed by their respective omeers thereunto duly authorized as of the date first written above.

ENTERGY CORPORATION By: /s/ Eow N LUPBERGER Eden Lupberger Chairman and Chief Decutive Opcer GULF STATES UTILITIES COMPANY

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By: /s/ JosEPli DONNELLY Joseph Donnelly Chairman and Chief Decutive ODIcer IIolding Company hereby agrees to be bound by and to comply with the provisions of the foregoing Agreement applicable to it.

ENTERGY-GSU 1-loLDINGS, INC.

By: /s/ EDWIN EUPDERGER Dated: November 4.1992 B-46

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__ _ _ . _ _ __ . .. ._ _ _ . _. _m_.

-,y-Schedule A Notwithstanding the restrictions of Section 5.1. Gulf States shall be permitted, subject to the restrictions l and limitations described below:

6 i

g 1. To amend its Articles of Incorporation (and By-laws if necessary), alter its capital stock, obtain necessary shareholder and regulatory approvals, and take any. other action, in each case, necessary to reclassify capital stock and other capital accounts to the maximum extent deemed appropriate by Gulf States to permit lawful payment of permitted dividends, to the extent and as contemplated by Section 5.1 of the Agreement, this Schedule, or the Financing Plan previously delivered by Gulf States to Entergy (the.

" Financing Plan").

2. To pay all dividend acrearages on Gulf States Preferred and Preference Stock and pay current dividends on all then outstanding Preferred and Preference Stock. Gulf States has the right to incur debt for this purpose, provided that a like amount of debt is retired during the entire period covered by the Financing Plan, subject to the receipt of an economic benefit to Gulf States.

3. To pay all sinking fund obligations in arrears and all sinking fund obligations as due or permitted, Gulf States can also exercise optional sinking fund rights for any issues of Gulf States Preferred Stock outstanding, subject to receipt of an economic benefit to Gulf States.

4. To purchase or issue Gulf States' common stock as necessary to meet the need of dividend reinvestment and employee benefit plans presently in effect consistent with past practice.

5. To grant SAR's as provided for under the plan presently in effect consistent with past practice.

6 To refund, refinance, redeem, retire or purchase any or all outstanding Gulf States Preferred and Preference Stocks; and, in connection with any such transaction, to issue new issues or series of either of such classes and to amend the Articles of Incorporation for any of the foregoing purposes, consistent with and as specified on the Financing Plan; Gulf States has the right to use cash on hand or to incur debt for this purpose; provided that any such transaction or series of transactions covered by this paragraph shall produce, after taking into account related transaction costs, a net reduction in Gulf States' cost of capital. In addition, these actions will be consistent with maintaining a Standard & Poor's Corp first mortgage bond credit rating of at least BBB- credit rating and a financial structure with debt not to exceed 56% of total capital, provided that a determination of whether this financial structure is satisfied shall be made excluding any write offs or write downs, or the creation of any reserves which may be taken.

7. To refund, refinance, redeem, defease, prepay, retire or purchase any outstanding debt; and, in connection with any such transaction, to issue new series of bonds (secured under Gulf States' Mortgage as heretofore and hereafter amended and supplemented) or other secured or unsecured debt, consistent with and as specified on the Financing Plan; Gulf States has the right to use cash on hand for this purpose:

provided that any such transaction or series of transactions covered by this paragraph shall produce, after taking into account related transaction costs, a net reduction in Gulf States' cost of capital.

8. To issue notes or renew and extend outstanding notes with terms of not more than three years and 101 secure them with newly issued or outstanding bonds or other property of Gulf States, in each case, as necessary to maintain a short-term credit facility of up to $200 million, consistent with and as specified on the Financing Plan.

9. To purchase, prepay, retire, redeem, reissue, refund, defease, or remarket any pollution control bonds presently outstanding as permitted by the goserning instruments thereof; to issue new pollution control bonds for such purposes; to permit sale / leaseback or lease / lease of pollution control facilities in connection with pollution control bonds, consistent with and as specified on the Financing Plan; to renew, extend or obtain new letters of credit to secure any pollution control bonds presently outstanding or issued in accordance with 1

e this Agreement and to encumber assets or other new or outstanding debt securities of Gulf St purpose; to enter into, amend, or extend agreements with the insurer of any such bonds, to make cash deposits, issue or renew and extend notes presently outstanding, or encumber assets o debt securities, in each case, to maintain the insurance in effect, consistent with and as spe Financing Plan; Gulf States has the right to use cash on hand for this purpose; provided t ,

transaction or series of transactions in the first and second clauses of this paragraph (othe and, in the case of refinancings of pollution control bonds insured by AMBAC, all other related produce, after taking into account related transaction costs, a net reduction in Gulf States'

10. To refinance or replace credit arrangements under Gulf States' nuclear fuel lease and to modify related agreements, encumber nuclear fuel and other assets or new or outstanding d and take any other action necessary, in each case, to maintain such lease in effect up to the pr limits thereof, consistent with and as specified on the Financing Plan.

11. To dispose of assets as follows:

(a) million. To complete the anticipated sale of Nelson Unit 6 facilities to SRMPA for approximate (b) As a part of the settlement of any litigation to which Gulf States is then a party, provided any such disposition or settlement shall be considered in determining whether Entergy has a under Article Vil or Vill of the Agreement.

12. To issue new debt, encumber assets or new or outstanding debt securities, or make arrangements deemed necessary by Gulf States to finance and to make capital expenditures for up additions to its system, consistent with and as specifted in the document entitled "GSU O Budgets", previously provided by Gulf States to Entergy (the " Budget"). Gulf States may r other expenditures in excess of the capital and operating budgets noted in the Budget, provid expenditures are deemed by Gulf States to be reasonably necessary (a) to meet alllicense a requirements with respect to the River Bend generating unit, and (b) to the extent necessary to States to make expenditures required under paragraph 14.

13. To write off or write down any assets or deferred costs or create any resen :s deeme appropriate by Gulf States, provided that Section 4.l(a)(iv) of the Agreement and Entergy's right thereon shall nevenheless apply.

