20050715Original application.pdf

PACIFICORP
PACIFIC POWER UTAH POWER
July 15 , 2005
BY OVERNIGHT MAIL
Jean Jewell, Commission Secretary
Idaho Public Utilities Commission
427 W. Washington
Boise, ill 83702-5983
825 E. Multnomah
Portland, Oregon 97232
[phone]
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!Di\!:O PUBLiCiT;! I'r!r-r'h~\4,jjl_IIICv ~hlft :J n
Joint Application Of MidAmerican Energy Holdings Company And PacifiCorp
d/b/a Utah Power & Light Company For An Order Authorizing Proposed
Transaction
Re:
Dear Ms. Jewell:
Enclosed for filing are the original and seven (7) copies of the Joint Application Of
MidAmerican Energy Holdings Company ("MEHC") and PacifiCorp d/b/a Utah Power & Light
Company ("PacifiCorp ) for an Order Authorizing Proposed Transaction.
Persons authorized on behalf of MEHC to receive notices and communications with respect to
this Application are:
Douglas L. Anderson
Senior Vice President & General Counsel
MidAmerican Energy Holdings Company
302 S. 36th Street, Suite 400
Omaha, Nebraska 68131
Phone: [phone]
Fax: [phone]
dandersonrq)JTI idmTI eri can. CO1TI
Mark C. Moench
Senior Vice President - Law
MidAmerican Energy Holdings Company
2755 E. Cottonwood Parkway, Suite 300
Salt Lake City, Utah 84171-0400
Phone: [phone]
Fax: [phone]
cnlO enc h~nli danl eri can. CO1TI
Persons authorized on behalf ofPacifiCorp to receive notices and communications with respect
to this Application are:
Andrea L. Kelly
Managing Director - Strategy
PacifiCorp
825 NE Multnomah, Suite 956
Portland, Oregon 97232
Phone: [phone]
Fax: [phone]
andrea.el1y~paci ficorp. conl
Carole Washbum
July 15, 2005
Page 2
Joint counsel for the Applicants should be served as follows:
James M. Van Nostrand
James F. Fell (ISB # 2274)
Stoel Rives LLP
900 SW Fifth Avenue, Suite 2600
Portland, Oregon 97204
Phone: [phone]
Fax: [phone]
i ill vamlO strand~stoel. COIn
i ffell(q;,stoel.com
Also, it is respectfully requested that all formal correspondence and Staff requests regarding this
filing be addressed to the following:
By E-mail (preferred):datareq uest~pacifi corp. conl
By Fax:[phone]
By regular mail:Data Request Response Center
PacifiCorp
825 NE Multnomah, Suite 800
Portland, OR 97232
Thank you for your assistance.
Sincerely,
~Y
Managing Director
cc: Service List
CERTIFICATE OF SERVICE
I hereby certify that on this 15th day of July 2005, I caused to be served, via Federal
Express, a true and correct copy of the MEHC-PPW Acquisition 07-05 Filing to the following:
Commission Staff
Scott Woodbury
Kira Pfisterer
Deputy Attorney Generals
Idaho Public Utilities Commission
472 W. Washington (83702)
PO Box 83720
Boise, ill 83720-0074
scott. woodbury~puc.idaho. gOV
mkira. pfisterer~puc.idaho. gOV
Monsanto, Inc.
Randall C. Budge
Racine, Olson, Nye, Budge & Bailey,
Chartered
201 E. Center
O. Box 1391
Pocatello, ill 83204-1391
rcb~racinelaw.net
A2rium
Conley E. Ward
Givens Pursley LLP
601 W. Bannock St. (83702)
O. Box 2720
Boise. ill 83701-2720
cew~givenspursley .com
Idaho Irri2ation Pumpers Assoc
Eric L. Olsen
Racine, Olson, Nye, Budge &
Bailey, Chartered
201 E. Center
O. Box 1391
Pocatello, ill 83204-1391
elo(q2racinelaw.net
J. R. Simplot
R. Scott Pasley
Assistant General Counsel
J .R. Simplot Company
999 Main St., Suite 1300 (83702)
O. Box 27
Boise, ill 83707
spasley(q2simp lot. com
Community Action Partnership Assoc
Idaho
Brad M. Purdy
Attorney at Law
2019 N. 17th Street
Boise, ill 83702
bmpurdycmhotmail.com
Timothy J. Schurtz
411 S. Main
Firth, ill 83236
timcmidahosupreme.com
Pegg
Regulatory Operations Coordinator
F:EGEIVED rxl
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- . HJt'JIO PUBLiC
U ffLfTIES COMMISSION
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN TIlE l\1A TTER OF THE JOINT
APPLIC.L~TION OF MIDAMERICAN
ENERGY IIOLDINGS COMPANY AND
ACIFICORP DBA UTAH POWER &
LIGIIT COMPANY FOR AN ORDER
AUTHORIZING PROPOSED
TRANSACTION
JOINT APPLICATION
CASE NO. P AC-O5-
CASE NO. PAC-O5-
Direct Testimonv and Exhibits
J Diy 2005
..?ECE1VED
;L.
James M. Van Nostrand
James F. Fell (ISB # 2274)
STOEL RIVES LLP
900 SW Fifth Avenue, Suite 2600
Portland, OR 97204
Telephone: [phone]
Fax: [phone]
Email: imvannostrand~stoe1.com
j ffell~stoe1.com
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oint Counsel for MidAmerican Energy
Holdings Company and PacifiCorp dba Utah
Power & Light Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE JOINT
APPLICATION OF MIDAMERICAN
ENERGY HOLDINGS COMPANY
AND P ACIFICORP DBA UTAH
POWER & LIGHT COMPANY FOR
AN ORDER AUTHORIZING
PROPOSED TRANSACTION
CASE NO. PA6-oS-c;9
JOINT APPLICATION
MidAmerican Energy Holdings Company ("MEHC") and PacifiCorp d/b/a Utah Power
& Light Company ("PacifiCorp ) (sometimes hereinafter jointly referred to as "Applicants
hereby request an order of the Idaho Public Utilities Commission ("Commission ) authorizing a
proposed transaction whereby MEHC would acquire all of the outstanding common stock of
PacifiCorp and PacifiCorp would thereafter become an indirect wholly-owned subsidiary of
MEHC (the "Application
JURISDICTION
This Application is filed pursuant to Idaho Code 9 61-328 , which requires authorization
by order of the Commission before an electric public utility owning, controlling or operating any
JOINT APPLICATION - Page 1
property located in Idaho used in the generation, transmission, distribution or supply of electric
power or energy to the public may merge, sell, lease, assign or transfer, directly or indirectly,
such property, or the operation, management or control thereof.
TIME FOR PROCESSING THE APPLICATION
MEHC and PacifiCorp respectfully request completion of all state reviews of the
proposed transaction by February 28 2006, in order to complete the acquisition on or before
March 31 , 2006. MEHC's proposed acquisition ofPacifiCorp is an important transaction for
PacifiCorp customers, employees and communities. In order to mitigate the ill effects of
uncertainty associated with the sale ofPacifiCorp, and expedite the delivery of important
benefits, Applicants respectfully request that the Commission schedule review of the Application
in a manner that will facilitate an order by February 28 2006.
Closing on or before March 31 , 2006, will facilitate the transition ofPacifiCorp
financial reporting from a fiscal year ending March 31 , which is the Scottish Power pic
ScottishPower ) approach, to a calendar fiscal year consistent with MEHC's financial
statements. Calendar year reporting is consistent with regulatory reporting, which should enable
the Commission to utilize a single year s audited financial statements rather than have regulatory
reporting span across two fiscal years.
In connection with Applicants' request for a Commission order by February 28 2006, it
is noteworthy that the Securities and Exchange Commission ("SEC") will not act in advance of
approvals from the respective state public utility commissions. The SEC's policy in this respect
is founded on its desire to avoid pressuring the states to act in a particular manner, to avoid
rendering decisions on theoretical transactions, and to avoid impacting share prices and value by
having an extended period between approval and closing. Thus, ruling on the Application should
JOINT APPLICATION - Page 2
not be delayed in the hope that doing so would permit the SEC to rule first, and Applicants
respectfully ask the Commission not to delay its ruling on the Application on this ground.
APPLICANT INFORMATION
The exact name and address ofMEHC's principal business office is as follows:
MidAmerican Energy Holdings Company
666 Grand Avenue, Suite 2900
Des Moines, Iowa 50309
MEHC is an Iowa corporation whose ownership, as of January 31 , 2005, is as follows:
Berkshire Hathaway Inc. (83.75% economic interest); Walter Scott, Jr., including family
interests, (15.89% economic interest); David Sokol (0.25% economic interest); and Greg Abel
(0.11 % economic interest). On a diluted basis the economic interests would be as follows:
Berkshire Hathaway Inc. (80.48% economic interest); Walter Scott, Jr., including family
interests, (15.27% economic interest); David Sokol (2.91 % economic interest); and Greg Abel
(1.34% economic interest).1 Further detail concerning the ownership ofMEHC may be found at
page 108 ofMEHC's 2004 annual report on Form 10-K attached to MEHC witness Pat
Goodman s testimony.
Berkshire Hathaway currently holds 9.9% of the voting stock ownership of MEHC and
263 395 shares ofMEHC's zero coupon convertible preferred stock.2 This preferred stock is
1 The voting stock ownership of these four investors is as follows: (1) Walter Scott, Jr.
including family interests, holds an 88.1 % voting interest; (2) Berkshire Hathaway, Inc. holds a
9% voting interest; (3) David Sokol holds a 1.4% voting interest; and (4) Greg Abel holds a
6% voting interest.
While the convertible preferred stock does not vote with the common stock in the
election of directors, the convertible preferred stock gives Berkshire Hathaway the right to elect
20% ofMEHC's Board of Directors (currently two of the ten members of the MEHC Board of
Directors). Additionally, the prior approval of Berkshire Hathaway, as the holder of convertible
preferred stock, is required for certain fundamental transactions by MEHC, as further discussed
in Mr. Goodman s testimony.
JOINT APPLICATION -Page 3
convertible into MEHC common shares at the option of Berkshire Hathaway under specific
circumstances, as discussed more fully in Mr. Goodman s testimony. One such circumstance is
the repeal or amendment of the Public Utility Holding Company Act of 1935 and any successor
legislation ("PUHCA") such that the conversion of preferred stock would not cause Berkshire
Hathaway (or any affiliate of Berkshire Hathaway) to become regulated as a registered holding
company. MEHC anticipates that Berkshire Hathaway will exercise its right to convert the zero
coupon convertible preferred stock in the event this circumstance occurs, whereupon Berkshire
Hathaway s voting interest would correspond to its ownership interest.
Persons authorized on behalf of MEHC to receive notices and communications with
respect to this Application are:
Douglas L. Anderson
Senior Vice President & General Counsel
MidAmerican Energy Holdings Company
302 S. 36th Street, Suite 400
Omaha, Nebraska 68131
Phone: [phone]
Fax: [phone]
danderson~midamerican. com
Mark C. Moench
Senior Vice President - Law
MidAmerican Energy Holdings Company
2755 E. Cottonwood Parkway, Suite 300
Salt Lake City, Utah 841 71-0400
Phone: [phone]
Fax: [phone]
mcm 0 ench~mi dam eri can. com
Persons authorized on behalf ofPacifiCorp to receive notices and communications with
respect to this Application are:
Andrea L. Kelly
Managing Director - Strategy
PacifiCorp
825 NE Multnomah, Suite 956
Portland, Oregon 97232
Phone: [phone]
Fax: [phone]
andrea.kell y~paci ficorp. com
JOINT APPLICATION - Page 4
Joint counsel for the Applicants should be served as follows:
James M. Van Nostrand
James F. Fell
Stoel Rives LLP
900 SW Fifth Avenue, Suite 2600
Portland, Oregon 97204
Phone: [phone]
Fax: [phone]
mvannostrand~stoe1. com
i ffell(q2stoe1.com
Data Requests
Data requests for the Applicants should be addressed in the following manner with copies
to Applicants' counsel:
By email (preferred): datarequest~pacificorp.com
By fax: [phone]
By regular mail: Data Request Response Center
PacifiCorp
825 NE Multnomah, Suite 800
Portland, Oregon 97232
MEHC Electronic Document Room
MEHC has created an Electronic Document Room containing the documents listed in the
attached Index, provided as Appendix 1 to this Application. These documents are intended to
anticipate initial discovery needs and provide parties with a solid foundation of knowledge
pertaining to MEHC and MidAmerican Energy Company ("MEC"
).
Provisions for quick access
to the Electronic Document Room can be arranged by contacting the following representative of
MEH C and MEC:
Charles ("Chuck") R. Montgomery
MidAmerican Energy Company
4299 NW Urbandale Drive
Urbandale, Iowa 50322
Phone: [phone]
Fax: [phone]
crm on t gomery~mi dam eri can. com
JOINT APPLICATION - Page 5
DESCRIPTION OF TRANSACTION
On May 23, 2005, ScottishPower and PacifiCorp Holdings, Inc. ("PHI"), its wholly
owned subsidiary directly holding PacifiCorp s common stock, reached a definitive agreement
Stock Purchase Agreement"), providing for the sale of all PacifiCorp common stock, held by
PHI, to MEHC for a value of approximately $9.4 billion, consisting of approximately $5.
billion in cash plus approximately $4.3 billion in net debt and preferred stock, which will remain
outstanding at PacifiCorp. The Stock Purchase Agreement is included as Appendix 2.
A limited liability company referred to as PPW Holdings LLC ("Holdings ) has been
established as a direct subsidiary of MEHC. Holdings will receive an equity infusion
approximately $5.1 billion raised by MEHC through the sale of convertible preferred stock to
Berkshire Hathaway and long-term senior notes, preferred stock, or other securities with equity
characteristics, to third parties. However, the transaction is not conditioned on such financing
and if funds were not available from third parties, Berkshire Hathaway is expected to provide
any required funding. Finally, Holdings will have no debt of its own for this transaction.
Holdings will, as provided in the Stock Purchase Agreement, pay PHI $5.1 billion in cash at
closing in exchange for 100% of the common stock ofPacifiCorp. In addition, it is projected
that the approximately $4.3 billion in net debt and preferred stock currently outstanding at
PacifiCorp will remain outstanding as liabilities ofPacifiCorp. The acquisition is subject to
customary closing conditions, including approval of the transaction by the shareholders of
ScottishPower and the receipt of required state and federal regulatory approvals.
