RBG-37-989, Application for Amend to License NPF-47,consisting of Proposed TS & Environ Protection Program,For Util Request to Become Licensed Operator of Facility

Application for Amend to License NPF-47,consisting of Proposed TS & Environ Protection Program,For Util Request to Become Licensed Operator of Facility

ML20127D035
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)
Shared Package
ML20127D040	List: ML20127D051 ML20127D055 RBG-37-989, Application for Amend to License NPF-47,consisting of Proposed TS & Environ Protection Program,For Util Request to Become Licensed Operator of Facility
References
RBEXEC-93-035, RBEXEC-93-35, RBG-37-989, NUDOCS 9301150068
Download: ML20127D035 (145)

Text

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GULF STATES UTILITIE'S COMPANY 25m' H I V I: 84 H E 9J D *i 1 A T l O N . f d it 's U . S H IO 44 W A Y O1 POniOFI ICt 00X 220 . t& T. I R A f4 C 19 V il 4 F. L O U l b l A N A 70/75 A H E A G O D I. (t, D 4 ) tt :1 $ 0 0 9 4 14 6 it ts ?. i Vl lil li' [ ?. GIM!iA

n e hen M hn < * [ier. I f tu; !i m ( m n:p (UI! 21-J U4 im empsi e January 13,1993 RBG 37,989 File Nos. G9.5, G9.42 RBEXEC-93-035 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), on behalf of itself and Cajun Electric Power Cooperative, Inc., hereby files an application to amend the River Bend Station - Unit 1 (River Bend) Facility Operating License NPF-47, pursuant to 10CFR i 50.90. This amendment application is filed to request approval for Entergy Operations, Inc. (EOI) to be included as a licensee of River Bend with authority to operate the facility on behalf ofits owners. The Attachments to this letter provide thejustifications, no significant hazards consideration analysis, and proposed revisions to the Operating License.

GSU and Entergy Corporation (Entergy) have agreed, subject to receiving all necessary approvals, to combine the businesses of their companies. Upon consummation of the proposed merger, GSU would become a wholly owned subsidiary of a newly formed holding company to be called Entergy Corporation.

EOI is a subsidiary of Entergy and presently operates the nuclear facilities in the Entergy System.

This amendment application for EOI to become the licensed operator of River Bend is being submitted in contemplation of the proposed merger and would become effective only upon the consummation of that merger.

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Page 2 of 2 RBG-37,989 January 13,1993 RBEXEC 93-035 Contemporaneously herewith, a separate application is being filed with the Nuclear Regulatory Commission regarding consent to a change in control over GSU, that is from a publicly owned company to a wholly owned subsidiary of the new Entergy Corporation.

This 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.

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

Sincerely, f b P. D. Graham Attachments l

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 l Mr. E. T. Baker M/S OWFN 13-H-15 U.S. Nuclear Regulatory Commission 11555 Rockville Pike Rockville, MD 20852 H

Department of Environmental Quality l Radiation Protection Division I i P.O. Box 82135 Baton Rouge, LA 70884-2135 l

i

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 States 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 knowledge, information and belief.

Pr 8 5sL.

P. D. Graham subscribed and sworn to before me, a Notary Public in and for tt(e State and Paris ,,above named, this f 3A day of

( ld_nD Q /tu , 19 ' . My Commission expires with Life.

U (

0)CtudiLA, khutat Claudia F. Hurst Notary Public in and for West Feliciana Parish, Louisiana

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ATTACHMENT 1 l

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GULF STATES UTILITIES COMPANY RIVER DEND STATION DOCKET 50-450/ LICENSE NO. NPF-47 (Change in Licensed Operator of the Facility)

LICENSING DOCUMENT INVOLVED OPERATING LICENSE NO. NPF-47 REASON FOR REQUEST This amendment application requests the Nuclear Regulatory Commission ("NRC"), pursuant to 10 C.F.R. 5 50.90, to amend Facility Operating License No. NPF-47 (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 Bond and to possess and use related licensed nuclear materials.

Gulf States Utilities Company ("GSU") and Cajun Electric Power Cooperative, Inc. (" Cajun") are currently the holders of the License for River Bond Station, Unit 1 ( " River Bend " ) . The operating License presently authorizes GSU and Cajun to possess River Bond as owners, and authorizes GSU to use and operate River Bond in accordance with the terms and conditions of the License.

GSU is authorized to act as agent for Cajun and presently has exclusive responsibility and control over the operation and maintenance of the facility. After issuance of the proposed amendment, GSU would be authorized only to possess (i.e., own) the facility.

As explained in more detail below, in June 1992, GSU and Entergy Corporation ("Entergy") ontered into an agreement providing for the combination of the businesses of their companies. In accordance with the merger plan, GSU, following the merger, Vill continue to operate as an electric utility, but as a subsidiary of a new holding company to be named Entergy Corporation with its electric operations fully integrated with those of the Entergy System. 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 Bond. Consummation of the proposed merger between GSU and Entergy would occur prior to and would be a condition procedent to the effectiveness of the amendment to the River Bend Operating License as proposed in this application.-

Under the proposed arrangement, ownership of River Bend will remain unchanged with GSU retaining its 70 percent undivided ownership interest in the facility and Cajun retaining its 30 percent undivided ownership interest. Likewise, GSU's and Cajun's ownership of and entitlement to capacity and energy from o River Bend will not be affected by the proposed change in operating responsibility for the unit from GSU to EOI.

EOI, a subsidiary of Entergy, is dedicated solely to nuclear.

operations. EOI has developed a corporate environment and philosophy designed to maximize safety, high performance and cost t

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pmxAos t efficiency in nuclear operations. The operation of River Bend by EOI will allow for the experience gained by EOI from operating the four nuclear units of the Entergy System to be shared promptly and effectively with River Bond. The change should enhance the aircady high level of public safety, operational efficiency, and cost-effective operations at River Bond.

Until the time the NRC issues the operating license amendment requested in this application and such amendment becomes effective, GSU, acting for itself and Cajun, will continue to be responsible, under the Operating License, for the operation and maintenance of River Bond.

Entergy and EOI have reviewed this document and supplied the information contained herein regarding such entities. The representations regarding the actions which will be taken by such entities after consummation of the proposed merger, and the expected benefits and consequences thereof, are based upon representations of Entergy and EOI.

DISCUSSION:

I. INTRODUCTION GSU was incorporated under the laws of the State of Texas in_1925 and is engaged 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. In addition to its principal electric business, GSU produces and sells steam to a large industrial customer and purchases and distributes natural gas at retall 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 GSU 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, GSU acts as agent for Cajun and has exclusive responsibility and control over the construction, operation and maintenance of River Bend.: GSU has a 70 percent ownership share of River Bend, and Cajun has the remaining 30 percent 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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sunraunt Entorgy is engaged principally in the generation, transmission, distribution and sale of electricity at retail and wholesale to  !

more than 1.7 million customors in parts of Arkancas, Louisiana and Mississippi.

EOI is a wholly owned subsidiary of Entergy organized in 1990 to oporato the Entergy Systom's nucleer-fuolod generating facilities. Since 1990, EOI has operated, on behalf of their owners, Arkansas Nuclear One ("ANO"), Units 1 and 2, located near Russo11vil10, Arkansas, Waterford Steam Electric Station, Unit No. 3 ("Waterford 3"), located near Taft, Louisiana, and the Grand Gulf Nuc1 car Station (" Grand Gulf"), located near Port Gibson, Mississippi.'

Entergy and GSU ontored into an Agrooment and Plan of Roorganization, dated as of June 5, 1992 (the " Roorganization Agrooment"), providing for the combination of Entergy and GSU.

A copy of the Roorganization Agrooment is attached as Exhibit 1 ,

to this Attachment 1. Pursuant to the Reorganization Agroomont, throo now corporations have boon or will be created in connection with the business combination. Entergy-GSU Holdings, Inc.  ;

(" Holdings") was created to accomplish the combination of >

Entorgy and GSU, as described below. Two other corporations, ETR Horger Corp. and GSU Morger Corp., will also be created in connection with tho merger. ETR Morger Corp. and GSU Morger Corp. will be wholly owned subsidiarios of Holdings.

Pursuant to the Roorganization Agrooment, ETR Morger Corp. Will be merged with and into Entorgy, with Entorgy being the surviving corporation and a wholly owned subsidiary of Holdings. Likewise, GSU Morger Corp. will be merged with and into GSU, with GSU being-the surviving corporation and a wholly owned subsidiary of Holdings. Following those morgers, Entergy will merge

" upstream" into Holdings,'with Holdings boing the surviving corporation. As a result, the separate-corporato existence of Entergy will coaso, and Holdings will succeed to all_the assets, liabilition, rights and obligations of Entergy. Holdings-will then be renamed Entergy Corporation, with the end result being that GSU will be a wholly owned subsidiary of the now Entergy Corporation. The corporato existence'of ETR Morger Corp. and_GSU Merger Corp. will coaso upon consummation of tho proposed morger.

The utilization of this merger structure is subject-to various conditions, including the recolpt of a ruling by the Internal

' By licenso amendments issued on December 14, 1989,'the NRC  :

approved EOI as the operator of (1) ANO Units 1 and 2 in Docket Nos. 50-313 and 50-368, respectively, (ii)_Waterford 3_in Docket No. 50-382, and (iii) Grand Gulf in Docket No. 50-416.

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Ravenue Servico that the transaction will be tax froo to the holders of Entergy and GSU common stock. If such ruling is not received, the final " upstream" morger of Entergy into Holdings will not tako place, and Holdings will simply be renamed "Entergy Corporation." Entergy would continuo its separato ,

corporato extstence as a wholly owned subsidiary of Holdings, but  ; '

would change its name sinco Holdings would be renamed Entergy Corporation. Undor this altornativo procedurc, Entergy end GSU '

will become wholly owned suosidiarios of the now Entergy Corporation.' The primary and alternative morger procedures ero illustrated on Exhibit 2 to this Attachment 1.

Upon consummation of the proposed transactions, Entergy's existing direct and indirect subsidiarios will continue their respective businessor, as direct subsidiarios of the now Entergy Corporation. Likewise, following the consummation of the  !

combination of the businessos of Entorgy and GSU, GSU will i

continue its business and will continue to own its undivided ownership interest in River Bond as well as its other generation and transmission facilities. However, rather than carrying on its business as a publicly owned, independent utility, it will conduct such business as a wholly owned subsidiary company of the now Entergy Corporation, with its electric operations fully .

integrated into those of the Entergy System.

Under the proposed arrangements, GSU would becomo a party to the agrooment among the Operating Companion and Entergy Services, Inc. (" System Agrooment") by which the operating companies  ;'

engage in the coordinated planning, construction and operation of their gonoration and transmission facilities.

EOI's responsibilitios and the limitations on its authority regarding the operation of ANO Units 1 and 2, Waterford 3 and Grand Gulf are set forth in separate but substuntially identical operating agrooments betwoon EOI and tho_respectivo plant owners.

Under those operating agruements, the plant owners provido all ,

funds for the operation, maintenanco and decommissioning by EOI of the nuclear plants and retain control over EOI's spending and contracting authority as their agent.  !

The proposed merger of GSU and Entergy is-subject to the regulatory _ approval of the NRC, tho_Fodoral Enorgy Regulatory Commission, the Securities and Exchange Commission, the Louisiana-Public Servico Commission, and the Public Utility Commission of Texas, and-the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as  ;

amended. Copios of the filings with those commissions will be. ,

provided to the HRC. Staff upon request. On December 17,_1992, the common shareholders of GSU and Entergy approved the merger.

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raior.<A e o EOI's agency responsibilities and the limitations on EOI's agency authority with respect to the operation and maintenance of River Bond will be set forth in an operating agrooment betwoon EOI and ,

GSU substantially identical to the existing operating agreements I between EOI and the owners of the Entergy Systom's nuclear facilities. EOI would assume operational and managerial '

responsibility for River Bond as agent for GSU and would bo solely responsible for the safe operation of River Bond. The operating agreement will be subject to the rights of GSU and Cajun under the Joint Ownership Agreement.

Upon consummation of these arrangements and subject to the Reorganization Agreement, substantially all employees of GSU who are presently dedicated to the operation of River Bond -

(approximately 890 persons) will be transferred to and becomo omployees of EOI. As with the operating agreements for ANO, '

Waterford 3 and Grand Gulf, the EOI-GSU operating agreement will not affect the ownership of River Bend; EOI's services thereunder will be provided at cost; and GSU will both retain control over EOI's spending and contracting authority and, pursuant to the Joint Ownership Agreomont, continue to provide its allocable share of the funds required for the operation, maintenance and  ;

decommi9sioning of River Bend.

In addition, EOI and GSU propose to anter into a related Support-Agreement and a Switchyard and Transmission Interfaco Agreement similar to the corresponding agreements entered into by EOI with the owners of the Entergy System's nuclear facilities.- Under these agreements, GSU-Will provide to EOI (1) necessary personnel, supplies and services to support the operation of River Bend and (2) access to and necessary control over the switchyard facilities at. River Bond and necessary personnel, 1 supplies and services portaining to the operation and maintenance of the associated transmission equipment.

II. .REOUESTED APPROVALS This application requests that the NRC, pursuant to 10 C.F.R. 5 50.90, amend Operating License No. NPP-47 to reflect in the license the change in the entity authorized to. operate the facility, as well as.to designate EOI as the entity authorized to.

possess and_use the related licensed nuclear materials.

Spocifically, GSU hereby requests that the NRC amend the License to change.the name of the Licensees for River Bend, such that (1) EOI, pursuant to Section 103 of the Atomic Ennrgy Act.

of 1954, ss amended (the "Act"), and 10 C.F.R. Part 50

" Domestic Licensing of Production and Utilization Facilities," is licensed to possess, use and operate I

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l River Bond at the designated location near St.- -

Francisville, Louisiana, in accordance with the )

procedures and limitations set forth in the License; (2) GSU and Cajun, pursuant to the Act and 10 C.F.R. part 50, are 11consed to possess River Bend at the I designated location near St. Franciaville, Louisiana, in accordance with the procedures-and limitations set i forth in the License; (3) EOI, pursuant to the Act and 10 C.F.R. Part 70, is licensed to receive, possess and-use at any time special nuclear material as reactor fuel, in accordance with the limitations for storage and amounts required for reactor operation, as described in the_ Updated Safety Analysis Report ("USAR"), as supplemented and- l amended; (4) EOI, pursuant to the Act and 10 C.F.R. Parts 30, 40 and 70, is licensed to receive, possess and use at any time l any by-product, source and special nuclear material as scaled neutron sources for reactor start-up, sealed sources for reactor instrumentation and radiation monitoring equipment calibration and as fission detectors in amounts as required; (5) EOI, pursuant to the Act and 10 C.F.R. Parts 30, 40 and 70, is licensed to receive, possess and use in amounts as required any by-product, source or special nuclear material without restriction to chemical or-physical form, for sample analysis or instrument calibration or-associated with radioactive apparatus or components; and (6) EOI, pursuant to the Act and 10 C.F.R. parts 30, 40 and ,

70, is' licensed to possess, but-not separate,_such by-product and special nuclear materials as may be produced.by the operation of River Bend.

Oth( snforming license changes are noted in the-attachments to ,

this application. Conforming changes, if necessary, in insurance and' indemnity agreements will be made in due course-by_ separate correspondence. Set forth below is-the-information-in1 support =of-this application to amend the License.

III. GENERAL INFORMATION A. Pronosed Additional Licensee:

Entergy-Operations, Inc.

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preuen B. Address:

Echelon One 1340 Echolon Parkway Jackson, MS 39213 C. Description of Bnginess or__OcqMDat12D: I EOI is a wholly owned subsidiary of Entergy. EOI will  ;

take necessary corporate action to authorize it to ,

operate River Bond, in addition to the four nuclear units that it currently operates. EOI was organized in 1990 to manage and operate the Entergy System's four nuclear generating facilities. EOI presently operates, as agent for their owners and pursuant to their-Operating Licenson, ANO, Units 1 and 2, Watorford 3 and i Grand Gulf.

D. Qtganization and Management of Oneratina Cornorations ,

EOI is a corporation organized and existing under the laws of the State of Dolaware. Its principal offico is located in Jackson, Mississippi. The corporation is ,

neither owned, controlled nor dominated by an alien, a foreign corporation or a foreign government.

All directors and principal officers of EOI are I citizens of the United States. Their names and addressos are as follows:

Directors -

Mr. Edwin A- Lupberger .

P. O. Box 61005 New Orleans, Louisiana 70161 Mr. James M. Cain ,

P. O. Box 60340 New Oricans, Louisiana 70160 Dr. Joseph M. Ilondrie 50 Bollport Iane Bellport,-New York- 11713- r Mr. Jerry L. Maulden P. O. Box 551 Little Rock, Arkansas 72203 7 of 20 y e .=- - - -:

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6@,0276A di1 Mr. Donald C. Hintz 1340 Echelon Parkway .

Echelon One l Jackson, Mississippi 39213 Mr. Robert D. Pugh P. O. Box 150 '

Portland, Arkansas 71663 Mr. William Clifford Smith P. O. Box 2266 Houma, Louisiana ~e0361 Admiral Kinnard R. McKee P. O. Box 610-Oxford, Maryland 21654 Brooke H. Duncan P. O. Box 2563 Now Orleans, Louisiana 70176 Principal Officers Chairman of the Board Edwin A. Lupborger P. O. Box 61005 New Orleans, Louisiana 70161 President and Chief Donald C. Hintz Executive Officer- 1340 Echelon Parkway Echelon Ono Jackson, Mississippi 39213 Chief Financial Officer Gerald D. McInvale 630 Loyola Avenue New Orleans, Louisiana 70113 Chief Accounting Officer Lee Randall 639 Loyola Avenue New Orleans, Louisiana 70113 Secretary and .

Joseph L. Blount Vice President - Legal - 1340 Echolon' Parkway ~

and External Affairs Echelon One Jackson, Mississippi 39213 Vice President - Ross P.tBarkhurst Operations P. O. Box B (Waterford 3) Killona, Louisiana -70066- -

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FDO226A d ti Vice President - Jerry W. Yelverton Operations Route 3 (ANO) Rusuellville, Arkansas 72801 Vico President - William T. Cottle operations P. O. Box 756 (Grand Gulf) Port Gibson, Mississippi 39150 Vice President - Jerrold G. Dewease Planning and 1340 Echelon Parkway Assurance Echelon one Jackson,-Mississippi 39213 Vice President - Richard J. Landy  !

Human Resources 225 Baronne Street J New Orleans, Louisiana 70112 Vice President - John R. McGaha Operations Support 1340 Echelon Parkway Echelon One Jackson, Mississippi 39213 Vice President - Robert D. Morehead i Administrative Services 1340 Echelon Parkway and Regulatory Affairs Echelon One '

t Jackson, Mississippi 39213 Treasurer H. Stuart Ball 639 Loyola Avenue ,

New Orleans, Louisiana 70113 Upon issuance of the license amendment, it is anticipated that certain-officers of GSU will become officers of EOI.

E. Technical Oualifications  ;

The technical qualifications of EOI to carry out its responsibilities under the Operating License for River.

Bend, as amended, will meet or exceed the present i technical qualifications of GSU. -When the proposed ,

i amendment becomes-effective, EOI will assume responsibility for, and control over,_ operation and maintenance of the facility. The present River Bend Plant organization, the_ Oversight organization, the-

-Business Systems organization, and the Engineering and Administration organization will be transferred essentially intact from GSU-to EOI, subject to the y

terms of the Reorganization Agreement. The technical 1 i

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pomun qualifications of the proposed River Bond organization, therefore, will be at least equivalent to those of the existing organization.

A central objective in planning the proposed consolidation and the transfer of employees and operating responsibilities from GSU to EOI has been to minimize disruption to the operation of the plant and-to respect the integrity of the existing, successful organitation. When the amendment becomes offectivo, EOI will operato, manago and maintain River Bond in accordance with the conditions and requiroments established by the NRC with the same regard for-public and personal safety horetoforo exemplified by GSU.

Thorofore, in the proposed EOI organization, the nuclear organization of River Bond will bo preserved with the only change that the senior nuclear executive will report directly to the President and Chlof Executivo Officer of EOI. This organization is illustrated in Exhibit 3 to this Attachment 1. Thus, for River Bond, the Vice President - River Bond Nuclear Group of CSU, will becomo an employco of EOI and report directly to the President and Chief Executive Officer of EOI. The Vice President-River Dond Nuclear Group will continue to be the officer at the sito responsible for the overall safe operation and maintenance of River Bond.

This structuro provides clear lines of authority and responsibility while ensuring that essential nuclear support functions are dedicated to River Bond and report to a single responsible sito executivo. The Quality Assurance organization-for the plant will also have direct access to the President and Chief Executive Officer of EOI on matters related to quality, and the offectivonoss of this organization will not be degraded-by the proposed consolidation.

This organizational approach accommodates the current plant-specific structure of the GSU organization. This ,

allows the transfer of GSU nuclear personnel to EOI with virtually-no organizational changes or disruption..

It also allows the management for-River Bend to retain-sufficient independence to-address plant-specific needs and to maintain existing priorities and ongoing plant improvement projects. . Importantly, there will be in-the near term no organizational or-physical location changes to the existing, dedicated, organization, which would include the engineering, maintenance,-quality.

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wars m assurance, and licensing organizations supporting R4.ver Bond.

The longer term consolidation of the GSU nuclear organization into EOI will be an evolutionary process.

The Licensees will continue to study possible organizational and programmatic changes to enhance corporate objectives and to realize the full benefits of EOI assuming operating responsibility for River Bond. EOI will keep the NRC informed of organizational changes, as appropriate. Special emphasis will be given to any changes involving centralization occurring as_a result of the assumption of operating responsibility by EOI for River Bend.

Moreover, selected Licensee programs are governed by formal plans which required NRC review and acceptance or approval. The NRC Staff's review in this regard focuses on the specific plan and the technical qualifications of the organization which will be responsible for implementing the plan, changes to such plans that involve a decrease in effectiveness or level of commitment of the plan require prior NRC review and approval. The Quality Assurance Program, the Emergency Plan, and the Security Plan are examples of such programs governed by appropriate-regulations. EOI will make a determination as to whether or not NRC review and prior approval is required in accordance with the appropriate provisions of 10 C.F.R. 50.54 or other applicable regulations.

F. Statement of Benefits of the License Amendment The assumption of operational responsibility for River Bend by EOI will provide benefits inherent to an integrated nuclear operating company. Some of the expected benefits are as follows:

(1) EOI, as a management company focused solely on nuclear operations, would provide coordinated -

nuclear management and centralized corporate support. This is expected to greatly enhance effectiveness and efficiency in making, s

communicating, and implementing decisions affecting nuclear operations at River Bond.