14. To set and revise rates, otter incentive rates (including rates below fully allocated cost-o acquire or dispose of assets in connection with projects or programs designed to retain exis

, defer customer self. generation or promote economic development within its service area, ado management programs, and enter into, amend, and extend wholesale and retail service contracts and take other action as reasonably necessary or appropriate to retain existing or obtain new customer obtain new franchises, or to meet competition, consistent with and as specified on the_ Mar previously outlined below:provided by Gulf States to Entergy except that such action shall be subject to the br (a) Residential and commercial rates at or above current level, subject to changes in the fuel o purchased power charges therein, except for certain commercial customer classes set out on S hereto, which will be considerrd under paragraph (b) below.

(b) Wholesale, industrial and economic development rates that assure cost recovery ofin variable costs (fuel, financing, asset disposal, variable O& M, etc.) plus a contribution to fixed rates recover incremental fixed costs of any new or reactivated capacity or upgrade associated with s

- service which-is reasonably allocable to the term of the contract and have approval of app regulatory agencies).

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If capacity additions or special project investments are required to retain / attract customers, then rates would be designed to fully recover such costs reasonably allocable to the contract term.

(c) Long term otters will be appropriately indexed to provide protection against uncertainties e and/or inflation associated with various economic parameters.

(d) Transmission access policy that is consistent with either Gulf States' present or Entergy's present policies.

All of the above are to be done as part of overall programs and policies of Gulf States aimed at continuing to meet its commitments to its shareholders and ratepayers and in accordance with sound utility practices.

15. To negotiate, renew, extend or enter into new contracts for the purchase of all capacity and energy reasonably necessary for operation of Gulf States' system and satisfaction of reserve and reliability needs, all on terms which are competitive at the time of contracting, reasonably determined by Gulf States to be in the best interests of Gulf States; provided that the period of any new contract shall not extend beyond January 1, 1996 and Entergy shall be given the right to bid to supply any needs for capacity purchases for periods in -

excess of one year,

16. To plan, engineer, design and take reasonable preparatory action to construct new generating capacity reasonably expected at that time to be necessary to meet then projected future load requirements to the extent reasonably necessary taking into account appropriate lead time, consistent with and specified on the Resource Plan previously provided to Entergy; provided that Gulf States shall not enter into any commitments for the foregoing. This paragraph shall not apply to capacity provided for in paragraph 14.

17. To formulate and implement legislative and regulatory policies and legal strategies and manage legislative, regulatory and legal issues and cases of Gulf States (other than cases, issues or other matters directly related to the Mergers contemplated by the Agreement) and, in so doing, but without limiting the foregoing, to:

(a) select counsel and file, prosecute, defend, respond to, atiandon, compromise, settit ar appeal any litigation or regulatory or administrative proceeding (including but not limited to rate cases, license proceedings, environmental and other proceedings) and,in connection with the settlement of any of such, to enter into contracts to buy, sell or exchange assets, purchase or sell capacity or energy, incur and; secure debt, make payments, pay fines, or penalties, provide transmission or other services or take such '

other actions as Gulf States deems necessary and appropriate to effect such willement 'or other resolution, (b) petition, lobby and otherwise take positions and solicit support or oppose administrative or governmental action or legislation at the municipal, county / parish, state or federal level, including without limitation the negotiations of new or extended local franchises.

- 18. Gulf States will consult with Entergy prior to commitment to purchase drm supplies of fuel of one year or greater duration that will extend beyond Jariuary 1,1994, -

General: With respect to any action by Gulf States as to which Entergy's consent is required, Entergy  ;

agrees that its consent will not be unreasonably withheld. Entergy agrees that as to any action by Gu'tl States as to which no consent is required, it will promptly confirm such to Gulf States upon request.-

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ENuncy Mructu AcutistENT Exillnit A PLAN OF MERGER PLAN OF MERGER (the " Plan of Merger"), dated as of ,199 by and among Entergy-GSU lloidings, Inc., a Delaware corporation ("Iloiding Company"), Entergy Corporation, a Florida corporation ("Entergy"), and ETR Merger Corp., a Florida corporation and a wholly-owned subsidiary of liolding Company (" Merger Sub A"). The parties to this Plan of Merger are hereinafter sometimes collectively referred to as the " Constituent Corporations" This Plan of Merger is being entered into pursuant to an Agreement and Plan of Reorganization, dated as of June 5,1992 (the " Reorganization Agreement") by and between Entergy and Gulf States Utilities Company, a Texas corporation (" Gulf States"). The Reorganization Agreement provides for the merger of Merger Sub A with and into Entergy and for the merger of Merger Sub B, a Texas corporation, with and into Gulf States (the " Gulf States Merger"), followed i- -diately by the upstream merger of Entergy with and into IIolding Company.

NOW, THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained herein, the parties hereto, intending to be legally bound hereby, agree as follows:

ARTICLE I TIIE MERGER Stcrtos 1.1. The Merger, in accordance with the provisions of this Plan of Merger and the Florida Business Corporation Act (the "FBCA"), at the Effective Time (as defmed in Section 1.4 hereof), Merger Sub A shall be merged with and into Entergy (the "Entergy Merger") and the separate corporate existence of Merger Sub A shall cease. Entergy shall be the surviving corporation in the Entergy Merger (hereinafter sometimes referred to as the " Surviving Corporation") and shall continue its corporate existence under the laws of the State of Florida. The name of the Surviving Corporation shall continue to be "Entergy Corporation". The Entergy Merger shall have the effects set forth in the FBCA.

SECTION 1.2. Afric/cs o[lnCorporation and By-Laws. (a) The Articles of Incorporation of the Surviving Corporation immediately after the Effective Time shall be the Articles of Incorporation of Entergy immediately prior to the EtTective Time.

(b) The By Laws of the Surviving Corporatmn immediately after the Effective Time shall be the By.

Laws of Entergy immediately prior to the Effective Time.

SECTION 1.3. Directors and Oficers. (a) At the EfTectise Time, the Board of Directors of the Surviving Corporation shall be comprised of all of the members of Entergy's Board of Directors immediately prior to the Effective Time.

(b) The ofTicers of Entergy at the Effective Time shall, from and after the Effective Time, continue as ollicers of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation's Articles of Incorporation and By-Laws.

