Exhibit 1
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER ("Agreement") is made as of December 19,
1996, by and among PACIFIC GAS AND ELECTRIC COMPANY, a California corporation
("PG&E"), PG&E MERGER COMPANY, a California corporation ("MergeCo"), and PG&E
CORPORATION, a California corporation ("ParentCo"), with reference to the
following facts:
A. PG&E has authorized capital consisting of (i) 800,000,000 shares
of Common Stock, with par value of $5 per share ("PG&E Common Stock"), of which
approximately 409,964,990 shares are issued and outstanding; (ii) 75,000,000
shares of First Preferred Stock, with par value of $25 per share ("First
Preferred Stock"), of which 21,582,229 shares (consisting of 13 separate series)
are issued and outstanding; and (iii) 10,000,000 shares of $100 First Preferred
Stock, with par value of $100 per share ("$100 First Preferred Stock"), of which
no shares are issued and outstanding.
B. MergeCo has authorized capital consisting of 1,000 shares of
Common Stock ("MergeCo Common Stock"), of which 100 shares are issued and
outstanding and owned beneficially and of record by ParentCo.
C. ParentCo has authorized capital consisting of 800,000,000 shares
of Common Stock ("ParentCo Common Stock"), of which 100 shares are issued and
outstanding and owned beneficially and of record by PG&E, and 85,000,000 shares
of Preferred Stock, none of which have been issued.
D. The Boards of Directors of the respective parties hereto deem it
advisable to merge MergeCo with and into PG&E (the "Merger") in accordance with
the California General Corporation Law ("California GCL") and this Agreement for
the purpose of establishing ParentCo as the parent corporation for PG&E in a
transaction intended to qualify for tax-free treatment.
NOW, THEREFORE, in consideration of the premises and agreements
contained herein, the parties agree that (i) MergeCo shall be merged with and
into PG&E (the "Merger"), (ii) PG&E shall be the corporation surviving the
Merger, and (iii) the terms and conditions of the Merger, the mode of carrying
it into effect, and the manner of converting and exchanging shares of capital
stock shall be as follows:
ARTICLE 1
THE MERGER
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1.1 Officers' Certificates. Subject to and in accordance with the
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provisions of this Agreement, officers' certificates of PG&E and MergeCo shall
be signed and verified and thereafter delivered, together with a copy of this
Agreement, to the office of the Secretary of State of California for filing, all
as provided in Section 1103 of the California GCL.
1.2 Effective Time. The Merger shall become effective at 12:01 a.m.
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on January 1, 1997 (the "Effective Time"). At the Effective Time, the separate
existence of MergeCo shall cease and MergeCo shall be merged with and into PG&E,
which shall continue its corporate existence as the surviving corporation (PG&E
and MergeCo being sometimes referred to herein as the "Constituent Corporations"
and PG&E, as the surviving corporation, being sometimes referred to herein as
the "Surviving Corporation"). PG&E shall succeed, without other transfer, to all
the rights and property of MergeCo and shall be subject to all the debts and
liabilities of MergeCo in the same manner as if PG&E had itself incurred them.
All rights of creditors and all liens upon the property of each of PG&E and
MergeCo shall be preserved unimpaired.
1.3 Appropriate Actions. Prior to and after the Effective Time,
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ParentCo, PG&E and MergeCo, respectively, shall take all such actions as may be
necessary or appropriate in order to effectuate the Merger. In this connection,
ParentCo shall issue the shares of ParentCo Common Stock into which outstanding
shares of PG&E Common Stock will be converted on a share-for-share basis to the
extent provided in Article 2 of this Agreement. 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 to vest the Surviving Corporation with full title
to all properties, assets, privileges, rights, immunities and franchises of
either of the Constituent Corporations, the officers and directors of each of
the Constituent Corporations as of the Effective Time shall take all such
further action.
ARTICLE 2
TERMS OF CONVERSION AND EXCHANGE OF SHARES
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At the Effective Time:
2.1 PG&E Common Stock. Each share of PG&E Common Stock issued and
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outstanding immediately prior to the Merger shall be automatically changed and
converted into one share of ParentCo Common Stock, which shall thereupon be
issued and fully-paid and non-assessable; provided, however, that such
conversion shall not affect shares of holders, if any, who perfect their rights
as dissenting shareholders under Chapter 13 of the California GCL.
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2.2 PG&E Preferred Stock. Shares of the First Preferred Stock and
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$100 First Preferred Stock of PG&E issued and outstanding immediately prior to
the Merger shall not be converted or otherwise affected by the Merger. Each such
share shall continue to be (i) issued and outstanding and (ii) a fully-paid and
non-assessable share (of First Preferred Stock or $100 First Preferred Stock, as
the case may be) of the Surviving Corporation.
2.3 MergeCo Shares. The shares of MergeCo Common Stock issued and
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outstanding immediately prior to the Merger shall be automatically changed and
converted into all of the issued and outstanding shares of Common Stock of the
Surviving Corporation, which shall thereupon be issued and fully-paid and non-
assessable, with the effect that the number of issued and outstanding shares of
Common Stock of the Surviving Corporation shall be the same as the number of
issued and outstanding shares of PG&E Common Stock immediately prior to the
Effective Time.
2.4 ParentCo Shares. Each share of ParentCo Common Stock issued and
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outstanding immediately prior to the Merger shall be canceled.
ARTICLE 3
ARTICLES OF INCORPORATION AND BYLAWS
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3.1 PG&E's Restated Articles. From and after the Effective Time, and
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until thereafter amended as provided by law, the Restated Articles of
Incorporation of PG&E as in effect immediately prior to the Merger shall be and
continue to be the Restated Articles of Incorporation of the Surviving
Corporation, except that Article NINTH shall be deleted in its entirety.