The sale ofPacifiCorp s common stock to MEHC will also include transfer of control
of the following PacifiCorp subsidiaries, which consist primarily of mining companies and
companies created to handle environmental remediation and generate carbon offset credits:
JOINT APPLICATION - Page 6
Centralia Mining Company, Energy West Mining Company, Glenrock Coal Company, Interwest
Mining Company, Pacific Minerals, Inc., Bridger Coal Company, PacifiCorp Environmental
Remediation Company, PacifiCorp Future Generations, Inc., Canopy Botanicals, Inc., Canopy
Botanicals, SRL, PacifiCorp Investment Management, Inc., and Trapper Mining Inc.
Upon completion of the transaction, PacifiCorp will be an indirect wholly-owned
subsidiary ofMEHC, through PacifiCorp s new direct parent company, Holdings, as illustrated
in the organizational chart included in the testimony ofMEHC witness Goodman. MEHC will
thereby acquire the power to exercise influence over the policies and actions ofPacifiCorp.
MEHC will also become an affiliated interest ofPacifiCorp.
Plan for Operating PacifiCorp
MEHC and its primary investor, Berkshire Hathaway, acquire a business with the
intention of holding and investing in the business for the long term, where such investments are
fair to customers, employees and shareholders. Nearly a decade ago, MEHC identified the
energy industry as a preferred area for investment of a significant amount of its capital resources.
This investment focus is premised on the belief that energy investments are stable investments
and, if operated correctly, provide opportunities for fair and reasonable returns. The proposed
acquisition ofPacifiCorp advances MEHC's focus on owning and operating a portfolio of high-
quality energy businesses with capable management already in place and a strong emphasis on
customer satisfaction, reliable service, employee safety, environmental stewardship and
regulatory/legislative credibility.
It is projected that PacifiCorp s service territories will require investment of at least
$1 billion per year, for the next five years, in order to assure reliable electric service. While the
profile of the returns on these capital requirements was not compatible with ScottishPower
JOINT APPLICATION - Page 7
continued ownership of PacifiCorp, MEHC is uniquely suited to undertake such investments.
MEHC is privately held and not subject to shareholder expectations of regular, quarterly
dividends and relatively fast returns on investments. MEHC's focus on significant, long-term
investment in well-operated energy companies is a focus that should provide PacifiCorp
customers, employees, the public and regulators with valuable stability, permitting PacifiCorp
management and employees to apply their full attention to exceeding customer expectations.
The opportunities for a successful transaction and transition are enhanced by the
significant similarities between PacifiCorp and MEC, MEHC's electric utility business platform.
MEHC plans to operate PacifiCorp much as it is operated today. MEHC, like PacifiCorp, has a
track record for investment in a diverse mix of generation technologies (gas, coal, wind
geothermal, etc.), investment in energy efficiency, demand-side management and environmental
technologies, and MEHC is accustomed to operating in a collaborative fashion when developing
its energy efficiency, demand side management and environmental plans. Like PacifiCorp,
MEHC is comfortable with operating in a diverse service area, with states that have opted for
competitive retail electric service as well as states that have opted for the traditional model of
regulated retail electric service. MEHC also shares PacifiCorp s dedication to customer service
a fact attested to by both organizations' customer satisfaction ratings. These similarities are
addressed in the testimony ofMEHC witness Gale.
MEHC intends to maintain separate debt ratings for PacifiCorp, and the Applicants
expect the transaction to have a positive impact on PacifiCorp s bond ratings and financing costs.
MEHC's financial capabilities and the reaction of the credit rating agencies to the announcement
of this transaction with respect to PacifiCorp s bond ratings are described below, in the
Financial Strength" section concerning MEHC.
JOINT APPLICATION - Page 8
PacifiCorp will continue to be charged for certain common services provided to it as part
of a larger organization. Under MEHC's ownership, these services will be limited to
management services (e., board of directors support, corporate tax, financial planning and
analysis, financial reporting) and will be provided by a service company ("ServCo ) subsidiary
of MEHC, as well as MEC. In connection with this transaction, MEHC is making a commitment
to cap such charges at $9 million per annum for a five (5) year period, compared to the
$15 million PacifiCorp is expected to incur from ScottishPower in FY 2006. See testimony on
shared service charges from MEHC witness Specketer.
PacifiCorp s headquarters will remain in Portland, Oregon. All PacifiCorp financial
books and records will be kept in Portland, Oregon, and will continue to be available to the
Commission, upon request, at PacifiCorp s offices in Portland and Salt Lake City, and elsewhere
in accordance with current practice. There are no plans for a reduction in workforce as a result
of this transaction. MEHC will also renew and extend the commitments that have been
previously made by PacifiCorp as set forth in Exhibit No. - (BEG-I) in the testimony of
MEHC witness Gale, and as discussed in the testimonies ofMEHC witnesses Abel, Goodman
Gale and Specketer.
As the foregoing demonstrates, PacifiCorp s customers, communities and regulators are
not likely to notice significant changes in PacifiCorp s business practices as a result of the
proposed transaction. To the contrary, customers, communities, and regulators will see benefits
from an owner ofPacifiCorp with significant financial strength, expertise in utility operations
and business planning, and a focus on improving reliability and business operations over the long
term.
JOINT APPLICATION - Page 9
MEHC'S IDENTITY, FINANCIAL ABILITY AND EXPERIENCE IN THE ENERGY
INDUSTRY
MEHC was initially incorporated in 1971 under the laws of the State of Delaware and
reincorporated in Iowa in 1999 at which time it changed its name from CalEnergy Company Inc.
to MidAmerican Energy Holdings Company. MEHC is a privately held global company
engaged primarily in the production and delivery of energy from a variety of fuel sources
including coal, natural gas, geothermal, hydroelectric, nuclear, wind and biomass. MEHC's six
major business platforms are as follows:
MidAmerican Energy Company is a vertically integrated electric and natural gas utility
headquartered in Des Moines, Iowa. MEC provides regulated electric service to
approximately 605 000 customers in Iowa, 84 000 customers in Illinois, and 3 700
customers in South Dakota. Regulated gas service is provided to approximately 526 000
customers in Iowa, 66 000 customers in Illinois, 75 000 customers in South Dakota, and
600 customers in Nebraska. Competitive gas and electric service is provided in several
states, including Illinois, to 3 200 customers.
CalEnergy Generation is a world leader in renewable energy, owning and operating a
total of fourteen (14) geothermal power plants in the western United States and the
Philippines. The business platform owns and operates natural gas generating stations in
Arizona, Illinois, Texas and New York, as well as an innovative hydroelectric plant and
irrigation project in the Philippines. CalEnergy is currently evaluating the development
of one of the largest single geothermal projects (215 MW) in the world in the Imperial
Valley of California.
Kern River Gas Transmission Company is a natural gas pipeline company
headquartered in Salt Lake City, Utah. Its interstate pipeline facilities comprise nearly
700 miles from Wyoming to southern California.
Northern Natural Gas Company is a natural gas pipeline company headquartered in
Omaha, Nebraska. Its pipeline system comprises more than 16 500 miles of pipeline
from Texas to the upper Midwest. The combined pipeline capacity of Kern River and
Northern Natural Gas is nearly 6.2 billion cubic feet per day, or approximately 10 percent
of all the natural gas consumed in America.
CE Electric UK Funding pic owns two electricity distribution businesses that serve 3.
million customers across approximately 10 000 square miles of northeast England. The
company also has a contracting subsidiary that engineers power projects for large
commercial and industrial customers.
JOINT APPLICATION - Page 10
HomeServices of America, Inc. is the second-largest residential real estate brokerage
company in the United States and is a leader in each of the 24 top markets its associates
serve. The company has 18 500 sales associates in 18 states and generated more than $60
billion in residential real estate sales in 2004.
More information regarding MEHC is available in the company s report on Form 10-K attached
to the testimony ofMEHC witness Goodman.
Financial Strength
MEHC has access to significant financial and managerial resources through its
relationship with Berkshire Hathaway, one of its owners, whose debt rating is AAA. MEHC'
global assets total approximately $20 billion; revenues in 2004 totaled $6.6 billion. MEHC'
financial reports are included in the MEHC 10-K attached to MEHC witness Goodman
testimony. On a consolidated basis (PacifiCorp and MEHC), as of March 31 , 2005, MEHC's pro
forma combined assets would be approximately $34 billion, and pro forma combined revenues
would be $9.6 billion.
The senior debt of the U.S. energy subsidiaries ofMEHC (MEC, Kern River, and
Northern Natural Gas) are all A-rated by the major credit rating agencies (A- by Standard &
Poor , A3 by Moody , and A- by Fitch). All ofMEHC's senior debt also holds investment
grade ratings from the three major bond rating agencies (BBB- by Standard & Poor , Baa3 by
Moody , and BBB by Fitch).
After the announcement of this transaction, Fitch affirmed MEHC's senior unsecured
debt at BBB, with a stable outlook. Standard & Poor s placed MEHC's corporate rating and
senior unsecured debt rating ofBBB- on CreditWatch-Positive and Moody s affirmed MEHC'
senior unsecured debt rating of Baa3 while noting a positive rating outlook for MEHC.
With respect to PacifiCorp s credit ratings, in the immediate aftermath of the acquisition
announcement, Moody s affirmed its ratings (senior secured - A3 and senior unsecured debt-
JOINT APPLICATION - Page 11
Baal) on PacifiCorp s debt, and changed the rating outlook from stable to developing. Moody
also expressed its belief that the acquisition would have positive long-term benefits on
PacifiCorp, particularly given the large capital expenditure program ofPacifiCorp over the next
several years. Moody s indicated that its "developing" rating outlook reflected the short-term
regulatory challenges faced by PacifiCorp as it litigates pending rate cases and seeks regulatory
approval of the acquisition.
Fitch reacted to the acquisition announcement by affirming all its PacifiCorp debt ratings
(senior secured
- "
; senior unsecured
- "
), and declared the PacifiCorp ratings outlook to
be stable. Fitch expressed its continued belief that regulation is a primary risk for PacifiCorp
investors, citing a lack of regulatory support and low returns in the past, and indicated that it
assumes recent progress in this area will continue. Fitch also noted its belief that MEHC has the
financial capability to provide equity financing for PacifiCorp s ongoing capital expenditure
program.
While Standard & Poor s placed PacifiCorp s debt on CreditWatch with negative
implications, it explained that its current rating for PacifiCorp (senior secured
- "
" and senior
unsecured - "BBB+") reflects ScottishPower s consolidated credit profile, and that the "negative
implications" observation is based on PacifiCorp weaker stand-alone metrics." However
Standard & Poor s also expressed its intention to assess such other factors as the transaction
proceeds, including: financing structure of the acquisition, MEHC's resulting consolidated
creditworthiness, the benefit of any "ring-fencing" mechanisms that MEHC structures around
PacifiCorp, the utility s stand-alone credit metrics, MEHC's history of strong operations and
regulatory management at MEC, and any necessary support for PacifiCorp s sizable capital
expenditure program.
JOINT APPLICATION - Page 12
Under the Stock Purchase Agreement, MEHC has committed to finance this acquisition
in a manner that maintains or improves MEHC's current investment grade credit rating.
MEHC's consolidated capitalization, on a pro forma basis, is addressed in the testimony of
MEHC witness Goodman.
MEHC's Experience in the Energy Industry
MEHC's regulated utility platform, MEC, and its predecessor corporations (e., Iowa
Power Inc., Iowa-Illinois Gas and Electric Company, and Iowa Public Service Company and
their predecessors), have provided electric and gas service in Iowa, Illinois, South Dakota and
Nebraska for approximately 100 years.
MEC resembles PacifiCorp in many respects, and these similarities attest to the fact that
PacifiCorp will continue to be operated with the same central emphases as it is today.
described in the testimony ofMEHC witness Gale, the similarities include the following:
comparable service territories (e., multi-state areas with relatively low population density and
some urban centers); a mix of retail-access and traditionally regulated utility business; a focus on
customer satisfaction and employee safety; use of renewable energy technologies; use of low-
sulfur, Western-basin coals; a long history of providing demand-side management and energy
efficiency programs; use of collaborative processes to develop environmental, demand-side
management and energy efficiency programs; reliance on wholesale transactions
interconnections and positive relationships with public power and cooperative utilities; and
service areas whose economies are significantly tied to the land (e., agriculture, forestry,
mining) .
MEHC's experience in owning and operating MEC means that it comes to this
transaction with a deep understanding of the responsibilities and general challenges of current
JOINT APPLICATION - Page 13
s. electric utility ownership and with directly applicable experience and knowledge about
some of the specific challenges now faced by PacifiCorp. Through its other subsidiaries, MEHC
also has significant experience in the natural gas industry and in the development of renewable
energy resources, which it can bring to bear on assisting PacifiCorp in meeting the objectives of
its projected future investment needs.
Background of Key Personnel
The chairman and current officers of MEHC are as follows:
David L. Sokol, 48, is chairman and chief executive officer ofMEHC. Mr. Sokol joined
the company in 1991 , as chairman, president and chief executive officer.
Gregory E. Abel, 43, is president and chief operating officer ofMEHC, having joined
the company in 1992. Mr. Abel has more than twenty (20) years of experience in senior
management and public accounting.
Patrick J. Goodman , 38 , is senior vice president and chief financial officer ofMEHC.
Mr. Goodman joined MEHC in 1995 and has served in various accounting positions including
senior vice president and chief accounting officer.
Douglas L. Anderson, 47, is senior vice president and general counsel ofMEHC. Mr.
Anderson joined MEHC in February 1993 and has served in various legal positions including
general counsel ofMEHC's independent power affiliates.
Keith D. Hartje, 55, is senior vice president ofMEHC and has been with MEHC and its
predecessor companies since 1973, holding a variety of positions in the legal, operations and
administrative areas of the company. Mr. Hartje has responsibility for the corporate
communications, safety audit and compliance, and the general services functions of the
company.
JOINT APPLICATION - Page 14
Maureen E. Sammon, 41 , is senior vice president of MEHC and has been with MEHC
and its affiliated companies since 1986. Ms. Sammon has served in various positions in the
finance and administrative areas of the company. Ms. Sammon has responsibility for the
information technology, human resources and insurance functions of the company.
The business address for Messrs. Sokol and Anderson is:
MidAmerican Energy Holdings Company
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
The business address for Messrs. Abel, Goodman and Hartje, and Ms. Sammon is:
MidAmerican Energy Holdings Company
666 Grand Avenue, Suite 2900
Des Moines, Iowa 50309
PUBLIC INTEREST CONSIDERATIONS
Idaho Code ~ 61-328(3) provides for Commission authorization of the proposed
transaction upon a finding that:
(a)the transaction is consistent with the public interest
(b)the cost and rates for supplying service will not be increased by reason of such
transaction, and
(c)the applicant for such acquisition or transfer has the bona fide intent and financial
ability to operate and maintain said property in the public service.
Applicants respectfully submit that this Application and supporting testimony and exhibits
provide a basis for the Commission to make the requisite findings under ~ 61-328(3).