SEctlON I A. Effective Time; Conditions. lthe Reorganization Agreement and this Plan of Merger are duly approsed by the shareholders of each of1he Constituent Corporations, the other conditions precedent set forth in Article Vil of the Reorganization Agreement are satisfied or (where permissible) waived, and this I

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Plan of Merger is not terminated under Section 3.1 hereof, articles of merger complying with Sec of the FDCA shall be delivered to the Department of State of Florida in accordance with Section the FBCA. The Entergy Merger shall become effective at the time and date which is the later o and date of the filing of the articles of merger relating to the Entergy Merger by the Department of S Florida or at such later time as provided for in the articles of merger as may be permitted by 607.1105(1)(b) of the FHCA and (ii) the issuance of a certificate of merger by the Secretary of Sta State of Texas with respect to the Gulf States Merger or such later time as provided in article with the Secretary of State of the State of Texas as may be permitted by Article 10,03 of the Texa Corporation Act (such time and date is herein referred to as the " Effective Time").

ARTICLE Il CONVERSION OF SIIARES StcTioN 2.1. Merger Sub A Common Stock, Each share of Common Stock of Merger Sub A

" Merger Sub A Common Stock") outstanding immediately prior to the EtTective Time shall, by Entergy Merger and without.any further actien by the holder thereof, be converted into and bec share of Common Stock, 55.00 par value, of the Surviving Corporation (the " Surviving Corpora Stock"). Each certificate which immediately prior to the Ellective Time represented outstandmg Merger Sub A Common Stock shall on and after the Effective Time be deemed for all purpos the number of shares of Surviving Corporation Common Stock into which the shares of Merger Common Stock represented by such certificate shall have been converted pursuant to this Section 2.1.

StcTioN 2.2. Entergy Common Stock. (a) Each share of Common Stock, par value 55.00 per Entergy (the "Entergy Common Stock"), which is held in the treasury of Entergy and each sh Common Stock owned by llolding Company, Gulf States or any subsidiary of Gulf States or Ent be cancelled and shall cease to exist from and after the Efrective Time.

(b) Each share of Entergy Common Stock outstanding immediately prior to the Effective Tim virtue of the Entergy Merger and without any action on the part of the holder thereof, be converted in become one share of Common Stock, 50.01 par value, of IIolding Company (the "I-loiding Co Common Stock"). Each certificate which immediately prior to the Effective Time represented o shares of Entergy Common Stock shall on and after the EfTective Time be deemed for all purpo the right to receive the number of shares of Iloiding Company Common Stock into which the shares of Entergy Common Stock represented by such certificate shall have been converted pursuant to this S

-2.2(b).

SECTION 2.3, Dissenters' Rights. Pursuant to Section 607,1302 of the FDCA, holders of shares of Entergy Common Stock do not have the right to dissent from this Plan of Merger.

i SecrtoN 2.4. Holding Company Common Stock. (a) Each share of Iloiding Company Common Stock issued to and held by Entergy immediately prior to the Effective Time shall be cancelled and shall c i- exist from and after the Effective Time.

(b) Effective as of the Effective Time, lloiding Company shall assume all stock option and other similar plans (the " Stock Option Plans") maintained by Entergy immediately prior to the Effective Time.

Each option (an "Entergy Option") to purchase shares of Entergy Common Stock that is

[

immediately prior to the EtTective Time under any Stock Option Plan shall, etrective as of the Eff and without further action by the holder thereof, be converted into and become an option to purchas number of shares of Iloiding Company Common Stock on the same terms (including, without limitation exercise price thereof and the conditions under which such option becomes exercisable) as app Entergy Option immediately prior to the Effective Time.

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ARTICLE III TERMINATION AND AMENDMENT SEcTioN 3.1. Termination. Notwithstanding the approval and adoption of this Plan of Merger by the shareholders of Entergy, llolding Company and Merger Sub A, this Plan of Merger shall terminate forthwith in the event that the Reor3anization Agreement shall be terminated as therein provided and may be terminated as otherwise provided in the Reorganization Agreement. In the event of the termination of this Plan of Merger as provided above, this Plan of Merger shall forthwith become void and there shall be no -

liability on the part of any of the parties hereto except as otherwise provided in the Reorganization Agreement.

StcTioN 3.2. Amendment. This Plan of Merger shall not be amended except in accordance with the 4

provisions of Section 8.3 of the Reorganization Agreement.

ARTICLE lY MISCELLANEOUS SECTION 4.1. GoFerning Law. This Plan of Merger shall be governed by the laws of the State of Florida.

SEcrtON 4.2. Counterparts. This Plan of Merger may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

IN WITNESS WilEREOF, the parties hereto have caused this Plan of Merger to be signed by their respective officers thereunto duly authorized as of the date first written above ENTERGY CORPORATION By:

ETR MERGER CORP.

By:

ENTERGY.GSU HOLDINGS, INC.

By:

3

Gt;i.r Sixtis Mi Rci-H Acuintmr Exitanti D PLAN OF MERGER PLAN OF MERGER (the " Plan of Merger"), dated as of .199 . by and among Entergy.

GSU lloidings, Inc., a Delaware corporation ("Iloiding Company"), GSU Merger Corp., a Texas corporation and a w holly owned subsidiary of Iloiding Company (" Merger Sub 11") and Gulf States Utilities Company, a Texas corporation (" Gulf States"). (The parties to this Plan of Merger are hereinafter sometimes collectively referred to as the " Constituent Corporations").

This Plan of Merger is being entered into pursuant to an Agreement and Plan of Reorganization, dated as of June 5,1992 (the " Reorganization Agreement") by and among Gulf States and Entergy Corporation, a Florida corporation ("Entergy"). The Reorganization Agreement provides for the merger of Merger Sub U with and into Gulf States and for the merger of ETR Merger Corp., a Florida corporation, with and into Entergy (the "Entergy Merger"), followed immediately by an upstream merger of Entergy with and into lloiding Company.

NOW, TilEREFORE, in consideration of the premises and the representations, warranties, covenants -

and agreements contained herein, the parties hereto, intending to be legally bound hereby, agree as follows:

ARTICLE I Tile MERGER St.cTroN 1,1. The Merger, in accordance with the provisions of this Plan of Merger and the Texas -

Dusiness Corporation Act (the "TBCA"), at the Effective Time (as defined in Section 1.4 hereo0, Merger Sub D shall be merged with and into Gulf States (the " Merger") and the separate corporate existence of -

Merger Sub 11 shall cease. Gulf States shall be the surviving corporation in the Merger (hereinafter sometimes referred to as the " Surviving Corporation") and shall continue its corporate existence under the laws of the '

State of Texas. The name of the Surviving Corporation shall contMue to be " Gulf States Utilities Company".