-(2) EOI, as an operating company for multiple reactors, has a large. repository ~of system nuclear l operating expertise and experience. Presently, l there is a wealth of nuclear operations talent 11 of 20

pwmu within EOI, as well as in the Gs0 River Bend organization. Consolidation of this talent into one company not only will result in a morger of expertise and experience for system-wide nuclonr operational support, but also will permit application of expertise in certain npecialized areas at River Bond that might not otherwise he developed if GSU continued to operate River Bond as a separate facility.

(3) EOI will be able to provide a philosophy of operation of River Bend in conjunction with the other nuclear units operated by EOI. EOI has developed a consistent philosophy specifically designed for nuclear plant operations. This focused philosophy can be used to maintain excellence in all aspects of nuclear operation at River Bend.

(4) Integration of River Bond into the EOI organization will allow more offective communication and use of EOI nuclear operating experience at the facility. For example, EOI shares " lessons learned" promptly, officiently, and consistently among the units, which will be a direct benefit to River Bond.

(5) Certain non-nuclear support functions at EOI and in the Entergy System have become specialized and focused on the requiremento of the Entergy Syston's nuclear units and thereby should be more effective in supporting River Bend operations.

(6) Bringing River Bend under the operation and managenent of EOI will provide a broader base and more competitive environment for management candidates who are specialized in nuclear power generation. Further, EOI, in its role as a system-wide operating company, should provide an environment in which all employees continue to be motivated toward high performance. EOI, with its expanded responsibilities, will also provide greater opportunity for career enrichment and advancement and thus greater opportunity to attract and retain highly qualified employees.

G. Financial Consjderatip_nq The business combination and proposed amendment do not in any way alter the statun gag with respect to GSU's 12 of 20

p000??GA d11 and Cajun's ability to obtain the funds necessary to cover all costs for the operation, maintenance, t Sair, accontamination and decommissioning of River Bend. GSU and Cajun will remain severally liable for such costs, on a pro rata basis, under the Joint Ownership Agreement. GSU's and Cajun's financial responsibility for River Bend and their sources of funds to support the facility will remain the same as under the present License.

EOI will be an operating company with no ownership interest in River Bond. EOI, under the proposed operating agreement with GSU, will be authorized to ~

operate the plant as the agent of GSU and Cajun.

Further, as discussed below, GSU and Cajun are committed under the Joint Ownerchip Agreement to provide all funds necessary for safe operation and decommissioning of River Bend, in conformance with NRC regulations, i

To summarize, the following interrelations will be establisned by the operating agreement between GSU, acting for itself and as agent for Cajun, and EOI:

1. EOI will not bave any ownership interest in River Bend; however, it will have overall responsibility for plant operations. EOI will operate River Bend in accordance with the Operating License and shall ha~r exclusive responsibility for making safety decisions.

2. GSU, c: . elf and as agent for Cajun, will ~

retain . .a . 1 controls over ultimate spending limits, aad will retain the authority to direct that River Bend be shut down in an orderly fashion by EOI (and in accordance with EOI's safety judgment). This retained authority will limit EOI's spending authority but will not encumber EOI's ability to make operational safety decisions and will have no impact on safe operation of River Bend.

3. Pursuant to the Joint Ownership Agreement between GSU and Cajun, as co-owners, all costs, including costs for the operation, maintenance, repair, decontamination and decommissioning of River Bend, incurred or accrued are liabilities of GSU and cajun when incurred or accrued and are borne in proportion to their respective 70 percent and 30 percent undivided interests in River Bend.

13 of 20

A d11 Thus, the sources of funds for operating of River ,

Bend will remain unchanged. .

A full financial qualifications review is not necessary as a result of the proposed license amendment. Under the terms of the proposed operating agreement between EOI and GSU for River Bend, all costs associated with operating River Bend will be borne by the owners, and accordingly, there will be no change in the financial qualifications associated with River Bend. Those qualifications will be unchanged. Accordingly, the information required under 10 C.F.R. 5 50.33(f) -

regarding the financial qualifications of EOI to carry out the activities described in this application is not ,

necessary.

H. Antitrust Considerations The plan for EOI to operate River Bend will not impact the existing ownership of River Bend or existing ownership of or entitlements to power._ EOI will do no more than operate River Bend. It will not be involved in the marketing or brokering of power or energy from the facility. Further, the proposal to designate'EOI 5 the entity authorized to use and operate River Bend.

'lll not alter the existing antitrust License c.onditions applicable to GSU. Those conditions will remain applicable to GSU. Accordingly, the requested amendment will have no impact whatscever on the_ market for electric power and raises no issue with respect to antitrust considerations affecting that market.

Statutory antitrust review pursuant to Section 105 of the Atomic Energy Act-and 10 C.F.R. 5 2.101(e) is not required.

I. 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 in the-licensed activities. However, in'the event that-such information does_become involved, EOI agrees that it will appropriately safeguard such information and it will-not permit any individual to have access to Restricted Data until the Office _of Personnel Management shall have made an investigation and-report to the NRC on the character, associations-and loyalty of such individual, and the NRC shall have_ determined that permitting _such person to have_ access to 14 of 20

@00226A d11 Restricted Data will not endanger the common defense and security of the United States.

IV. SPECIFIC INFORMATION REGARDING RELATED ISSUES A. Public Health. Safety and Welfare Considerations The proposed license amendment would designate EOI as a Licensee'and authorize EOI, an agent for the other Licensees, to manage, operate and maintain River Bond.

It would not affect the physical configuration of the facility or adversely affect the technical specifications under which River Bond operates.

Moreover, as described in this application, the technical qualifications of EOI to operate River Bend will be at least equivalent to those of GSU. The proposed license amendment will therefore not have any adverse impact on the public health, safety and welfare.

B. Emeroency Planning Upon approval of the proposal to authorize operation of ,

River Bond by EOI, EOI will assume authority and responsibility for functions necessary to fulfill the

~

emergency planning requirements specified in 10 C.F.R. 9 50.47(b) and Part 50, Appendix E. No substantive changes will be made to the existing River Bend Emergency Plan presently implemented by GSU. - In addition, there will be no changes to the existing Emergency Planning Organization.

Following the assumption of-operating responsibility by EOI, emergency planning support will be provided by GSU as needed. In essence, to the extent that personnel, resources, and facilities are not being transferred to EOI, GSU will continue to fulfill selective emergency planning functions. These functions. will be thoroughly reviewed, and the required support will be assured by a support agreement that will be entered into between GSU-t and EOI under which GSU will provide personnel, l

supplies and services to EOI necessary to support the-l River Bend Emergency Plan. Long-term utilization of GSU's resources in these' areas will be based on cost-effectiveness and existing relationships with offsite-organizations and agencies.

-Appropriate action will also be taken with respect to existing agreements for support from organizations and agencies not affiliated with the Licensees, to notify 15 of 20

\^

\

p002? fad 11 the parties to such agreements.of EOI's agency relationship with the owners and EOI's responsibility for management and operation of River Bond. This will be accomplished by GSU prior to the change of responsibility.

In sum, the proposed license amendment will not impact compliance with the emergency planning requirements.

Because the effectiveness of the Emergency Plan will not be decreased, specific emergency plan and procedure changes to reflect the change in the entity responsible for plant operation will be submitted to the NRC after the changes are made, in accordance with 10 C.F.R. 5 50.54(q) and Appendix E,Section V, as appropriate.

C. Offsite Power Offsite power is currently assured to River Bend over transmission' facilities owned or controlled by GSU, one of the Licensees of River Bond. These arrangements will not change as a result of the change in operational control requested by this application. The amendment to authorize assumption of operating responsibility by EOI involves no changes in the ownership or design of the offsite power System for River Bend, or in its operation, maintenance or testing. Upon approval of the amendment, GSU will continue to fulfill its current responsibilities with respect to compliance with General Design Criterion

("GDC") 17.

GDC 17 specifically requires that there be an assured source of offsite power to the plant. Pursuant to this-requirement, GSU and EOI will maintain and implement procedures and agreements specifying: (1)- the arrangements for provision of a continued source of offsite power and (2) the arrangements for. controlling.

operation, maintenance, repair, and other activities with respect to the switchyard and the transmission lines such that adequate independent sources of offsite power will continue to be provided.

In essence, the-written procedures and agreements will provide for the future interface between GSU and EOI.

First, GSU has committed to providing offsite power for River Bend. Second, tdua procedores and agreements will provide for the. continuation of current arrangements for the operation and maintenance of the switchyard for River Bend-and associated transmission facilities. The procedures and agreements will also specify_that GSU 16 of 20

~

1

MK102? fad 11 will obtain approval from EOI prior to implementing any changes to the equipment in the switchyard, which includes the. unit circuit breakers, switching '

disconnects, transmission lines and protective relaying which are adjacent to the River Bond protected area.

In addition, the agreements will also specify that GSU will coordinate with EOI all activities which will directly affect power supply to River Bend.

D. Exclusion Area Upon approval of the amendraent providing for assumption of operating responsibility by EOI, EOI will have authority to determine all activities within.the River Bend exclusion area, to the extent required by 10 C.F.R. Part 100.

GSU controls all surface and subsurface property rights within the exclusion area boundary of River Bond. With respect to property rights owned by GSU, and owned by both GSU and Cajun as-tenants in common, GSU currently has authority, as cajun's agent, to exercise appropriate exclusion area control. Under the operating agreement to be entered into between EOI and GSU, for itself and as agent for Cajun, it is expressly agreed that EOI will have unrestricted access to the property constituting the River Bend site including all-land, facilities, switchyard, equipment and personal property on the site. The operating agreement also will grant EOI authority to exercise complete control over the exclusion area as defined in the USAR and to determine all activities in that area.

With respect to the activities unrelated to-plant operation that will occur in the exclusion area identified in Section 2.1.2.2 of the USAR, there will be no change. EOI will assume responsibility for the Emergency Plan as discussed above.

E. Security The proposed license amendment will not impact compliance with the physical security requirements of 10 C.F.R. Part 73. Upon assumption of operating responsibility,-EOI will assume ultimate responsibility-for implementation of-all aspects of the present security program. Appropriate action will be taken

, with respect to existing agreements for support from organizations and agencies not affiliated with the Licensees to notify the parties to such agreements of 17 of 20

F300226A di t i

EOI's agency relationship with GSU and EOI's l responsibility for management and operation of-River- i Bend. Changes to the plans to reflect this transition. -j will not decrease the effectiveness of the plans and  !

will be submitted to the NRC within two months after )

the changes are made, in accordance with 10 C.F.R. ,

5 50.54(p).  !

F. Quality Assurance Procram The proposed license amendment will not impact compliance with the~ quality assurance requirements of 10 C.F.R. 50, Appendix B, nor will it reduce the commitments in the NRC accepted quality assurance program description for River Bend. Upon assumption of operating responsibility, EOI will assume the ultimate responsibility for present functions associated with the River Bend quality assurance program. As discussed above, the Quality Assurance organization will have direct access to the President and Chief Executive Officer of EOI on matters related to quality. In this regard, EOI management already has responsibility for operations and quality assurance for four other nuclear units. Otherwise, the organization, function and structure of the River Bend Quality Assurance organization will not be affected by this license amendment. Changes to reflect the transition, which will be handled in accordance with 10 C.F.R. 50.54(a),

will not reduce the commitments in the quality assurance program description.

G. Updated Safety Analysis Report With the exception of areas discussed in this-license amendment application, the proposed license amendment will-not change or invalidate information presently appearing in the River Bend USAR. Revisions to the-USAR necessary to reflect the assumption of. operating authority by EOI will be incorporated-into the River-Bend USAR following NRC approval in-accordance with 10 C.F.R. 50.71(e).

H. Trainina The proposed license amendment will not impact compliance with the operator requalification program requirements of 10 C.F.R. 50.54 and related sections, nor maintenance of the Institute of Nuclear Power Operations accreditation for licensed and non-licensed personnel training. Upon assumption of operating 18 of 20

. g:3CMFAd11 responsibility for River Bend, EOI will assume ultimate responsibility for implementation of present training programs. Changes to the programs to reflect the transition will not decrease the ; cope of the approved ,

operator requalification program in accordance with 10 C.F.R. 50.54(i).

I. Encineerina Sunnort Currently the engineering support for River Bend is provided by a dedicated engineering organization that is an integral part of the Engineering & Administration organization. Because the existing Engineering &-

Administration organization at GSU will-transfer, subject to the Reorganization Agreement, virtually intact to EOI upon approval of this application, there will be essentially no change in the engineering-support provided and no change in the interfaces between the organizations responsible for engineering support and maintenance and operations at River Bend.

Thus, there will be no degradation of-the engineering support function and its integration with maintenance and operations. After issuance of the proposed license amendment, as evolutionary changes are made to consolidate River Bend organizations within EOI, EOI will ensure the continued integration of the engineering support function with the maintenance and operation function.

V. 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 am-assessment or statement. Alternatively, the applicants herein-request.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.

VI. OTHER MATTERS The proposed operation of River Bend by EOI is conditioned upon the consummation of the proposed business combination of Entergy and GSU-and, in addition to the NRC, requires the approval, as to certain issues, of the Securities and Exchange Commission and the 19 of 20

l sexxxmuu Louisiana Public Service Commission. GSU and Entergy intend that the business combination _take place as soon as possible after all regulatory approvals have been obtained, and in any event prior to January 1, 1994. GSU requests that the NRC review this request on a schedule that will permit final action on it as promptly as possible, and in any event before october 1, 1993, conditioning the effectiveness of this action as it deems necessary upon consummation of the business combination and the-receipt of other necessary regulatory approvals. GSU 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.

20 of 20

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. 1 AGREEMENT AND PLAN OF REORGANIZATION dated as of June 5,1992 between Entergy Corporation and Gulf States Utilities Company -

f I

. TABLE OF CONTENTS +

1.

Pan FORMATION 1.1 OF llOLDING COMPANY AND MERGER SUBSIDIARIES B.) . . . . . .. . .

Organization of Holding Company . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . -.B.1 .....

1.2 Directors and Officers of Ilo! ding Company . . . . . . . . . . . . . . . . . . . . . . . .

1.3 B1 Organization of Merger Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.4 .B-2 1.5 A ctions of Directors and Officers . . . . . . . . . . . . . . . . . . . . ............. . . . . . . . . . . . .B.2 . . .- . . . . . . . . .

Actions of Entergy and Gulf States . . . . . . . . . . . . . . . . . . .

B-2 II. Ti f E M E R G ERS; CL OS ING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... ....................

2.1 Th e Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... . ..... ........ B.2 2.2 Alterna tive Reorganiza tion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.2 2.3 Closing............................................................... B3 III. ...................... B.4 REPRESENTATIONS 3.1 AND WARRANTIES OF ENTERGY . . . . . .

B.4 ... ........

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

B.4 ...

' Capitaliza tion . . . . . . . . . . . . . . . . . . . . . . . . .

3.3

,1 S u bsidiari es . . . . . . . . . . . . . . . . . . . . . . ... . . .......................

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.5 3.4 B.5 Authority; Non Contravention; Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . .... .......

3.5 B.5 Reports and Financial Sta te .ents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... . . . . . . . . B.7 3.6 Absence of Certain Chan 3.7 Litiga tion . . . . . . . . . . . . .ges or E vents . . . . . . . . . . . . . . . . . . . . . . . . . . .B.7 .............

3.8 ....................................................

Registration Statement and Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B8' B-7 3.9 Permits; No Violation of Law . . . . . . . . . .

3.10 Taxes.......................,.......................................... B.8

..................................... B.8 -

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

3.12 Opinion of Financial Ad visor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

B9 3.13 Environmental Protection ...... ...... ................ B.10 .

B-10 3.14 3.15 Insurance.............................................................

............ ............. B-12 R eg ula tion as a U t ili ty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... ............

3.16 B.12 -

Com pliance wit h A greements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B.12. .....

3.17 Vot e Required . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . .

3.18 Additional Represen tations . . . . . . . . . . . . . . . . . . ., . . . . . .......... ....................... B.12 -

3.19 B.12 IV. Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . ................

. . . . . . . . . . . . . B.13 ........ ......

REPRESENTATIONS 4.1 AND WARRANTIES Organization and Qualification . . . . . . . . .

OF G ULF STATES . .B.13 ...... ......

4.2 Ca pi ta liza t io n . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.13 4.3 4.4 S u bsidia ries . . . . . . . . . . . . . . . . .................................

. . . . . . . . . . . . . . . . . . . . . . . . . ~. . . . . . . . . . . . . . . . . .

Authority; Non-Contravention; Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B 15 .

.4.6 4.5 - Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-16 .

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

4.7 Li t i gat io n . . . . . . . . . . . . . . . . . . . . . . . . .,..

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B 17 4.8 Registration Statement and Proxy Statement. . ................................ B.171

, 4.9 Permits; No Violation of Law . ................................. B.17

.... .... ........................... ....... B.17 4.10 Taxes . . . ... ...... .. ........

[

-4.11 .... ... .......................... ... B-18' Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . . . . . .

4.12 B.18 -

Opinion of Fina ncial Ad visor . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.13 Environmental Protection .... ... ...... ...... ....... B.19 4.14 Insurance . . . . . . ... . ........... .... ....... .. .. ... .. .............. ...... ... B.19 4.15 Regulation as a Utility . . . . . , . . . . . ...... .. ......... ... B-20 4.16 Compliance with Agreements . ......... . . B.21 4.17 Vote R.equired . . . . . . . . . . . . . . . B.21 '

.... ... ...... .. . .. . ........,..... .... B.21 4.18 A bsence of Undisclosed Liabilities . . . . . . . . . .. . ....... ... ............. . B.21 s

Patt V.

CONDUCT OF BUSINESS PENDING Tile MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.21 5.1 Conduct of Business by Gulf States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . B.21 5.2 No Solicitation by Gulf States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B 23 5.3 Conduct of Business by Entergy . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . B-24 5.4 No Solicitation by Entergy. . . . . . . ............ .. .. .... . . . . . . . . . . . . B 24 5.5 Conduct of Business by liolding Company and the Merger Subsidiaries Pending the M e r g 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 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.27 6.6 Compliance with the Securities Act

.......... . . . . . . . . . . . . . . . . . . . .. . B.28 6.7 Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.28 6.8 P ublic S tat eme n t s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B 29 6.9 Gulf States Employees and Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . B 29 6.10 Post. Merger Operations . . . . . . . ................ . ..... .............. .. B.31 6.11 Directors' and Officers' indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B.32 6.12 Reasonable Best Efforts . . . . .. ..... . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . B.33 6.13 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . B 33 6.14 Continuation of Standstill . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . .. B.34 6.15 Supplemental Disclosure . . . . . . . ....... ........... . .. . . . . . . . . . . .. . B 34 6.16 Delivery of Certain Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . B.34 VII. CO N D I T I O N S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , , . . . . . .. . .... 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . . , , , . . .. . . B41 8.3 Amendment . ... . ... .... . .

. . . . . . . . . . . . . . . . . . . . . .. .. . . B43 8.4 Waiver . . . . . . . . ............ ......... .. . . . . . . . . . . . . . . . . . . . . - B43 8.5 Limitation on Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . , B-43 IX. GENERAL PROVISIONS... . ......... ......... .. .. .. . . . . . . . . . . . . .. . . . .. B43 9.1 Brokers . . . . . .

........ ........... ....... ... . . . . . . . . . . . . . . . . . . . B43 9.2 Notices . . . . . . . . . . ............ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B 43 9.3 Interpretation

... .. . . ..... ...... . . . . . . . . . . . . . . . . . . . . . . . - B.45 9.4 MisceLneous . .... .. . . . . .. . . .. . . . . . . . . . . . . . B.45 9.5. Parties in Interest . . .. . . . . . . . . . . . . . . . . . . . . . . B45 9.6 Specific Performance. . . . . . . . .. . . . . B45 9.7 Gosetning Law .. . . . . . . . . . . B45 9.8 Counterparts .. . . . . . . . . . . . . . B45 9.9 - Assignment . . . . . . . . . . . . . B45 9.10 Ses erability .. . . .. . . . . B45 ea

__ _ , _ _ _ , , , , _ _ , _ _ . _ _ _ _ _ - _ - - - - - - - - - - - - - - - ' " - - - - - - - " " ~ - - - ' - - -

AGREEMENT 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 Texas corporation (" Gulf States") (the parties hereto are hereinafter sometimes referred to individually as a "Comnany" and collectively as the " Companies").

WHEREAS, the Boards of Directors of the Companies have approved, and deem it advisable and in t best interests of their respective Companies and stockholders to consummate the. reorganization (

" Primary Reorganization") provided for herein, pursuant to which the Companies will form a ho company (" Holding Company"), which will acquire all of the common stock of each of the Companies, through the merger of two subsidiaries of Holding Company with and into the Companies and pro thereafter Entergy will merge with and into Holding Company and, as a result of the Primary Reorgan the respective common shareholders of the Companies will own all of the outstanding shares of commo stock of Holding Company, and each share of any other class of capital stock of the Companies shall be unaffected by the Primary Reorganization and shall remain outstanding.

WHEREAS, the Boards of Directors of the Companies have approved, and deem it advisable and in the best interests of their respective Companies and stockholders to consummate, but only in the circumstanc set forth in Section 2.2 and then in lieu of the Primary Reorganization, the reorganization pursuant to whic the Companies will form Holding Company, which will acquire all of the common stock of each of the Companies, though the merger of two subsidiaries of Holding Company with and into the Companie contemplated by the Primary Reorganization, but thereafter fatergy will not merge with and into Hold Company (the " Alternative Reorganization," and together with the Primary Reorganization, the

" Reorganization").

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 FORMATION OF HOLDING COMPANY AND MERGER SUBSIDIARIES StenoN l.1 Organization ofHolding Company. As promptly as practicable following the execution of this Agreement and receipt of any required approvals, the Companies shall cause Holding Compa organized under the laws of the State of Delaware The Articles of Incorporation and Dy-laws of Hold Company shall be in such forms as shall be determined by Entergy with the consent of Gulf States, whi consent shall not be unreasonably withheld, as soon as practicable following the execution of this Agreem The authorized capital stock of Holding Company shall consist initially of 500 million shares of common stock,50.01 par value (the " Holding Company Common Stock"), of which 100 shares shall be issued to -

Entergy and 100 shares shall be issued to Gulf States at a price of $1.00 per share.

SEcnON l.2 hitecton and Of]icen 0/OMng Company. (a) Upon formation of Holding Company, the P

Companies shall cause individuals designated by Entergy to be elected as (i) Chairman of the Board a ,

Director and (ii) Treasurer, and individuals designated by Gulf States to be elected as (1) President a Director elected. and (2) Secretary. Each such officer and director shall remain in otlice until their successors (b) Prior to the EfTective Time, each of Entergy and Gulf States, as the case may be, may substi the place of any director designated by it, ancther director of such Company (with the consent of th Company which shall not be unreasonably withheld or delayed), and, in the place of any office by it, another officer of such Company (with the consent of the other Company which shall not be unreasonably withheld or delayed).