With respect to ~ 61-328(3)(a), the discussion that follows in this section of the
Application demonstrates that the transaction is consistent with the public interest and, in fact
will provide benefits to Idaho and PacifiCorp s customers in Idaho. With respect to ~ 61-
JOINT APPLICATION - Page 15
328(3)(b), Mr. Gale s testimony addresses the impacts of the transaction on PacifiCorp s cost
and rates for supplying service. Mr. Gale states that the commitments being offered by MEHC
in connection with the transaction will not increase the percentage of rate increases in
PacifiCorp s existing projections. Thus, cost and rates for supplying service in Idaho will not be
increased by reason of the transaction. With respect to 9 61-328(3)(c), the discussion in the
section entitled "Plan for Operating PacifiCorp" above demonstrates MEHC's bona fide intent to
operate and maintain PacifiCorp s property in Idaho in the public service. As discussed in the
section entitled "Financial Strength" above, MEHC also has the financial ability to operate and
maintain such property in the public service.
Customer Interests
The proposed acquisition ofPacifiCorp, by MEHC, will result in no harm to PacifiCorp
customers. This result is demonstrated by the following:
Commitments. MEHC and PacifiCorp will adopt a uniform set of commitments that are
based upon the commitments undertaken by PacifiCorp as a part of the ScottishPower
merger; these uniform commitments will be extended to all six states, not just the states
that requested a particular commitment in the previous PacifiCorp transaction. See the
testimony of MEHC witness Gale.
State-Specific Commitments. In recognition of the differences among the states
MEHC and PacifiCorp will offer to continue several state-specific commitments based
upon the unique interests or local conditions in the specific state. See the testimony of
MEHC witness Gale.
Separate Business Platform. PacifiCorp will become a separate business platform
under MEHC, with its own business plan, its own management, its own state policies
and responsibility for making decisions that achieve the objectives identified in the
testimony ofMEHC witness Abel (i., customer satisfaction, reliable service, employee
safety, environmental stewardship, and regulatory/legislative credibility).
Similarities. The many similarities between MEC and PacifiCorp will facilitate the
transition ofPacifiCorp into a separate subsidiary ofMEHC. See the testimony of
MEHC witness Gale.
JOINT APPLICATION - Page 16
Continued Emphases. MEC's operations, as a subsidiary ofMEHC, provide
demonstrable evidence that PacifiCorp will continue its emphasis on key utility
performance areas such as: customer service; safety; a balanced mix of generating
resources, including renewable generation; use of energy efficiency and demand-side
management; investment in environmental emission control technology; and
collaborative processes to arrive at energy efficiency and demand-side management plans
and environmental plans. See the testimony ofMEHC witness Gale.
MEHC intends to operate PacifiCorp in much the same way as it is currently being
operated. The Commission will continue to exercise the same degree of regulatory oversight
over PacifiCorp as it does today. The proposed transaction will result in no harm to PacifiCorp
customers.
Public Interests
Nor will the transaction result in any harm to the public interest, as evidenced by the
following factors:
Investment in Infrastructure. MEHC is poised to deploy significant amounts of capital
to ensure PacifiCorp has the infrastructure necessary for the provision of reliable and
economic electric service. MEHC offers commitments to invest significant capital in
transmission and distribution projects in the testimony ofMEHC witness Abel.
Stability. MEHC's long-term value investment focus means that MEHC intends to own
PacifiCorp for the long term, lending stability to, and confidence in, the regional energy
infrastructure. See the testimony ofMEHC witness Abel.
Diverse Resource Mix. MEHC has a demonstrated willingness to invest in a diverse
mix of generation technologies (gas, coal, wind, geothermal, etc.), energy efficiency and
demand-side management technologies, as well as environmental technology. This
willingness will enhance the diversity ofPacifiCorp s generation resources, improve their
environmental performance, and balance reliance on generation with technology that
manages the demand for power and energy. These steps will further the energy security
of the region, in an environmentally responsible manner. See the testimony ofMEHC
witnesses Abel and Gale.
Collaborative Processes. MEHC, through its energy business platform, MEC, has an
established record for formulating its energy efficiency, demand-side management and
environmental plans in collaborative processes. PacifiCorp can be expected to continue
its collaborative processes as a business platform ofMEHC. See the testimony ofMEHC
witness Gale.
JOINT APPLICATION - Page 17
Environmental Initiatives. As part of this transaction, MEHC and PacifiCorp are
offering a commitment to environmental initiatives aimed at controlling SF6, SO2, NOx,
mercury, and CO2 emissions, as set forth in the testimony ofMEHC witness Abel. These
initiatives will redound to the benefit of the general public.
Safety Emphasis. MEHC has an established record of focusing on employee safety, and
PacifiCorp will be expected to continue that focus. See the testimony ofMEHC witness
Gale.
Positive Relationships. MEHC and its subsidiaries have a demonstrated history of
emphasizing the importance of positive relationships with public power and cooperative
utilities, regulators, legislators, consumer representatives and customers. See MEHC
witness Gale s testimony.
The proposed transaction will not result in harm to the interests ofPacifiCorp
customers or to the public interest.
Benefits of the Transaction
The MEHC acquisition ofPacifiCorp will produce benefits for customers. The principal
advantages of this transaction, from a customer perspective, are discussed in the testimony of
MEHC witness Abel and are as follows:
$812 million investment in emissions reduction technology for existing coal plants
which, when coupled with the use of reduced emissions coal technology for new coal-
fueled generation, would be expected to reduce the SO2 emissions rate by more than
50010, to reduce the NOx emissions rate by more than 40%, to reduce the mercury
emissions rate by nearly 400/0, and to avoid an increase in CO2 emissions rate;
$78 million investment in a Path C transmission upgrade to increase the transfer
capability between PacifiCorp s east and west control areas;
$196 million investment in a transmission line from Mona to Oquirrh to increase
import capability into the Wasatch Front;
$88 million investment in a transmission link between Walla Walla and Yakima or
Vantage to enhance the ability to accept wind energy;
While MEHC has immersed itself in the details ofPacifiCorp s business activities in the
short time since the announcement of the transaction, it is possible that upon further review of
this investment and the two which follow, the investments may not prove to be cost-effective or
optimal for customers. If that should occur, MEHC pledges to propose an alternative with a
comparable benefit to the Commission.
JOINT APPLICATION - Page 18
$75 million investment in the Asset Risk Program;
$69 million investment in local transmission risk projects in all states;
at least a 10 basis point reduction for five years ($6.3 million) in the cost of
PacifiCorp s issuances of long-term debt;
at least a $30 million reduction (over five years) in corporate overhead costs;
consideration of reduced-emissions coal technologies such as IGCC and super-
critical;
affirmation of PacifiCorp s goal of 1400 MW of cost-effective renewable resources,
including 100 MW of new wind energy within one year of the close of the
transaction and up to 400 MW of new wind energy after the transmission line
projects are completed;
reduction in sulfur hexafluoride emissions;
$1 million shareholder-funded system-wide study designed to further demand-side
management and energy efficiency programs where cost effective;
a 2-year extension of the customer service standards and performance guarantees;
a commitment of MEHC's resources and involvement, in cooperation with the
PacifiCorp states, to look into transmission projects beneficial to the region, such as
the Rocky Mountain Area Transmission Study ("RMATS") and the Frontier
transmission line project;
uniform application of the commitments from the prior PacifiCorp transaction in
all six states; and
offering a utility own/operate option for consideration in renewable energy RFPs.
The above-mentioned benefits will be of substantial value to PacifiCorp s customers
communities and employees in future years, as will MEHC's long-term commitment to assist
PacifiCorp to execute on its projected future capital needs, including long-term investment in
PacifiCorp s integrated energy infrastructure.
MEHC believes the chief benefit from the proposed transaction is MEHC's willingness
JOINT APPLICATION - Page 19
and ability to deploy capital to meet PacifiCorp s significant infrastructure needs. MEHC has
focused on investments in the energy industry and is uniquely positioned to invest significant
capital in the industry. Thus, MEHC is exceptionally well-matched to utilities, such as
PacifiCorp, with a need for significant capital investment. This is particularly true when one
considers the further advantage that arises from the reduced cost of debt that results from
association with Berkshire Hathaway. As noted in the testimony ofMEHC witness Goodman
the savings from this effect are substantial. The energy business is very capital intensive. With
an owner like MEHC, that is well-positioned to undertake the efficient raising of capital
PacifiCorp will possess a key ingredient for successfully meeting its customers ' current and
future demands for energy. This is especially so since MEHC is free from the quarterly demand
for shareholder dividends. It is MEHC's expectation that it will be the last owner ofPacifiCorp,
because MEHC invests for the long term. MEHC believes this will be to the benefit of
PacifiCorp s customers, communities and employees. Knowing that MEHC intends to own
PacifiCorp for the long-term will, MEHC believes, enhance customer and community confidence
in PacifiCorp and its energy infrastructure that is so important to economic development.
MEHC's long-term focus should also enhance the confidence ofPacifiCorp s employees and
management, enabling them to devote their full focus on exceeding customer expectations.
OTHER REGULATORY APPROVALS
Authorization from the SEC will be required both for MEHC's acquisition ofPacifiCorp,
and for MEHC's operation as a registered utility holding company under PUHCA. Repeal of
PUHCA is in legislation currently before a joint House-Senate conference committee of the
S. Congress; however repeal is not necessary for completion of the transaction.
Based on discussions with SEC staff and the assessments of legal counsel, we expect the
JOINT APPLICATION - Page 20
transaction to be authorized by the SEC under the terms and precedents of PUHCA. We believe
the acquisition will satisfy the standards under Section 10 ofPUHCA that require a utility
acquisition to be for reasonable and fair consideration, to not unduly concentrate control of
public utilities, to not unduly complicate the capital structure of utility systems, and to tend
towards the development of an integrated public utility system. See the testimony of MEHC
witness Gale for further details.
MEHC and PacifiCorp will seek approval of the Federal Energy Regulatory Commission
FERC"), pursuant to Section 203 of the Federal Power Act ("FP A"), for the proposed
transaction, inasmuch as it will result in the indirect transfer, to MEHC, of control of the
jurisdictional facilities" of PacifiCorp. PacifiCorp and MEC will also seek FERC approval
pursuant to Section 205 of the FP A, of: (i) any revisions to their respective Open Access
Transmission Tariffs; and (ii) their Joint Operating Agreement which will govern certain
transactions between PacifiCorp and MEC, and which will establish the process for PacifiCorp-
MEC analysis of opportunities to increase efficiencies.
ScottishPower will file with the SEC for deregistration and sale approval under Sections
5(d) and 12(d) ofPUHCA.
MEHC and PacifiCorp will make notification filings pursuant to the Hart-Scott-Rodino
Antitrust Improvement Act of 1976 ("HSR Act"
).
The proposed transaction cannot be
consummated until the waiting periods prescribed in the HSR Act lapse.
As a non-operating owner of2.5% of the Trojan nuclear power plant, which is in the later
stages of decommissioning, PacifiCorp and MEHC must seek approval from the Nuclear
Regulatory Commission ("NRC") for an indirect transfer of the spent nuclear fuel license
resulting from the change in control of the licensee. The applicants must assure the NRC that
JOINT APPLICATION - Page 21
there will be no adverse impact on its ability to meet its financial obligations under the license
and that there will be no adverse impact on the public interest, national security or the public
health and safety.
MEHC and PacifiCorp will also obtain approval, from the Federal Communications
Commission, of the change of control with respect to certain communication licenses held by
PacifiCorp.
Finally, MEHC must obtain authority to acquire PacifiCorp from each of the six (6) states
in which it provides retail electric service: Utah, Oregon, Wyoming, Washington, Idaho and
California. MEHC is not required to obtain any approval in the states where MEC currently
provides regulated electric or gas service: Iowa, Illinois, South Dakota and Nebraska.
After discussions with each of the representatives of each of the above regulatory
agencies, we believe that the approvals can be obtained in the timeframes we have proposed.
DESCRIPTION OF THE FILING
This Application is supported by testimony from the following witnesses:
Greg Abel President and COO ofMEHC, will describe MEHC and its business
platforms, describe the transaction, explain the reasons for MEHC's proposed purchase
ofPacifiCorp, demonstrate that the transaction will benefit PacifiCorp s customers
employees and communities, and describe PacifiCorp s operations once the transaction is
completed.
Judi Johansen President and CEO ofPacifiCorp, will testify regarding PacifiCorp
support for the transaction and the reasons for ScottishPower s sale ofPacifiCorp.
Brent Gale Senior Vice President of MEC, will provide evidence that the transaction is
in the public interest and will sponsor commitments to ensure there will be no harm to
that interest. He will also provide testimony regarding the similarities between
PacifiCorp and MEC, and the experience ofMEC as a regulated utility subsidiary of
MEHC.
Pat Goodman Chief Financial Officer ofMEHC, will provide detail regarding MEHC'
corporate structure, PacifiCorp s place within that structure, MEHC's capital structure
JOINT APPLICATION - Page 22
the financial and accounting aspects of the transaction, some of the financial and
structural commitments being offered by MEHC and PacifiCorp, and the "ring fencing
protections MEHC will employ. He also will provide information regarding Berkshire
Hathaway.
Tom Specketer Vice President of U.S. Regulatory Accounting and Controller ofMEC,
will testify about the formation of a service company to provide certain common services
to PacifiCorp, MEC and other MEHC subsidiaries. Mr. Specketer will describe the
service company, the procedures for sharing services between MEHC and its affiliates
the joint administrative services agreement applicable to MEHC and its affiliates, and the
implications and benefits for PacifiCorp customers. He will also sponsor some of the
regulatory oversight commitments being offered by MEHC and PacifiCorp.
Jeff Gust Vice President of Energy Supply Management ofMEC, will testify regarding
the transmission path that is planned to connect PacifiCorp with MEC and the Joint
Operating Agreement that will govern certain aspects of the use of that transmission path.
CONCLUSION
MEHC has made more than 60 commitments to the public interest, customers and states
served by PacifiCorp. Included in these commitments are reductions in PacifiCorp s costs
totaling more than $36 million over five years and more than $75 million over a longer period.
MEHC shareholders will also absorb $1 million of costs of a system-wide demand side
management study. In addition to these readily quantifiable benefits, MEHC is committing to
$1.3 billion of infrastructure investment in PacifiCorp s system.