The Merger shall have the elTects set forth in the TDCA, with all properties, liabilities and obligations of Gulf States remainin;; with Gulf States as the Surviving Corporation and all properties,' liabilities and obligations of Merger Sub D being alk)cated to and vested in Gulf States as the Surviving Corporation.

SrCTION l.2 sfrticles offncorporation and By Laws. (a) The Restated Articles ofIncorporation of Gulf States as in effect immediately prior to the Effective Time shall be the Articles of Incorporation of the -

Surviving Corporation immediately after the EfTective Time.

(b) The By laws of Gulf States as in effect immediately prior to the Effective Time shall be the Dy-laws of the Surviving Corporation immediately after the Effective Time.

SterioN 1.3. Directors and Oficers. (a) 'At the Effective Time the Board of Directors of the Surviving

. Corporation shall be comprised of all of the members of Gulf States' Board of Directors immediately prior to the Etiective Time and four additional persons designated by Entergy pursuant to Section 6.10(e) of the Reorganization Agreement.

(b) The officers of Gulf States at the Effective Time shall, from and after the Effective Time, continue as omcers of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation's Articles of-Incorporation and Dy Laws. .

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SrcnoN 1.4. Efective Timet Conditions. If the Reorganization Agreement and this Plan of Merger are duly approved by the shareholders of each of the Constituent Corporations, the other conditions preced

- set forth in Article Vil of the Reorganization Agreement are satisfied or (where permissible) waived, and this Plan of Merger is not terminated under Section 3.1 hereof, articles of merger complying with Article 5.04 -

and Part Ten of the TBCA shall be filed with the Secretary of State of the State of Texas in accordance with Article 5.04 of the TBCA. The Merger shall become effective at the time and date which is the later of(i) the issuance of a certificate of merger by the Secretary of State of the State of Texas or at such later time as provided for in the articles of merger as may be permitted by Article 10.03 of the TBCA and (ii) the date and time of the filing of the articles of merger relating to the Entergy Merger by the Florida Department of State or at such later time as provided for in the articles of merger as may be permitted by Section 607.110$(

of the FBCA (such time and date is herein referred to as the " Effective Time"). Gulf States shall pay filing fees in connection with the filing of the articles of merger with the Secretary of State of the State of Texas required pursuant to Article 10.01.A(3) of the TBCA. ,

ARTICLE II CONVERSION OF SIIARES SEcnoN 2.1. MergerSub Common Stock. Each share of Common Stock of Merger Sub B (the " M Sub B Common Stock") outstanding immediately prior to the Effective Time shall, by virtue of the M and without any further action by the holder thereof, be converted into shares of Common Stock, without par value, of the Surviving Corporation (the " Surviving Corporation Common Stock"). Each certificate which immediately prior to the Etrective Time represented outstanding shares of Merger Sub B Common Stock '

shall, on and after the Effective Time, be deemed for all purposes to represent the number of shares of Surviving Corporation Common Stock into which the shares of Merger Sub B Common Stock rspresen by such certificate shall have been converted pursuant to this Section 2.1.

SECDON 2.2. Conversion ofGulfStates CapitalStock in the Merger. At the Etiective Time, by virtue of the Merger and without any action on the part of any holder of capital stock of Gulf States:

(a) Each share of Common Stock, without par value, of Gulf States (the " Gulf States Common Stock which is held in the treasury of Gulf States and each share of Gulf States Common Stock owned by Company, Entergy or any subsidiary of Entergy or Gulf States shall be cancelled and shall cease to exist -

from and after the Effective Time.

(b) Subject to Sections 2.6 and 23, each remaining issued and outstanding share of Gulf States Common Stock shall be converted as follows:

(i) Each outstanding share of Gulf States Common Stock, which under the terms of Section 2.5 is to be converted into Common Stock, 50.01 par value, of Ifolding Company (the "liolding Company Common Stock"), shall be converted into the right to receive such number of shares of fully paid and non. assessable 11olding Company Common Stock as shall equal the Exchange Ratio. The Exchange Ratio shall be the number determined by dividing (x) $20.00 (the " Unadjusted Cash Price") minus the aggregate amount per share of all cash dividends declared on Gulf States Common Stock on the date of -

the Reorganization Agreement through the Effective Time (the " Gulf States Dividend Amount")

the Dividend Adjustment Amount (as defined below) by (y) the Average Trading Price (as defined l

below), and rounding the result to three decimal points. The " Dividend Adjustment Amount" shall ,

mean the greater of (a) the aggregate amount per share of all cash dividends declared on Ent Common Stock from and after June 5,1994 to the Effective Time multiplied by a fraction, the numera

. of which shall be the Unadjusted Cash Price and the denominator of which shall be the Aser Price of Entergy Common Stock) and (b) 5.25 per quarter (prorated for a partial quarter) from and after June'5,1994 to the Effective Time. The " Average Trading Price of Entergy Common Stock" shall mean the average closing sales price, rounded to four decimal points, of the Common Stock,55.00 par va i 2

, ,y, . _ - _ . ,

g. .

per share, of Entergy (the "Entergy Common Stock") as reported on The New York Stock Exchange, Inc. (the "NYSE") Composite Tape, for the 15 consecutive trading day period ending on (and including) the sixth trading day prior to the Effective Time.

(ii) Each outstanding share of Gulf States Common Stock which under the terms of Section 2.5 is to be converted into the right to receive cash shall be converted into the right to receive an amount (the

" Cash Amount") equal to the Unadjusted Cash Price minus the Gulf States Dividend Amount plus the Dividend Adjustment Amount,in cash.

(c) Each share of each series of Preferred Stock,5100 par value, of Gulf States (the "$100 Par Value Preferred Stock"), Preferred Stock, without par value, of Gulf States (the "No Par Value Preferred Stock"),

Preference Stock, without par value, of Gulf States (the " Preference Stock") and of every other class of capital stock of Gulf States (other than cummon stock)("Other Capital Stock") that shall be issued and outstanding immediately prior to the Effective Time (and each share of each series of $100 Preferred Stock, No Par Value Preferred Stock and Preference Stock and Other Capital Stock held in the treasury of Gulf States at the Effective Time) shall, by virtue of the Gulf States Merger and without any further action by the holder thereof, continue unchanged and remain outstanding as one share of such series of $100 Preferred Stock, No Par Value Preferred Stock, Preference Stock or Other Capital Stock, as the case may be, of the Surviving Corporation.