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(c) As of the Effectise Time, the Companies shall cause (i) the Board of Directors ofliolding 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 OtTicer of Gulf States and (ii) the of!icers of Iloiding Company to consist of the persons who then occupy such positions with Entergy, in each case to remain in office until their successors are elected.

SECT 1oN 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 Florida (" Merger Sub A"). The Articles of Incorporation 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 sha!! be issued to lloiding Company at a price of $1.00 per share.

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(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 forms 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 shall initially consist of 100 shares of common stock, without par value, which shall be issued to Holding Company at a price of 51.00 per share.

SEcrioN 1.4 Actions of Directors and Oficers. As promptly as practicable following the execution of this Agreement, Entergy and Gulf States shall designate the directors and officers of Merger Sub A and Merger Sub B, respectively, and shall cause (i) Holding Company to elect the directors of the Merger Subsidiaries, (ii) the directors of Merger Sub A and Merger Sub B to elect their respective officers, (iii) the directors ofliolding 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 ececuted on behalf of the parties thereto, and (v) the directors and officers 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.

SELTION 1.5 Actions ofEntergy 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 IIolding Company, shall cause Holding Company to approve and execute this Agreement, and shall cause IIolding Company, as the sole shareholder of each of the Merger Subsidiaries, to adopt 6e Merg,er

- Agreements and the Upstream Merger Agreement. Each of Entergy and Gulf States shall cause Holding Company and the Merger Subsidiaries to perform their respective obligations under this Agreement and the Merger Agreements and the Upstream Merger Agreement.

ARTICLE 11 TIIE MERGERS; CLOSING SECriON 2.1 The 3fergers. 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", respectively, 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 a id in the Merger Agreements and the Upstream Merger Agreement:

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.l (a) Merger Sub A shall be merged with and into Entergy (the "Entergy Merger") in accordance with the apptbabic provisions of the laws of the State of Florida. Entergy shall be the surviv corporation in the Entergy Merger and shall continue its corporate existence under the laws of the S of Florida. As a reste of the Entergy Merger, Entergy shall become a subsidiary of fieldin The effects Agreement. and consetpences of the Entergy Merger shall be as set forth in the Entergy M (b) Merger Sub B will Se merged with and into Gulf States (the " Gulf States Merger"), in j accordance with the applicable provisions of the laws of the State of Texas. Gulf States shall be~ the I surviving corporation in the Gulf States Merger and shall continue its corporate existence under the of the State of Texas. As a result of the Gulf States Merger, Gulf States shall become a su Holding Company. The effects and consequences of the Gulf States Merger shall be as set forth i Gulf States Merger Agreement.

(c) Immediately after the consummation of the Entergy Merger and the Gulf States Merge Entergy shall be merged with and into Holding Company (the " Upstream Merger" and, collecti the Entergy Merger and the Gulf States Merger, the " Mergers") in accordance with the applic provisions of the laws of the States of Florida and Delaware. Holding Company shall be the s corporation in the Upstream Merger and shall continue its corporate existence under the laws of the

! State of Delaware. The effects and consequences of the Upstream Merger shall be as set forth in t Upstream Merger Agreement.

(d) In the event the Alternative Reorganization is to be consummated, the term " Mergers" shall in lieu of the definition set forth in (c) above, mean the Entergy Merger and the Gulf States M (e) The term " Effective Time" shall mean the time and date which is the later of(i) the fding of th articles of merger relating to the Entergy Merger by the Florida Department of State (or such other d and time as may be specified in such articles as may be permitted by Florida law) and (ii) the issuance o a certificate of merger by the Secretary of State of the State of Texas with respect to the Gulf States -

Merger law).

(or such other date and time as may be specified in such articles as may be permitted SECTION 2.2 A//ernative Reorganization. (a) In the event that there is a failure to satisfy the condi set forth in Section 7.2(d) and Section 7.3(d) or Entergy and Gulf States determine pursuant to Sect that such conditions are unlikely to be satisfied. Section 7.2(d) and Section 7.3(d) shall be deeme to read as set forth in (b) below, and the Companies agree to consummate the Alternative Reorganiz 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. Frank, Harris, Shriver & Jacobson, in form substance reasonably satisfactory to Gulf States, dated the date of the Effective Time, (ii) a ru the IRS, in form and substance reasonably satisfactory to Gulf States, or (iii) a combination of the referred to in clauses (i) and (ii) that the Alternative Reorganization will qualify as a tax free trans d

described in sections 351 an' /or 368 of the Code and that no gain or loss _will be recognized States and Entergy shareholders that exchange shares of Gulf States and Entergy stock solely fo of Holding 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, Arps, State, Meagher & Flom, in form a substance reasonably satisfactory to Entergy, dated the date of the Effective Time (ii) a ruling f

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1 IRS,in form and substance reasonably satisfactory to Entergy, or (iii) a combination of the items r to in clauses-(i) and (ii) that the- Alternative Reorganization will quahfy as a tax free transaction described in sections 351 and/or 368 of the Code and that no gain or loss will be recognized by G

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4' States and Entergy shareholders that exchange shares of Gulf States and Entergy stock solely for shares of Iloiding Company stock in such transaction."

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

(d) In the event the parties determine that the Alternative Reorganization will be consurnmated, the parties shall execute an amendment to this Agreement to reflect the modifications set forth in this Section 2.2.

SrcTtoN 2.3 Closing. The closing (the " Closing") of the transactions contemplated by this Agreement and the Merger Agreements shall take place at the ofTices of Skadden, Arps, State, Meagher & Flom at 10.00 A.M., local time, on the second business day immediately following the date on which the last of the conditions set forth in Article VII hereofis satisfied or waived, or at such other time and place as Entergy

. and Gulf States shall agree (the " Closing Date").

ARTICI,E III REPRESENTATIONS AND WARRANTIES OF ENTERGY Entergy represents and warrants to Gulf States as follows:

SocTtoN 3.1 Organization and Quahfication. (a) Entergy and each direct or indirect subsidiary (as defined in Section 3.3 hereoO of Entergy is a corporation or partnership duly organized or formed, validly existing and in good standing under the laws of thejurisdiction ofits incorporation or formation and has the requisite power and authority to own, lease and operate its assets and properties it now owns, leases and operates and to carry on its busmess 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 qualificatiort 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 Agreement, an "Entergy Material Adverse Effect" shall mean a material adverse etTect on the business, operations, properties, assets,' condition (fmancial or -

other) or results of operations of Entergy and its subsidiaries taken as a whole; provided, however, that an Entergy Material Adverse 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 Exchange, Inc. (the "NYSE"), or a material change in prices of securities generally on the NYSEt (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States; (iii) the commencement or continuation of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States; (iv) any limitation (whether or not mandatory) by -

any United States governmental authority or agency on the extension of credit by banks or other financial institutions; (v) any general 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 FASD 96 or FASD 109; and (vii)in the case of any of i

the events described in the foregoing clauses (i) through (v), a material acceleration or worsening thereof

_ (collectively, " General Changes").

{ (b) True, accurate and complete copies of the Articles of incorporation and By-laws of Entergy and each of EntergyTeorporate subsidiaries, as in effect on the date hereof, have here'ofore been delivered to Gulf States.

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, 1 Sirno' 3.2 Capitalization. (a) The authorized capital stock of Entergy consists of 500,000,000 shares of Common Stock, par value 55.00 per share (the "Entergy Common Stock"). As of the date of this 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 agreement obligating Entergy or 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 or obligating Entergy or any subsidiary of Entergy to grant, extend 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 or any 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.

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St.CTION 3.3 Subsidiaries. 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 Stnes, as the case may be, or any other subsidiary of Entergy or Gulf States, as the case may be, is entitled by virtue ofits ownership of more than 50% of the outstanding securities having ordinary voting power, or otherwise, to elect a majority of the directors or (b) any partnership, joint venture or other entity which Entergy or Gulf States, as the case may be, or any other subsidiary of Entergy or Gulf States, as the case may be, controls by virtue ofits ownership of more than 50% of the equity or otherwise Except as set forth on Schedule 3.3 of the Entergy Disclosure Schedule hereto, all subsidiaries of Entergy are set forth on Exhibit 22 to Entergy's Annual Report on Form 10-K far the fiscal year ended December 31, 1991. Except as set forth on Schedule 3.3 of the Entergy 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 outstanding shares of capital stock and partnership 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, equities, 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 capital stock and partnership or other ownership interests in each ofits 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 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 Entergy, including any right of conversion or exchange under any outstanding security, instrument or agreement. Prior to the date hereof. Entergy has delivered to Gulf States a list of all material corporations, partnerships, joint ventures and other business entities in which Entergy or any of its subsidiaries directly or indirectly owns an interest and Entergy's and such subsidiaries' direct and indirect share, partnership or other ownership interest in each such entity.

Except as set forth on Schedule 3.3 of the Entergy Disclosure Schedule hereto, no entity in.which Entergy 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 "alliliate" of any public utility company within the meaning of Section 2(a)(5),2(a)(7),2(a)(8) or 2(a)(11) of the Public Utility ifolding Company Act of 1935, as amended (the "llolding Company Act").

St.cTION 3.4 Authority: Non Contravention: Approvals. (a) Entergy has full corporate power and authority to enter into this Agreement, the Entergy Merger Agreement and the Upstream Merger Agreement (collectively, the "Entergy Transaction Agreements") and, subject to the Entergy Shareholders' Approval (as dermed in Section 6.4), to consummate the transactions contemplated hereby and thereby, other than the Mergers which are also subject to the Entergy Required Statutory Approvals (as defined below). The D-5

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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 Board of -

Directors of Entergy, and no other corporate proceedings on the part of Entergy are necessary to authorize the execution and delivery of this Agreement and the Entergy Transaction Agreements and the consummation by Entergy of the transactions contemplated hereby and thereby, except for the Entergy Shareholders' Approval. 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 liolding 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 be limited by applicable bankruptcy, insolvency, moratorium or other similar laws affecting or relating to enforcement of ereditors' 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 tirne 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, security interest, charge or encumbrance upon any of the properties or assets of Entergy or any of its subsidiaries under any of the terms, conditions or provisions of (i) subject to the receipt of the Entergy Shareholders' Approval, the Articles of Incorporation or By4ws of Entergy or any' ofits subsidiaries, (ii) subject to the receipt of the Entergy Shareholders' Approval, any statute, law, ordinance, rule, regulation, judgment, decree, order, injunction, writ, franchise, permit or license of any court, federal, state or local governmental authority or municipality applicable to Entergy 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 kind 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 interests, 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 Pubiic 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-municipalities or other local governmental bodies in the State of Texas, in the case of each of (A) and (B),

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 required, of the Nuclear Regulatory Commission (the "NRC") pursuant to the Atomic Energy Act of 1954, as amended (the " Atomic Energy Act"). (v) the approval, if required, of the SEC pursuant to the lloiding Compaily Act (vi) 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 llolding 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 effectiveness thereof by the SEC and filings with the various blue sky authorities pursuant to applicable state securities laws (ix) the filings required pursuant .

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to Article 1 and Article 11 hereof in connection with the organization ofIlolding Company and the Merger Subsidiaries,(x) the fding of articles of merger with the Secretary of State of the State of Florida in accordance with the Florida Business Corporation Act and the Secretary of State of the State of Delaware in accordance with the Delaware General Corporation Law in connection with the Entergy Merger and the Upstream Merger and (xi) the fding by or on behalf of IIolding 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 fdings and 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 approval 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 or made, will 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.

SECTION 3.5 Reports and financial 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 llolding Company Act have filed with the 5 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, all 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 t

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 of the appropriate act and the rules and regulations thereunder in effect on the date such report was filed. Entergy has previously delivered to Gulf States copies of each report, schedule, registration statement and definitive proxy statement filed by Entergy or any of its subsidiaries with the SEC since Decernber 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 renuired to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited consolidated financial statements and unaudited consolidated interim financial statements of Entergy included in such reports (the "Entergy Financial Statements") have been ptepared 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 Entergy and its subsidiaries as of the dates thereof and the results of theit operations and changes in financial position for the periods then ended, subject, in the case of the unaudited consolidated interim fmancial statements, to normal year-end audit adjustments and any other adjustments described therein.

- SECHON 3.6 Ah3tnce 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 Effect.

SECTION 3.7 litigation. Except as set forth on Schedule 3.7 of the 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 reviews pending or threatened, against, relating to or affecting 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, rule or order (other than rate orders and rate proceedings) of any court, governmental department, B-7 l

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t commission, agency, instrumentality or authority or any arbitrator which would have an Entergy Material Adverse Effect.

Sectton 3.8 Registration Statement and Proxy Statement. None of the information to be supplied by Entergy or its subsidiaries for inclusion in (a) the Registration Statement on Form S-4 (the " Registration Statement") to be filed under the Securities Act with the SEC by Entergy in connection with the issuance of the lloiding Company Common Stock pursuant to the transactions contemplated by this Agreement, the Gulf States Merger Agreement or the Entergy Transaction Agreements (collectively, the " Transaction Agreements") or (b) the joint proxy statement to be distributed in connection with Gulf States' and Entergy's meetings of their respective shareholders to vote upon this Agreement and the transactions contemplated hereby and by the Transaction Agreements (the " Proxy Statement", and together with the prospectus 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 Statement and any amendments or supplements thereto, and at the time of the meetings of shareholden of Gulf States and Entergy to be held in connection 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 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 Proxy Statement / Prospectus wi!! comply as to form in all material respects with all applicable laws, including the provisions of the Securities Act, the Exchange Act and the Holding Company Act and the applicable 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.

StcTtoN 3.9 Permitst No Violation 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 have an Etitergy Material Adverse EtTect. 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 subsidiaries except for notifications of violations which,in the aggregate, would not have an Entergy Material Adverse Effect. 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 have an Entergy Material Adverse Effect.

StcrtoN 3.10 Taxes. 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, have an Entergy Material Adverse Effect, Entergy and each of its 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 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 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 pending 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 have an Entergy Material Adverse Effect. Entergy has established adequate accruals for Taxes and for any liability for deferred 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 utihty commission orders, rules and practices and that accruals for deferred taxes required under FASB 96 and FASH 109 have not been established.

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.p SicTtoN 3.11 Employee Beneft Plans; ERISA. (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 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 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 all applicable requirements oflaw, except where the failure to so comply would not have an Entergy Material Adverse EKect, and no " reportable event" or " prohibited transaction"(as such terms are dermed in ERISA) or termination has occurred with respect to any Entergy Plan under circumstances which present a risk of liability of Entergy and its subsidiaries to any governmental entity or other person, which liability would have an Entergy Material Adverse EKeet. 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 previously' have been provided to Gulf States.

i (b) Each Entergy Plan intended to qualify under Section 401(a) of the Code is so qualified and, except '

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 -

l 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 which is subject to Part 3 of Subtitle B of Title 1 of ERISA or Section 412 of the Code has incurred any " accumulated funding deficiency" (as defined in Section 412 of the Code and f Section 302 of ERISA), whether or not waived. Neither Entergy nor any ofits subsidiaries has sought or

! received a waiver of its 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 "multiemploye plan," within the meaning of Section 3(37) of ERISA or a " multiple employer plan," within the meaning of Section 4063 of ERISA.

• (c) Except as disclosed on Schedule 3.11(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 contemplat;d 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 indebtedness, acceleration of payment or funding, vesting, or increase in benefits or compensation with respect to any current or former employee of Entergy or any o subsidiaries, except as would not have an Entergy Material Adverse Effect.

! - (d) Except as required by applicable law or as set forth on Schedule 3.1l(d) of the Entergy Disclosure Schedule hereto, neither Entergy nor any of its 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 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 ugn their termination of emplo or retirement, except for benefits which do not, individually or in the aggregate, have an Entergy Material Adverse Effect.

(c) Except as disclosed on Schedule 3.11(e) of the Entergy Disclosure Schedule or in the Entergy S Reports, na payment or benefit which will or may be made by Entergy or any'of its subsidiaries will be characterized as an " excess parachute payment," within the meaning of Section 280G(bXI) of the Code.

(i) 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 appli law, or the terms of such Entergy Plan or any collective bargaining agreement.

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(g) Neither Entergy, nor its subsidiaries, nor ! .ntergy Related Person has incurred, nor reasonably ,

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

(h) Entergy and its subsidiaries have paid all premiums (and interest charges and penalties for late .

payment,if any) due to the Pension Benefit Guaranty Corporation with respect to the Entergy Plans, except where the failure to pay would not have an Entergy Material Adverse Effect.

(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 4980D of the Code with respect to employees covered under any " group health plan" within the-meaning of Section 5000(b)(1) of the Code (the "COURA" requirements), except where the failute to be in compliance does not, individually or in the aggregate, have an Entergy Material Adverse Effect.

StrrlON 3.12 Opinion offinancial Adrisor. Entergy has received the opinion of Salomon Brothers 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 Merger Agreement and the Gulf States Merger Agreement for shares of Entergy Common Stock and Gulf States Common Stock (as defined in Section 4.2)in the Mergers (the " Merger Consideration") is fair from a fmancial point of view to the shareholders of Entergy, and a copy of such opinion has been delivered to Gulf States.

StcrioN 3.13 Environmental Protection. (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 list, and neither Entergy 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 Entergy, to the knowledge of Entergy. Entergy and its subsidiaries are and have been in compliance with all applicable Environmental Laws (as hereinafter defmed),

except where the failure to be in compliance would not have an Entergy Material Adverse Effect - Except as .

previously disclosed in writing by Entergy Entergy 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 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 Material Adverse Effect, (c) Except as previously disclosed in writing by Entergy, there is no Environmental Claim (as hereinafter defined) 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 ventures has retained or assumed either contractually or by operation of law (including by merger or consolidation) which, if L _

adversely determined, individually or in the aggregate, would have an Entergy Material Adverse Effect.

Except as previously disclosed in writing by Entergy, no off-site 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 not its subsidiaries have received, with respect to any off-site 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, Environmental Laws.

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

(ii) Except as previously disclosed in writing by Entergy, there are no past or present actions, activities, events, conditions or circumstances of any kind or type that would reasonably be expected to prevent 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 noncompl 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 locations where Entergy or its subsidiaries have stored, disposed or arts jed the disposal of hazardous wastes (as defmed under federal or state law), asbestos, waste oil, and batteries, and alllocations at which Entergy or its subsidiaries had a construction landfill (including any such landfill's years of operation), have been previously disclosed in writing by Entergy, (x) all underground storage tanks, and the capacity and contents of such tanks, located on property owned, operated or leased by Entergy o

- 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 for t- of any building, building component, structure or ottice 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 $500,000 and (z) except as previously disclosed in writing by Entergy, no PCBs have been or are stored for disposal except in compliance with all applicable laws or hwe been disposed of on property owned, operated or leased by Entergy or its subsidiaries.

(e) Entergy and its subsidiaries have, and are in substantial compliance with, all required permits, authorizations 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 en 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 defined) into the environment of any Hazardous Materials (as hereinafter defined); or (b) circumstances forming the ba

' 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 Hazardous Materials.

(ii) " Environmental Laws" means any and all federal, state and local statutes and regulations relating to llazardous Materials or Hazardous Materials waste management, pollution control, or -

investigation and cleanup of Hazardous 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.

(iii) " Hazardous Materials" means (a) any petroleum or petroleum products, radioactive materials, asbestos in any form that is friable, and PCBs, PCB Articles, PCB article containersi PCB containers, PCB. contaminated electrical equipment, PCB equipment, PCB items, PCB transformersfand PCB j

wastes as defined by applicable federal and state law (collectively, "PCBs"); and (b) any chemicals, materials or substances which are now defined as or included in the defmition of" hazardous substanc

" hazardous wastes," " hazardous materials," " extremely hazardous wastes," " restricted hazardous B-ll

f wastes," " toxic substances," or " toxic pollutants" under any Environmental 1.aw; and (c) any other chemical, material, substance or waste, discharge of which or exposure to which is prohibited, limited or regulated by any governmental authority in a jurisdiction in which Entergy or its subsidiaries operate 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.

StcrioN 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 financially responsib!c 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. ScheJule 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 lasurance 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.

SECTios 3.15 Regulation as a Utility. Entergy is a public utility holding company registered under the Ifolding 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 public 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.

SocTtos 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, Enterg 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 By-laws or similar 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 Enter Material Adverse Effect.

SECTtoN 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 the capital stock of Entergy required to approse the Reorganization.

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

Stcrtos 3.18 Additional Representations. In ' the event the Alternative Reorganization is to be consummated. Entergy will represent that it does not have any plan or intention to cause !!olding 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 liolding 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 M

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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 Entergy to cause such condition to be satisfied is inconsistent with the agreements in the first two sentences of Section 6.D(b), actions by Entergy after the Effective Time which cre consistent with the representations so given shall not be deemed a breach of this Agreement.

SLcuoN 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 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 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, 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 the past practices.

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF GULF STATES Gulf States represents and warrants to Entergy as follows:

SECDON 4.1 Organication and Quah[caffon. (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 standing under the laws of the jurisdiction ofits incorporation or formation and has the requisite power and 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 a Gulf States Material Adverse Effect (as defmed 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 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 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, operaticas, properties, assets, condition (financial or other) or results of operations of Gulf States and its subsidiaries taken as a whole;provided, however, that a Gulf States Material Adverse Effect shall not include (i) any General Changes, (ii) the transactions contemplated by the Settlement Agreement -

between Gulf States Utilities Company, Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company and Southern Company Services, Inc., dated December 21,1990 (the

" Southern Company Settlement") which was consummated on November 7,1991, (iii) the compromise, settlement, adjudication or other resolution of any pending FERC proceedings between Cajun Electric Power -

Cooperative, Inc. (the " Cajun Cooperative") and Gulf States and the suit filed by the Cajun Cooperatise and Jetierson 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 to the foregoing suits or proceedings,(iv) any write-offs or write downs, or reserves therefor, or agreements or understandin B 13

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I to take write offs or w rite dow ns, or resvnes therefor (collecthely, " Write Downs") w hich (A) do not reduce Gulf States' regthtory rate base as in eficci from time to time and (b) do not reduce the book salue of Gulf States' Louisiana derrgulated awet plan; prosided, that, notwithstanding (A) and (II) abos e, any Wnte Dow n or similar charge resulting frorn resolution of the G1E deferred tax inue or the El Paso espense inue as prenously desenbed to Entergy or the appeal of the deferred inenue requirement not included in rates in Louisiana Phase 2 case shall not be included in determining Gulf States Material Adverse Effect, (v) any a

changes in rates or any rate casn or proceedings and related appeals or remands which result from the repurchase, refmancing 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 caso or proceedmgs previously dneribed in wntirg by Gulf States to Entergy but only to the estent doenbed in tuch writing,(vii)(A) the compromise, settlement, adjudication or other resolution against Gulf States of the Cajun 1.itigation (as defmed in Sectir n 8.l(i)) and (11) any judicial rulings, discoveries of facts or circumstances _ changes in status or other de elopments after the date hereof with respect to the Cajun Litigation, or (viii) the suspension of disidend or sinking fund payments with respm to any of Gulf States' l capital stock by reason of the ocorrence of any of the events set forth in clauses (i) through (sii) above. l l .