MEHC looks forward to being able to invest in the future ofPacifiCorp, focusing upon
our identified objectives of customer satisfaction, reliable service, employee safety,
environmental stewardship and regulatory/legislative credibility. This application and testimony
demonstrate that it is committed to extending customer service standards and performance
guarantees, investing to improve transmission reliability and import capability, investing to
enhance wind power development, investing to reduce emissions from coal plants, and furthering
demand side management and energy efficiency. This will be done while maintaining our focus
on exceeding customer expectations. Lastly, but perhaps most importantly, we believe that
JOINT APPLICATION - Page 23
regulators and legislators in the states MEHC currently is privileged to serve will (;lgree that
perhaps the most valuable asset MEHC brings to the areas it serves is integrity in its relationship
with all of its stakeholders. We believe this is what PacifiCorp s customers, employees and
communities deserve and require.
WHEREFORE, Applicants respectfully request that the Commission issue an order
pursuant to Idaho Code 9 61-328 authorizing MEHC to acquire all of the outstanding common
stock ofPacifiCorp.
Dated: July 15, 2005
MIDAMERICAN ENERGY HOLDINGS COMPANY
and P ACIFICORP D/B/A UTAH POWER & LIGHT COMPANY
s M. Van Nostrand
James F. Fell (ISB # 2274)
Stoel Rives LLP
Joint Counsel for MEHC and PacifiCorp
JOINT APPLICATION - Page 24
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L1tseNo.PAC-05-
iDAHO PUBLIC Appendix No.
UTILI TI E S.eOt'1HfSStON
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
. \
ACIFICORP
Appendix
Index of Electronic Data Room Documents
July 2005
Key
CBEC4
CECI
FERC
GDMEC
ICC
IUB
MAPP
MEC
MEHC
MEMA
SDPUC
SEC
1.0
Index to MEHC's Electronic Document Room
Council Bluffs Energy Center - Unit 4
CalEnergy Company Inc.
Federal Energy Regulatory Commission
Greater Des Moines Energy Center
Illinois Commerce Commission
Iowa Utilities Board
Mid-Continent Area Power Pool
MidAmerican Energy Company
MidAmerican Energy Holdings Company
Mid -Continent Energy Marketers Association
South Dakota Public Utilities Commission
Securities and Exchange Commission
Corporate Records1.01 MEHC
1.01.01
1.01.02
1.01.03
1.01.04
1.01.05
1.02 MEC
1.02.
02.
1.02.
02.
MEHC Articles of Incorporation
MEHC Bylaws
MEHC Organization Chart
MEHC Credit Ratings
1.01.04.01 Moodys
1.01.04.02 Fitch
01.04.03 Standard and Poors
SEC No Action Letter
MEC Articles of Incorporation and Name Change
MEC Bylaws
1.02.02.01 Amendment 7-24-1996
MEC Organization Chart
MEC Credit Ratings
1.02.04.01 Moodys
02.04.02 Fitch
02.04.03 Standard and Poors
MEHC SEC Reports
1.03.01 MEHC 10-K 2004
1.03.02 MEHC 10-K 2003
1.03.02.01 MEHC 10K-A 2003
MEHC .10- K 2002
MEHC 10-Q - 1 st Qtr 2005
MEHC 10-Q - 1 st Qtr 2004
MEHC 10-Q - 2nd Qtr 2004
MEHC 10-Q - 3rd Qtr 2004
1.03
1.03.
1.03.
1.03.
1.03.
03.
1.03.
1.03.
1.03.
1.03.
1.03.
1.03.
1.03.
1.03.
1.03.
1.03.
1.03.
1.03.
1.03.
1.03.
1.03.
MEHC 10-Q 1st Qtr 2003
MEHC 10-Q - 2nd Qtr 2003
MEHC 10-Q - 3rd Qtr 2003
MEH C 10-Q - 1
st Qtr 2002
MEHC 10-Q - 2nd Qtr 2002
MEH C 10-Q - 3 rd Qtr 2002
Form 8-K dated March 8, 2002. MEHC announced that it had entered into
an agreement to acquire Kern River Gas Transmission Company from
Williams Companies, Inc. ("Williams ) for $450 million plus the
assumption of $506 million of debt.
Form 8- K dated March 28, 2002. MEHC announced that it had completed
its acquisition of Kern River Gas Transmission Company from Williams
for $450 million plus, through a subsidiary, it completed its purchase of
466,667 shares of 9 7/8 % cumulative convertible preferred stock of
Williams for $275 million. In addition, Berkshire Hathaway Inc. has
completed its contribution of $725 million to MERC in exchange for $323
million of MERC' s trust preferred securities and $402 million of zero
coupon convertible preferred stock.
Form 8~K dated June 21 2002. Kern River Gas Transmission Company
announced that it had closed a bank loan facility on June 21 , 2002
providing for aggregate loans of up to $875 million to be used for
construction of the 2003 Kern River Expansion Project.
Form 8-K dated July 18 2002. On July 17,2002 Kern River Gas
Transmission Company announced that it had received approval from
Federal Energy Regulatory Commission to construct and operate the Kern
River 2003 Expansion Project from SW Wyoming to Southern California.
Form 8-K dated July 30, 2002. On July 29, 2002, MEHC announced it
has reached a definitive agreement with Dynegy Inc. to acquire 100%
ownership of Northern Natural Gas Company for $928 million in cash and
the assumption of $950 million in debt.
Form 8-K dated August 14,2002. Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2002, filed on August 14, 2002 by MEHC
was accompanied by certifications by the Chief Executive Officer, David
L. Sokol, and Chief Financial Officer, Patrick J. Goodman, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Form 8-K dated August 23,2002. MEHC announced on August 16 2002
the completion of its acquisition of Northern Natural Gas Company
NNG"
Form 8-K dated September 23 2002. MERC announced on September
23, 2002 that subject to market and other conditions, it intends to offer an
aggregate of approximately $600 million of senior notes.
Form 8-K dated October 2 2002. MERC announced that on October 1
2002 it priced its offering of $200 million in aggregate principal amount of
its 4.625% senior notes due October 1 , 2007 and $500 million in aggregate
principal amount of its 5.985% notes due October 2012.
03.
1.03.
1.03.
1.03.
1.03.
1.03.
03.
1.03.30
1.03.31
1.03.32
1.03.33
03.34
1.03.35
03.36
Form 8- K dated October 4, 2002. MERC announced that on October 4
2002 it completed the sale of $200 million in aggregate principal amount
of its 4.625% senior notes due October 1 , 2007 and $500 million in
aggregate principal amount of its 5.875% notes due October 1 2012.
Form 8-K dated November 13 2002. MERC "safe harbor" cautionary
statements
Form 8-K dated November 14 2002. Regulation FD disclosure
Form 8- K dated January 2, 2003. MERC commences exchange offer for
625% senior notes due 2007 and 5.875% senior notes due 2012.
Form 8-K dated May 2, 2003. Completion of the Kern River 2003
Expansion Project and the issuance of Kern River Funding Corporation
$836 million 4.895% senior notes
Form 8- K dated May 16, 2003. MERC completed sale of $450 million of
its 3.50% senior notes due May 15,2008.
Form 8-K dated May 20,2003. MERC reports The Williams Companies,
Inc. agreed to repurchase all the shares of Williams' 97/8% cumulative
convertible preferred stock.
Form 8-K dated October 15, 2003. MEHCreports that its subsidiary, CE
Casecnan Water and Energy Company, Inc. ("CE Casecnan ) and the
Philippines National Irrigation Administration ("NIA") have entered into a
supplemental agreement settling the International Chamber of Commerce
arbitration case initiated by CE Casecnan in August 2002 to enforce a
provision in the amended and restated project agreement ("Project
Agreement") between CE Casecnan and the NIA.
Form 8- K dated October 17, 2003. MEC, a subsidiary of MERC, reported
that the ruB approved a settlement agreement between MEC and the Iowa
Office of Consumer Advocate that extends the electric revenue sharing
mechanism through 2010, and that the ruB approved ratemaking
principles for MEC's wind project.
Form 8-K dated January 23, 2004. MEHC's subsidiary, CE Casecnan
received full and timely payment from the Republic of the Philippines for
principal and interest due on the bond received as part of the October 15,
2003 settlement of a dispute with NIA.
Form 8- K dated January 30. 2004 reports that affiliate Salton Sea Funding
Corporation notified holders of the 7.475% senior secured Series F bonds
due November 30, 2018 of the redemption of an aggregate amount of
$136,383,000 to redemption date of March 1 , 2004.
Form 8-K dated February 12 2004. MEHC reported it completed the sale
of $250 million in aggregate principal amount of its 5.00% senior notes
due February 15, 2014.
Form 8-K dated February 18 2004. MEHC "safe harbor" cautionary
statements
Form 8- K dated March 1 , 2004. MEHC affiliate, Salton Sea Funding,
completed redemption of an aggregate principal amount of $136 383 000
of the 7.475% senior secured Series F bonds due November 30,2018.
1.04
03.37
03.
1.03.
1.03.
1.03.
1.03.
1.03.
03.
1.03.
03.
1.03.
1.03.
Form 8- K dated March 30, 2004. Exhibits filed herewith relate to
indebtedness of a subsidiary of the registrant (CE Electric UK Funding
and AMBAC documents).
Form 8-K dated April 14, 2004. MEHC reports that its subsidiary, CE
Casecnan, and CP Casecnan-Consortium, a limited liability consortium,
Cooperativa Muratori e Cementisti-CMC, Di Ravenna and Impresa
Pizzarotti & C. S.A (collectively, the "Contractor ) have entered into an
agreement, dated April 7, 2004, settling all claims and counterclaims
between the parties in the International Chamber of Commerce arbitration
case initiated by the Contractor in February 2001 seeking scheduled relief
and compensation for additional costs and damages arising out of an
engineering procurement and construction contract between CE Casecnan
and the Contractor for the Casecnan irrigation and hydroelectric project in
the Philippines.
Form 8- K dated September 10, 2004 reports cessation of operations of the
Zinc Recovery Plant.
Form 8-K dated February 2 2005. Yorkshire Power Finance 2 Limited
exercised its call option related to the f155 million reset senior notes due
2020.
Form 8-K dated April 14, 2005reports Northern Natural Gas Company
sale of $100 million 5.125% senior notes due 2015.
Form 8-K dated April 20, 2005. CE Electric UK Funding, Northern
Electric Distribution and Yorkshire Electricity s committed revolving
credit facility
Form 8- K dated April 21, 2005. CE Electric UK Funding appointed The
Royal Bank of Scotland pIc to arrange new funding for its UK subsidiaries.
Form 8-K dated April 22, 2005. CE Electric UK Limited and CalEnergy
Investments C. V. entered into a second amended and restated
uncommitted subordinated revolving credit agreement.
Form 8-K dated May 23 2005. MEHC enters into material definitive
agreement with Scottish Power pIc and PacifiCorp Holdings, Inc. to
acquire 100% of the common stock ofPacifiCorp.
Form U-3A-2 for the year ended December 31 2002, dated February 28
2003
Form U-3A-2 for the year ended December 31 , 2003, dated February 27,
2004
Form U-3A-2 for the year ended December 31 , 2004, dated February 28,2005
MEC SEC Reports
04.01 MEC 10-K 2004
04.02 MEC 10- K 2003
1.04.02.01 MEC 10K-A 2003
MEC 10- K 2002
MEC 10-Q - 1
st Qtr 2005
MEC 10-Q - 1 st Qtr 2004
04.
04.
04.
1.05
1.06
1.07
04.
04.
04.
04.
1.04.
1.04.
1.04.
1.04.
1.04.
1.04.
1.04.
1.04.
1.04.
1.04.
MEC 10-Q - 2nd Qtr 2004
MEC 10-Q - 3
rd Qtr. 2004
MEC 10-Q - 1 st Qtr 2003
MEC 10-Q - 2nd Qtr 2003
MEC 10-Q - 3rd Qtr 2003
MEC 10-Q - 1 st Qtr 2002
MEC 10-Q - 2nd Qtr 2002
MEC 10-Q - 3rd Qtr 2002
Form 8- K dated February 8, 2002. MEC announced it issued $400 million
of its medium-term notes due 2031.
Form 8-K dated August 2, 2002. MEC announced it had entered into an
agreement to resolve all disputes with Nebraska Public Power District
concerning the Cooper Nuclear Station.
Form 8- K dated August 14, 2002. Regulation FD disclosure
Form 8-K dated November 12,2002. Regulation FD disclosure
Form 8-K dated October 20,2003. The ruB approved a MidAmerican
plan that extends through 2010 an electric rate freeze that began in 1995.
Form 8- K dated October 1 , 2004. MEC completed sale of $350 million
aggregate principal amount of its 4.650% medium-term notes due October2014.
PacifiCorp Acquisition
05.01 Stock Purchase Agreement (May 23, 2005)
05.02 News Release
05.03 Post-Acquisition Organizational Chart (simplified)
Other Recent MEHC Acquisitions
06.01 Agreement and Plan of Merger by and among MEHC, Teton Formation
C. and Teton Acquisition Corp. dated as of October 24, 1999
Purchase Agreement between The Williams Companies, Williams Gas
Pipeline LLC, and Kern River Acquisition, LLC (as Sellers) and MEHC
KR Holding, LLC, KR Acquisition 1 , LLC and KR Acquisition 2, LLC (as
Buyers) for the Kern River Gas Transmission Company dated March 7,
2002
Stock Purchase Agreement (Kern River Acquisition) between The
Williams Companies, Inc., MEHC Investment, Inc. and MidAmerican
Energy Holdings Company dated March 7, 2002
Purchase and Sale Agreement between Dynegy Inc., NNGC Holding
Company, Inc. and MEHC dated July 28,2002
Agreement and Plan of Merger among CalEnergy Company, Inc.
Maverick Reincorporation Sub, Inc., MidAmerican Energy Holdings
Company and MA VH Inc., dated as of August 11 , 1998
06.
06.
06.
06.
Excerpt of MEHC Federal Tax Return (non-confidential portions)
1.07.01 2003
1.07.02 2002
Employee Matters
08.01 MEC Retirement Savings Plan Summary Plan Restatement dated January
1, 2003 including Amendment 1 dated January 1 , 2004 and Amendment 2
dated March 25, 2005
MEHC 2000 Stock Option Plan dated March 25, 2005
MEHC Amended and Restated Long-Term Incentive Partnership Plan
dated January 2, 2004
Amended and Restated MEC Retirement Plan dated January 1 , 2001
including Amendment One dated February 28, 2008 and Amendment Two
dated December 13, 2004
Corporate Perfonnance Incentive Plan
07.
1.08
08.
08.
08.
08.
2001
Berkshire Hathaway Inc. Annual Reports
1.09.01 2004
09.02 2003
1.09.03 2002
1.09
Financial Documents
. 2.01 MEHC
01.01
01.02
01.
01.04
01.05
01.