Gulf States will not have, immediately prior to the Effective Time, any stock option or similar plan or arrangement providing for the issuance of Gulf States Common Stock.

SECrioN 2.3. Holding Company Common Stock. Each share of IIolding Company Common Stock issued to and held by Gulf States immediately prior to the Effective Time shall be cancelled and shall cease to exist from and after the Effective Time.

SEcrioN 2.4. Election Procedures. Each holder of Gulf States Common Stock (other than holders of Gulf States Common Stock to be cancelled as set forth in Section 2.2(a)) shall have the right to submit a request, in accordance with the following procedures, specifying the number of shares of his Gulf States Common Stock which he desires to have converted into the right to receise llolding Company Common Stock in the Merger and the number of shares of his Gulf States Common Stock which he desires to have converted into a right to receive cash in the Merger in accordance with the following procedure.

(a) Each holder of Gulf States Common Stock may specify in a request made in accordance with the provisions of this Section 2.4 (herein called an " Election"):

(i) the number of shares of Gulf States Common Stock owned by such holder which such holder shall desire to have converted into a right to receive cash in the Merger (" Cash Election"); and (ii) the number of shares of Gulf States Common Stock owned by such holder which such holder shall desire to have converted into 11olding Company Common Stock in the Merger (" Stock Election").

(b) llolding Company shall authorize one or more persons to receive Elections and to act as Exchange Agent hereunder (the " Exchange Agent").

(c) llolding Company shall prepare a form (the " Form of Election") pursuant to which each holder of i

Gulf States Common Stock at the close of business on the EtTective Time may make an Election and which shall be mailed to Gulf States stockholders at such time as to permit Gulf States stockholders to exercise their right to make an Election. As used herein," Election Date" means the date announced by Entergy,in a i

news release delivered to the Dow Jones News Service, as the last day on which Forms of Election will be accepted; provided, that such day shall be a business day no earlier than twenty business days prior to the Effective Time ~and no later than the date on which the Effectise Time occurs and shall be at least five business days following the date of such news release, provided further, that Entergy shall have the right to set a later 3

date as the Election Date so long as such later date is no later than the date on which the Effective occurs. l' (d) Any Election shall have been properly made only if the Exchange Agent at its office desi the Form of Election shall have received, by 5:00 p.m. local time in the city in which such Ex located, on the Election Date, a Form of Election properly completed and signed (with the si signatures thereon guaranteed if required by the Form of Election); accompanied either by the ce certificates representing all of the shares of Gulf States Common Stock owned by such holder, d or otherwise acceptable for transfer, or by an appropriate guaranty of delivery in the form customa in transactions of this nature from a member of a national securities exchange or a member of the Association of Securities Dealers, Inc. or a commercial bank or tn.st c, mpany in the United States to deliver shares covered by such a guaranty of delivery within the time set forth on such guarant deemed to invalidate any otherwise properly made Election.

(e) Any holder of Gulf States Common Stock may at any time prior to the Election Date chang Election by written notice received by the Exchange Agent at or prior to the Election Date a a properly by completed, subsection (d) above). revised Form of Election (with such other documents as are required as c (f) Any holder of Gulf States Common Stock may at any time prior to the Election Date revoke his Election by written notice receised by the Exchange Agent at or prior to the Election Date or by wit prior to the Election Date of his certificates for Gulf States Common Stock or of the guarantee such certificates, previously deposited with the Exchange Agent.

(g) As used in this Agreement " holders" of Gulf States Common Stock shall mean record holders of Gulf States Common Stock. Record holders who are nominees only may submit a separate Form o for each beneficial owner for whom any such record holder is a nominee; provided, however, that at request of Iloiding Company, such record holder shall certify to the satisfaction of Iloiding Compa such record holder holds such shares as nominee for the beneficial owner thereof, For purposes of Agreement, holder of shares. each beneficial owner for which a Form of E!cetion is submitted will be treated as a (h) IIolding Company shall have the right to make rules not inconsistent with the terms of this Agreement governing the validity of the Forms of Election, the manner and extent to which Elections a be taken into account in making the determinations prescribed by Section 2.5, the issuance an certificates for llolding Company Common Stock into which Gulf States Common Stock is converted in the

- Merger and the payment for shares of Gulf States Common Stock cornerted into the right to receive c the Merger.

States CommonAll such rules and determinations thereunder shall be final and binding on all holders of Gu Stock, SLCTtON 2.5. Selection of Gul/ States Common Stock. The manner in which eac Common Stock (other than shares of Gulf States Common Stock to be canc shall be converted at the Effective Time into either cash or llolding Company Stock shall be as set forth below in this Section 2.5.

4 (a) As is more fully set forth below, the number of shares of Gulf States Common Stock to be conver'ed into_the right to receive cash in the Merger pursuant to this Agreement (the " Cash Conversion Nur shall not exceed (i) $250,000,000 less amounts to be paid in lieu of fractional shares divided by (ii) th<{

Amount.

(b) If Cash Elections are received for a number of shares of Gulf States Common Stock v nich is to or less than the Cash Cornersion Number, each share of Gulf States Common Stock evvered by a C Election shall be converted into agight to receive cash in the Merger.

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(c) If Cash Elections are received for a number of shares of Gulf States Common Stock which is more than the Cash Conversion Number, the shares of Gulf States Common Stock for which Cash Elections have been received shall be converted into a right to receive cash and flolding Company Common Stock in the following manner:

(i) A cash proration factor (the " Cash Proration Factor") shall be determined by dividing the Cash  !

Conversion Number by the total number of shares of Gulf States Common Stock with respect to which j effective Cash Elections were made. i i

(ii) The number of shares of Gulf States Common Stock covered by each Cash Election to be  !

converted into the right to receive cash shall be determined by multiplying the Cash Proration Factor  !

by the total number of Shares of Gulf States Common Stock covered by such Cash Election, rounded to the next lowest integer.

l (iii) Each share of Gulf States Common Stock covered by a Cash Election and not converted into a

' right to receive cash as set forth above shall be converted into llolding Company Common Stock in the Merger.

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' (d) Each share of Gulf States Common Stock for which Stock Elections have been made shall be-  ;

converted into the right to receive IIolding Company Common Stock in the Merger.