With inpect to the compromise, settlement, adjudication or resolution of any claims, actions or proceedings against Gulf States or its subsidiaries the term " Net Cost l* shall mean the cost to Gulf States of such settlement or other resolution (including reasonable expenses (including reasonable attorneys' fees)) and after tases and net ofinsurance and any property or property or contract rights receised or receivable by Gulf States pursuan " uch settlement or rnolution and any recoscry through rates reflected in an order of a regulatory body on aole to Gulf States which has become fmal (esen if subject to appeal) in cash, property, services or cAchange 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 rnolution 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 ta agree, to an arbitrator selected by the American Arbitration Anociation, for toolution in accordance with the ruin of the American Arbitration Asweintion and the decision of the arbitrator shall be final and binding: '

provided, that such arbitrator shall not make any determination as to any recosery through rates if an order of a regulatory body applicable to Gulf States has not been issued and become fmal; and, prodded further, that ith ropect to a fmal order inued, such arbitrator shall only resche questions of interpretation of the order ,md sha!! not resol e or determine the effect of any possible appeal, remand or modificanon thereof, (b) True, accurate and complete copin of the Articles of Incorporation and Ily. laws of Gulf States and eat h of Gulf States' corporate subsidiaries, as in effect on the date hereof, base heretofore been delisered to '

Entergy, StenoN 4.2 Capitalization. (a) The authorized 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 5100 Preferred Stock"), 10,000,000 shares of Preferred Stock, without par value (the " Gulf States No Par Value Preferred Stoek" and, together with the Gulf States 5100 Preferred r

Stock, the " Gulf States Preferred Stock") and 20,000,000 shares of Preference Stock, without par salue (the

" Gulf States Preference Stock"). As of the date of this Agreement, 114.0$$,065 shares of Gulf States Common Stock, and as of March 31,1992 such number of shases of Gulf States $100 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 inued and outstanding. All of the iuued and outstanding shares of Gulf States Common Stoek, Gulf States fl00 Preferred Stock and Gulf States Preference Stock are salidly inued and are fully" paid, nonauessable rmd free of preemptise rights.

(b) Except as set forth on Schedule 4'2(b) of Gulf Statee Disclosure Schedule (the " Gulf States Disclosure Schedule") hereto, as of the date hereof, there are no outstanding subscriptions, opnons, calls, contracts, commitment % understandmps, restnetions arranFements, rights or warrants includmg any nght 11 14 r

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of convenion or exchange under any outstanding security, instrument or other agreement obligating Gulf States or any subsidiary of Gulf States to issue, deliver or sell, or cause to be issued, delisered or sold, additional shares of the capital stock of Gulf States or obligating Gulf States or any subsidiary of Gulf States l to grant, extend or enter into any such agreement or commitment, except for Gulf States' Dividend Reinvestment 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 agreements or understandings to which Gulf States or any subsidiary of Gulf States is a party or is bound with respect to

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

St ettoN 4.3 Subsidiaries. Except as set forth on Schedule 4.3 of the Gulf States Disclosure Schedule herem, all subsidianes of Gulf States are set forth on Exhibit 22 to Gulf States' Annual Report on Form 10 K for the fiscal year ended December 31,1991. Except 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 preemptise rights, and the ountanding shares of capital stock and partnership or other ownership interests in each subsidiary owned directly or indirectly by Gu'f States are owned free and clear of any liens, claims, encumbrances, secunty 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 *tock and partnership 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, options, warrants, rights, calls, contracts, voting trusts, proxies or other commitments, undentandings, 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 exchange 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' aat 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 compray," a " subsidiary company" or an "afliliate" of any public utihty company within the meaning of Section 2(a)(5),2(a)(7),2(a)(8) or 2(a)(ll) of the Holding Company Act.

Sirrtos 4.4 Authority: Non-Contravention: Approvah. (a) Gulf States has full corporate power and authority to enter into this Agreement and the Gulf States Merger 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 Mergers which are also subject to the Gulf States Required Statutory Approvals (as defmed below). The execution and delivery of this A;;rcement and the Gulf States Merger Agreement and the consummation by Gulf States of the transactions contemplated hereby and thereby have been duly authorized by Gulf States' Doard of Directors and no other corporate proceedings on the part of Gulf States are necessary to authorize the exceution and delivery of this Agreement and the Gulf States Merger Agreement and the consummation by Gulf States of the transactions contemplated hereby and thereby, except for the Gulf States Snar.nolders' Approval. This Agreement has been, and the Gulf States Merger Agreement will be, duly and validly executed and delisered by Gulf States and, assuming that this Agreement constitutes, and the Gulf States Merger Agreement will constitute, a salid and binding agreernent of Entergy and floiding Company, as the case may be, subject to the receipt of Gulf States Required Statutory Appronts, this Agreement constitutes, and the Gulf States Merger Agreement will constitute, a valid and binding agreement of Gulf States enforceable against Gulf States in accordance with its terms, escept that such enforceability may be limited by applicable bankruptcy, inscheney, moratorium or other similar laws affectiag or relating to enforcement of creditors' rights generally or general principles of equity.

(b) Except ab set forth on Schedule 4.4(b)of the Gulf States Disclosure Schedule hereto and other than the Gulf States Required Statutory Approvals, the esecution and deinery of this Agreement by Gulf States 11 15

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I does not, and the execution and deliver'y of the Gulf States hierger Agreement and the consummation by Gulf States of the transactions contemplated hereby and thereby will not, violate, conflict with or result in a l 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 sesult 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, security inte,est, charge or encumbrance upon any of the properties or assets of Gulf States or any ofits subsidiaries under, any of the terms, conditions or provisions of (i) subject to the receipt of the Gulf States Shareholders'  ;

Approval, the Articles of Incorporation or Ily laws of Outf States or any ofits subsidiaries,(ii) subject to the receipt of the Gulf States Shareholders' Approval, any statute, law, ordinanec, rule, regulation, judgment,  ;

decree, order, injunction, writ, franchise, permit or beense of any court, federal, state or local goserntnemul authority or municipality applicable to Gulf Statts 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, obligativn or agreement of any kind to which Gulf States or any ofits subsidiaries is now a party or by w hich Gulf States 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 '

siolations, conflicts, breaches, defauhs, terminations, accelerations or creations of liens, secunty interests, charges or encumbrances that would not, in the aggregate, have 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, i

(c) Except as set forth on Schedule 4.4(b) of the Gulf States Disclosu e Schedule above and except for (i) any required approvals under the Federal Power Act,(ii)(A) notice by Gulf States to and an order by the .

PUCT to the effect that the transactions contemplated under this Agreement are in the public interest and L (11) the approval, if required, of municipalities or other local governmental bodies in the State of Texas, in the case of each of(A) and (II), 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 Ifolding Company Act,(vi) the filing of the Joint Prosy Statement / Prospectus with the SEC pursuant to the liolding Company Act and Exchange Act, (vii) the filings by Gulf States and Entergy required by Title 11 of the llSR Act,(viii) 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 ofIlolding Company and the Merger Subsidiaries,(x) the filing of articles of merger with the Secretary of State of Texas in accordance with the Texas ilusiness Corporation Act

("TilCA") in connection with the Gulf States Merger and (xi) the filing by or on behalf of the !!olding 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 " Gulf States Required Regulatory Approvals" and the filings and approvals referred to in clauses (i) through (xi) are collectively referred to as the "Oulf 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, hase a Gulf States Material Adverse Effect or materially adsersely affect the ability of Gulf States to con ummate the transactions contemplated hereby and by the Gulf States Merger Agreement.

StcTtoN 4.5 Repons and financialStarcments. Since December 31,1M8. Gulf States and each of its 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 Eneigy 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, all 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 PURAT, the Louisiana Statutes, the Atomic Energy 11 16 WfW.a, _..e,. wp4,e,.s, - - , . - .4,pqp py.w- g ,r y.,et 9y p y .-,q y, p9 9 ypi 9 9.f 4,.w ,

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Act, the Federal Power Act and the'lloiding Company Act and the respective rules and regulations thereunder, all of which con plied in all matetial respects with all applicable requirements of 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 staternent and dermitive proxy statement fded by Gulf States or any ofits subsidiarios with the SEC since December 31,1988 pursuant to the Securities Act or the Exchange Act (collectively, the "Oulf 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 -l i

circurnstances under which they were made, not misleading. The audited consolidated (mancial statements 1

and unaudited cor,solidated interirn financial statements of Gulf States included in such reports (the "Oulf 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 pr-sent the fmancial position of Gulf States and its subsidiaries as of the dates thereof and the results of their operations and changes in financial position for the periods then ended, subject, in the case of the unaudited -

consolidated interim financial statements, to normal year end audit adjustments Ond any other adjustments described therein.

i

' StcTioN 4.6. Alnence of CertaIn Changes or Events. 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, Outf States has operated its businesses in the ordinary course consistent with past practice and there has not

, }

been any Gulf States Material Adverse Effect nor any development that would result in a Oulf States Material  !

. Adverse Effect.

StcTioN 4.7 Eltigation. 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 clairns, suits, actions or proceedings pending or, to the knowledge of Gulf States, threatened, nor, to the best knowledge of Gulf States, are there any imestigations '

rw reviews pending or threatened, against, relating to or affecting Gulf States or any ofits subsidiaries, which, if adversely determined, would have a Oulf States Material Adserse Effect. Except as contemplated by the Gulf States Required Statutory Approvals or as set forth on Schedule 4.7 of the Gulf States Disclosure i

Schedule hereto or in the Gulf States SEC Reports, neither Guif States nor any ofits subsidiaries is subject ,

to anyjudgment, decree, injunction, rule or order (other than rate orders and rate proceedings) of any court, .

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

• SrcitoN 4.8 Registration Statement and Proxy Statement. None of the information to be supplied by i 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 supplernents thereto, at the time of the i 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 fded or becomes effective contain any untrue statement of a' material fact or i 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 misicading. The Registration Statement

[

1 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 4 the applicable rules and regulations promulgated thereunder, except that no representation is made by Gulf States with respect to information supplied by Entergy or its subsidiaries specifically for inclusion therein. -

SLc1 ton 4.9 Perm! r No l'iolation of Law. Gulf States and its subsidiaries have all Permits necessary to conduct their businesses as presently conducted, except where the failure to havt such Permits does not have a Gulf StateA Material Adverse EfTect. Except as set forth on Schedule 4.9 of the Gulf States Disclosure ,

Schedule hereto Outf States has nnt receised any written notification that it or any subsidiary is in siolation ibl7 i

y y.y -

of any such Permit, or any law, statute, order, rule, regulation, ordinance or judgment of any Fosernmental or regulatory body or authority applicable to Gulf States and its subsidiaries, except for notifications of violations which would not, in the aggregate, hase a Gulf States Material Adverse Effect. Gulf States and its subsidiaries are in compliance with all Permits, laws, stateles, orders, rules, regulations, ordinances, or judgments of any governmental or regulatory body or authonty applicable to Gulf States and its subsidiaries, except for violations which,in the aggregate, do not base a Gulf States Material Adverse Effect.

St.cTioN 4.10 Tures. Except as set forth on Schedule 4.10 of the Gulf States Disclosure Schedule hereto or as to any failures to so file or pay that would not, individually or in the aggregate, base a Gulf States Material Adserse Effect, Gulf States and each ofits subsidiaries has (a) filed all matenal federal, state, local and foreign income and other Tax returns or reports (including declarations of estimated Tax) required to be fded 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 Disclosure Schedule hereto, there ate no claims or assessments pending nFainst Gulf States or any of its subsidiaries for any alleged deficiency in Tax, and Gulf States does not know of any threatened Tax claims or assessments aFainst Gulf States or any ofits subsidiaries, w hich if upheld could hase a Gulf States Material Ads erse Effect. Gulf States has established adequate accruals for Taxes and for any liabdity for deferred Taxes in the Gulf States Financial Statements in accordance with generally accepted accounting principles, provided that accruals for deferred tax rescrses have not been set up for certain book.to tas timing differences for w hich accruals are not required to be established in accordance with utility commission orders, rules and practices and that accruals for deferred taxes required under FASil 96 and FASil 109 have not been established.

StriloN 4.11 Employer Bencfr Plans ER/S4 (a) Each " employee benefit plan," as defined in Section 3(3) of ERISA, and each other emricyce or director benefit or compensation plan, program or arrangement 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 Statst would be deemed a single employer pursuant to Sections 414(b), (c) or (m) of the Code (the " Gulf States Plans") complies with all applicable requirements of law, except where the failure to so comply would not hase a Gulf States Material Adverse Effect, and no " reportable esent" or " prohibited transaction" (as such terms are 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 hsted on Schedule 4.ll(a) of the G States Disclosure Schedule hereto and copies or descriptions of a'l of the Gulf States Plans previously hase been provided to Entergy.

(b) Each Gulf States Plan intended to qualify under scetion 401(a) of the Code is so qualified and, except 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 trust, and no circumstances exist which would adsersely 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 waised. Neither Gulf States nor any ofits subsidiaries has sought or received 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 ERIS A or a " multiple employer plan," wnhin 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, nenher the execution or delisery 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 events), shall constitute an event under any Gulf States Plan, loan or other agreement that may result in any payment (whether of severance pay or otherwise), restriction or limitanon Ibl8 t

e

upon the assets of any Gulf States Plan, forgiseness of indebtedness, acceleration of payment or funding, sestinf, or increase in benefits or compensation with respect to any current or fotmer employee of Gulf States or any of its subsidiaries, except as would not base a Gulf States hinterial Adserse Effect.

(d) Except as required by applicable law or as set forth on Schedule 4.ll(d) of thv Gulf States Disclosure Schedule hereto, neither Gulf States not any ofits subsidiaries (i) provides any health, w clfare or life insurance benefits to any of their former or retired employees, which benefits would be material either individually or in the afgregate 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 employrnent or retirement, except for benefits uhich do not, individually or in the aggregate, t are a Gulf States Material Adscrse Effect.

(c) Except as disclosed on Schedule 4.ll(c) of the D N States Disclosure Schedule hereto or in the Gulf States SEC Reports, no payment or benefit which ww i nt W tade by Gulf States or any ofits subsidiaries wdl be characterized as an " excess parachute paymc e oth the meaning of Section 280G(b)(1) of the Code.

(f) Full payment has been timely made of all amounts which 'Julf States and/or any ofits subsidiaries are required as of the date of this Agreement to have paid as a contnbution 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 Person has incurred, not 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 sutwidiaries have paid all premiums (and interest charges and penalties for late payment, if any) due to the Pension Benefit 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 limitatic,n, the COBRA requirements, except where the failure to be in compliance does not, individually or in the agFregate, have a Gulf States Material Adverse Effect.

SLCi10N 4.12 Opinion offinancia/ 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 financial 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 Environmental Protection. (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 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 w riting by Gulf States, to the knowledge 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 base a Gulf States Material Adserse Effect. Except as previously disclosed in writing by Gulf States, Gulf States and its subsidiaries base not received any communication from a governmental or regulatory authority or agency, employee (including a former employee) or citizen group that alleFes that Gulf States or any of its subsidiaries is not in compliance with applicable Ensironrnental Laws, except where the failure to be in compliance would not hase a Gulf States Material Adverse Effect.

Ibl9

(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, thtcatened against Gulf States or any ofits subidiaries or joint ventures or, to the knowledge of Gulf States and its subsidiaries, any person or entity whose liability for any Environrnental Claim Gulf States or its subsidiaries or joint sentures has retained or assumed either contractually or by operation of law (including by merger or consolidation) w hich, if adscrsely determined, individually or in the aggregate would have a Gulf States Matenal Adserse Effect. Except as previously disclosed in writing by Gulf States, no off site location at which 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 not its subsidiaries have recched, with respect to any off site 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) Gulf States has previously prosided Entergy with estimates made by or on behalf of Gulf States of future costs of cornpliance with, and environmental cleanup and response under Environmental Laws, -

Except with respect to those matters previously described 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 Effect.

(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 expected to present 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 noncompliance 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 knowledge 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 defmed under federal or state law), asbestos, waste oil, and batteries, and all locations at which Gulf States or its subsidiaries had a construction landfill (including any such landfill's years of operation), base 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 presiously 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 cornponent, structure or oflice space owned, operated or 1 cased by Gulf States or its 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 (r) except as previously -

disclosed in writing by Gulf States, no PCils 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.

(e) Gulf States 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 Gulf States and its subsidiaries pursuant to applicable Environmental Laws.

StnioN 4.14 inwrance. 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 fmancially responsible insurers in such amounts and against such risks and losses as 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 (collectively, the " Gulf States insurance Policies"), including the name of the insurer and the types of coserages. Except as set forth on Schedule 4.14 of the Gulf States Disclosure Schedule hereto, neither Gulf States nor its subsidiaries hase 1140 l

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teceised any notice of cancellation or termination with respect to any material Gulf States Insurance Policy.  :

The Gulf States Insurance Policies are valid and enforceable policies.

Stcitos 4.15 Regulation as a Utility. Gulf States operates and is regulated as a publi utility only in the States of Texas and Louisiana. Except as set forth on Schedule 4.1$ of the Gulf States Disclosure Schedule hereto, neither Gulf States nor any ofits subsidiaries is subject to 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.

StettoN 4.16 Compliance with Agreements. Except as $ct 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 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, I would resuh in a default under, (i) the Articles of incorporation or Dy 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, approsal or other instrument to which 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 for 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.

StcrtoN 4,17 Vote Required. (a) The approval ofIwo-thirds of the votes of the Gulf States Common Stock outstanding and entitled to vote on the Reorganization is the only vote of the holders of any class or series of the capital stock of Gulf States required to approve the Reorganir.ation.

(b) The shareholders of Gulf States are not entitled to appraisal rights under the TBCA as a result of the transactions contemplated by this Agreernent, StcTioN 4.18 Absence of Undisclosed Liabilities. 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 nor 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 StcTtoN 5.1 Conduct of Business by Culf States. Except as set forth on Schedule A hereto or as otherwise contemplated by this Agreement (including < without limitation, the provisos to this Section and Section 5.2), after the date hereof and prior to the Effective Time or earlier termination of this Agree unlcw Entergy shall otherwise consent in writing (w hich consent snall not unreasonably be withheld), G States shall, and shall cause each of its 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 would conduct its business and operations; s (b) use4 heir reasonable best efforts to preserve intact their respective business organizations and goodwill, keep available the services of their respective present officers and Ley employees, and pres B.21 '

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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 against such risks and losses as are customary for companies engaged in the electric utility industry and employing methods of generating electric power and fuel sources similar to those rnethods employed 4

and fuels used by Gulf States; (d) use all reasonable efforts to maintain in effect all existing Permits pursuant to which Gulf States and its subsidiaries operate in their service territories; (e) not amend or propose to amend their respective Articles of Incorporation or Dy-laws (except 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);

(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 series of capital stock (other than common stock) issued by Gulf States as permitted pursuant to this Article V and the payment of any arrears thereon,(!!) 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 Article Y. (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 and (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);provided, that the payment of dividends as contemplated 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 exchangeable for Golf 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 recapitalize any shares of its capital stock, other than (i) as permitted or required by the governing terras 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 commence 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 effect as of the date hereof, not .

engage in any single transaction or series of transactions with the same party for the w holesale bulk sale -

of capacity in excess of 200 megawatt:. in the aggregate for periods in excess of 5 years, without prior consultation with Entergy; (k) not engage in any activity which would cause a change in the status of Gulf States, or that of its subsidiaries, under the llolding Company Act, provided that Gulf States may acquire a new subsidiasy to om n and operate or lease a rail spur to serve an existing generating facility and may acquire joint ownership interests in facilities and equity interests in projects as contemplated in paragraph 14 of Schedule A, so long as, in each case, any such acquisition would not be prohibited under the standards B.22

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of the llolding Company Act that would be applicable to Gulf States as a subsidiary of a registered holding company; j

(1) except in the ordinary course of business consistent with past practice, not enter into, adop terminate or amend any bonus, profit sharing, compensation, severance, termination, pension, retirement, deferred compensation, employment, sescrance, collective bargaining or other empl l benefit agreements, for the benefit or welfare of any director, omcer or employee, or increase in manner the compensation or benefits of any director, omeer or employee or pay any benefit not requ by any existing plan and arrangement (including, without limitation, the granting of stock options, s appreciation course rights, shares of restricted stock or performance units) other than increases in the oj of business; (m) operate within the capital, operation and maintenance budgets depicted in the document titled "GSU Operating and Capital Budgets", previously provided to Entergy, subject to exceptions noted in Schedule A, item 12; (n) as promptly as practicaMe after the Approval Date, permit a senior staff member of Entergy to

, be assigned to River Bend as a liaison person only to monitor operations and afford such represent the same treatment as would be afforded a senior mernber of the River Dend staff; (o) confer on a regular and frequent basis with one or more representatises of Entergy to discuss matters of materiality and the general status of ongoi,g operations; and (p) not enter into any contract, agreement, commitment or arrangement, whether written or oral, with respect to (x) any of the transactions set forth in the foregoing paragraphs (a) through (o) which

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

' are permitted by Schedule A, if the actions taken or to be taken exceed the parameters permitted by; Schedule A; provided, however, that notwithstanding anything to the contrary herein, Gulf States shall be permitted take any action whether or not permitted or prohibited by Section 5.1 or Schedule A (other than any act; that would breach any of the covenants of Gulf States set forth in Section 5.l(c),(f),(g),(h),(i),(k),(1) i or any covenant contained in any Section of this Agreement other than Section 5.1), and the taking of any such action by Gulf States (x) shall not constitute a breach of this Agreement, but shall give rise s i

right of Entergy set forth in Sections 8 l(h) and 8.2(b)(i)(B) and ( ) shall not give rise to the payment of fe or expenses by Entergy pursuant to Section 8.2(b)(iv) or Section .2(b)(vi)if such actions would violate the provisions of Section 5.1 or such actions are of the type specified L. Schedule A which exceed the pa permitted by Schedule A, which actions materially adversely affect the ability of either Entergy or Gulf Stat to satisfy the condition set forth in Section 7.l(0. The taking of any action that would not be perm the covenants Section 5,1. contained in Sections 5 l(e), (0, (g), (h), (i), (k), (1) or (n) shall be considered a breach Any violation of the provisions of Section 5.1 or the taking of any action of the type specified in Sch A which exceeds the parameters of Schedule A shall be considered in determining w hether there has o a Gulf States Material Adverse Effect. l SrcTroN 5.2 No S9/icitation by Gul/ States. Except as expressly permitted by this Agreemen without limitation. Section 5.1 and Schedule A, Gulf States and its subsidiaries will not..and will use t best efforts to cause their respective directors, ollicers, employees, representatives,imestment or affiliates not to, directly or indirectly, (a) initiate contact with, solicit or encourage submissio inquiries, proposals or offers by, or (b) participate in any discussions or negotiations with, or d information concerning Gulf States or any ofits subsidiaries to, or afford any access to the properti or records of Gulf States or any ofits subsidiaries to, or otherwise assist, facilitate or encourage, or enter into .

any agreement oe understanding with, any person (other than Entergy its affiliates agents and-representatives) in connection with any possible proposal (a " Gulf States proposal") regarding a sale or -

B.23 B=- =- ___

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4 acquisition of any of the capital stock or any other equity interest in Gulf States or any of its subsidianes (other than in the ordinary course of businen or as permitted in Section 5.1 or Schedule A), or a merger ,

consolidation or busmess combinauon invohmg Gulf States or any of its subsidiaries, or the liquidation or reorganitation of Gulf States or its subsidiaries, or a sale of all or (other than in the ordinary course of business or as otherwise permitted pursuant to Section 5.1 or Schedule A) any portion of the awets of Gulf Statn or any ofits subsidiaries or any material sirmlar transaction (a " Gulf States Acquisition Transaction").