01.07
Indenture between MEHC and The Bank of New York dated February 26
1997 for 61,4% convertible junior subordinated debentures due 2012
Indenture between MEHC and The Bank of New York
dated August 12, 1997 for 6 V2% Convertible Junior Subordinated
Debentures due 2027
Indenture between lliJ Schroder Bank & Trust Company and MEHC
dated October 15, 1997 (Senior Debt Securities)
Amended and Restated Declarations of Trust
01.04.01 MidAmerican Capital Trust I dated as of March 14 2000
01.04.02 MidAmerican Capital Trust n dated as of March 12 2002
01.04.03 MidAmerican Capital Trust III dated as of August 16, 2002
First Supplemental Indenture between lliJ Schroder Bank & Trust
Company and MEHC dated October 28 1997 ($350,000 000 7.63% Senior
Notes due 2007)
Credit Agreement between MidAmerican Energy Holdings Company,
Banks and Other Financial Institutions Parties hereto, Bank One, N A
Credit Suisse First Boston, Cayman Islands Branch, Union Bank of
California and ABN AMRO Bank N., Bank One, NA, and BNP Paribas
dated June 6, 2003
01.06.01 First Amendment dated October 8 2004
Second Supplemental Indenture ($1,400 000 000 Senior Notes & Bonds)
between lliJ Schroder Bank & Trust Company and MEHC dated
September 22, 1998 ($1.4 billion Senior Notes due 2003, 2005, 2008 and
2028)
01.08
01.09
01.10
01.11
01.12
01.13
01.14
01.15
01.16
01.17
MEC
02.
02.
02.
Indenture between MidAmerican Energy Holdings Company and The
Bank of New York dated October 4, 2002 (Senior Debt Securities)
01.08.01 First Supplemental Indenture dated October 4, 2002
01.08.02 Second Supplemental Indenture dated May 16, 2003
01.08.03 Third Supplemental Indenture dated February 12, 2004
Third Supplemental Indenture (7.52% Senior Notes due 2008) between
ffiJ Schroder Bank & Trust Company and MEHC dated November 13,
1998
Revolving Credit Agreement between MidAmerican Energy Holdings
Company and MHC Inc. dated March 12, 1999, and three subsequent
Amendments
Subscription Agreement executed by Berkshire Hathaway Inc. dated
August 16, 2002
Indenture between MidAmerican Energy Holdings Company and The
Bank of New York dated March 14, 2000 (11 % Junior Subordinated
Deferrable Interest Debentures)
Subscription Agreement executed by Berkshire Hathaway Inc. dated
March 14, 2000
Subscription Agreement executed by Berkshire Hathaway Inc. dated
March 7, 2002
Subscription Agreement executed by Berkshire Hathaway Inc. dated
March 12, 2002
Indenture between MidAmerican Energy Holdings Company and The
Bank of New York dated March 12, 2002 (11 % Junior Subordinated
Deferrable Interest Debentures)
Indenture between MidAmerican Energy Holdings Company and The
Bank of New York dated August 16, 2002 (11 % Junior Subordinated
Deferrable Interest Debentures)
General Mortgage Indenture & Deed -Trust Midwest Power Systems and
Morgan Guaranty Trust Company dated January 1 , 1993
02.01.01 1st Supplemental Indenture January 1 , 1993
02.01.02 2nd Supplemental Indenture January 15, 1993
02.01.03 3rd Supplemental Indenture May 1, 1993
02.01.04 4th Supplemental Indenture October 1 , 1994
02.01.05 5th Supplemental Indenture November 1 , 1994
02.01.06 6th Supplemental Indenture July 1 , 1995
Indenture for Senior Debt Securities ($500 000 000)MEC and Bank of
New York dated February 8, 2002 with First Supplemental Indenture
February 8,2002, Second Supplemental Indenture dated January 14 2003
and Third Supplemental Indenture dated October 1 , 2004
Form S-3 Registration Statement for $600,000 000 MidAmerican Energy
Company Debt Securities and Preferred Stock filed December 12 2002
MEC General Information01 Recent Rate Case Activity-Other Regulatory Decisions
01.01 IUB Docket No.APP-96-1/RPU-96-8, Amended Settlement Agreement
and Joint Motion for Adoption of Amended Settlement Agreement filed
March 10, 1997
IUB Docket No.APP-96-1/RPU-96-, Order Approving Settlement
Granting Waivers, and Requiring Additional Information dated June 27
1997
IUB Docket No.APP-96-1/RPU-96-8, Petition for Approval of
Amendment to Settlement Agreement and First Amendment to Settlement
Agreement filed May 26, 1998.
IUB Docket No.APP-96-1/RPU-96-, Order Approving Amendment to
Settlement dated September 11 , 1998
IUB Docket No. APP-96-1/RPU-96-8 Order Regarding Contract
Provisions dated April 15, 1999
IUB Docket Nos. RPU-01-3 and RPU-01-5 Order Approving Settlement
with Modifications, dated December 21 , 2001
IUB Docket No. RPU-01-09 (Ratemaking Principles - Greater Des
Moines Center), Order dated May 29,2002
IUB Docket No. RPU-02-10 (Ratemaking Principles - Council Bluffs
Energy Center Unit 4), Errata Order dated June 16, 2003 and Order
Approving Settlement dated May 29,2003 (including Settlement
Agreement and Amendments thereto)
02.
02.
02.
02.
02.
02.
02.
01.02
01.03
01.04
01.
01.06
01.07
01.08
Amendment No.1 to Form S-3 Registration Statement for $600,000 000
MidAmerican Energy Company Debt Securities and Preferred Stock (filed
December 12 2002) filed December 26,2002
Post-Effective Amendment No.1 to Form S-3 Registration Statement for
$600,000 000 MidAmerican Energy Company Debt Securities and
Preferred Stock (filed December 12,2002) filed Apri19, 2003
Form S-3 Registration Statement for $800 000 000 MidAmerican Energy
Company Debt Securities and Preferred Stock filed November 10, 2003
Amendment No.1 to Form S-3 Registration Statement for $800,000,000
MidAmerican Energy Company Debt Securities and Prefeued Stock filed
December 23, 2003
Credit Agreement MEC, Lenders, Bank of New York, ABN Amro Bank,
BNP Paribas and Bank One dated January 15,2004 with Promissory
Notes
Amendment No.2 to Form S-3 Registration Statement for $800 000 000
MidAmerican Energy Company Debt Securities and Preferred Stock filed
January 16, 2004
Amendment No.3 to Form S-3 Registration Statement for $800,000 000
MidAmerican Energy Company Debt Securities and Preferred Stock filed
February 4, 2004
01.09
01.10
ruB Docket No. RPU-03-01 (Ratemaking Principles - Wind and
extension of Freeze), Order Approving Stipulation and Agreement dated
October 17, 2003
Regulatory Approvals of Recent MEC Reorganizations
01.10.01 ruB Docket No. SPU-98-8, (Cal Energy Reorganization)
Order Terminating Docket dated March 11, 1999
01.10.02 IUB Docket SPU-99-32 (Berkshire Hathaway) Order
Terminating Docket dated March 10,2000
ICC Docket 99-0609 (Berkshire Hathaway) Memorandum
to Hearing Examiner re Recommended Action dated
January 3, 2000
01.10.04 ICC Docket 99-0609 (Berkshire Hathaway) Order dated
January 12, 2000
FERC Docket ECOO-18-000 Order Authorizing Disposition
of Jurisdictional Facilities (Berkshire Hathaway) dated
December 15, 1999
01.10.
01.10.
02. Recent Generating Facility Siting Certificate Proceedings
02.01 Greater Des Moines Energy Center
02.01.01 Application - Pleading
02.01.02. Application - General Information
02.01.02.01 Parts 1 - 7
02.01.02.02 Part 8 v.
02.01.02.03 Part 8 v.1 and Parts 9-
02.01.03 Application - Regulatory Information
02.01.04 Testimony
02.01.04.01 Cross Index
02.01.04.02 Alexander
02.01.04.03 Guyer
02.01.04.04 Kruempel
02.01.04.05 O.Stevens
02.01.05 Additional information submitted by MEC
02.01.06 Initial Brief - MEC
02.01.07 Office of Consumer Advocate Statement
02.01.08 Order
Council Bluffs Energy Center Unit No.
02.02.01 Application - Pleading
02.02.02 Application - General Information
02.02.02.01 Part 1 v.
02.02.02.02 Part 1 v.
02.02.02.03 Part 1 v.
02.02.02.04 Part 1 vA
02.02.02.05 Part 1 v.
Application - Regulatory Requirements
Application - Parts 3-
Testimony
02.
02.02.
02.02.
02.02.
02.
02.
02.
02.02.05.01 Cross Index
02.02.05.02 Alexander
02.02.05.03 Kruempel
02.02.05.04 O.Stevens
02.02.05.05 D.Stevens
02.02.05.06 Guyer
02.02.06 Initial Brief MEC
02.02.07 Order
Wind Power Project
02.03.01 Petition For Declaratory Order
02.03.02 Declaratory Order
Iowa Siting Statutory Provision
Orders Re CBEC4 Transmission Facilities
02.05.01 Proposed Order and Decision Granting Franchises
02.05.02 Franchise-Pottawattamie County 12-29-
02.05.03 Franchise-Cass County 12-29-
02.05.04 Franchise-Dallas County 12-29-
02.05.05 Franchise-Adair County 12-29-
02.05.06 Franchise-Madison County 12-29-
Recent Ratemaking Principles Proceedings
03.01 Greater Des Moines Energy Center
03.01.01 Application - Pleading
03.01.02 Application - General Information
03.01.02.01 Parts 1-
03.01.02.02 Part 6 v.
03.01.02.03 Part 6 v.
03.01.02.04 Part 6 v.3 and Parts 7-
Application - Economic Evaluation
Application - Risk Mgmt and Non-Cost Factors
Application
--.:
Ratemaking Principles
Application - Supply Options v.
Application - Supply Options v. 2
Application - Energy Efficiency
Testimony - MEC
03.01.09.01 Cross Index
03.01.09.02 Alexander
03.01.09.03 Foster
03.01.09.04 Graves
03.01.09.05 Guyer
03.01.09.06 Kruempel
03.01.09.07 Morin
03.01.09.08 O.Stevens
03.01.10 Testimony - Chesnut for Ag Processing Inc.
03.01.11 Testimony - Office of Consumer Advocate
03.01.11.01 Turner
03.01.
03.01.
03.01.
03.01.
03.01.07
03.01.
03.01.09
03.
Habr
Fuhrman
Vitale
03.01.11.04.
03.01.11.04.
03.01.11.04.
03.01.11.04.
03.01.11.04.
03.01.12 Initial Brief - MEC
03.01.13 Initial Brief - Hawkeye Generating LLC
03.01.14 Initial Brief - Office of Consumer Advocate
03.01.15 Reply Brief - MEC
03.01.16 Reply Brief - Office of Consumer Advocate
03.01.17 Rebuttal Testimony - MEC v.
03.01.18 Rebuttal Testimony - MEC v.
03.01.19 Order
03.01.20 MECs Acceptance
Council Bluffs Energy Center Unit No.
03.02.01 Application - Pleading
03.02.02 Application - General Information
03.02.02.01 Part 1 v.
03.02.02.02 Part 1 v.
03.02.02.03 Part 1 v.
03.02.02.04 Part 1 vA
03.02.03 Application - Economic Evaluation
03.02.03.01 Part 2 v.
03.02.03.02 Part 2 v.
03.02.03.03 Part 2 v.3
Application - Risk Mitigation
Application - Non-Cost Factors and Ratemaking Principles
Application - Supply Options
03.02.06.01 Part 6 v.
03.02.06.02 Part 6 v.
03.02.06.03 Part 6 v.
03.02.06.04 Part 6 vA
03.02.07 Application - Energy Efficiency
03.02.08 Testimony
03.02.08.
03.02.08.
03.02.08.
03.02.08.
03.02.08.
03.02.08.
03.02.08.
03.02.08.
03.02.08.
03.01.11.02
03.01.11.03
03.01.11.04
03.02.
03.02.
03.02.
Cross Index
Alexander
Kruempel
Stevens
Stevens
Brewer
Foster
Guyer
V anderW eide
Vitale Exhibits
Workpapers v.
Workpapers v.
Workpapers v.
Workpapers v A
03.
03.
03.
03.02.08.10 Graves
03.02.08.11 Bundy and Arends
Application Revised re 2.2 Installed Cost
MEC Answers
Motion to Supplement and Amend by MEC
03.02.11.01 Supplemental Testimony-Brewer
Joint Motion for Settlement Agreement Approval
Agreement Modified and Clarified
Order
03.02.14.01 Errata Order
03.02.15 Notification by MEC of Increased Share
Wind Power Project
03.03.01 Index cross reference
03.03.02 Application - Pleading
03.03.02.01 Application with revisions
03.03.02.02 Application exhibits v.
03.03.02.03 Application exhibits v. 2
03.03.0~ Testimony
03.03.03.01 Alexander
03.03.03.02 Gale
03.03.03.03 Crist
03.03.03.04 Poore
03.03.03.05 O.Stevens
03.03.03.06 D.Stevens
03.03.03.07 Guyer
03.03.03.08 VanderWeide
03.03.03.09 Foster
03.03.04 Intervenor Approval of Settlement Agreement
03.03.05 Order
Wind Power Project Expansion
03.04.01 Application
03.04.02 MEC Answers
03.04.03 Testimony
03.04.03.01 Crist
03.04.03.02 Budler
03.04.03.03 Foster
03.04.03.04 O.Stevens
03.04.03.05 D.Stevens
03.04.04 - Supplemental Application and Motion
03.04.04.01 Testimony-Crist
03.04.04.02 Exhibits
03.04.05 Order
Iowa Ratemaking Principles Statute
03.02.
03.02.
03.02.
03.02.
03.02.
03.02.
- '
MEC's Annual Electric Generator Report to Department of Energy
04.01 Year 2002
04.Year 2003
04.02.
04.02.
04.02.
Year 2004
04.03.
04.03.
04.03.
2004 v.
2004 v.
2004 v.
2003 v.
2003 v.
2003 v.
04.
Mid-Continent Energy Marketers Association (MEMA)
05.01 Capacity and Energy Tariff
05.02 2nd amended and restated bylaws
Wholesale Mid-Continent Area Power Pool Agreement (MAPP)
06.01 MAPP Restated Agreement
06.01.01 Exhibit B-Generation reserve sharing pool schedule
06.01.02 Exhibit C-Schedule F-open access transmission tariff
Annual Load and Capability Reports to MAPP
07.01 Peak Demand and Energy Reports
07.01.01 2002 Annual
07.01.02 2002 Monthly
07.01.03 2003 Annual
07.01.04 2003 Monthly
07.01.05 2004 Annual
07.01.06 2004 Monthly
07.01.07 2005 Annual
07.01.08 2005 Monthly
Demand and Capacity Reports
07.02.01 2002 Winter
07.02.02 2002 Summer
07.02.03 2002 Monthly
07.02.04 2003 Winter
07.02.05 2003 Summer
07.02.06 2003 Monthly
07.02.07 2004 Winter
07.02.08 2004 Summer
07.02.09 2004 Monthly
07.02.10 2005 Winter
07.02.11 2005 Summer
07.02.12 2005 Monthly
Capacity Purchases Reports
07.03.01 2002 Winter
07.03.02 2002 Summer
07.03.03 2002 Monthly
07.03.04 2003 Winter
07.