(c) For the purposes of this Section 2.5, outstanding shares of Gulf States Common Stock (other than shares of Gulf States Common Stock to be cancelled as set forth in Section 2.2(a)) as to which an Election is not in effect and effective on the Election Date shall be called "Non-Electing Gulf States Common Shares."

IfIIolding Company shall determine for any reason that any Election was not properly made with respect to shares of Gulf States Common Stock, such Election shall be deemed to be not in effect and shares of Gulf States Common Stock covered by such Election shall, for the purpose hereof, be deemed to be Non. Electing Gulf States Common Shares. Each Non. Electing Gulf States Common Share shall be converted into the right to receive llolding Company Common Stock in the Merger.

SECTtON 2.6. Holding Company To Make Cash and Certi6 cates hallable: Transfer Taxes. (a) Holding Company shall make available to the Exchange Agent promptly after the Election Date (the ." Allocation ,

Date"), an amount in cash equal to the cash to be paid in the Merger, which, including amounts to be paid in lieu of fractional shares, shall not exceed 5250,000,000 and suflicient shares ofliolding Company Common Stock to permit the Exchange Agent to make the distributions of cash and Holding Company Common Stock -

provided for hereunder. The Exchange Agent shall not be entitled to vote or exercise any rights of ownership with respect to such shares held by it from time to time hereunder, except that it shall receive and hold all dividends or other distributions paid or distributed with respect to such shares for the account of the persons entitled thereto.

(b) As soon as practicable after the Allocation Date, the Exchange Agent shall distribute to holders of -

shares of Gulf States Common Stock whose shares are to be converted into cash in accordance with Section :

2.2(b)(ii), upon surrender to the Exchange Agent (to the extent not previously surrendered with a Form of Election) of one or more certificates for such shares of Gulf States Common Stock for cancellation, a bank check for an amount equal to the Cash Amount for each share of Gulf States Common Stock so converted. >

In no event shall the holder of any such surrendered certificates be entitled to receive interest on any of the funds to be received in the Merger. If such check is to be sent to a person other than the person in whose-- .

name the certificates for shares of Gulf States Common Stock surrendered for exchange are registered,it shall be a condition of the exchange that the person requesting such exchange shall pay to the Exchange Agent ,

any transfer or other taxes required by reason of the delivery of such check to a person other than the -

registered holder of the certificate surrendered, or shall establish to._the satisfaction of the Exchange Agent that such tax has been paid or is not applicable. Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto shall be liable to a holder of shares of Gulf States Common Stock for any amount paid - '

-to a public ollicial pursuant to any applicable abandoned property, escheat or similar law .

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(c) As soon as practicable after the Allocation Date, each holder of shares of Gulf States Common Stock converted into the right to receive shares ofliolding Company Common Stock pursuant to Section 2.2(b upon surrender to the Exchange Agent (to the exteri not previously surrendered with a Form of Election) of one or more certificates for such shares of Gulf States Common Stock for cancellation, will be entitled to receive certificates representing the number of shares of Holding Company Common Stock to be issued in respect of the aggregate number of such shares of Gulf States Common Stock previously represented stock certificates surrendered based upon the Exchange Ratio. Notwithstanding any other provision of th Plan of Merger, no certificates or scrip for fractbnal shares of Holding Company Common Stock shall be issued upon the surrender for exchange of Certilcates pursuant to Article 11 in the Merger and Company Common Stock dividend, stod split or interest shall relate to any fractional security, and such fractional interests shall not entitle the owner thereof to vote or to any other rights'of a security holder.

lieu of any such fractional shares, each holder of Gulf States Common Stock who would otherwise have entitled to a fraction of a share of IIolding Company Common Stock.upon surrender of Gulf States Certificates for exchange pursuant to Article il shall be entitled to receive from the Exchange Agent a cash payment in lieu of such fractional share equal to such fraction multiplied by the Average Trading Price of Entergy Common Stock. Ilo! ding Company shall make available to the Exchange Agent the amount of cash required to make any cash payments in lieu of fractional shares pursuant to this Section 2.6. Notwith the foregoing, neither the Exchange Agent nor any party hereto shall be liable to a holder of shares of Gulf States Common Stock for any shares of Ilolding Company Common Stock or dividends or distributions thereon delivered to a public official pursuant to applicable escheat laws.

(d) The cash paid and shares of Iloiding Company Common Stock issued, upon the surrender of certificates in accordance with the terms hereof, shall be deemed to have been paid and issued in full satisfaction of all rights pertaining to such shares of Gulf States Common Stock, as the case may be.

StenoN 2.7i Certain Adjustments. If, between the date of this Agreement and the Effective Time, the outstanding shares of Entergy Common Stock or the outstanding shares of Gulf States Common Stock shall -

be changed into a different number of shares or a different class of shares by reason of any reclassif recapitalization, stock split, stock dividend, exchange of shares, or similar adjustment, the Exchange Ra shall be appropriately adjusted therefor and the new Exchange Ratio resulting from any such adjustm shall be rounded to three decimal places.

Sterios 2.8. Closing of Transfer Books. From and after the EtTective Time, the stock transfer books of 1 Gulf States shall be closed and no transfer of shares of Gulf States Common Stock shall thereafter be made, if, after the Effective Time, Gulf States Common Stock certificates are presented to lloiding Compa shall be cancelled and exchanged for certificates representing liolding Ccmpany Common Stock pursuan Section 2.2(b).

StenoN 2.9. DissentingShares. Pursuant to Article 5.11 of the TI1CA, holders of shares of capital stock of Gulf States do not have the right to dissent from this Plan of Merger.

ARTICLE 111 AhlENDMENT AND TERAllNATION 5 tenon 3.1. Terminatmn. Notwithstanding the approval and adoption of this Plan of Merger by the shareholders of the Constituent Corporations, this Plan of Merger shall terminate forthwith in the esent tha the Reorganization Agreement shall be terminated as therein provided and may be terminated as otherwis provided in the Reorganization Agreement. In the event of the termination of this Plan of Merger as pr p

above, this Plan of. Merger shall forthwith become said and there shall be no liability on the part of a the parties hereto except as otherwise provided in the Reorganization Agreement.

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- 4 Se ctios 3.2. Amendment. This Plan of Merger shall not be amended except in accordance with the -

prosisions of Section 8.3 of the ReorFanization Agreement.