Gulf States wdlimmediately cease any and all existmg actisities, discussions or negotiations with any panies conducted heretofore with respect to any of the foregomg restricted actisities. Notwithstandmg the foregoing, poor to the obtaining of the Gulf States Shareholders' Approsal and the Entergy Shareholders' Approsal, Gulf Statn may, to the estent required by its fiduciary duties under applicable law (as determined in good faith by the lloard of Directors of Gulf States based on the advice of outside counselt participate m discuwons or negotiations with, futnish infortuation to, and atTord accen to the properties, books and records of Gulf States and its subsidiaries to, any person (including without hmitation any person with whom discunions or negotiations base previously been conducted) in connection with a posuble Gulf States -

Proposal by such person. Gulf States will notify Entergy immediately if any inquiry or proposal is made or any such infonnation or access is requested in connection with a Gulf States Proposal or potential Gulf States Proposal and, except and only to the extent limited by the prosisions of a confidentiality agreement with a third party acccu. in efTect on the date of this Agreement, promptly preside the detads of such inquiry, proposal or St cuoN 5.3 Conduct of Business by Entergy. Except as set forth on Schedule 5.3 of the Entergy Disclosure Schedule hercto or as otherwise contemplated by this Agreement, after the date hereof and pnor to the EfTectise Time or carher tennination of this Agreement, unless Gulf States shall otherwise consent in wiiting (w hich consent shall not unreasonably be withheld), Entergy and its subsidiaries shall not (a) declare, set aside or pay any extraordmary or special disidend or distnbution on any of the capital stock of Entergy or (b) make or agree to make extraordinary acquisitions of any capital stock of Entergy, except pursuant to a stock repurchase program, to the extent not prohibited by the SEC under the llolding Company Act, prosided that Entergy shall not repurchase stock within sixty (00) days prior to the EfTectise Time.

St cuoN 5 4 No Solicitation by Entergr. Except as expressly permitted by this Agreement, Entergy and its subsidiaries will not, and will use their best efforts to cause their respectise directors, otricers, employee '

representatises, insestment bankers, agents or affiliates not to, directly or indirectly, (a) initiate contact with, solicit or encourage submission of any inquiries, proposals or offers by, or (b) participate in any discuniom or negotiations with, or disclose any information concerning Entergy or any of its subsidiaries to, or afTord any access to the properties, books or records of Entergy or any of its scbsidiaries to, or otherwise suist, facilitate or encourage, or enter into any agreement or understanding with, any person (other than Gulf Stata, its afiliates, agents and representatises) in connection with any possible proposal (a "Entergy Preposal") regarding a sale or acquisition of any of the capital stock or any other equity interest in Enterg or any of its subsidianes (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 subsidianes, or a sale of all or (other than m the ordinary course of business or in conjunction with a sale leaseback, pollution control fmancing or other similar tran<, action) aity matenal portion of the anets of Entergy or any of its subsidiaries or any similar transaction; prouded that nothing contained in this Section 5 4 shall restrict the taking of any action which would not (i) hase an Entergy Material Adserse Effect or (ii) matenally adsecsely atTect (includmg by materially adsersely affecting the regulatory approval process) the abihty of Entergy to consummate the transactions contemplated hereby and by the Entergy Transaction Agreements. Entergy wdl immediately cease any and all custing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregomg restricted actisities. Notwithstanding the foregomg, pnor to the obtaming of the Gulf States Shareholders' Approsal and the Entergy ShareholJers' Approsal Entergy may, to the estent required by its fiduciary duties under applicable law (as deterrnined in good faith by the lloard of Directors of Entergy based on the adsice of outside counsel), participate in discuniom or negotiations with, formsh information to, and atTord access to the properties, books and records of Entergy 1144

-___-_m. _ . _ _ _ _ _ _ _ _ _ _ _ _ - _ . _ _ _ . _ . _ . _ _ . _ _ _ _ . . .-

~! .

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 ard, except and only to the '

extent limited by the prm'isions of a confidentiality agreement with a third party in effect on the date of this i Agreement, promptly provide the details of such inquiry, proposal or access.

t l

St.c1\oN 5.5 Conduct of Business by Holding Company and the Merger Subsidiaries Pending the Merger. Pnor to the Effective Time and subject to the Entergy Required Statutory Approvals and the Gulf States Required Statutory Approvals, Entergy and Gulf State < shall cause llolding Company and the Merger 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 and

' the Transaction Agreements and the transactions contemplated hereby and therebyt (c) not engage directly 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 1

which is not contemplated by this Agreement or the Transaction Agreements and (d) not create, grant or suffer 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 Effective Time.

St canos 5.6 Certain Information Relating to industrial Customers. After the date hereof and prior to the Effective Time, 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, arrangement, understanding or agreement with any person relating to the provision of electric or gas utility service by Entergy or any ofits subsidiaries, on the one hand, or Gulf States or any of its subsidiaries, on the other hand, to industrial customers in the service territory of the other party.

ARTICLE VI ADDITION \L AGREEMENTS

)

SrcTioN 6.1 Preferred Stock Arrearages. Entergy agrees to take all reasonable action necessary to cause Gulf States to pay, at the Effective Time or as promptly as practicable and as permitted by apphcable 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 payments or satisfy such obhgations on account of write-offs by Gulf States prior to the Effective Time.

StcTtos 6.2 Access to Information. (a) Gulf States and its subsidiaries shall afiord to Entergy and its

- uccountants, counsel, environmental consultants, financial adsisors and other representatises (the "Entergy .

Representatives") reasonable access during normal business hours upon reasonable notice throughout the period prior to the EfTectise Time to all of their respective facilities, properties, books, contracts,'

commitments and records and, during such period,(A) permit Entergy Representatives to make reasonable inspections ard investigations, and to take other reasonable acts, as they deem necenary or desirable to determine and evaluate the presence, absence or threat of release of liarardous Materials, and (D) furnish promptly to Entergy (i) a copy of each report, schedule and other document filed or receised by any of them 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 and personnel as Entergy may reasonably requestt provided that no investigation pursuant to this Section 6.ha) -

made by Entergy or any Entergy Representatises shall afTect any representations or warranties made herein by Gulf States or cause a condition to ihe obligations of the respective parties to consummate the transactions -

contemplated hereby and by the. Transaction Agreements to be deemed to be satisfied or waired, if, in the 3

- B 25 e

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.o absence of such irnestigation, such condaion would not base been otherwise satisfied or waised. All information furnished to or obtained by Entergy and the Entergy Representatnes pursuant to this Section 6.2(a) shall be subject to the prosisions of the Confidentiality Agreement dated May 9,1991 between Enterry and Gulf States (the " Gulf States ConfiJentiahty Agreement") and shall be treated as Esaluation Material (as defined m such agreement).

(b) Entergy and its subsidiaries shall alTord to Gulf States and its accountants, counsch environmental consultants, fmancial adsisors and other representatises (the " Gulf States Representatis es") reasonable access dunng norrnal busmess hours upon reasonable notice throughout the period prior to the Effectisc Time to all of their respectne facihties, properties, books, contracts, commitments and records and, during such period.

(A) permit Gulf States Representatives to make reasonable inspections and investigations, and take other reasonable acts, as they deem necenary or desirable to detennine and evaluate the presence, absence or threat of release of liarardous Materiah, and (II) furnish prornptly to Gulf States (i) a copy of each report, schedule and other docurnent fded or recened by any of them pursuant to the requirements of federal or state securities laws or filed by any of them with the SLC, applicable state utikty comrnissions NRC or FERC and (ii) any other information concerning their respective busineues, properties and personnel as Gulf States inay reasonably request;provided that no investigation pursuant to this Section 6.2(b) made by Gulf States or any Gulf States Representatises shall aficet any representations or warranties made herem by Entergy or cause a condition to the obligations of the respective parties to consumrnate the transactions contemplated hereby and by the Transaction Agreements to be deemed to be satisfied or waived, if, in the absence of such imestigation, such condition uould not have been otherwise satisfied or waived. Allinformation furnished to or obtained by Gulf States and the Gulf States Representatives pursuant to this Section 6.2(b) shall be subject to the provkions of the Confidentiality Agreement dated May 9,1991 between Gulf States and Entergy (together with Gulf States Confidentiahty Agreement, the " Confidentiality Agreements") and shall be treated as Evaluation Material (as defined in such agreement).

51 etins 63 Registration Starcment and fro.ty Statement. (a) Entetgy and Gulf States shall, and shall cause lloidmg Company to, prepare and file with the SEC as soon as is reasonably practicable after the date hereof the Joint Prmy Statement / Prospectus and shall use all reasonable efforts to respond promptly to 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 hase the Registration Statement declared effectise by the SEC as promptly as practicable. Entergy and Gulf States shall, and shall cause lloiding Company to, take any action required to be taken under applicable state blue sky or securities laws in connection with the issuance of Iloiding Company Cornmon Stock in the Merg Entergy and Gulf States shall promptly furnish to each other allinformation, and take such other actions, l may reasonably be requested in connection with any action by any of them in connection with the prec sentence. The information prosided and to be prouded by Entergy and Gulf States, respectively, for use in the Joint Proxy Statement / Prospectus shall be true and correct in all material respects without omission any material fact which is required to make such information not fake or misleading.

(b) It shall be a condition to the mailing of the Joint Proxy Statement / Prospectus to the shareholders o Entergy and Gulf States that (i) Entergy shall have receised (A) an opinion of Salomon Brothers Inc, d the mading date of the Joint Proxy Statement /Prmpectus, to the effect that, as of the date thereo Consideration is fair from a financial point of siew to the shareholders of Entergy and (!!) an opini Coopets & l.) brand, certified pubhc accountants for Gulf States, dated the mading date ofIb Statement / Prospectus, with respect to the financial statements of Gulf States included in t Statement / Prospectus, addressing such matters as is customary for transactions smular to by this Agreement and in a form reasonably acceptable to the parties hereto, and (ii) Gulf States sh received (A) an opmion of Goldman, Sachs & Co., dated the mading date of the Jomt Prox Statement / Prospectus, to the c Tect that, as of the date thereof, the Merger Consideration is fair fr fmancial point of new to the holders of Gulf States Common Stock and (11) an opinion of Delo cert fied pubhc accountants for Emergy, dated the mailing date of the Joint Proxy Statement / P 114 6 unummmamanasamn, em e

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

with respect to the fmancial statements of Entergy included 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. 'i 6

P St ctson 6.4 Approval of Gulf States Shareholders: Approval of Entergy Shareholder 1 (a) Gulf States i shall (i) take all steps necessary duly to call, give notice of, convene and hold a special meeting of its i

shareholders (the " Gulf States Special Meeting") and cause a shareholder vote to occur within 150 days after *

' I the date of this Agreement or,if Gulf States is unable to cause the Gulf States Special Meeting to be held 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) distribute to itt

• shareholders the Joint Proxy Statement / Prospectus in accordance with applicable federal and state law and with its Restated Articles of Incorporation and Dy. Laws (iii) subject to the fiduciary duties of the Board of Directors of Gulf States in connection with a Oulf States Proposal, recornmend to its shareholders the approval of the transactions contemplated hereby and by the Gulf States Merger Agreement and such other matters as may be submitted to its shareholders in connection with this Agreement and the Gulf States Merger Agreement and (iv) ccoperate and consult with Entergy with respect to each of the foregoing matters.

I (b) EnterFy shall as soon as reasonably practicable (i) take all steps neceaary to call, gise 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 purpose of (A) approving this Agreement, the Entergy_ Transaction Agreements and the transactions

' contemplated hereby and thereby (the "Entergy Shareholders' Approval"), and (D) such other purposes as i

- may be necessary or desirable, (ii) distribute to its shareholders the Joint Proxy Statement / Prospectus in accordance with applicable federal and state law and its Articles of Incorporation and Hy Laws,(iii) subject to the fiduciary duties of the Board of Directors of Entergy in connection with a Entergy Proposal, i recomtnend to its shareholders the approval of the transactions contemplated hereby and by the Entergy 1

Transaction Agreements and such other matters as rnay be submitted to its shareholders in connection with

~

this Agreement and the Entergy Transaction Agreements and (iv) 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 Meeting and Gulf States Special Meeting to be held as close together in time as shall be reasonably practicable.

SicitoN 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 required -

to be filed under the IISR 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 efforts to make such filings at the agreed upon time, to respond >

promptly to any requests for additional information made by either of such agencies, and to cause the waiting periods under the llSR Act to terminate or expire at the earliest ponible date after the date of(ding.

(b) Entergy, Gulf States and lielding Company shall cooperate with each other and (i) promptly prepare and fde all necessary documentation, (ii) effect all necenary applications, notices, petitions and filings and execute all agreements and documents, (iii) use all reasonable efforts to obtain all necessary permits, consents, approvals and authoritations of all governmental bodies and (is) u3e all reasonable etrorts to obtain all necessary Permits, consents, approvals and authoritations 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 contemplated by this Agreement and the Transaction Agreements (including, without limitation, the Entergy Required Statutory Approvah and the Gulf States Required Statutory Approvals)or required by the terrns of any note, bond, mortgage, indenture, deed,of trust, license, franchise, permit, concession, contract, lease or other 8,27

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instrument to which Entergy, Gulf States or any of their respective subsidiaries is a party or by which any of them is bound. Entergy shall have the right to review and approve in advance all characterizations of the information relating to Entergy; Gulf States shall have the right to review and approve in advance all characteritations of(i) the information relating to Gulf States and (ii) any information relating to Gulf States' Riser Bend nuclear generating facility or the present or future fmancial, accounting or rate treatment thereof or any rate proceedings, appeals or litigation relating thereto, which information is incorporated in a characteriration of Entergy or the Combined Companies; and each of Entergy and Gulf States shall have the right to review and approve in advance all characterizations of the information relating to the transactions contemplated by this Agreement and the Merger Agreements, in each case which appear in any filing (includmg, without limitation, the Joint Proxy Statement / prospectus and all filings with regulatory and gmernmental bodies to obtain the consents and approvals required under Section 7.l(f)) made in connection-l with the transactions contemplated hereby and by the Merger Agreements. The Companies agree that they will consult with each other with respect to the obtaining of all such necessary Permits, consents, approvals and authoritations 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, 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 tespect to regulatory fdings to be rnade 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 record with respect to such filings. Any actiow taken by either party pursuant to this paragraph shall not be deemed a waiver of any actual conflict that may exist with respect to the participation of any such counsel.

(c) Entergy shall consult with Gulf States (and any separate legal counsel designated by Gulf States as provided above) prior to proposing or entering into any stipulation or agreement with any federal, state or local gosernmental authority or agency or any third party in connection with any federal, state or local gosernmental consents and approvals legally required for the consummation of the Mergers and shall not propose or enter into any such stipulation or agreement which would have a material effect 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 Effective Time. Entergy agtses that any requirement of the SEC that Gulf States divest its gas operations shall not constitute a Gulf States Material Adverse Etfect or a Regulatory Material Adverse Effect (as dermed in Section 7.l(f)).

(d) Entergy has previously provided 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 hereb SicTioN 6.6 Compliance with the Securities Act. Prior to the Closing Gulf States shall 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, " affiliates" of such party for-purposes of Rule 145 under the Securities Act. Each of Gulf States and Entergy shall use all reasonable etTorts to cause each person named in the letter it delivers to the other to Lver at or prior to the Effective Time a written agreement with respect to sales of sceurities issued in the Mergers, containing prosisions as are customary forparties acceptable to the transactions hereto. similar to those contemplated by this Agreement and in a form reasonably Sic 11oN 6.7 Schange Listing. The Companies shall cause llolding Company to use its best efforts to I

etTect, at or before the Effectise Time, authorization for listing on the NYSE, Pacific and Midwest Stock Eu:hanges, upon official notice of issuance, of the shares of fielding Company Common Stock to be issued pursuant to the Mergers. ,

Ib28

i

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i 1 SicTION 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 t 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 may make public announcements, statements or oth i disclosures with respect to this Agreement, the Transaction Agreements and the transactions cont hereby and thereby to the extent and under the circumstances in which the parties are expressly the Confidentiality Agreements to make disclosures of " Evaluation Material" (as defined in the Confidentiality Agreements).

SLcTioN 6.9 Gulf States Employees and Employce Benefts. (a) (i) As of the Effectisc 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 sarne terms and conditions as those in effect immediately prior to the Effective Time and to bargain in good faith with Local 2286 of the International Drotherhood of Electrical Workers. AFL-CIO (the "lDEW") over all issues as stated in the collective bargaining agreement in effect a the Effective Time.

(ii) For a period of three years following the Effective Time (A) any reductions in working force in respect of non bargaining unit Employees shall (1) be made on a fair and equitable basis, in light of the 6

circumstances and the objectives to be achieved, giving consideration to previous work history, job e and quahfications, without regard to whether ernployment was with Entergy or its subsidiaries or Gulf States or its subsidiaries, and any non bargaining unit Employees whose employment is terminated or jobs a climinated by the Surviving Corporation or any of its subsidiaries or by Entergy or any ofits subsidiaries during such period shall be entitled to participate on a fair and equitable basis in the job opportunity and employment placement programs offered by Entergy or any ofits 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 climinated at Gulf States, plus the number of persons terminated (voluntarily or involuntarily) under Gulf States' Executive Continuity Plan, plus the number of Employees accep .

transfera to Entergy or one ofits subsidiaries, and (B) any non. bargaining unit Employees who are relocated from service areas of the Surviving Corporation and its subsidiaries after the Effective Time will be entitle to participate in Entergy's and its subsidiaries' relocation assistance plans.

(iii) From and after the Effective Time, 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 und or with respect to all Gulf States Plans and all agreements or plans set forth on Schedule 6.9(a) of the Gu 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 e or accrued thereafter in the ordinary course. Entergy, Gulf States and llolding Company hereby acknow that the consummation of the Gulf States Merger constitutes a " change in control" of Gulf States of any Gulf States Plan, or any agreement or plan set forth on Schedule 6.9(a) of the Gulf States Disclosure' Schedule hereto which relates to any Employee or former employee, director or former director of Gulf State and its subsidiaries which contains change in control provisions, and, accordingly, lloiding Company shal cause the Surviving Corporation to honor all prosisions under such Gulf States Plans and any agreements or plans set forth on Schedule 6.9(a) of the Gulf States Disclosure Schedule relating to a change in control.

(iv) From and after the Effective Time, Entergy and liolding Company agree that employees of the Surviving Corporation and its subsidiaries shall be entitled to participate on the same basis as of Iloidmg Company, Entergy and their subsidiaries in all job training, career development and educat programs of Iloiding Company and its subsidiaries and shall be entitled to fair and equitable consideration together with other employees of liolding Company and its subsidiaries in connection with any manag or executive job opportunities with llolding Company and its sabsidiaries.-

B 29

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4 (b) (i) For a period of three years following the Effective Time, there shall be no (A) termination of the Gulf States Trusteed Retirement Plan (the " Retirement Plan"); (D) transfer of assets or liabilities between the Retirement Plan and any other " employee benefit plan" within the meaning of Section 3(3) of ERISA (an

" Employee Benefit Plan"), other than transfers in any plan year involving in the aggregate less than 1% of the fair market value of the Retirement Plan's assets as of the beginning of such year;(C) merger or consolidation of the Retirement Plan with any other Employee Denefit Plan or (D) change in the funding method or policy, interest rate, mortahty tables or other actuarial assumptions used with respect to the Retirement Plan which would have the efTect of reducing contnbutions or the rate of contributions to the Retirement Plan, unless and to the estent required by law;provided. however, that notwithstanding the foregoing, if agreed to in writing by Gulf States (through action by a majority of the directors of Gulf States w ho were directots of Gulf States prior to the Effective Time (the " Continuing Directors"); provided, tha, if no Continuing Directors shall still be serving on such Board, a decision required to be made by Continuing 1/ rectors pursuant to this Agreement shall be made by a majority of the entire Board unless the reason there a e no Continuing Directors is that they were removed without cause or were not renominated) and Entergy, the Surviving Corporation may -

transfer the participation of Employees from the Retirement Plan to a dermed benefit plan of Entergy specified 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 ptovisions 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 effect immediately prior to the Effective Time, without any reduction in benefit levels or reward opportunities, or any increase in cost to participants (other than normal premiim 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 service with the Surviving Corporation and its affiliates aner the EfTective Time determined in accordance with the .

practices and procedures of Gulf States prior to the Effective Time; provided, however, that the Surviving Corporation may replace one or more Gulf States Plans (other than the Retirement Plan) with substitute p;ans or arrangements 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 EfTective -

Time with Gulf States and its subsidiaries, or any predecessor employer (to the extent such credit was ghen by Gulf States or any ofits subsidiaries) and all service 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 for all purposes for w hich such service was taken into account or recognized by Gulf States or its subsidiaries. Employees represented by the IDEW will have benefits. if any, under the terms and conditions of their collective bargaining agreement then in effect.

(iii) The Surviving Corporation will pay a cash payment to each Employee who is a participant in the Gulf States incentisc Compensation Program (the "Incenthe Plan") immediately preceding the EtTectise 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 Effectise Time occurs or (D) who is in the employ of the Surviving Corporation on December 31 cf the year in which the Effective Time occurs, Entergy and llolding Company agree that the cash payment shall be equal to the greater of(I) the amount paid under the incentise Plan to each such Employee for the last plan year ended prior to the EITectne Time and (II) the target award for the plan year in which the Effectise Time occurs (the "Donus"h provided, howerce, that the amount of the Donus to be paid to each Employee pursuant to clause (A) of the preceding sentence shall be multiplied 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 employment is terminated through the date the Employee's employment is terminated and ,the denominator of which shall be 365.