3.2 PG&E's Bylaws. From and after the Effective Time, and until
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thereafter amended as provided by law, the Bylaws of PG&E as in effect
immediately prior to the Merger shall be and continue to be the Bylaws of the
Surviving Corporation.
ARTICLE 4
DIRECTORS AND OFFICERS
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The persons who are directors and officers of PG&E immediately prior
to the Merger shall continue as directors and officers, respectively, of the
Surviving Corporation and shall continue to hold office as provided in the
Bylaws of the Surviving Corporation. If, at or following the Effective Time, a
vacancy shall exist in the Board of Directors or in the position of any officer
of the Surviving Corporation, such vacancy may be filled in the manner provided
in the Bylaws of the Surviving Corporation.
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ARTICLE 5
STOCK CERTIFICATES
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5.1 Pre-Merger PG&E Common Stock. Following the Effective Time, each
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holder of an outstanding certificate or certificates theretofore representing
shares of PG&E Common Stock may, but shall not be required to, surrender the
same to ParentCo for cancellation or transfer, and each such holder or
transferee will be entitled to receive a certificate or certificates
representing the same number of shares of ParentCo Common Stock as the shares of
PG&E Common Stock previously represented by the stock certificate(s)
surrendered.
5.2 Outstanding Certificates. Until surrendered or presented for
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transfer in accordance with Section 5.1 above, each outstanding certificate
which, prior to the Effective Time, represented PG&E Common Stock shall be
deemed and treated for all corporate purposes to represent the ownership of the
same number of shares of ParentCo Common Stock as though such surrender or
transfer and exchange had taken place.
5.3 PG&E Stock Transfer Books. The stock transfer books for PG&E
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Common Stock shall be deemed to be closed at the Effective Time and no transfer
of shares of PG&E Common Stock outstanding prior to the Effective Time shall
thereafter be made on such books.
5.4 Post-Merger Rights of Holders. Following the Effective Time,
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the holders of certificates representing PG&E Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to stock of the Surviving Corporation and their sole rights shall be
with respect to the ParentCo Common Stock into which their shares of PG&E Common
Stock shall have been converted by the Merger, subject to the rights of any
dissenting shareholders under Chapter 13 of the California GCL.
ARTICLE 6
CONDITIONS OF THE MERGER
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Completion of the Merger is subject to the satisfaction of the
following conditions:
6.1 Shareholder Approval. The principal terms of this Agreement
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shall have been approved by such holders of capital stock of each of the
Constituent Corporations as is required by the California GCL.
6.2 ParentCo Common Stock Listed. The ParentCo Common Stock to be
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issued and to be reserved for issuance pursuant to the Merger shall have been
approved for listing, upon official notice of issuance, by the New York Stock
Exchange.
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ARTICLE 7
AMENDMENT AND TERMINATION
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7.1 Amendment. The parties to this Agreement, by mutual consent of
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their respective boards of directors, may amend, modify or supplement this
Agreement in such manner as may be agreed upon by them in writing at any time
before or after approval of this Agreement by the pre-Merger shareholders of
PG&E (as provided in Section 6.1 above); provided, however, that no such
amendment, modification or supplement shall, if agreed to after such approval by
the pre-Merger shareholders of PG&E, change any of the principal terms of this
Agreement.
7.2 Termination. This Agreement may be terminated and the Merger and
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other transactions provided for by this Agreement may be abandoned at any time,
whether before or after approval of this Agreement by the pre-Merger
shareholders of PG&E, by action of the board of directors of PG&E if such board
of directors determines for any reason that the completion of the transactions
provided for herein would for any reason be inadvisable or not in the best
interests of PG&E or its shareholders.
ARTICLE 8
MISCELLANEOUS
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8.1 Approval of ParentCo Shares. By its execution and delivery of
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this Agreement, PG&E, as the sole pre-Merger shareholder of ParentCo, consents
to, approves and adopts this Agreement and approves the Merger, subject to
approval of this Agreement by the pre-Merger shareholders of PG&E (as provided
in Section 6.1 above).
8.2 Approval of MergeCo Shares. By its execution and delivery of
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this Agreement, ParentCo, as the sole pre-Merger shareholder of MergeCo,
consents to, approves and adopts this Agreement and approves the Merger, subject
to approval of this Agreement by the pre-Merger shareholders of PG&E (as
provided in Section 6.1 above).
8.3 No Counterparts. This Agreement may not be executed in
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counterparts.
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IN WITNESS WHEREOF, PG&E, ParentCo and MergeCo, pursuant to approval
and authorization duly given by resolutions adopted by their respective boards
of directors, have each caused this Agreement to be executed by its chairman of
the board or its president or one of its vice presidents and by its secretary or
one of its assistant secretaries.
PG&E:
PACIFIC GAS AND ELECTRIC COMPANY,
a California corporation
By: /s/ Xxxxxxx X. Xxxxxxx
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Its: Chairman and Chief Executive Officer
By: /s/ Xxxxxx Xxxxxxx
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Its: Secretary
ParentCo:
PG&E CORPORATION,
a California corporation
By: /s/ Xxxxxxx X. Xxxxxxx
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Its: Chairman and Chief Executive Officer
By: /s/ Xxxxxx Xxxxxxx
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Its: Secretary
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MergeCo:
PG&E MERGER COMPANY,
a California corporation
By: /s/ Xxxxx X. Xxxxxxxxxxx
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Its: President
By: /s/ Xxxxx X. Xxxxxxxxxxx
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Its: Secretary
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