ARTICLE IV 511SCELLANI:OUS j Sic 1:oN 4.1. GOVERN /NG LilV. Tills Pl.AN OF MERGER Sil ALL llE GO\ ERNED llY Tile I LAWS OF Tile STATE OF NEW YORK, WITilOUT REGARD TO Tile CONFLICT OF LAWS .l PROVISIONS 111EREOF, EXCEPI' TilAT PROVISIONS OF ARTICLE I RELATING TO Tile MECllANICS OF Tile MERGER CONTEMPLATED llEREllY SilALL IlE GOVERNED fly Tile LAWS OF Tile STATE OF TEXAS.

SLc1 oN 4.2. Counterparts. This I'lan of Merger may be executed in two or more counterpans, each of which shall be deemed to be an original, but all of w hich shall constitute one and the same agreement.

IN WITNESS WIIEREOF, the parties hereto have cause this Plan of Merger to be signed by their respective oHicers thereunto duly authorized as of the date first written above.

Getr STATi.s UrsuTits CostrANy

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ENII'RGY-OSU 1101 DINGS, INC, fly:

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Un's1Htot Mt aci n Acut i sits 1 Ihtuutt C PLAN OF MI:llGl:It PLAN OF M IRGER (the " Plan of Merger"), dated as of ,199 , by and between Entergy.

GSU lloidings, Inc., a Delaware corporation ("Ilolding Compan>"), and Entergy Corporation, a Florida corporation ("Entergy"). (The parties to this Plan of Merger are herrinniter sometimes collectisely referred te as the " Constituent Corporations").

This Plan of Merger is being entered into pursuant to an Agreement and Plan of Reorganization, dated as of June $,1992 (the " Reorganization Agreement") by and between Entergy and Gulf States Utilities Company, a Texas corporation (" Gulf States"). The Reorganisation Agreement provides for the rnerger of -

GSU Merrer Corp, a Texas corooration, with and into Gulf States (the " Gulf States Mercer") and for the merger of ETR Merfer Corp., a Florida corporation, with and into Entergy (the "Entergy Merger"), followed immediately by an upstream rnerger of Entergy with and into llo! ding Company pursuant to this Plan of Merger.

I NOW, TilEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained herein, the parties hereto, intending to be legally bound hereby, agree as follows:

1

t AllTICLE I Tile MEltGElt t SititoN 1.1. 7hc Merger. In accordance with the prositions of this Plan of Mery the Florida Ilusiness Corporation Act (the "FilCA") and the Delaware General Corporatiot, ' aw (the "DGCL"), at the Effectise Time (as defmed in Section 1.4 hereof), Entergy shall be merged with and into llolding Company (the " Upstream Merger") and the separate corporate existence of Enterfy shall cease. Ilolding Compat.y shall be the surviving corporation in the Upstream Merger (hereinafter sometimes referred to as the "Suniving Corporation") and shall continue its corporate exisience under the laws of the State of Delaware. E name 3 of the Surviving Corporatio

: shall become "Entergy Corporation". The Upstream Merger shall base the effects set forth in the FDCA and the DGCL, with title to all real estate and cther property, or uny interest j therein, sested in the Survising Corporation without reservation or impairment and with the Survivirq Corporation thenceforth responsible and liable for all the liabilities and obligations of Entergy.

SicrioN 1.2. Artic/cs of Incorporation and By Laws. (a) The Articles of incorporation .loldii g Company, as in effect immediately prior to the EfTectisc Time, shall be the Articles of Incorporation of the Suniving Corporation after the Effective Time except that Article I shall be amended to read:"The name of the Corporation is "Lntergy Corporation" (hereinafter, the " Corporation")."

(b) The Dy laws of IIolding Company, as in ettect immediately prior to the Effectise Time, shall be the Hy laws of the Surviving Corporation after the Effectise Time escept that the liy Laws shall be deemed amended to refleet the name of the Surviving Corporation is "Entergy Corporation" Sicitos 1.3. Dircerors and O!Jicers. (a) At the Effectise Time the Board of Directors of the Sunning Corporation shall be comprised of all of the members of Iloiding Company's lloard of Directon immediately i prior to the Eticctise Time.

(b) The ofEcers of Ilolding Comprny at the Effectise Time shall, from and after the Ellectise Time, 4 continue as officers of the Surviving Corporation until their successors have been duly elected or appointed

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and qualified or until their earlier death, resignation or removal in accordance with the Survivi Corporation's Articles ofincorporation and Ily Laws. .

Si ctioN 1.4. E/ Ject /re Timet Condition.t. If the conditions precedent set forth in Article Vil of the ,

Reorganization Agreement are satisfied or (where permissible) waived and the Gulf States Merger a Entergy Merger are effective, and thh Plan of Merger is not terrninated under Section 3.1 hereof, ar -!

merger cornplying with Section 607.1105 of the FilCA shall be delivered to the Department of State of the State of Florida in accordance with Section 607.1105 of the F11CA and a certificate of owners ,

complying with Section 253 of tt DOCL shall be delivered to the omce of the Secretary of State of the St of Delaware in accordance with Section 253 of the DOCL The Upstream Merger shall become ef

" Effective Time") at the time and date which is the later of(i) the filing of such articles of merger by

• Department of State of the State of Florida or at such later time and du as provided for in such articles rnerger as may be permitted by Section 607.110$(1)(b) of the FIICA and (ii) the fding of such certificate of ownership and merger with the Secretary of State of the State of Delaware as at such later time and date as provided for in such certificate of ownership and merger as may be permitted by Section 253 of the DGCL

.AllTICLE 11 CONVERSION OF SilARES SEctlON 2.1. Conversion i ofEnfergy Common Stock. At the Effective Time, by virtue of the Upstream Merger and without any act on on the part of any holder of Common Stock,55.00 par value, of Enterg "Entergy Cornmon Stock"), each share of Entergy Common Stock which is held by lloiding Company o any direct or ind;tect wholly owned subsidiary of the lloiding Company shall be cancelled and shall cease to exist from and after the Effective Time.

SterlON 2.2, //olding Company Common Stock. Each share of Common Stock, 50.01 par value, of Iloiding Company outstanding imtnediately prior to the Effective Time shall remain outstanding as a sha of common stock of the Surviving Corporation.

J ARTICLE !!!