D 30

.l

(c) Severance and Vestmg Under Plans. Without limiting *.he generality of the foregoing, the Surviving Corporation shall provide severance pay and other benefits to any non bargaining urut Employee whose ,

employment is terminated (other than forjust cause related tojob performance) by the Surviving Corporation l or any subsidiary within three years following the Effective Time w hich are no less favorable to the Employee i than the schedule of severance pay and benefit entitlements set forth on Schedule 6.9(e) of the Gulf States Disclosure Schedule, plus an augmeM aarly retirement benefit taking into account the Employee's actual 3 ears of service (instead of credited 6 - substantially equivalent to such benefit offered by Gulf States in its 1990 Severance package. i (d) llolding Company agrees that, as of the EfTectise Time, the collective bargaining agreement between Gulf States and the illEW and all responsibilities and obligations that arise thereunder with respect to employees of Gulf States covered thereby then in effect shall continue to be applicable to the Surviving '

Corporation.

(c) Entergy and llolding Company unconditionally agree that on and after the Effective Time they will cause the Surviving Corporation to continue in effect for the Doard of Directors of the Surviving Corporation

• Gulf States' deferred compensation plan and retirement pian for Gulf Statev directors as in effect at the Effective Time, until such time as terminated by the Board of Directori of the Surviving Corporation (through action by a majority of the Continuing Directors).

(f) The lloiding Company shall cause the Sorviving Corporation to maintain and honor in the same '

form as in effect on the date of this Agreement the Gulf States Executive income Security Plan and the Gulf States Executive Continuity Pian. 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 number of participants under any such Plans may increase by up to 10% to add persons who are designated by Gulf States to fill a position vacnted by an existing participant and designated by the Board of Directors of Gulf States to be eligible to participate in such Plan. I Sr.CTION 6.10 PosrJterger Operations. (a) At the Effective Time, Entergy and Gulf States shall cause the Board of Directors ofIlolding Company to be comprised of the persons designated by Entergy and Gulf States pursuant to Section 1.2 hereof. Entergy and lielding Company agree to notainate the individuals designated by Gulf States pursuant to Section 1.2 to initially serve as directors ofIloiding Company for a '

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

(b) If, during the Three Year Period, any member of the Daard of Directors of I!olding 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 of Ilolding Company, the Chairman of the Board cfiloiding Company :

shall designate another individual to serve on the floard of Directors of }{olding Company, appointed frcm the members comprising the Board of Directors of Gulf States immediately prior to the Effective 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 of the Board ofIloiding Company and until age 65 years Chairman of the Board of Directors and Chief Executive Officer of the Surviving Corporation.

(d) During the Three. Year Period, the Surviving Corporation shall operate the business formerly conducted by Gulf States as a direct or indirect subsidiary of floiding Company to be headquartered in the city of Beaumont, Texas. The Surviving Corporation shall be known for at least five 3 ears following the Effective Time as " Gulf States Utilities Company."

(c) At the Effectise Time, lloiding Company shall cause the Board of Directors of the' Surviving Corporation to be comprised of(i) four persons designated by Entergy, and (ii) all of the members of Gulf-States' Doard of Directors immediately prior to the EffectiveTime, subject to such changes in composition as may be required by lloiding 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.

• U 31 e

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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 scryice areas of Gulf States, as long as goods and sersices available and prices and fees charged by such vendors are reasonably competitive with alternative vendors outside such service areas and the quality of such supplies and services is reasonably comparable to that of such 4/.ternative vendors.

(g) During the Three Year Penod, lloiding Cornpany 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 substantially comparable to the levels of charitable contributions and community support provided by Entergy and its subsidiaries within their service areas during such period.

StrTION 6.11 Olterton' and Oficed' /ndemn([Ication. (a) llolding Company shall cause the Articles of incorporation and fly Laws of the Surviving Corporation to contain provisions no less favorable with respect to indemnification of directors, omcers, ernployees and agents than the provisions set forth in the Restated Articles of it corporation and Ily 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, rencated or otherwise modified for a period of ten years from the Effective Time in any manner that would adversely affect the rights thereunder of individt,als who at or prior to the Effective Time were directors, omccrs, '

employees or agents of Gulf States, or who are directors, omeers, employees or ar,ents 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 Company sh:!! cause the Surviving Corporation to maintain in effect for six years from the Effective Time the current policies of directors' and omeers' 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 omeets of Gulf States serving at or prior to the Effecthe Time with respect to claims arising from occurrences prior to the Effective Time.

(ii) llolding Company shall cause the Surviving Corporation to maintain for a period of at least six years following the Effective Time policies of directors' and omeers' liability insurance covering the individuals who are directors and/or omeets of the Surviving Corporation at any time during such period, which policies shall, at all times, contain terms and conditions which are at Icast as favorable as those contained in the most favorable of directors' their subsidiaries, and omeers' liability insurance policies provided by llolding Company, Entergy o ,

(iii) lloiding Company shall cause to be maintained for a period of at least six years following the Effective Time policies of directors' and omeers' liability insurance cosering the individuals designated Gulf States w ho are directors and/or omeets of llolding Company, which policies shall at all times contain terms and conditions which are at least as favorable as those covering other directors and omeets of liolding Company.

9 (d) After the Elketive Time, llolding Company shall, to the fullest extent permitted under applicable--

law, indemnify and hold harmless, each present and fortner director and omeer of Gulf States or any ofits subsidiaries set forth on Schedule 6.ll(d) of the Gulf States Disclosure Schedule, and any successor to any director or omeer on the date of thh Agreement (each an " Indemnified Party" and collectively, the

" Indemnified Parties") against any costs or expenses (including attorneys' fees), judgments, fines, losses.

claims, damagescliabilities and amounts paid in settlement (collectively, " Liabilities")in connection with an claim, action, suit, proceeding or investigation, w hether eisil, criminal, administratis e or investigatis e, aris Ib32 t

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out of, relating to or in connection with any action or omission occurring prior to the Effective Time in connection with such persons' serving as an otlicer or director of Gulf States or any of its subsidiaries or arising out of or pertaining to the transactions contemplated by this Agreement. Ilolding Company shall no be required to prmide such indemnification except to the extent an indemnified Party has sought and failed to obtain indemnification from (i) any insurance which may be available to emer such Liability and (ii) the Surviving Corporation pursuant to any obligation of the Sursiving Corporation to provide indemnification, in the event an indemnified Party seeks indemnincation as contemplated by clauses (i) and (ii) above, an unsuccenfulin obtaining indernnification within 90 days of seeking such indemnification and confirms such facts in writing to the lloiding Company, the llolding Company will deem the Inderrnined Party to have satisfied his obligation to seek indemnification as contemplated by clauses (i) and (ii) abose. An Indemnified Party shall use his best efforts to subrogate the lloidmg Company to any rights he may base to recover 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 Agreeraent or any other agree ,

with the llokling Company or the Surviving Corporation for the cost or amount oL Liability for which -

he has receised reimbursement or an indemnification payment from some other source or for which reason, he suffers no loss or liability. The foregoing indemnity shall apply irrespective of the negligence (whether sole, concurrent or contributory) of the Indemnined Party; provided, that such indemnity will not apply in the event of gross negligence or willful misconduct of the Indemnified Party, in the event of a such claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time),

lloiding Company shall pay the reasonable fees and expenses of counsel selected by the Indemnified P which counsel shall be reasonably satisfactory to lloiding Company, proraptly after statements therefor are received and (ii)lloiding Company shall cooperate in the defense of any such matter;rovided however, that l iloiding Company shall not be liable for any settlement effected without its written consent (which consent

?

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 provisio of this Section 6.11.

(c) In the event the Surviving Corporation or lloiding Company or any of their successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all ofits properties and assets to any person, then and in each such case. proper prosision shall be made so that the successors and assigns of

• the Survising Corporation or llolding Company, as the case rnay be, shall assume the obligations nt forth in this Section 6.11.

StfUoN 6.12 Reasonable Best Egorts. Subject to the terms and coniitions herein provided, each of the parties hereto agrees to use reasonable best efforts to take, or cause to be taken, all action, and to do, or ca to be done, all things reasonably necessary, proper or advisable under applicable laws and regulations to consummate and make efTectise the transactions contemplated by this Agreement and the Transaction i Agreements. Iloth parties shall consult on a reasonable and frequent basis regarding matters relating t 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 ta ke all such

= StritoN 6.13 Certain Tax Matrcrs. (a) As soon as practicable after the date hereof, Enterpy and Gulf States shall request from the IRS a letter ruling to the etrett that the Primary Reorganization will be trea as a transacthn 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 oflloldmg Company stock in such transaction. Gulf States and Entergy shall use all reasonable to determine as soon as practicable whether the IRS is likely to inue the letter ruling described in the immediately precedmg sentence. In the esent that Entergy and Gulf States determine that the 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 Alternalise Reorganization will be treated as a 11 33 1

transaction described in sections 351 a-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 solely fo of Iloiding Company stock in such transaction.

(b) Prior to, at and after the Effective Time, neither Entergy, Gulf States, nor flolding Company shall take or fail to take any action which could adversely affect the characterization of the exchanges of st pursuant to this Agreement as tax free exchanges under the Code. Without limiting the generality of the foregoing, in the esent the Alternative Reorganization is to be consummated, for a period of at leas j following the Effective Time, Entergy and Gulf States shall cause lloiding Company not to, and ll i Company shall not, liquidate either Gulf States or Entergy or merge or consolidate either Gulf Sta i with and into any other corporation (including flo! ding Company). Notwithstanding the foregoing Company, Gulf States or Entergy (as the case may be) may take any of the actions prohibited by either o two preceding sentences ifIlolding Company, Gulf States or Entergy (as is appropriate) shall have first received an unquahfied opinion of Skadden. Arps, State, Meagher & Flom or other nationally recognized, indepe United States tax counsel or an IRS ruling that such action will not cause either or both of the Merg to qualify as exchanges under Section 35)(a) and/or 368, as appropriate, of the Code; and (c) Entergy and Gulf States will cause llolding Company to, and llolding Company will, and after the Efrective Time lloiding Company will cause Gulf States, Entergy and flolding Company's other subsidiaries (direct and indirect) to, fde its and their federal income tax returns for all periods beginning after o the EtTective Time on a basis consistent with the treatment of the exchanges of stock pursuant to as tax free exchanges under Section 351(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 llolding Company after the Effective Time to tak of the Section 3.18 Actions and will provide representations to that efTect to the attorneys furnishing opinions provided in Section 7.2(d).

SictioN 6.14 Continuation o/ Standstill Notwithstanding anything contained in the Confidentiality Agreements to the contrary, except as expressly permitted by the terms of a written waiver executed States, the standstill provisions contained in the sixth paragraph of the Confidentiality Agreements shall- i 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.

StettoN 6.15 Supplemental Disclosure. (a) Entergy shall have a continuing obligation to notify Gulf States, and Gulf States shall have a continuin;; 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 respectively, being materially inaccurate or incomplete in any material respect. The parties shall provide th 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 war 4 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 Enterg Disclosure Schedule or the Gulf States Disclosure Schedule. -

SI:cuoN 6.16 Delivery of Ccriain Certylcates. (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 C but in no event more than ten days after receipt of such request, state in a certificate executed by its Chie Executive Officer and Chief Financial Omeer and delisered to Entergy as to whether there shall have occurre and be continuing,in the aggregate, a Gulf States Material Adverse EITect or a Cajun Material Adverse Effect (as hereinafter derned) or if it 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 tonable to make such a conclusion Entergy shall not request such a certificate more than once esery 90 days, i

13 34

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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 tirne 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 Executise Otheer and Chief Financial Ollicer arid delivered to Gulf States as to whether there shall have occurred and be continuing, in the aggregate, an Entergy hinterial Adserse Effect or ifit is unable to make such a conclusion, the facts and circumstances that it has rehed upon in determining that it is unable to make such a conclusion. Gulf States shall not requ such a certificate more than once escry 90 days.

ARTICLE VII CONDITIONS St ctsus 1.1 Conditions to Each Party's OMigation to Q]ect the Mergers. The respectist obligations of ~

the Companies to etTect 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 hase been approved and adopted by the requisite vote of the shareholders of Gulf States and Entergy under applicable law and their respective Articles ofincorporation; (b) The llolding Company Common Stock issuable in the hiergets shall have been authorized for listing on the NYSE upon official notice ofissuance; (c) The waiting period applicable to the consummation of the hiergers under the llSR Act shall have expired or been terminated; (d) The Registration Statement shall have become etrective in accordance with the provisions of the Secunties effect; Act and no stop order suspending such effectiveness shall have been issued and remain in (e) No preliminary or permanent injunction or other order or decree by any federal or state court w hich prevents the consummation of the hiergers shall have been issued and remain in effect (each party agreeing to use its reasonable best efforts to have any such injunction, order or decree lifted) and no statute, rule or regulation shall hase been enacted by any state Eor federal overnment or gosernmental agency in the United States which prohibits the consummation of the hiergers; (f) (i) All federal, state and local governmental consents and approvals required for the

, consummation of the hiergers 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 hase a material adverse effect on the business, operations, properties, assets, condition (financial or other), rates or results of operations of l{olding Company and the Companies and their subsidiaries taken as a whole, and (b), in the case of the state and local gasernment approvals, would not have a material adverse etreet on the businest operations, properties, assets. condition (financial or other), rates or results of operations of Gulf States and Entergy's electric public utility divisions, subsidiaries and afliliates operating in the State of Louisiana (the "Ilase 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 td(d))(either (a) or (b), a " Regulatory Niaterial Adserse Effect")), and (ii) the Gulf States Required Regulatory Approvals and Entergy Required Regulatory Approvals shall base become Final Orders (a " Final Order" means a tinal order after all opportumties for rehearing are exhausted (whether or not any appeal thereof is pending)) and shall not be subject tmterms and conditions which, in the aggregate, would result in a Regulatory hiaterial Adserse EfTect. For purposes of this Section 7.l(f), (A) a FERC order which contains no " retail IM5

i I

wheeling" 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 oneroul; than those imposed in recent FERC orders with respect to mergers insolving electric utility cor e shall not be deemed to result in a Regulatory hinterial Adverse Effect, and (10 in determining whethe Regulatory Material Adserse EITect has occurred, there shall be excluded any rnatter excluded from th!!

defmition of a Gulf States Material Adserse Effect under Section 4.l(a)(iii) to the exten proceedings and 4.l(a)(iv), (v) and (si),

(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 Mergers shall have been obtained, other than those which, if not obtained, would not, in the aggregate, have an Entergy Material Adserse Effect,in the case of consents and approsals required for any note, bond, mortgage, indenture, coturact or other agreement of E or any of its subsidiaries, or a Gulf States hiaterial Adverse Effect, in the case of consents and approv .

required its for any subsidiaries; and note, bond, mortgage, indenture, contract or other agreement of Gulf States or an (h) The shares ofiloiding Company Common Stock to be issued to holders of Gulf States Cornmon-Stock in the Gulf States Merger and holders of Entergy Cornmon Stock in the Entetgy Merger shall be validly issued, fully paid, nonassessable, free of preemptive rights and free and clear of any tiens, claim encumbrances, security interests, equities, charges and options of any nature whatsoever, SictioN 7.2 C<mditions to Obligation of Gu(f States. The obligation of Gulf States to etTect the transactions contemplated by this Agreement and the Gulf States F Merger A reement (but not the obligatio 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 have performed in all material respects its cosenants and agreements contained in -

this Agreement required to be performed at or prior to the Effective Time; (b) There shall not hase occurred and be continuing, in the aggregate, an Entergy Material Adverse Etiect; (c) Gulf States shall hase received a certificate from the Chivf Executive Omcer and the C Financial Omcer of Entergy, dated the Closing Date, to the effect that to the best of such officers' knowledge, the conditions set forth in Sections 7a(a) and (b) have been satisfied; (d) Gulf States shall have received a ruling from the IRS, in form and substance reasonab'y

, 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 of!!o Company stock in sucii transaction.

Sr.cTios 7.3 Conditions to Obligation of fntergy. 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 Effective Time of ,he following additional conditions:

(a) Gulf States shall hase performed in all material respects its cosenants and agreements contained 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 Adscrse E!Tect has resulted therefrom and is continuing) required to be performed at or prior to the Effectise Time; '

[(b) There shall not have occurred and be continuing, in the aggregate, a Gulf States Mate Adserse EtTect; 11 36 i

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i (c) Entergy shall have recei[ed a certificate from the Chief Executive Omcer and the Chief Financial OMccr of Gulf States, dated the Closing Date, to the effect that, to the best of such officers' 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 l'rirnary 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 recognited by Gulf States and Entergy shareholders that exchange shares of Gulf States and Entergy stock Solely for shares of Iloiding Company stock in such transaction; and (c) Gulf States shall not, without the prior written consent of Entergy, have entered into any cornpromise, settlement, adjudication or other resolution with respect to, or be the subject of any comptornise, settlement, adjudication or other resolution with respect to, or ha$ e 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 hate a Cajun Material Adverse Effect (as such term is defined in Section 8.l(i) hereoO or (ii) relating to any other claim, action, suit or proceeding, for an aggregate Net Cosi which, in the aggregate, would have a Gulf States Material

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

ARTICII Yll!

TERMINATION, AMENDMENT AND WAIVER Stc1:ON 8.1 Rtmination.

(a) This Agreement and the Transaction Agreements may be terminated at any time prior to the Ettective Time, whether before or al'ter 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 date of this agreement (the " Initial Termination Date");provided that the right to terminate this Agreement and the Transaction Agreements ander this Section 8.l(b) shall not be available to any party whose failure to fulfdl any obligation under this Agreement or the Tranuction Agreements has been the cause of, or resulted in, the failure of the Effectisc 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 7,1(f) has' not been satisfied or waived and the other conditions to the consummation of the transactions contemplated hereby are then capable of being satisfied, and the approvals required by Section 7.l(0 which have not yet been obtained are being pursued with diligence or (ii) the Gulf States Required Regulatory Approvals and the Entergy Required Regulatory Approvals shall have become Final Orders, the conditions set forth in Article VII hereof (other than Section 7.l(0) have been satisfied or waised or are then capable of being satisfied by action of the other party, and the other party fails or refuses to consummate the Mergers within sixty (60) days after the later of(A) the date the conditions set forth in Article VII hereof (other than Section 7.l(f)) have been satisfied or waised or are then capable of being satisfied by action of the other pany and (D) receipt of the last of such Final Orders for any reason, including but not limited to its assertion that the Final Orders do not satisfy the condition set forth in Section 7.l(O; and prosided, further, that the ,

Alternatisc Termination Date shall automatically be extended to 30 months from the date of this Agreement if(x) on the Alternatise Termination Date the condition set forth in Section 7.l(0 has not bee waised. (y)(i) the other conditions to the consummation of the transactions contemplated hereby are then capable of being satisfied, and (ii) none of the approvals required by Section 7.l(0 hase been formally denied by the administratise or regulatory body ultimately responsible for granting or denying such approvals and the approvals required by Section 7.l(0 which hase not yet been obtained are being pursued with diligence D.37

,. * ~~ ~

1 id

4 and (r) Enterry, on or before the Alternatise Termination Date, advises Gulf States in writing that it wishes to extend the Alternatise 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' Approsal shall not hase been obtained at the Gulf States Special Meeting or any adjournments thereof,(ii) the Entergy Shareholders' Approval shall not hase been obtained at the Entergy Special Meeting or any adjournments thereof,(iii) any gosernmental 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 hase dete ned not to grant its consent and all appeals of such determination shall base been taken and have been unsuccessful, or (is) any court of competent jurisdiction in the United States or any State shall have inued an order, judgment or decree permanently restraining, enjoining or otherwise prohibiting the Mergers and such order, judgment or decree shall have become fmal 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' Approsal(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 en 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 Otheer 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 hase been true and cortcet 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 Officer, and dated the Approval Date, to that efTect 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 lloard of Directors of Gulf States belieses, in good faith and in accordance with its fiduciary duties after consultation with Gulf States' financial advisors, is more favorable directly or indtectl/ io Gulf States'

~

shareholders than the transactions contemplated by this.A;;reement.

(g) If, at any time prior to the Effective Time there shall have occurred and be continuing an esent or events (including judicial and nonjudicial deselopments in Entergy's business or operations occurring since the date of this Agreement) which, in the aggregate (x) have or are likely to hase an Entergy Material Adverse Effect or (y) other than as a result of actions taken by Gulf States, have or are likely to hase a material adserse effect on the abihty of the parties to consummate 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 esent or events are then continuing; prosided that Gulf States shall be deemed to have waived any such right to terminate with respect to such esent 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 ;esolved.

(h) If, at any time prior to the EfTective Time there shall have occurred and be continuing an event or events (including judicial and nonjudicial developments in Gulf States' business or operations occurring since 11 38

=

- = -

the date of this Agreement) which, in the argreFate, (x) hate or are likely to hase a Gulf States Material Adscrse Effect or (y) other than as a result of actions taken by Entergy, base or are hLely to base a matenal adverse effect on the ability of the parties to consummate the transactions contemplated hereby, which event or esents continue sixty days after untten notice from Entergy to Gulf States requesting that Gulf States take such actions as are necessary such that such esents do not exist (or are continuing at the Closmg if the Closing is to occur less than sixty days atter such noticei is F ven), this Agreement and the Transaction Agreements may be terminated by Entergy 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 expiratmn of such sixty day period)if such l

i ennt or events are then continuing; provided that Entergy shall be deerned to base waived any such right to terminate with respect to such esent or events unless, within such twenty day period, Entergy (A) exercises its right of termination in respect thereof or (11), in the case of an esent or events ansing from a breach of this Agreement, commences htipation against Gulf States seeking to require Gulf States to remedy such breach, in which case such 20 day period shall continue until 10 days after such htigation is resobed.

(i) In the event that (A) the Cajun Litigation has been completely settled or otherwise resched prior to the Effectise Time for an aggregate Net Cost to Gulf States which gises rise to a material adserse etlect on the business, operations, properties, assets, condition (fmancial or other) or results of operations of Gulf States and its subsidiaries taken as a whole (a " Cajun Material Adserse Effect") or (11) the Carm Litigation has not been completely settled or resolved pnor to Closing and (i)in the period from the date hereof through the date all conditions to Closing (other than those within the control of Gulf States) are satisfied or waived (the l " Cajun Determination Date") there base been sigmficant judicial rulings, discoveries of facts or cir, 'mstances, changes in the status of the Cajun Litigation or other developments in the Cajun Litigation in the aggregate of which Entergy has knowledge as a result of which the totalliability of the Cajun Litigation to Gulf States has materially increased and (ii) there is a reasonable probability that the Cajun Litigation will 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 j against Gulf States for an aggregate Net Cost which would base a Cajun Material Adscrse EtTect, then,in the case of (A), within thirty business days after such settlement or resolution (subject to extension upon mutual written agreement of the parties), Entergy may terminate this Agreement and the Transaction Agreements and,in the cae of(II), within ninety business days after the occurrence of both (II)(i) and (II)(ii)

(subject to extension upon mutual written agreement of the parties), Entergy may terminate this Agreement and the Transaction Agreements.

i 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 Cooperathe and any existing or future litigation, claim, cause of action or proceeding in a court of law or before any gosernmental or regulatory body related to or arisin out of essentially the same operathe facts or issues as in such currently ptnding litigation or agency proceeding with the Cajun Cooperatise (other than the litigation set forth in Section 4,1(a)(iii) and the "sersice water" litigation).