07.
07.
07.
07.03.05 2003 Summer
07.03.06 2003 Monthly
07.03.07 2004 Winter
07.03.08 2004 Summer
07.03.09 2004 Monthly
07.03.10 2005 Winter
07.03.11 2005 Summer
07.03.12 2005 Monthly
Capacity Sales Reports
07.04.01 2002 Winter
07.04.02 2002 Summer
07.04.03 2002 Monthly
07.04.04 2003 Winter
07.04.05 2003 Summer
07.04.06 2003 Monthly
07.04.07 2004 Winter
07.04.08 2004 Summer
07.04.09 2004 Monthly
07.04.10 2005 Winter
07.04.11 2005 Summer
07.04.12 2005 Monthly
Interregional Purchases and Sales
07.05.01 2005 Summer
07.05.02 2005 Winter
MEC Coal Plant Performance - Periodical Literature
08.01 Coal Plants by Production Costs-Platts Power
Ownership Agreements for Jointly-Owned Generating Facilities
09.01 The Basic Generating Agreement Unit 3 (George Neal Generating Station)
betweenlowa-lllinois Gas and Electric Company, Iowa Power and Light
Company, Iowa Southern Utilities Company and Iowa Public Service
Company dated February 2, 1971 with Amendments
The Basic Generating Agreement Unit 4 (George Neal Generating Station)
between Iowa Public Service Compapy, Interstate Power Company, Corn
Belt Power Cooperative, Northwest Iowa Power Cooperative, Algona
Municipal Utilities, Bancroft Municipal Utilities, Coon Rapids Municipal
Utilities, Graettinger Municipal Light Plant, Laurens Municipal Light &
Power Plant, Milford Municipal Utilities, Spencer Municipal Utilities and
City of Webster City Iowa dated June 26, 1974 with Amendments
Agreement Louisa Generating Station between Iowa Public Service
Company, Iowa Power and Light Company, Eastern Iowa Light and
Power Cooperative, Iowa-lliinois Gas and Electric Company and City of
Tipton dated October 4, 1977 with Amendments
The Basic Generating Agreement Unit 3 (Council Bluffs Energy Center)
between Cedar Falls Municipal Electric Utility, Central Iowa Power
09.
09.
09.
09.
09.
Cooperative, Inc., Corn Belt Power Cooperative Inc., Eastern Iowa Light
and Power Cooperative Inc., Iowa-Illinois Gas and Electric Company and
Iowa Power and Light Company dated July 31, 1973
09.04.01 Amendment No.1 to Basic Generating Agreement Unit 3
(Council Bluffs Energy Center) dated January 31 , 1975
Amendment No.2 to Basic Generating Agreement Unit 3
(Council Bluffs Energy Center) dated September 5, 1975
Determination of Interpretation of Section 2.03 of Basic
Generating Agreement Unit 3 (Council Bluffs Energy
Center) dated March 22, 1976
Amendment No.3 to Basic Generating Agreement Unit 3
(Council Bluffs Energy Center) dated March 31, 1981
Amendment No.4 to Basic Generating Agreement Unit 3
(Council Bluffs Energy Center) dated February 7, 1983
Amendment No.5 to Basic Generating Agreement Unit 3
(Council Bluffs Energy Center) dated June 28, 1995
CAAA of 1990 Agreement pursuant to Amendment No.
to Basic Generating Agreement Unit 3 (Council Bluffs
Energy Center)
Ottumwa Generating Station Agreement Unit 1 between Iowa Southern
Utility Company, Iowa Public Service Company, Iowa Power and Light
Company and Iowa-lllinois Gas and Electric Company dated April 16
1975
09.05.
09.04.
09.04.
09.04.
09.04.
09.04.
09.04.
Addendum Agreement to Ottumwa Generating Station
Agreement Unit 1 dated December 7, 1977
Agreement Adopting Accounting Memorandum re:
Ottumwa Generating Station Agreement Unit 1 dated July
11,1978
Joint Ownership Agreement for Council Bluffs Energy Center Unit 4
between MidAmerican Energy Company, City of Lincoln, Nebraska
Central Iowa Power Cooperative, City of Cedar Falls, Iowa, City of Pella
Iowa, City of Spencer, Iowa, City of Eldridge, Iowa, City of New
Hampton, Iowa, City of Montezuma, Iowa, City of Waverly, Iowa, City of
Aha, Iowa, City of Sumner, Iowa and City of West Bend, Iowa dated
September 4, 2002
09.06.01 Amendment to Joint Ownership Agreement for Council
Bluffs Energy Center Unit 4 dated October 14 2002
Second Amendment to Joint Ownership Agreement for
Council Bluffs Energy Center Unit 4 dated August 13
2003
09.05.
09.06.
FERC Form 423 Reports - Monthly Report of Cost and Quality of Fuels for Electric
Plants
3.10.
10.
10.
MEC FERC Form 423 2002
MEC FERC Form 423 2003
MEC FERC Form 423 2004
10.MEC FERC Form 423 2005
Regulatory Approvals for Power Purchase Agreement between MEC and its affiliate
Cordova Energy Company
11.01 ICC Order Approving Power Purchase Agreement 07-06-
11.02 ICC Order Approving Amendment - Power Purchase Agreement 02-21-
11.03 ruB Order Approving Power Purchase Agreement 06-26-
11.04 IUB Order Approving Amendment - Power Purchase Agreement 02-23-11.05 SDPUC Order Approving Power Purchase Agreement 06-28-11.06 SDPUC Order Approving Amendment to Power Purchase Agreement 03-
14-
MEC Service Area Map
12.01 MEC Service Area Map
Recent Iowa Regulatory Legislation
13.01 House File 577
13.02 House File 659
Affiliate Transactions
14.01 Affiliate Laws and Regulations
14.01.01 illinois Statute on Intercorporate Relations
14.01.02 illinois Electric Rules on Affiliate Transactions
14.01.03 illinois Gas Rules on Affiliate Transactions
14.01.04 Iowa Statute on Affiliate Transactions
14.01.05 Iowa Rules on Affiliate Transactions
14.01.06 South Dakota Statutes on Affiliate Transactions
illinois Affiliate Transaction Approvals
14.02.01 Insurance Services Agreement
14.02.02 CBEC Railway Real Estate Sale
14.02.03 CBEC Railway Financing and Revolving Credit
Agreements
Cordova Energy Center Transactions
Cordova Energy Center Firm Natural Gas Distribution
Agreement
14.02.06 Inter-company Contracts with Subsidiaries
14.02.07 Inter-company Service Agreements
14.02.08 McLeod Master Pole Duct and Tower Use Agreement
14.02.09 MERC Combustion Turbines Acquisition-Interim Order
Affiliate Compliance Filings
14.03.01 Iowa Compliance Filings 2002
14.03.02 Iowa Compliance Filings 2003
14.03.03 Iowa Compliance Filings 2004
14.03.04 Iowa Compliance Filings 2005
14.03.05 illinois Compliance Filings 2002
14.03.06 illinois Compliance Filings 2003
14.
14.02.
14.02.
14.
14.03.
14.03.
14.03.
14.03.
14.03.
14.03.
14.03.
14.03.
14.03.
14.03.
14.03.
14.03.
14.03.
14.03.
14.03.
Illinois Compliance Filings 2004
illinois Compliance Filings 2005
illinois Affiliate List 01-09-
illinois Affiliate List 06-13-
illinois Affiliate List 09-25-
illinois Affiliate List 01-21-
illinois Affiliate List 06-24-
illinois Affiliate List 10-15-
illinois Affiliate List 02-18-
illinois Affiliate List 03-30-
illinois Affiliate List 06-07-
illinois Affiliate List 10-06-
illinois Affiliate List 01-03-
illinois Affiliate List 03-30-
illinois Affiliate List 07-06-
Inter-Company Service Agreement
15.01 Inter-Company Administrative Service Agreement
Iowa Energy Efficiency/Demand Side Management
16.01 2003 Energy Efficiency Plan Filing
16.02 2003 EEP Filing Revisions
16.03 Unanimous Settlement Agreement
16.04 Order Approving Settlement - July 18,2003
16.05 2003 Low Income Report
16.06 2003 EEP Annual Report Vol.
16.07 2003 EEP Annual Report Vol. 2
16.08 2004 EEP Annual Report Vol.
16.09 2004 EEP Annual Report Vol. 2
16.10 Miscellaneous Energy Efficiency
Environmental
17.01 Iowa Manufactured Gas Plant Remediation Reports
17.01.01 March 2002 MGP Report
17.01.02 October 2002 Addendum
17.01.03 March 2003 MGP Report
17.01.04 May 2003 MGP Report
17.01.05 July 2003 MGP Report
17.01.06 October 2003 MGP Report
17.01.07 March 2004 MGP Report
17.01.08 October 2004 MGP Report
17.01.09 March 2005 MGP Report
Environmental RESPECT Policy
17.02.01 Environmental RESPECT Policy
Environmental Reports
17.03.01 2001 Environmental Report
17.
17.
17.
17.
17.03.02 2003 Environmental Report
Title V Operating Permit Annual Compliance Certification Filings
17.04.01 Coralville Compliance Certification 2002-2004
17.04.02 Council Bluffs Compliance Certification 2002-2004
17.04.03 Electrifarm Compliance Certification 2002-2004
17.04.04 Knoxville Compliance Certification 2002-2004
17.04.05 Louisa Compliance Certification 2002-2004
17.04.06 Merl Parr Compliance Certification 2002-2004
17.04.07 Moline Compliance Certification 2002-2004
17.04.08 Neal North Compliance Certification 2002-2004
17.04.09 Neal South Compliance Certification 2002-2004
17.04.10 Pleasant Hill Compliance Certification 2002-2004
17.04.11 River Hills Compliance Certification 2002-2004
17.04.12 Riverside Compliance Certification 2002-2004
17.04.13 Shenandoah Compliance Certification 2002-2004
17.04.14 Sycamore Compliance Certification 2002-2004
17.04.15 Waterloo Compliance Certification 2002-2004
Emissions Inventory Questionnaire
17.05.01 Louisa 2002
17.05.02 Riverside 2002
17.05.03 Coralville 2002
17.05.04 Neal North 2002
17.05.05 Neal South 2002
17.05.06 Council Bluffs 2002
17.05.07 Pleasant Hill 2002
17.05.08 Sycamore 2002
17.05.09 River Hills 2002
17.05.10 Merl Parr 2002
17.05.11 Electrifarm 2002
17.05.12 Waterloo 2002
17.05.13 Shenandoah 2002
17.05.14 Knoxville 2002
17.05.15 Moline 2002
17.05.16 Riverside 2003
17.05.17 Coralville 2003
17.05.18 Louisa 2003
17.05.19 Neal North 2003
17.05.20 Neal South 2003
17.05.21 Council Bluffs 2003
17.05.22 Pleasant Hill 2003
17.05.23 Sycamore 2003
17.05.24 River Hills 2003
17.05.25 Merl Parr 2003
17.05.26 Electrifarm 2003
17.05.27 Waterloo 2003
17.05.28 Shenandoah 2003
17.
17.
17.
17.
17.
17.05.29 Knoxville 2003
17.05.30 Moline 2003
17.05.31 Riverside 2004
17.05.32 Coralville 2004
17.05.33 Louisa 2004
17.05.34 Neal North 2004
17.05.35 Neal South 2004 voL
17.05.36 Neal South 2004 voL2
17.05.37 Council Bluffs 2004 voL 1
17.05.38 Council Bluffs 2004 vo1.2
17.05.39 Pleasant Hill 2004
17.05.40 Sycamore 2004
17.05.41 River Hills 2004
17.05.42 Merl Parr 2004
17.05.43 Electrifarm 2004
17.05.44 Waterloo 2004 voL
17.05.45 Waterloo 2004 voL2
17.05.46 Shenandoah 2004 voL
17.05.47 Shenandoah 2004 voL2
17.05.48 Knoxville 2004
17.05.49 Moline 2004
Title Acid Rain Program Annual Report
17.06.01 Annual Compliance Certification 2002
17.06.02 Annual Compliance Certification 2003
17.06.03 Annual Compliance Certification 2004
CBEC4 Air Quality PSD Construction Permit
17.07.01 CBEC Unit 4 PSD Construction Permit
lliinois Environmental Disclosure Reports
17.08.01 Electricity Sources and Emissions 09-30-
17.08.02 Electricity Sources and Emissions 12-31-
17.08.03 Electricity Sources and Emissions 03-31-
17.08.04 Electricity Sources and Emissions 06-30-
17.08.05 Electricity Sources and Emissions 09-30-
17.08.06 Electricity Sources and Emissions 12-31-
17.08.07 Electricity Sources and Emissions 03-31-
17.08.08 Electricity Sources and Emissions 06-30-
17.08.09 Electricity Sources and Emissions 09-30-
17.08.10 Electricity Sources and Emissions 12-31-
17.08.11 Electricity Sources and Emissions 03-31-
Iowa Renewable Energy Program
17.09.01 MEC-Renewable Energy Program Report-2004
17.09.02 Iowa Statute on Renewable Energy Sources
Title V Operating Permit Fees
17.10.01 Coralville Operating Permit 2002-2004
17.10.02 Council Bluffs Operating Permit 2002-2004
17.10.03 Electrifarm Operating Permit 2002-2004
17.
17.10.04 Knoxville Operating Permit 2002-2004
17.10.05 Louisa Operating Permit 2002-2004
17.10.06 Merl Parr Operating Permit 2002-2004
17.10.07 Moline Operating Permit 2002-2004
17.10.08 Neal North Operating Permit 2002-2004
17.10.09 Neal South Operating Permit2002-2004
17.10.10 Pleasant Hill Operating Permit 2002-2004
17.10.11 River Hills Operating Permit 2002-2004
17.10.12 Riverside Operating Permit 2002-2004
17.10.13 Shenandoah Operating Permit 2002-2004
17.10.14 Sycamore Operating Permit 2002-2004
17.10.15 Waterloo Operating Permit 2002-2004
Iowa Electric Power Generation Facility Emissions Plan
17.11.01 Plan Filing April 2002
17.11.02 Proposed Order March 2003
17.11.03 Order Affirming Proposed Order July 2003
17.11.04 Updated Plan Filing April 2004
17.11.05 Order Approving Settlement October 2004
Open Access Transmission Tariff
18.01 Open Access Transmission Tariff
State Statutes on Retail Competition
19.01 illinois
19.01.01
19.01.02
Michigan
19.02.