AMENDMENT AND TERMINATION SicrioN 3.1. Termination. Notwithstanding the approval and adoption of this Plan of Merger by the lloard of Directors oflloiding Company, this Plan of Merger shall terminate forthwith in the event that the Reorganization Agreement shall be terminated as therein provided and may be terminated as otherwise provided in the Reorganization Agreement. In the event of the termination of this Plan of Merger as prov ,

abose, this Plan of Merger shall forthwith become void and there shall be no liability on the part of a ~

the parties hereto except as otherwise provided in the Reorganization Agreement.

Srct1os 3.2. Amendment. This Plan of Merger shall not be amended except in accordance with the prosisions of Section 8.3 of the Reorganization Agreement.

ARTICLE IV SLctioN 4.1. Governing Law. This Plan of Merger shall be governed by the laws of the State of Dehware without regard to the conflict of laws provisions thereof, except that the provisions of Article I relating to the mechanics of the merger contemplated hereby governed by Florida law shall be governe the laws of the State of Florida. * '

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i SrrrioN 4.2. Counterparn. This Plan of Merger may be executed in Iwo or more counterparts, each of I which shall be deemed to be an original, but all of which shall constitute one and the same sgreement.

IN WITNESS WilEREOF, the parties hereto have caused this Plan of Merger to be signed by their respective ollicers thereunto duly authorized as of the hte first written above.

EN1f.ROY OSU llot DINGS INC.

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ENTLRGY CORI' ORATION 13v:

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EXHIBIT 2 TO ATTACHMENT 1 PRIMARY REORGANIZATION I..

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( PRIhtARY REORGANIZADON STEP 1:

h!DIGDt OF llOLDINGS SUBSIDIARIES IhTO ENERGY AND IlOLDINGS (Delsware)

GULF STATES GSU hiDtGUI 4~~~ ETR CORP. ENTERGY (Texas) htERGER CORP. ~~*

(Terms) 0%rida) (Wrida) l EsTERGY SUBSIDIARIES STEP 2:

MERGER OF ENTERGY INTO I!OLDINGS;

.. HOLDINGS OIANGES NAhiE TO ENERGY IIOLDINGS

( Otenamed ENTERGD 4 (Delsware) l 1

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GULF STATES t ENTERGY (Texas) 0%rida)

ENERGY SUBSIDIARIES STEP 3: _

FTNAL STRUCTURE-PRIh!ARY REORGANIZATION ENTERGY r

(Delaware)

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EXHIBIT 3 TO ATTACHMENT 1 ALTERNATE REORGANIZATION

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C* ALTERNA'ITYE REORGAN17AT10N I SIIP 1: ,

MERGER OF 1IOLDINGS SUIISIDIARIES INTO ENTE 4

IlOLDINGS (Delaware) i

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GULF STATES

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FINAL STRUCTURE-ALTERNATIVE REORGANIZATION -

IIOLDINGS no be Renused ENTERGY)

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GULF STATES ENITRGY -

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SUBSIDIARII3 y .

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ATTACHMENT 2 "w - - ,- *y w y F- e rw-vi--4T- - +

NO SIGNIFICANT HAZARDS CONSIDERATION In accordance with the requirem?nts of 10 C.F.R. 5 50.92, the following discussion is provided in support of the determination that no significant hazardc consideration is created by the change proposed by this submittal.

A. Proposed change:

The proposed amendment to the Operating License would revise the Operating License to reflect the business combination of Gulf States and Entergy.

The amendment does not change either ownership or operation of River Bond.

B. No Significant flazards Consideration Analysis: ,

Applying the three standards set forth in 10 C.F.R. $ 50.92, the proposed change to the Operating License involves no significant hazards consideration:

1. The proposed change will not involve a significant increase in the probability or consequences of an accident previously evaluated. As a result of che proposed license amendment, there will be no physical change to the River Bond facility, and all Limiting Conditions for Operation, Limiting Safety System Settings and Safety Limits specified in the Technical Specifications will remain unchanged. Also, the River Bend Quality Assurance Program, Emergency Plan, Security Plan, and Operator Training and Requalification Program will be unaffected.

2. The proposed amendment will not create the possibility of a new or different kind of accident from any accident previously evaluated. The proposed amendment will-have no effect on the physical configuration of -

River Bend or the manner in which it will operate. The plant design and design basis will remain the same. The current plant safety analyses will therefore remain complete and accurate in addressing the l design basis events and in analyzing plant response and consequences, i

The Limiting Conditions for Operations,,

Limiting Safety System Settings and Safety Limits specified in the' Technical Specifications for River Bond are not affected by the proposed license amendment.

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no :07.P29 As such, the plant conditions for which the design basis accident analyses have been performed will remain valid. Therefore, the proposed license amendment cannot create the possibility of a new or different kind of accident from any accident previously evaluated.

3. The proposed amendment will not involve a significanc reduction in a margin of safety.

plant-safety margins are established through ,

J Limiting Conditions for Operation, Limiting Safety System Settings and Safety Limits '

specified-in the Technical Specifications.

Since there will be no change to the physical -

design or operation of the plant, there will be no change to any of those margins. Thus, the proposed license amendment will not involve a significant reduction in any margin of safety.

C.

Conclusion:

Based upon the analyses and description of the transaction provided herein,-the proposed license amendment only reflects a change in ownership of Gulf States, and will not involve a significant increase in the probability or consequences of any accident previously evaluated, create the possibility of a new or different kind of accident from any accident previously evaluated, or-involve a reduction in a margin of safety. As-a result, the proposed change meets the requirements of 10 C.F.R. 6 50.92(c) and doe. not involve a significant hazards consideration.

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ATTACHMENT 3

NPP-47, i 1. A. , As PROPOSED TO DE AMEllDED

1. Tho Nuclear Regulatory Commisalon (the Comminnion or thu NRC) han found that:

A. The application fpr licenso filed by Gulf States Utilition Company actin _g on behalf of itoolf and Cajun l Electric Power Cooperativo, complion with the utandarda  !

and requiremonto of the Atomic Energy Act of 1954, ao l amended (the Act), and the Commission's regulation not forth in 10 C.P.R. Chapter I, and all required notificationn to other agencion or bodion have boon duly mado; t

i

_ Gulf States Utilition company, which ownn a 70 percent undivided interont in River Bond, has morged with a wholly owned

!- subsidiary of Entergy Corporation. Gulf Staton Utilition company was tho-surviving company in the morger.

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