I I (j) This Agreement and the Transaction Agreements may be terminated by Gulf States at any time prior I to the Closing, if any of the following esents shall base occurred: (i) acquisition of Entergy by merger or otherwise by any person other than any person w ho is an ailitiate of Entergy as of the date of this Agreement (a " Third Party");(ii) acquisition by a Third Party of more than 50% of the total assets of Entergy and its consolidated subsidiaries, taken as a whole, (iii) acquisition by a Third Party of more than 509 of the outstanding soting power of all equity securities of Entergy; or (iv) adoption or implementation by Entergy of a plan of hquidation.

g (k) This Agreement and the Transaction Agreements may be terminated by Entergy at Closing if the I condition set forth in Section 7.3(e) shall not be satisfied or may be termmated by Entergy at any time poor to Closing satisfied if, as a-result of actions taken by Gulf States or otherwise, such condinon is incapable of bemg at Closing.

i tid 9

l (1) In the event of a breach of the covenant and agreement of Gulf States set fonh 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 Agreernents 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 (I) unless, in such 20 business day l period. Entergy (A) exercises its right of termination in respect thereof or (11) commences litigation against Gulf States seeking to require Gulf States to deliver such certificate. '

(rn) In the esent of a breach of the covenant and agreernent 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 ard the Transaction Agreements may be terminated by Gulf States within 10 -

1 business days after the expiration of such 20 day period if such breach is continuing: provided, that Gulf l'

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 (II) commences litigation against Entergy seeking to require Entergy to deliver such certificate.

i

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(n) In the event that at the time the parties hereto wouH otherwise mail the Joint Proxy Statement / Prospectus to their respective shareholders Gulf States shall have requested and shall not have received the herns set forth in Section 6.3(b)(ii), then, within ten business days after such date Entergy or e 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 i

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 $.l(c),(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 i is then continuing; provided th' ta Entergy shall be deemed to have waived any such breach pursuant to this clause (p) unless whhin 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 w:ill likely require Gulf States to effect a write-off, write down or create a reserve with respect to the River Dend 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 reser es 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 parai;raph (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 satisfied:

- and, provided further, that Gulf 5tates shall be deerned to hase waised 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 (qt and, within 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 11 40

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I l

argregate, 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 prosisions 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 A greement.

Sic 1loN 8.2 Ef]Pcr of Termination. (a) The representations, warranties and agreements in this Agreement and the Transaction Agreements shall terminate at the Effectisc Time or the termination of this Agreement pursuant to Section 8.1, as the case may be, except that the representations, warranties and agreements set forth in Sections 9.1,9.2,9.3,94,9.5,9.6,9.7 and 9.10 of this Agreement and Article !! of the Merger Agreements shall survive the Effectisc Time indefinitely, those set forth in Sections 6.9,6.10 and 6.11 of this Agreement shall survive the Effective Time for the periods centemplated therein, those set forth in Section 6.14 of this Agreement shall sunise the EfTectise Time until the expiration of the applicable -

statutes oflimitations, and those set forth in the last sentence of Section 4.l(a) and Sections 8.2, 8.4, 9.1, 9.2, 9.3, 9.4, 9.5 and 9.7 and the last sentence of Sections 6.2(a) and 6.2(b) of this Agreement shall survive ternunation indefmitely.

(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 (D) by Entergy pursuant to Section S.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 dcrumented 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 'Iransaction 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 (D) 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 cipenses i

' incurred by Gulf States (including without limitation, fees and expenses payable to imestment 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 515,000,000 (the " Gulf States Expenses").

(iii) If this Agreement and the Transaction Agreements are terminated by Galf States pursuant to Section 8.1(f), Gulf States shall promptly pay to Entergy in cash the sum of $25,000,000 plus an amount 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.l(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 c!Tectne only at or after the Effective Time or (y) resulting from the failure to obtain SEC approval under the llolding Company Act for the Alternatise Reorganization or (z) arising from actions of Gulf States that would siolate the prmisions of Section 5.1 of arising from actions of Gulf States of the type specified in Schedule A which exceed the parameters permitted by Schedule A, which actions base materially adversel> atTected the ability of either Entergy or Gulf States to satisfy the condition set forth in Section 7.l(f)((x), (y), and U). colleetisely, the " Regulatory Fee Exceptions"), or (D) by Entergy or Gulf States pursuant to Secuon 8.l(c) tin), except for terminations arning in whole or part from the Regulatory Fee Exceptions, in each such case. Entergy shall promptly pay to Gulf States in cash the sum of $50,000,000, plus an amount equal to the Gulf States Expenses.

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(v) pursut. If this Agreement and the Transaction Agreements are terminated by Entergy or Gulf St L., Section 8.l(b) solely by reason of the condition set forth in Sectionen7 satisfied

. l(f) not having be or wa.w., or solely pursuant to Section 8.l(c)(iii), in either case arising solely from the failure to obtain S approval under the !!olding Company Act for the Alternative Reorganization (which, for purpo clause (v), shall be deemed to include the imposition by the SEC of conditions to its approv liolding Company Act of the Alternative Reorganization as a result of which the conditi cannot the Gulf Statesbe satisfied),

Expenses. then in such case Entergy shall promptly pay to Gulf State:,in cash an (vi) In the event this Agreement and the Transaction A,rcemer:ts are terminated by Enterr States pursuant to Section 8.l(c)(iv), (i) if the order, injunction or decree enjoins, sets aside or re unavailable or ineffective a Final Order and does not otherwise enioin or otherwise restrict th parties to consummate the transactions contemplated by this Agreement then, except where s injunction or decree arises in whole or part from a Regulatory Fe, Exception, Entergy shall '

Gulf States in cash the sum of $50,00n,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 pr

. . Gulf States in cash an amount equal to the Gulf States Expenses.

(vii) If this Agreement and the Transaction Agreements are terminated by Gulf States ptorsua Section 8.l(q), except as provided in the last sentence of Section 8.l(q), neither pa:ty shall pay a f expenses to the other party on account of such termination.

(viii) If this Agreement and the Transaction Agreements are terminated by Entergy pursuant to Section 8.10)(11), Entergy shall promptly pay to Gulf States in cash the sum of $25,000,000 plus an am the Gulf States Expenses,,

(ix) If this Agreement and the Transaction Agrcements are terminated by Entergy pursuant to Sectio 1

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 fmal Alternative Termination Date, Entergy shall pay to Gulf States the sum of $10,000,000 in addition to any other am payabie under Section 8.2. if any, including but not limited to the amounts, if any, payable under Sectio 8.2(b)(iv) or (vi).

(c) All costs and expenses incurred in connection with the prepration, printing and distribt. tion of Joint Prosy Statement / Prospectus (including w 3out limitation, the fding fees related thereto) sha equally by Gulf States and Entergy, except as otWrwise provided in Section 8.2(b). Except as set f preceding sentence or as otherwise provided in this Section 8.2, whether or not tha Mergers are c all costs and espenses incurred in connection with this Agreement, the Transaction Agreements transactions contemplated hereby : nd thereby shall be paid by the party incurring such expen agree that the rights and remedies of the parties expressly set forth in Sections 8.2 and 8.5 constit and exclusive rights and remedies of the parties upon a termination of this Agreement pursuant to 8.1, and, except as provided la Sections 8.2 and 8.5, upon a termination of this Agreement pursuan 8.1, no party hereto shall have ny liability or obligation to any other party to this Agreement. The agree that the rights and remedies under Section 8.2(b) are alternative and not cumulative. W the two preceding sentences, Entergy cgrees that, in the event'of a termination of this Agreem States in accordance with Section 8.1 hereof, provided that Gulf States shall have paid all amo to Entergy by reason of such termination pursuant to this Section 8,2. none of Entergy, its subsidiaries an alliliates will (i) assert or pursue in any manner, directly or indirectly, any claim or cause of action based in whole or part upon alleged tortious or othee interference with their rights under this Agreement aga entity or person submitting to Gulf States a Gulf States Propwal or (ii) assert or pursue in any manner, directly or indirectly, any claim or cause of action a;.ainst Gulf States or any ofits officers or directors based 11 42 p g _ - - --

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).

50citoN 8.3 Amendment. This Agreement and the Transaction Agreements may be ame. L f the parties hereto and thereto at any time before or after approval by the shareholders of Gulf States c > ..tc rgy, but, after any such approval, no amendment shall be made to this Agreement or the Transaction Agreements which (a) changes Anicle 11 of the Gulf States Merger Agreement in ar,y 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

$100 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 Eritergy 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 behaF of ,

cach of the parties hereto and, in the case of an amendment n Wher of the Transaction Agreements, by an instrument in writing signed on behalf of each of the parties if: acto and approved in writing by the parties '

. hereto, StcTios 8.4 Waircr. 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.

St:cnoN 8.5 Limitation on Actions. Except for the payment 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 j result of a breach or termination of this Agreement, except that if a party willfully and in bad fait & breaches any provision cf 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 SirrtoN 9.1 BroAers. 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 contenplated 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 f+ier or iavestment banker is entitled L to any brokerag- Jnder'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 Eetergy.

SECTioN 9.2 Notices. All notices and other commur ications 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 overnight courier or by facsimile to the parties at the following addresses (er 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:

s Entergy Corporation 225 Baronne Street New Orleans, Louislana 70112 Attention: Don llunter with a copy to:

Skadden, Arps, State, Meagher & Flom '

919 Third Avenue New York, New York 10022 Attention: Peter Allan Atkins, Esq.

and with a copy to:

Reid & Priest 40 West $7th Street New York, New York 10019 Attentiom Thomas J. Igoe, Jr., Esq.

(b)If to Gulf States, to:

Gulf States Utilities Company P.O. Box 29$1 Beaumont, Texas 77704 Attention: Cecil Johnson, Esq.

with a copy to:

Fried, Frank, liarris, Shriver & Jacobson One New York Plaza New York, New York 10004 Attentiom Arthur Fleischer, Jr., Esq.

and with a copy to:

Orgain, Dell & Tucker 470 Orleans Street Beaumont, Texas 77701 Attentiam Benny 11. Ilughes, Jr., Esq.

and with a copy to:

LeBoeuf, Lamb, Leiby & MacRae

- $20 Madison Avenue New York, New York 10022 ~

. Attention: Douglas W. Ilawes, Esq.

Any notice which is addressed and mailed,in the manner herein provided or delivered by telegr be conclusively presumed to have been duly given to the party to which it is addressed at the clo local time of the recipient, on the third day after it is placed in the mail. Any notice which is se courier shall be conclusively presumed to have been received on the next business day. Any notice sent by cable, telea or facsimile shall be.conclusisely presumed to base been received on dispa notice shall be confirmed by mail.

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Srcrios 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.

SrcTioN 9.4 Miscellaneous. This Agreement (including fhe documents and instruments referred to herein), the Merger Agreements and the Confidentiahty 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.

StcTios 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.

Stc11on 9.6 Spec ('ic Performance. The parties hereto acknowledge and agree that a violation of any of

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the terms or provisions of Sections 5.6, 6.9(e) and (f), 6.10(a), (b), (c) and (e), 6.11 and 6.16 will cause the p:rsons to whom such terms and provisions relate irreparable injury for which 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).

SrcrioN 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.

SECr!ON 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 oflaw, without the prior written consent of the other parties.

SterlON 9.10 Severability. If any term, covenant or restriction of this Agreement is held by a court of com),etent 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 th most limited extent possible and the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and efTect and shall in no way be affected, impaired or invalidated.

IM5

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

IN WITNESS WilER00F, Entergy End Gulf States have caused this Agreement to be signed >

respective officers thereunto duly authoriied as of the date first written above. '

ENTERGY CORPORATION.

Dy. /s/ EDWIN LUPBERGLR' Edeln Lupberger Chairman and Chief Esecutin Ofcer GULF STATES UTILITIES COhlPANY Dy: /s/ JcsEPH DONNELLY -

Joseph Donnelly Chairman and Chief Erecatin Ofcer liolding Company hereby agrees to be bound by and to comply with the provisions of the foregoi Agreement rpplicable to it.

ENTERGY-GSU llOLDINGS, INC. -

9 By: /s/ EDWIN LUPDERGER Dated: November 4,1992 1

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Schedule A Notwithstanding the restrictions of Section 5.1, Gulf States shall be permitted, subject to the restrictions I

and limitations described below:

I y 1. To amend its Articles c,f 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 arrearages 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 etTect consistent with past practice.

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

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6. To refund, refinance, redeern, 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 4 of at least BBB- credit rating and a fmancial structure with debt not to exceed $6% 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 extena outstanding notes with terms of not more than three years and to 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 outstandmg as permitted by the governing 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 Phn; to renew, extend or obtain new letters of credit to secure any pollution control bonds presently outstandmg or issued in accordance with I

this Agreement and to encumber assets or other new or outstanding debt securities of Gulf States for such 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 or new or ou debt securities, in cach case, to maintain the insurance in effect, 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 suc transaction or series of transactions in the first and second clauses of this paragraph (other than rem and, in the case of refinancings of pollution control bonds insured by AMDAC, all other related costs) sh produce, after taking into account related transaction costs, a net reduction in Gulf States' cost of cap

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

I1. To dispos: of assets as follows: .

(a) million. To complete the anticipated sale of N-1 son Unit 6 facilities to SRMPA for approximately $13 (b) Ts a part of the settlement of any litigation to which Gulf States is then a party, provided that any such disposition or settlement shall be considered in determining whether Entergy has any rights under irticle Vil or VI!! of the Agreement.

12. To ksue new debt, encumber assets or new or outstanding debt securities, or make other finan arrangements deemed necessary by Gulf States to fmance and to make capital expenditures for upgrades or additions to itc system, consistent with and as specified in the document entitled "GSU Operating and Budgets", preiiously provided by Gulf States to Entergy (the " Budget"). Gulf States may make capital a other expend;.ures in excess of the capital and operating budgets noted in the Budget, providing such expenditures ai? deemed by Gulf States to be reasonably necessary (a) to meet all license and regulato requirements with respect to the River Bend generating unit, and (b) to the extent necessary to permit Gulf States to make expenditures required under paragraph 14.

13. To write off or write down any assets or deferred costs or create any reserves deemed necessary o appropriate by Gulf States; provided that Section 4.l(a)(iv) of the Agreement and Entergy's rights based thereon shall nevertheless apply.

14. To set and resise rates, offer incentis e rates (including rates below fully allocated cost-of-service) or acquire or dispose of assets in connection with projects or programs designed to retain existing customers, defer customer self-generation or promote economic deselopment within its service area, adopt demand sid 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 customers, to preserv obtain new franchises, or to meet competition, consistent with and as specified on the Marketing Plan previously outlined below:provided by Gulf States to Entergy except that such action shall be subject to the broad guidelines (a) Residential and commercial rates at or above current level, subject to changes in the fuel or purchased power charges therein, except for certain commercial customer classes set out on Schedule 14 hereto, w hich will be considered under paragraph (b) below.

(b) Wholesale, industrial and economic development rates that assure cost recosery ofincremental variable costs (fuel, financing, asset disposal, variable O&M, etc.) plus a contribution to fixed costs Thes .

rates recover incremental fixed costs of any new or reactitated capacity or upgrade associated with such service which-is reasonably allocable to the term of the contract and have approval of appropriate 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 offers will be appropriately indexed to provide protection against 'uncertaint:es 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. 1 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 a9d Entergy shall be given the right to bid to supply any needs for capacity purchases for periods in excess ..f 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 tp, abandon, compromise, settle or 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 etTect such settlement or other resolution.

(b) petition, lobby and otherwise take positions and solicit support or oppose administratise 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 firm supplies of fuel of one -

_ year or greater duration that will extend beyond January 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 Gulf States -

as to which no consent is required, it will promptly confinn such to Gulf States upon request.

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ENTERGY h1ERGER AGREDtENT Extiin TA PLAN OF hlERGER PLAN OF h1ERGER (the " Plan of hierger"), dated as of ,199 . by and among .

Entergy GSU lioldings, Inc., a Delaware corporation ("Ilolding Company"), Entergy Corporation, a Florida corporation ("Entergy"), and ETR hierger Corp., a Florida corporation and a wholly-owned subsidiary of llolding Company ("hierger Sub A"). The parties to this Plan of hierger are hereinafter sometimes collectively referred to as the " Constituent Corporations" This Plan of hierger 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 hierger Sub A with and into Entergy and for the merger of hierger Sub B, a Texas corporation, with and into Gulf States (the " Gulf States hierger"), followed immediately by the 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 TIIE hiERGER SECTION l.1. The 3ferger. In accordance with the provisions of this Plan of hierger and the Florida Business Corporation Act (the "FBCA"), at the Effective Time (as defined in Section 1.4 hereof), hierger Sub A shall be merged with and into Entergy (the "Entergy hierger") and the separate corporate existence of hierger Sub A shall cease. Entergy shall be the surviving corporation in the Entergy hierger (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 hierger shall have the effects set forth in the FBCA.

SEcTios 1.2. Articles ofIncorporation and Ry-Laws. (a) The Articles of incorporation of the Suniving Corporation immediately after the Effective Time shall be the Articles of Incorporation of Entergy immediately prior to the Effective Time.

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

Laws of Entergy immediately prior to the Effective Time.

StcTios 1.3. Directors and Officers. (a) At the Effective Time, the Board of Directors of the Suniving Corporation shall be comprised of all of the members of Entergy's Board of Directors immediately prior to the Effective Time.

(b) The officers 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.

SECTION 1.4. Effective Time; Conditions. If the Reorganization Agreement and this Plan of hierger are duly approved b'y the shareholders of each of the Constituent Corporations, the other conditions precedent set forth in Article Vil of the Reorganization Agreement are satisfied or (where permissible) waived, and this 1

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Plan of Mergeris not terminated under Section 3.1 hereof, articles of merger complying with Sectio

- of the FBCA shall be delivered to the Department of State of PLnda in accordance with Section 607 the FBCA. The Entergy Merger shall become effectise at the time and date which is the later of and date of the filing of the articles of merger relating to the Entergy Merger by the Department of Sta 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 FBCA and (ii) the issuance of a certificate of merger by the Secretary of State State of Texas with respect to the Gulf States Merger or such later time as provided in articles with the Sec.etary of State of the State of Texas as may be permitted by Article 10.03 of the Texas D Corporation Act (such time and date is herein referred to as the " Effective Time").

ARTICLE 11 CONVERSION OF SIIARFS SECTION 2.1. aferger Sub A Common Stock. Each share of Common Stock of Merger Sub A (t

" Merger Sub A Common Stock") outstanding immediately prior to the Effective Time shall, by virtue o Entergy Merger and without any further action by the holder thereof, be converted into and become o share of Common Stock,55.00 par value, of the Surviving Corporation (the " Surviving Corporation C Stock"). Each certificate which immediately prior to the Effective Time represented outstanding shar Merger Sub A Common Stock shall on and after the Effective Time be deemed for all purposes the number of shares of Surviving Corporation Common Stock into which the shares of Merger Sub Common Stock represented by such certificate shall have been converted pursuant to this Section 2.1.

StenON 2.2. Entergy Common Stock (a) Each share of Common Stock, par value 53.00 per share, of Entergy (the "Entergy Common Stock"), which is held in the treasury of Entergy and each share Common Stock owned by llolding Company, Gulf States or any subsidiary of Gulf States or Entergy be cancelled and shall cease to exist from and after the Effective Time.

(b) Each share of Entergy Cammon Stock outstanding immediately prior to the Effective Time sh virtue of the Entergy Merger and without any action on the part of the holder thereof, be converted into and become one share of Common Stock, 50.01 par value,-of ifolding Company (the " Holding Compa Common Stock"). Each certificate which immediately prior to the Effective Time represented outst shares of Entergy Common Stock shall on and after the Effective Time be deemed for all purposes t the right to receive the number of shares ofifolding Company Common Stock into which the shares of Entergy Common Stock represented by such certificate shall have been converted pursuant to this Section l 2.2(b).

SECDON 23. Dissenters' Rights. Pursuant to Section 607.1302 of the FBCA, holders of shares of Entergy Common Stock do not have the right to dissent from this Plan of Merger, l

SECEON 2.4. Holding Company Common Stock. (a) Each share ofifolding Company Common Stock '

issued to and held by Entergy immediately prior to the Effective Time shall be cancelled and shall cease to exist from and after the Effective Time.

(b) Effective as of the Effective Time, Iloiding 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 outs immediately prior to the Effective Time under any Stock Option Plan shall, effective as of the EtTective T and without further action by the holder thereof, be converted into and become an option to purchase a li number of shares of IIolding Company Common Stock on the same terms (including, without limitation, th exercise price thereof and the conditions under which such option becomes exercisable) as applied to Entergy Option immediately prior, to the Effective Time.

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ARTICLE III TERN 11 NATION AND AMENDMENT Stc11oN 3.1. Termination. Notwithstanding the approval and adoption of this Plan of hierger by the shareholders of Entergy,llolding Company and Merger Sub A, 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 Reorgsnization 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.

StcTios 3.2. Amendment. This Plan of Merger shall not be amended except in accordance with the provisions of Section 8.3 of the Reor anization Agreement.

ARTICLE IV MISCELLANEOUS SLCTION 4.l. GoFern/ng [4W. This Plan of Merger shall be governed by the laws of the State of Florida.

SEcrioN 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 he:eto 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 llotoiNGs, INC.

By:

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GUEF StAn:s MERGl:R AGREDIENT Extumi B PLAN OF MERGER PLAN OF MERGER (the " Plan of Merger"), dated as of ,199 . by and among Entergy-GSU Iloidings, Inc., a Delaware corporation ("Ilolding Company"), GSU Merger Corp., a Texas corporation and a wholly-owned subsidiary oi aloidmg Company (" Merger Sub B") and Gulf States Utilities Company, a Texas corporation (" Gulf States"). (The parties to this Plan of Merger are here;nafter 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 B 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, 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 1 TIIE MERGEl' SECTION 1.1. The 3ferger. In accordance with the provisions of this Plan of Merger and the Texas Business Corporation Act (the "TBCA"), at the EtTective Timt (as defmed in Section 1.4 hereof), Merger Sub B shall be merged with and into Gulf States (the " Merger ') and the separate corporate existence el Merger Sub B 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 continue to be " Gulf States Utilities Company".