19.02.
Ohio
19.03.
19.03.
IL Electric Service Customer Choice and Rate Relief Law
IL Alternative Gas Supplier Law
19.
MI Customer Choice and Electric Reliability Act
MI Public Act 634 of 2002
19.
OH Competitive Retail Electric Service
OH Alternative Rate Plan for Natural Gas Companies...
Quarterly Reports of Wholesale Electric Transactions to FERC
20.01 2005-Qtr1 Contract information
20.02 2005-Qtrl Transaction data
20.03 2005-Qtr1 Filer infonnation
20.04 2004-Qtr4 Contract information
20.05 2004-Qtr4 Transaction data
20.06 2004-Qtr4 Filer infonnation
20.07 2004-Qtr3 Contract information
20.08 2004-Qtr3 Transaction data
20.09 2004-Qtr3 Filer infonnation
20.10 2004-Qtr2 Contract information
20.11 2004-Qtr2 Transaction data
20.12 2004-Qtr2 Filer infonnation
20.
20.
20.
20.
20.
20.
20.
20.
20.
20.
20.
3.20.
20.
20.
20.
20.
20.
20.30
20.31
20.32
20.33
20.34
20.
20.36
2004-Qtr 1 Contract information
2004-Qtr 1 Transaction data
2004-Qtr 1 Filer information
2003-Qtr4 Contract information
2003-Qtr4 Transaction data
2003-Qtr4 Filer information
2003-Qtr3 Contract information
2003-Qtr3 Transaction data
2003-Qtr3 Filer information
2003-Qtr2 Contract information
2003-Qtr2 Transaction data
2003-Qtr2 Filer information
2003-Qtrl Contract information
2003-Qtr 1 Transaction data
2003-Qtrl Filer information
2002-Qtr4 Contract information
2002-Qtr4 Transaction data
2002-Qtr4 Filer information
2002-Qtr3 Contract information
2002-Qtr3 Transaction data
2002-Qtr3 Filer information
2002-Qtr2 Contract information
2002-Qtr2 Transaction data
2002-Qtr2 Filer information
Customer Service Evaluations21.01 J.D. Power and Associates
21.01.01 2002 Residential Gas Press Release
21.01.02 2003 Residential Electric Press Release
21.01.03 2003 Residential Gas Press Release
21.01.04 2004 Residential Electric Press Release
21.01.05 2004 Electric Utility Business Press Release
21.01.06 2004 Residential Gas Press Release
21.01.07 2005 Electric Utility Business Press Release
TQS Research Inc.
21.02.01 2002 TQS Final Report
21.02.02 2003 TQS Final Report
21.02.03 2004 TQS Final Report
21.02
Communi ty Leadership
22.01 Community Leadership
MEC Weather Disaster Recovery-Literature
23.01 1993 Flood
23.01.01 Central Iowa vol.
23.01.02 Central Iowa vol. 2
23.
23.
23.
23.01.03 Eastern Iowa
1990 Ice storm
1986 Tornado
Related matters
Employee Safety Program
24.01 Employee Safety Policy
Labor Agreements
25.01 Labor Agreement between Local Union No. 125, United Association of
Journeymen & Apprentices of the Plumbing & Pipefitting Industry of the
United States & Canada effective March 1 2005 to February 28, 2008
Union Agreement between Local 7-0738 Paper, Allied Industrial
Chemical & Energy Workers International Union, AFL-CIO, CLC for
South Dakota Craft & Clerical Employees and MidAmerican Energy
Company effective October 1 , 2004 - September 30, 2007
Collective Bargaining Agreement between International Brotherhood
Electrical Workers Locals 499 & 109 and MidAmerican Energy Company
effective March 1, 2000 - March 1 2004
25.03.01 Job Descriptions
25.03.02 Agreement to Modify Collective Bargaining Agreement
dated October 22, 2002
2003 Settlement Agreement executed June 16,2003
25.
25.
25.03.
FERC Form 1 Annual Reports to Federal Energy Regulatory Commission
26.01 MEC FERC Form 1 2000 Vol.
26.02 MEC FERC Form 1 2000 Vol. 2
26.03 MECFERC Form 1 2001 Vol.
26.04 MEC FERC Form 1 2001 Vol. 2
26.05 MEC FERC Form 1 2002 Vol.
26.06 MEC FERC Form 1 2002 Vol. 2
26.07 MEC FERC Form 1 2003 Vol.
26.08 MEC FERC Form 1 2003 Vol. 2
26.09 MEC FERC Form 1 2004 Vol.
26.10 MEC FERC Form 1 2004 Vol. 2
IE-I Annual Reports to Iowa Utilities Board
27.01 MEC IE-I Iowa 2000
27.02 MEC IE-I Iowa 2001
27.03 MEC IE-I Iowa 2002
27.04 MEC IE-I Iowa 2003
27.05 MEC IE-I Iowa 2004
ILCC Form 21 Annual Reports to illinois Commerce Commission
28.01 MEC ILCC Form 21 illinois 2000
28.02 MEC ILCC Form 21 illinois 2001
3.30
28.
28.
28.
MEC ILCC Form 21 lliinois 2002
MEC ILCC Form 21 lliinois 2003
MEC ILCC Form 21 lliinois 2004
Prior Merger Final Orders
29.01 Midwest Resources Inc., effective 11-
29.01.01 Iowa Utilities Board
29.01.02 Minnesota Public Utilities Commission
29.01.03 Securities Exchange Commission
29.01.04 Federal Energy Regulatory Commission 12-1990
29.01.04.1 FERC 6-1991
29.01.05 Federal Trade Commission
Midwest Power Systems Inc.
29.02.01 Iowa Utilities Board
29.02.02 Minnesota Public Utilities Commission
MidAmerican Energy Company
29.03.01 Iowa Utilities Board
29.03.02 lllinois Commerce Commission
29.03.03 South Dakota Public Utility Commission
29.03.04 Federal Energy Regulatory Commission
29.
29.
Prior Testimony of MERC Witnesses
30.01 Brent Gale-Wind Power Ratemaking Principles Testimony
30.02 Tom Specketer-Captive Insurance Direct Testimony
30.03 Tom Specketer-Captive Insurance Rebuttal Testimony
30.04 Tom Specketer-Captive Insurance Cross Exam Transcripts
30.05 Tom Specketer-Gas Rate Case
30.06 Pat Goodman-Teton Merger-Iowa Utilities Board
30.06.01 Direct-Supplemental-Reply
30.06.02 Exh-Agreement and Plan of Merger PJG-
3.30.06.03 Exh-MERC 1997 Summary Annual Report PJG-
30.06.04 Exh-CalEnergy 1997 Annual Report PJG-
30.06.05 Exh-CalEnergy 1997 Financial Report
30.06.06 Exh-MEHC 1998 Annual Report PJG-
30.06.07 Exh-Moodys 10-25-1999 on MERC PJG-
3.30.06.08 Exh-MEC Consolidated Balance Sheets PJG-
30.06.09 Exh-MERC Estimated Savings Report PJG-
3.30.06.10 Exh-SEC Schedule 14A for MEHC 11-10-99 PJG-
30.06.11 Appendix A PJG-
30.06.12 Appendices B-G PJG-
Pat Goodman-Teton Merger-lliinois Commerce Commission
30.07.01 Direct
30.07.02 Supplemental Direct
30.07.03 Exh-Moodys 10-25-1999 on MEHC
30.07.04 Exh-MEC Affiliates 10-25-1999
30.07.05 Exh-Agreement and Plan of Merger
3.30.
3.30.07.
30.07.
30.07.
30.07.
30.07.
Exh-NRC Consent 11-1999
Exh-SEC Schedule 14A for MEHC 11-10-1999
Exh-Estimated Transaction Costs
Exh-Calculation of Acquisition Premium
Exh-Intercompany Admin.Srvs.Agreement
Other Regulatory Filings in Connection with the PacifiCorp Acquisition31.01 Nuclear Regulatory Commission Filing
31.01.01 Exhibit A License Termination Letter
3.31.01.02 Exhibit B Stock Purchase Agreement
3.31.01.03 Exhibit C PacifiCorp Form 10-K filed May 2005
3.31.01.04 Exhibit D MEHC Form 10-K filed March 2005
3.31.01.05 Exhibit E MEHC List of Current Officers and Directors
3.31.01.06 Exhibit F(i) PacifiCorp List of Current Officers and
Directors
Exhibit F(ii) Description of Proposed Directors after
Transaction
Exhibit G Directors Resolutions Approving Transaction
Exhibit H ISFSI Funding Letter April 2005
31.02
3.31.03
3.31.04
31.
3.31.06
3.31.01.07
31.01.08
31.01.09
State Filings
31.02.01 California
3.31.02.02 Idaho
3.31.02.03 Oregon
31.02.04 Utah
3.31.02.05 Washington
3.31.02.06 Wyoming
Federal Energy Regulatory Commission
Securities and Exchange Commission
Hart-Scott-Rodino Act Filing
Federal Communications Commission
(\t 1\Irh:' .. IV
::." ~
... H .
1005 JUt \ 5 1\H\: to Case No. PAC - E-O5-
Hl~HOPHBLIC .
. .
Appendix No.
U T itl 1ft!: S GOMMlSS\ OH
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
ACIFICORP
Appendix 2
Stock Purchase Agreement
July 2005
/ .
STOCK PURCHASE AGREEMENT
BY AND AMONG
SCOTTISH POWER PLC, AS SELLER PARENT
ACIFICORP HOLDINGS, INC., AS SELLER
AND
MIDAMERICAN ENERGY HOLDINGS COMPANY
AS BUYER,
FOR THE PURCHASE AND SALE OF
ALL OF THE COMMON STOCK, NO PAR VALUE
OF P ACIFICORP, AN OREGON CORPORATION
Dated as of May 23, 2005
EXECUTION COpy
SECTION 1.
SECTION 1.
TABLE OF CONTENTS
Paee
ARTICLE I.
SALE AND PURCHASE
Agreement to Sell and to Purchase....
............. .......... ......... ........ ............ ............
Closing.............................................................................................................. .
ARTICLE II.
REPRESENT A TIONS AND WARRANTIES OF THE SELLER PARENT AND THE
SELLER
SECTION 2.
SECTION 2.
SECTION 2.
SECTION 2.4.
SECTION 2.
SECTION 2.
SECTION 2.
SECTION 2.
SECTION 2.
SECTION 2.10.
SECTION 2.11.
SECTION 2.12.
SECTION 2.13.
SECTION 2.14.
SECTION 2.15.
SECTION 2.16.
SECTION 2.17.
SECTION 2.18.
SECTION 2.19.
SECTION 2.20.
SECTION 2.21.
SECTION 2.22.
Organization and Qualification.... .... .................................................................
Capital Stock .....................................................................................................
Authority Relative to this Agreement ...............................................................
Non-Contravention; Approvals and Consents...................................................
SEC Reports, Financial Statements and Utility Reports. ..................................
Absence of Certain Changes or Events .............................................................
Absence of Undisclosed Liabilities ...
........ ..... ..... ........ ......... .................... ..... ....
Legal Proceedings .....................
........ .............. ..... ........... ... .............. .................
Seller Parent Circular ........................................................................................
Pennits; Compliance with Laws and Orders .....................................................
Compliance with Agreements .........................................................................1 0
Taxes. ............................................................................................................. .
Employee Benefit Plans; ERISA. ....................................................................
Labor Matters ............
...... .......... ..... ...... ..... .......... ... .... .................... ............. ....
Environmental Matters ....................................................................................
Intellectual Property ........................................................................................
Regulation as a Utility .
....................................................................................
Insurance .........................................................................................................
Vote Required...................... ........... .......
..... ..... ... ........... ...... ...................... .......
Affiliate Transactions ........
........ ............ ........ ....... ..... ....... ...............................
Trading ..
............................... ......... ....... ..... ............. ...... .... ...............................
Article VII of the Company s Articles of Incorporation and Sections
60.825-60.845 of the BCA Not Applicable.....................................................
SECTION 2.23. Sufficiency and Condition of Assets ...............................................................
SECTION 2.24. Joint Venture Representations ..................
~......................................................
SECTION 3.
ARTI CLE III.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Organization.............. ...............................................................
...................... .
SECTION 3.
SECTION 3.
SECTION 3.4.
SECTION 4.
SECTION 4.
SECTION 4.
SECTION 4.4.
SECTION 4.
SECTION 4.
SECTION 4~7.
SECTION 4.
SECTION 4.
SECTION 5.
SECTION 5.
SECTION 5.3.
SECTION 5.4.
SECTION 5.
SECTION 5.
SECTION 5.
SECTION 5.
SECTION 5.
SECTION 5.10.
SECTION 5.11.
SECTION 5.12.
SECTION 5.13.
SECTION 5.14.
SECTION 6.
SECTION 6.
Table of Contents
continued)
Page
Authority Relative to This Agreement ............................................................
Non-Contravention; Approvals and Consents.................................................
Financing ............ ............. ....
..... ........ .......................... ...... ............ ................ ...
AR TI CLE IV.
COVENANTS
Covenants of the Seller Parent and Seller .......................................................
Covenants of the Buyer ...................................................................................
. Tax Matters......................................................................................................
Discharge of Liabilities ...
......... ....... .............. ............ .... .... ................... ........ ...
Contracts ...... .............. ................. ..... .........
..... ......................... ................... ... ..
No Solicitations ...
........... .... ......... ..... ... ..... ................. ..... ...................... .......... .
Third Party Standstill Agreements ..................................................................
Joint Executive Committee .............................................................................
Control of Other Party's Business...................................................................32.
ARTICLE V.
ADDITIONAL AGREEMENTS
Access to Infonnation ...
............. ........ ........ ................ ........ ......... .............. ......
Approval of Shareholders. ...............................................................................
Regulatory and Other Approvals..... ..............................
.............. ......... ...........
Employee Benefit Plans. .................................................................................
Directors' and Officers ' Indemnification and Insurance.................................
Additional Matters...........................................................................................
Expenses ............. .............. .............. .......... .................. .................. ........
... ..... ...
Brokers or Finders ...........................................................................................
Conveyance Taxes ...........................................................................................
Rate Matters ..............
........ .................. ...................... ..... ..... ..... ....... ............... .
Seller Parent Cure................... .....
....... ........... ..... ....................... ......... ............ .
Post Closing Payments. ...................................................................................
Tax Returns... ........ .................