The Merger shall have the effects set forth in the TBCA, with all properties, liabilities and obligations of Gulf States remaining with Gulf States as the Surviving Corporation and all properties, liabilities and obligations of Merger Sub B being allocated to and vested in Gulf States as the Surviving Corporation.

SECTION 1.2 sfrticles offncorporation and By-Laws. (a) The Restated Articles ofIncorporation of Gulf States as in etreet immediately prior to the Effective Time shall be the Articles of Incorporation of the Surviving Corporation immediately after the Effective Time.

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

of the Surviving Corporation immediately after the Effective Time.

SECTION l.3. Directors and Oficers. (a) At the EfTective 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 Effective 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 officers 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.

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P SrctioN 1.4. Efeet/ve Time, Conditions. If the Reorganization Agreement and this Plan of Merger a duly approved by the shareholders of each of the Constituent Corporations, the other conditions prec set forth in Article Vil of the Reorganization Agreement are satisfied or (where permissible) waived, and thi Plan of Merger is not terminated under Section 3.1 hereof, articles of merger complying with Article 5.04 and Part Ten of the TDCA shall be filed with the Secretary of State of the State of Texas in accordance wit t

Article SD4 of the TDCA. The Merger shall become effective at the time and date which is the later of(i) issuance of a certificate of merger by the Secretary of State of the State of Texas or at such later tim provided for in the articles of merger as may be permitted by Article 10.03 of the TDCA and (ii) the dat time of the filing of the articles of merger relating to the Entergy Merger by the Florida Department of S or at such later time as provided for in the articles of merger as may be permitted by Section 607.ll05 of the FUCA (such time and date is herein referred to as the " Effective Time"). Gulf States shall pa 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 TDCA.

ARTICLE II CONVERSION OF SilARES SECTION 2.l. MergerSub Common Stock, Each share of Common Stock of Merger Sub D (the "Me Sub D 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 Effective 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 represen by such certificate shall have been converted pursuant to this Section 2.1.

SecrtoN 2.2. Conversion of GulfStates CapitalStock in the Merger. At the Etfcctive 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 l{

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 2.7, 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 IIolding Company (the "flolding Company Common Stock"), shall be converted into the right to receive such number of shares of fully paid and non. assessable lloiding Company Common Stock as shall equal the Exchange Ratio. The Exchange Ratio shall be the number determined by dividing (x) 520.00 (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")plu the Dividend Adjustment Amount (as defined below) by (y) the Average Trading Price (as dermed 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 Entergy Common Stock from and after June 5,1994 to the Effective Time multiplied by a fraction, the numerator of which shall be the Unadjusted Cash Price and the denominator of which shall be the Average Tra 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, $5.00 par value 2

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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 common 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 Suniving 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.

SECn0N 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 Procedurcs. 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 receive llolding Company Common Stock in the Merger and the number of shares of his Gulf States Common Stock which he desires to have conved i .;o 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 llolding Company Common Stock in the Merger (" Stock Election").

(b) IIolding 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 Effective 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 news release delisered 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 Etrective Time ^and no later than the date on which the Effective 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

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l date as the Election Date so long as such later date is no later than the date on which the Effective Time occurs.

(d) Any Election sha!! have been properly made only if the Exchange Agent at its office designated in the Form of Election shall have received, by 5:00 p.m. local time in the city in which such Exchange Agent is located, on the Election Date, a Form of Election properly completed and signed (with the signature or signatures thereon guaranteed if required by the Form of Election), accompanied either by the certificate or certificates representing all of the shares of Gulf States Cornn.on Stock owned by such holder, duly endorsed or otherwise acceptable for transfer, or by an appropriate guaranty of delisery in the form customarily used in transactions of this nature from a member of a national securities exchange or a member of the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States. Failure to deliver shares covered by such a guaranty of delivery within the time set forth on such guaranty shall be deemed to invalidate any otherwise propstly made Election.

(e) Any holder of Gulf States Common Stock may at any time prior to the Election Date change his Election by written notice received by the Exchange Agent at or prior to the Election Date accompanied by

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a by properly subsection completed, (d) above). revised Form of Election (with such other documents as are required as contemplated (f) Any holder of Gulf States Common Stock may at any time prior to the Election Date revoke his Election by written notice received by the Exchange Agent at or prior to the Election Date or by withdrawal prior to the Election Date of his certificates for Gulf States Common Stock or of the guarantee of delivery of 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 holdcrs who are nominees only may submit a separate Form of Election for each beneficial owner for whom any such record holder is a nominee; provided, however, that at the request of Iloiding Company, such record holder shall certify to the satisfaction of Ilolding Company that such record holder holds such shares as nominee for the beneficial owner thereof. For purposes of this Agreement, holder of shares.each beneficial owner for which a Form of Election is submitted will be treated as a separate (h) lloiding 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 nie to be taken into account in making the determinations prescribed by Section 2.5, the issuance and delivery o certificates for floiding Company Common Stock into which Gulf States Common Stock is converted in the Merger and the payment for shares of Gulf States Common Stock converted into the right to receise cash in the Merger. All such rules and determinations thereunder shall be final and binding on all holders of Gulf States Common Stock.

SrrrtoN 2.5. Selection of Cul/ States Common Stock The manner in which each share of Gu Common Stock (other than shares of Gulf States Common Stock to be cance!!ed as set shall be converted at the Effective Time into either cash or lloiding Company Stock shall be as set forth below in this Section 2.5.

(a) As is more fully set forth below, the number of shares of Gulf States Common Stock to be converted into the right to receive cash in the Merger pursuant to this Agreement (the " Cash Conversion Number")

shall not Amount. exceed (i) $250,000,000 less amounts to be paid ia lieu of fractional shares divided by (ii) the Cash (b) If Cash Elections are received for a number of shares of Gulf States Common Stock which is equal to or less than the Cash Consersion Number, each share of Gulf States Common Stock covered by a Cash Election shall be converted into a right 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 Stack for which Cash Elections have been received shall be converted into a right to receive cash and llolding 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 effective Cash Elections were made.

(ii) The number of share > of Gulf States Common Stock covered by each Cash Election to be converted into the right to receise 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.

(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 lloiding Company Common Stock in the Merger.

' (d) Each share of Gulf States Common Stock for which Stock Elections have been made shall be converted into the right to receive Ifolding Company Common Stock in the M:rger.

(e) 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."

If Iloiding 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 IIolding Company Common Stock in the Merger.

Stcrton 2.6. Holding Company To Make Cash and Certficates Available: Transfer Taxes. (a) llolding 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 $250,000,000 and sufficient shares ofIIolding Company Common Stock to permit the Exchange Agent te make the distributions of cash and liolding 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 a 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 w hose 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. N_otwithstanding 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 official 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 ofIloiding Company Common Stock pursuant to Section 2.2(b)(i) 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 cancela. ion, will be entitled to receive certificates representing the number of shares of Ilolding Company Common Stock to be issued in respect of the aggregate number of such shares of Gulf States Common Stock previously represented by th stock certificates surrendered based upon the Exchange Ratio. Notwithstanding any other provision of this Plan of Merger, no certificates or scrip for fractional shares of Iloiding Company Common Stock shall be issued upon the surrender for exchange of Certificates pursuant to Article 11 in the Merger and no liv Company Common Stock dividend, stock 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. In lieu of any such fractional shares, each holder of Gulf States Common Stock who would otherwise have been entitled to a fraction of a share of Ilolding Company Common Stock upon surrender of Gulf States Certificates for exchange pursuant to Article 11 shall be entitled to receive from the Exchange Agent a cash payment in lieu of such fractional share equal to such fraction multiphed by the Average Trading Price of Entergy Common Stock. Iloiding Company shall make available to the Exchange Agent the amount of cash requi:r ' to make any cash payments in lieu of fractional shares pursuant to this Section 2.6. Notwithstan 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 liolding Company Common Stock or dividends or distnbutions 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.

StrrioN 2.7. Certain Adjustments. If, between the date of this Agreement and the Eticctive Time, the outstanding shares of Entergy Common Stock or the outstanding shares of Gulf States Common Stock shall be changed into a ditTerent number of shares or a different class of shares by reason of any reclassification recapitalization, stock split, stock dividend, exchange of shar:s, or similar adjustment, the Exchange Ratio shall be appropriately adjusted therefor and the new Exchange Ratio resulting from any such adjustment shall be rounded to three decima! places.

Stenos 2.8. Closing of Transfer Books. From and after the Effectise Time, the stock transfer books of Gulf States shall be closed and no transfer of shares of Gulf States Common Stock shall the If, after the Effective Time, Gulf States Common Stock certificates art presented to llo! ding Company, the shall be cancelled and exchanged for certificates representing Holding Company Common Stock pursuant to Section 2.2(b).

Srrrios 2.9. Dissenting Shares. Pursuant to Article 5.1I of the TUCA, holders of shares ofcapital stock of Calf States do not have the right to dissent from this Plan of Merger.

ARTICLE Ill AMENDMENT AND TERMINATION SLCrlON 3.1. Termination. Notwithstanding the approval and adoption of this Plan of Merger by the shareholders of the Constituent Corporations, this Plan of Merger shall terminate forthwith m the esent 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 prosi above, this Plan of Merger shall forthwith become void and there shall be no hability on the part of any o the parties hereto except as otherwise provided in the Reorganization Agreement.

SocTioN 3.2. Amendment. This Plan of Merger shall not be amended except in accordance with the provisions of Section 8.3 of the Reorganization Agreement.

ARTICLE IV MISCELLANEOUS St.cTroN 4.1 GOl'ERNING LA H'. TIIIS PLAN OF MERGER SilALL DE GOVERNED BY Ti!E LAWS OF Tl!E STATE OF NEW YORK, WITIIOUT REGARD TO TIIE CONFLICT OF LAWS PROVISIONS TilEREOF, EXCEPT TIIAT PROVISIONS OF ARTICLE I RELATING TO TIIE MECilANICS OF Tile MERGER CONTEMPLATED llEREDY SilALL DE GOVERNED BY Tile LAWS OF Tile STATE OF TEXAS.

StcTioN 4.2. Countceparts. 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 WiiEREOF, the parties hereto have cause this Plan of Merger to be signed by their respective oflicers thereunto duly authorized as of the date first written above.

GULF STATES UTILITIES COMPANY Dy:

GSU MERGER CORP.

L i By:

ENTERGY.GSU 110t DINGS, INC.

By:

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Urs~tREut MEnctu Acnt fatENT Exilimi C PLAN OF MERGER PLAN OF MERGER (the " Plan of Merger"), dated as of ,199 . by and between Entergy.

GSU lloidings, Inc., a Delaware corporation ("Iloiding Company"), and Entergy Corporation, a Florida l

corporation ("Entergy"). (The parties to this Plan of Merger are hereinafter sometimes collectively referred to as the "Comtituent 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 GSU Merger Corp., a Texas corporation, with and into Gulf States (the " Gulf States Merger") and for the merger of ETR Merger Corp., a Florida corporation, with and into Entergy (the "Entergy Merger"), follow ed immediately by an upstream merger of Entergy with and into liolding Company pursuant to this Plan of Merger, l 1 NOW. TilEREFORE, in consideration of the premises and the representations, warranties, covenants i

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

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J ARTICLE I 1 TIIE MERGER l

a.  :

1 SEcTioN 1.1. The 3ferger. In .ccordance with the provisions of this Plan of Merger, the Florida i Business Corporation Act (the "ECA") and the Delaware General Corporation Law (the "DGCL"), at the Effective Time (as defined in Section 1.4 hereof), Entergy shall be merged with and into liolding Company  ;

(the " Upstream Merger") and the separate corporate existence of Entergy shall cease. IIolding Company shall <

be the surviving corporation in the Upstream Merger (hereinafter sometimes referred to as the " Surviving Corporation") and shall continue its corporate existence under the laws of the State of Delaware. The name 3 of the Surviving Corporation shall become "Entergy Corporation", The Upstream Merger shall have the effects set forth in the FBCA and the DGCL, with title to all real estate and other property, or any interest therein, vested in the Surviving Corporation without reservation or impairment and with the Suniving Corporation thenceforth responsible and liable for all the liabilities and obligations of Entergy.

SECTION 1.2. Articles of Incorporation and By Laws. (a) The Articles of incorporation of llolding Company, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation after the Effective Time except that Article I shall be amended to read: "The name of the Corporation is "Entergy Corporation" (hereinafter, the " Corporation")."

(b) The 13y-laws of Iloiding Company. as in effect immediately prior to the Effectis e Time, shall be the Dy-laws of the Surviving Corporation after the Effectise Time except that the Ily-Laws shall be deemed amended to reflect the name of the Surviving Corporation is "Entergy Corporation" SrcrlON l.3. Directors and Ogicerf. (a) At the Effective Time the floard of Directors of the Suniting Corporation shall be comprised of all of the members of llolding Company's floard of Directors immediately 9 pnor to the Effective Time.

3 (b) The officers of ifolding Company at the Effective Time shall, from and after the Effectise Time, 4 continue as officers of the Surviving Corporation until their successors have been duly elected or appointed 1<

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l and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation's Articles ofincorporation and Ily Laws.

St cTtoN 1.4. Egertive Time; Conditions. If the conditions precedent set forth in Article Vil of the Reorganitation Agreement are satisfied or (where permissible) waised and the Gulf States Mergcr and the Entergy Merger are effectise, and this Plan of Merger is not terminated under Section 3.1 hereof, articles of merger complying 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 FIlCA and a certificate of ownership and complying with Section 253 of the DGCL shall be delivered to the office of the Secretary of State of the State of Delaware in accordance with Section 253 of the DGCL The Upstream Merger shall become effective "Etiective Time") at the time and date which is the later of (i) the fding of such articles of merger by the Department of State of the State of Florida or at such later time and date as provided for in such articles of merger as may be permitted by Section 607.1105(1)(b) of the FilCA and (ii) the fding of such certificate of ownership and merger with the Secretary of State of.he State of Delaware as at such later time and date as ~

provided for in such certificate of ownership and r.ierger as may be permitted by Section 253 of the DOCL ARTICLE 11 CONVERSION OF SIIAMS StenoN 2.1. ConFey/on o[Entergy Common Stock. At the Effective Time, by virtue of the Upstream Merger and without any action on the part of any holder of Common Stock, $5.00 par value, of Entergy (th "Entergy Common Stock"), each share of Entergy Common Stock which is held by Holding Ccmpany or any direct or indirect wholly owned subsidiary of the llolding Company shall be cancelled and shall cease to exist from and after the Effective Time.

SrcTioN 2.2. Holding Company Common Stock. Each share of Common Stock, 50.01 par value, of Iloiding Company outstanding immediately prior to the Effective Time shall remain outstanding as a share of common stock of the Surviving Corporation.

ARTICLE III -

AMENDMENT AND TERMINATION SrcTioN 3.1. Termination. Notwithstanding the approval and adoption of this Pian of Merger by the Iloard of Directors of Iloiding Company, this Plan of Merger chall 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 provided above, this Plan of Merger shall forthwith become void and there shall be no liability on the part of any o the parties hereto except as otherwise provided in the Reorganization Agreement.

St.cnos 3.2. <imendment. This Plan of Merger shall not be amended except in accordance with the provisions of Section 8.3 of the Reorganization Agreement.

ARTICI.E IV SrcTioN 41. Governing Law. This Plan of Merger shall be governed by the laws of the State of Delaware without regard to the conflict of lews prosisions thereof, except that the prosisions of Article I relating to the mechanics of the merger contemplated hereby governed by Florida law shall be govern the laws of the State of Florida.

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• SrcrioN 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 respetive omcers thereunto duly authorized as of the date first written above.

ENTERGY-GSU llototscs, INc.

BY:

ENTERGY CORPORATION BY:

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- on EXIIIBIT 2 TO A'ITACIIMENT 1 PRIMARY AND ALTERNATIVE REORGANIZATION m . . . . _ . . .

i hu.uA

s.

PRIMARY REORGANIZATION

_ STEP 1:

h!ERGER OF !!OLDINGS SUBSIDIARIES IhTO ENTE 110LDINGS (Delaware)

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F GULFSTATIS 4--- GSU MERCER ETR CORP. MERGER CORP. ,--""+ ENTERGY (Texas)

(Texas)

Glorida) j Glorida) 1-ENTERGY SUBSIDIARIES STEP 2:~

MERGER OF ENITRGY INIO HOLDINGS;

..IIOLDINGS C11ANGES NAME TO ENTERGY HOLDINGS g,g ggy) 4- -- -,__ -

(Delaware) l_

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i GULFSTATES  ?

(Texas) ENTERGY.

Florida)

ENTERGYf SUBSIDIARIES STEP 3: _

FINAL STRUCTURE --PRIMARY REORGANIZATION ENTERGY (Delaware) -

GULFSTATES __

( etas) ENIIRGY.

SUBSIDIARIES e s- .. a -  % ., - . . - ..%.-

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• ALTERNATIVEREORGANIZA110N STEP h MERGER OF llOLDINGS SUBS 1 DIARIES TATES INTO ENTER llOLDINGS (Delaware)

GULF STATIS 4-~~ GSU MERGER LTR (Texas) CORP. ENTERGY Gezas) MERGER CORP. *

(Morida)

Glorida)

ENTERGY SUBSIDIARIES STEP 2:

FINAL STRUCTURE-ALTEILNAT&T REORGANIZATION IIOLDINGS Go be Rena:ned ENTERGY)

(Delaware)

~

GULF STATES Rexas) ENTERGY Uo be Renamed) m._

SUBSIDIARIIS um- _ _ . _ _ _ _ _ _ _ _- __ _ _

p00022fAdi1 EXHIBIT 3 TO ATTACH. MENT 1 ORGANIZATION CHART

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l Proposed Entergy Operations,Inc. Organization Entergy Operatons President & CEO l

l l l l l l l I River Bend ANO Grand Gulf Waterford 3 Engineenng Operatons Nuclear Fuels Total Quaktf VP-Operations VP-Operations VP-Operations VP-Operations VP Support VP Director Director l

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F ATTACHMENT 2 l

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I NO DIGNIFICANT HAZARDS CONSIDERATION In accordance with the requirements of 10 C.F.R. 5 50.92, the following discussion is provided in support of the determination that no significant hazards consideration is created by the change proposed by this submittal.

I. PROPOSED CHANGE The proposed amendment would revise Facility Operating License No. NPF-47 for River Bend to authorize EOI to act on behalf of the owners of River Bend with responsibility for and control over the physical operation and maintenance of the facility.

II. BACKGROUND Under the terms of the proposed amendment, the operating License for River Bend would recognize EOI as the legal entity which will provide the technical and managerial resources for the continued safe operation of the facility, and ac the entity with exclusive authority to make operational safety decisions. The proposed license amendment involves no change in the ownership of the facility and no physical changes to the plant, and no substantive change to operating procedures. Funds for operation of the plant will continue to be provided by the owners.

All of the current License conditions will remain in effect, and the Limiting Conditions for Operation, Limiting Safety System Settings, and Safety Limits specified in the Technical Specifications will remain unchanged. While the Emergency Plan, Security Plan, and plant operating and emergency procedures may require administrative changes to reflect EOI's role as agent for GSU and Cajun and as operator of River Bend, no changes will be made that decrease the effectiveness of these plans and procedures.

Similarly, while the Quality Assurance Program may require administrative changes to reflect the role of EOI, no changes will be made that reduce the commitments in the program. Written procedures and agreements maintained and implemented by EOI and GSU will clearly ensure continued compliance with GDC 17. Similarly, the operating agreement will ensure that EOI has authority to determine all activities within the exclusion area.

The technical qualifications of EOI to carry out its responsibilities under the Operating License, as amended, will meet or exceed the present technical qualifications of 1 of 3

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(>X12M B611 GSU. GSU will continue to act as the operator of River Bend, pending the amendment of the Opera. ting License. When the amendment becomes effective, EOI wjll assume responsibility for, and control over, the physical construction, oporation, and maintenance of the facility.

The present River Bond Plant, Oversight, Business Systems, and Engineering and Administration staffs will be transferred essentially intact to EOI, subject to the terms of the Reorganization Agreement. The technical qualifications of the EOI River Bond organization therefore will be at least equivalent to those of the existing organization.

The assumption of operational responsibility fc. River Bond from GSU by EOI will provide benefits to River Bend inhoront to an integrated system-wide, nuclear management company.

Some of the expected benefits are discussed in paragraph III.F of Attachment 1.

III. MALYjilH The following oiscussion provides a specific analysis of the g proposed inge against the three standards delineated in 10 C.F.R. 50.92 and demonstrates that the proposed change involves significant hazards consideration:

1. The proposed change will not increase the probability or consequences of any accident previously evaluated.

The employees of GSU presently engaged in the operation of River Bend will becomo employees of EOI. Personnel qualifications, therefore, will remain the same as those discussed in the Tocht.ical Specifications and the USAR. The organizational structure of EOI will provide for clear management control and effective lines of authority and communication among the organizational units involved in the management, operation, and technical support of the facility. Accordingly, the technical qualifications of EOI will be at least equivalent to those of GSU presently.

As a result of the proposed amendment, there will not be physical changes to the facility, and all Limi. ting Conditions for Operation, Limiting Safety Sy; tem Settings, and Safety Limits specified in the Technical Specifications will remain unchangeu. With the exception of administrative changes to reflect the role of EOI, the Quality Assurance Program, the Emergency Plan, Security Plan, and Training Program are 2 of 3

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pumnen l

l unaffected. Operating agroomonts will ensure continued i compliance with GDC 17 as well as E0I control over all I activition within the exclusion area.

Thorofore, the proposed changes will not increase the probability or consequences of any accident previously evaluated.

2. The proposed amendment will not create the ps1sibility of a now or different kind of accident from any accident previously evaluated. The design and design bases of River Bond will remain the same. Thoroforo, '

the current plant safety analysos remain complete nd accurato in addressing the licensing basis events and analyzing plant response and consequences.

The Limiting Conditions for Operation, Limiting Safety System Settings, and Satety Limits are not affected by the proposed amendment. With the exception of  ;

administrativo changes to reflect the role of EOI, plant procedures are unaffected. As such, the plant '

conditions for which the design basis accident analysos have boon performed are still valld. Therefore, the proposed amendment c;nnot create the possibility of a now or different kind of accident than previously evaluated.

3. The proposed amendment w!]l not involve a reduction in a margin of safety. Planc safety margins are established through Limiting Conditions for operation, Limiting Safety System Settings, and Safety Limits specified in the Technical Specifications. There will be no change to the physical design or operation of the plant or to any of these inargins. The proposed amendment therefore will not involve a reduction in a margin of safety.

IV. CONCLUSION Based upon the analysis provided herein, the proposed amendment will not increase the probability or consequences of an 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. Therefore, the proposed amendment meets _the requirements of 10 C.F.R. 5 50.92(c) and does not involve a significant hazards consideration.

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t' ATTACHMENT 3

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