....... ........ ........ .................. ....... ........... ............. .
Intercompany Items ...................................................................
~.....................
ARTICLE VI.
CONDITIONS
Conditions to Each Party's Obligation to Effect the Share Purchase..............42
Conditions to Obligation of the Buyer to Effect the Share Purchase..............43
SECTION 6.3.
SECTION 7.
SECTION 7.
SECTION 7.
SECTION 7.4.
SECTION 8.
SECTION 8.
SECTION 8.
SECTION 8.4.
SECTION 8.
SECTION 8.
SECTION 9.
SECTION 9.
SECTION 9.
SECTION 9.4.
SECTION 9.
SECTION 9.
SECTION 9.
SECTION 9.
SECTION 9.
SECTION 9.10.
SECTION 9.11.
SECTION 9.12.
SECTION 9.13.
SECTION 9.14.
Table of Contents
(continued)
Page
Conditions to Obligation of the Seller Parent and the Seller to Effect
the Share Purchase.......... ....... ......... .................. ................... ............. ............. ..
ARTICLE VII.
TERMINATION, AMENDMENT AND WAIVER
Termination..... ......................
........ ................................ ... .... ......................... ..
Effect of Termination. ...
........... ............ .................. ....... ... .......... .....................
Amendment ....
.... .......................... ...................... ..... ......... .............. ............. ....
Waiver ....
..... .... ...................... .... .................... ....... ....... ..... .... ................ """'!" .
ARTICLE VIII.
INDEMNIFICATION
Survival..... ..............................
.................... .................. ..... .......~.................... .
Indemnification Coverage. ..............................................................................
Procedures. .....
............. ... ......... ......................................... ........... ..... ...............
Remedy.... ........... ........................ ........ ................... ........... .........
.................... ..
Limitation on .Claims. ........................... ......... .................. .......... ..................... .
Release of Directors .......
.... ....... ........... ....................... .... .............. ..................
ARTICLE IX.
GENERAL PROVISIONS
Notices........................................................................................................... ..
Entire Agreement; Incorporation of Exhibits ..................................................
Public Announcements .....
.... ......... ............... ... ....... ..... .... ....... .........................
No Third Party Beneficiary .............................................................................
No Assignment; Binding Effect ..........
................ ............ ............ ....................
Headings....... ......
......... ....... .................. .......... ............ ..... ...... ...................... ....
Invalid Provisions .......
...... .... ................ .......... ..... ....... ... ... ..... ..........................
Governing Law ................................................................................................
Submission to Jurisdiction; Waivers ...............................................................
Enforcement of Agreement .............................................................................
Certain Definitions......................... .........................................................
.... ....
Counterparts........;......................................................................
................... ..
WAIVER OF JURY TRIAL ..................
.................... ..... ................................
Limitation of Liability..................... ..
..................:.......................................... .
111
Seller Parent Disclosure Letter
Section 2.
Section 2.
Section 204
Section 2.
Section 2.
Section 2.
Section 2.
Section 2.
Section 2.
Section 2.
Section 2.
Section 2.
Section 2.
Section 2.
Section 2.
Section 2.
Section 2.
Section 4.
'Section 4.1(d)
Section 4.1(f)
Section 4.1(g)
Section 4.1 (i)
Section 4.(n)
Section 4.3
Section 5
Section 6.2(e)
Section 9.11(e)
Organization and Qualification
Capital Stock
Non Contravention; Approvals and Consents
SEC Reports, Financial Statements and Utility Reports
Absence of Certain Changes or Events
Absence of Undisclosed Liabilities
Legal Proceedings
Permits; Compliance with Laws and Orders
Compliance with Agreements
Taxes
Employee Benefits Plans; ERISA
Labor Matters
Environmental Matters
Intellectual Property
Regulation as a Utility
Insurance
Affiliate Transactions
Covenants of the Seller Parent and the Seller
Dividends
Acquisitions
Dispositions
Employee Benefits
Transmission; Generation
Tax Matters
Employee Benefit Plans
Resigning Directors
Knowledge
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of this 23rd day of May, 2005, by and among Scottish Power pIc, a Scottish public
limited company registered under the laws of Scotland (the "Seller Parent"), PacifiCorp
Holdings, Inc., a Delaware corporation and indirect wholly owned subsidiary of Seller Parent
(the "Seller ), and MidAmerican Energy Holdings Company, an Iowa corporation (the
Buyer
WITNESSETH:
WHEJ,U:AS, the Seller owns 312 176 089 shares (together with any and all shares
of Common Stock issued pursuant to Section 4.1 (e), the "Shares ) of Common Stock, no par
value (the "Common Stock"), ofPacifiCorp, an Oregon corporation (the "Company ); and
WHEREAS, the Buyer desires to purchase all of the Shares from the Seller, and
the Seller desires to sell its Shares to the Buyer, in each case upon the tenDS and subject to the
conditions set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual tenDs, conditions and other
agreements set forth herein, the parties hereto hereby agree as follows:
AR TI CLE I.
SALE AND PURCHASE
SECTION 1.1. Agreement to Sell and to Purchase. On the Closing Date and
upon the tenDS and subject to the conditions set forth in this Agreement, the Seller shall (and the
Seller Parent shall cause the Seller to) sell, assign, transfer, convey and deliver all of the Shares
free and clear of any pledges, restrictions on transfer, proxies and voting or other agreements
liens, claims, charges, mortgages, security interests or other legal or equitable encumbrances
limitations or restrictions of any nature whatsoever ("Encumbrances ), to the Buyer, and the
Buyer shall purchase the Shares from the Seller.
SECTION 1.2. Closing. Subject to the provisions of the last sentence of Section
2(c), the closing of the sale and purchase of the Shares (the "Closing ) shall take place at 10:00
, three business days after the satisfaction or waiver of the conditions contained in Article
VI (other than those conditions that by their nature are to be fulfilled at Closing), or at such other
time and date as the Buyer and the Seller Parent shall agree in writing (the "Closing Date ), at
the offices ofWillkie FaIT & Gallagher LLP, 787 Seventh Avenue, New York, New York 10019
or at such other place as the Buyer and the Seller Parent shall agree in writing. At the Closing,
the Seller shall (and the Seller Parent shall cause the Seller to) deliver to the Buyer, or its
designees, a certificate or certificates evidencing the Shares, with a stock power duly endorsed in
blank. In full consideration for the Shares, the Buyer shall thereupon pay to the Seller an amount
(the "Purchase Price ) equal to $5 109 500 000 plus an amount equal to the aggregate amount
of capital contributions made to the Company pursuant to Section 4:1 (a)(i)(y) in immediately
a v ai labte-funds-ro-an-accoUIIldemgnated-in-writing-bythe-S-eUerParent-to-the-B-uyer-at-1 e as t 4 8
hours before the Closing without deduction, setoff or withholding except as provided in this
Agreement.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
OF THE SELLER PARENT AND THE SELLER
The Seller Parent and the Seller hereby, jointly and severally, repres~p.t and
warrant to the Buyer, as of the date hereof and as of the Closing Date (or if made as of a
specified date, such date), as follows:
SECTION 2.1. Organization and Qualification. (a) Each of the Seller Parent
and the Seller is duly organized, validly existing and in good standing (with respect to
jurisdictions which recognize the concept of good standing) under the laws of its jurisdiction of
organization. Each of the Company and the Company s Subsidiaries is duly organized, validly
existing and in good standing (with respect to jurisdictions which recognize the concept of good
standing) under the laws of its jurisdiction of organization and has full corporate or partnership,
as the case may be, power and authority to conduct its business as and to the extent now
conducted arid to own, use and lease its assets and properties, except for such failures to be so
organized, existing and in good standing (with respect to jurisdictions which recognize the
concept of good standing) or to have such power and authority which, individually or in the
aggregate, would not reasonably be expected to have a material adverse effect on the Company
and its Subsidiaries taken as a whole. Each of the Company and its Subsidiaries is duly
qualified, licensed or admitted to do business and is in good standing (with respect to
jurisdictions which recognize the concept of good standing) in each jurisdiction in which the
ownership, use or leasing of its assets and properties, or the conduct or nature of its business
makes such qualification, licensing or admission necessary, except for such failures to be so
qualified, licensed or admitted and in good standing (with respect to jurisdictions which
recognize the concept of good standing) which, individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the Company and its Subsidiaries
taken as a whole. Section 2.1 of the letter, dated May 23 , 2005 , and delivered to the Buyer by
the Seller Parent on such date (the "Seller Parent Disclosure Letter ) (i) sets forth the name
and jurisdiction of organization of each Subsidiary of the Company, (H) with respect to
Subsidiaries that are corporations, lists (A) such Subsidiary s authorized capital stock, (B) the
number of issued and outstanding shares of such Subsidiary s capital stock and (C) the record
owners of such Subsidiary s shares, (Hi) with respect to Subsidiaries that are partnerships, lists
the names and ownership interests of the partners thereof, and (iv) specifies each of the
Subsidiaries that is (A) a "public utility company," a "holding company," an "exempt wholesale
generator" or a "foreign utility company" within the meaning of Section 2(a)(5), 2(a)(7), 32(a)(I)
or 33(a)(3) of the Public Utility Holding Company Act of 1935, as amended (the "1935 Act"
respectively, (B) a "public utility" within the meaning of Section 201(e) of the Federal Power
Act (the "Power Act") or (C) a "qualifying facility" within the meaning of the Public Utility
Regulatory Policies Act of 1978, as amended, or that owns such a qualifying facility. The Seller
Parent or the Seller has previously delivered to Buyer copies of the Organizational Documents as
currently in effect of the Company and its Subsidiaries. "Organizational Documents" shall
mean certificates or articles of incorporation, bylaws, certificates of formation, limited liability
company agreements, partnership or limited partnership agreements, or other formation or
governing documents of a particular entity.
(b) Section 2.1 of the Seller Parent Disclosure Letter sets forth a description
of all Joint Ventures in existence as of the date hereof, including (i) the name of each such entity
and the Company s interest therein, and (ii) a brief description of the principal line or lines of
business conducted by each such entity. For purposes of this Agreement
, "
Joint Venture" shall
mean any corporation or other entity (including, but not limited to, partnerships and other
business associations) that is not a Subsidiary of the Company and in which the Company or one
or more of its Subsidiaries owns directly or indirectly an equity or similar interest, other than
equity interests which are less than 5% of each class of the outstanding voting securities or
equity interests of any such entity.
(c) Except for interests in the Subsidiaries of the Company and the Joint
Ventures, and as disclosed in the SEC Reports filed on or before the Cutoff Date or Section 2.
of the Seller Parent Disclosure Letter, none of the Company nor any of its Subsidiaries owns
directly or indirectly, any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any material corporation
partnership, limited liability company, joint venture or other business association or entity.
Cutoff Date" shall mean (i) in the case of the Draft 2005 10-, May 20, 2005, and (ii) in all
other cases, the date which is 10 days before the date hereof.
(d) Except as disclosed in Section 2.1 of the Seller Parent Disclosure Letter
neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become
a party to, any joint venture, off-balance sheet partnership or any similar Contract (including
without limitation any Contract relating to any transaction or relationship between or among the
Company and any of its Subsidiaries, on the one hand, and any unconsolidated affiliate
including without limitation any structured finance, special purpose or limited purpose entity or
person, on the other hand, or any "off-balance sheet arrangement" (as defined in Item 303(a) of
Regulation S-K of the Securities Act of 1933 , as amended, and the rules and regulations
thereunder (the "Securities Act"
)).
(e) Section 2.1 of the Seller Parent Disclosure Letter sets forth the direct and
indirect ownership of the capital stock of the Seller.
SECTION 2.2. Capital Stock.(a) The authorized and outstanding capital stock
of the Company consists of:
(i) 750 million shares of Common Stock, of which 312 176 089 are
issued and outstanding, and
(ii) 126 533 shares of 5% preferred stock, of which 126 243 are issued
and outstanding; 3.5 million shares of serial preferred stock, of which 288 390 are issued and
outstanding and of which 2 065 are designated the 4.52% Series, 18 046 are designated the
00% Series, 5 930 are designated the 6.00% Series, 41 908 are designated the 5.00% Series
65,959 are designated the 5.40% Series, 69 890 are designated the 4~ 72% Series, and 84 592 are
designated the 4.56% Series, respectively; and 16 million shares of no par serial preferred stock
of which 525 000 shares are designated the $7.48 Series (collectively, the "Company Preferred
Stock"
All of the issued and outstanding shares of capital stock of the Company, and all
shares reserved for issuance will be, upon issuance in accordance with the terms specified in the
instruments or agreements pursuant to which they are issuable, duly authorized, validly issued,
fully paid and nonassessable. There were no outstanding subscriptions, options, warrants, rights
(including, but not limited to, stock appreciation rights), preemptive rights or other contracts
commitments, understandings or arrangements, including, but not limited to, any right of
conversion or exchange under any outstanding security, instrument or agreement (together
Options ), obligating the Company or any of its Subsidiaries to. issue or sell any shares of
capital stock of the Company or to grant, extend or enter into any Option with respect thereto.
(b) Except as disclosed in the SEC Reports filed on or prior to the Cutoff Date
or Section 2.2 of the Seller Parent Disclosure Letter, all of the outstanding shares of capital stock
of each Subsidiary of the Company are duly authorized, validly issued, fully paid and
nonassessable and are owned, beneficially and of record, by the Company or a Subsidiary wholly
owned, directly or indirectly, by the Company, free and clear of any Encumbrances, other than
Encumbrances or failures to so own which are immaterial. Except as disclosed in the SEC
Reports filed on or prior to the Cutoff Date or Section 2.2 of the Seller Parent Disclosure Letter
there are no (i) outstanding Options obligating the Company or any of its Subsidiaries to issue or
sell any shares of capital stock of any Subsidiary of the Company or to grant, extend or enter into
any such Option or (ii) voting trusts, proxies or other commitments, understandings, restrictions
or arrangements in favor of any person other than the Company or a Subsidiary wholly owned
directly or indirectly, by the Company with respect to the voting of, or the right to participate in
dividends or other earnings on, any capital stock of any Subsidiary of the Company.
(c) The Company is a "public utility company" and a "subsidiary company
of a "holding company" that is registered under Section 5 of the 1935 Act. None of the Joint
Ventures is a "public utility company" or a "holding company" within the meaning of Section
2(a)(5) or 2(a)(7) of the 1935 Act, respectively.
(d) Except as disclosed in the SEC Reports filed on or prior to the Cutoff Date
or Section 2.2 of the Seller Parent Disclosure Letter, there are no outstanding contractual
obligations of the Company or any Subsidiary of the Company to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any material capital stock of any
Subsidiary of the Company or to provide any material amount of funds to, or make any material
investments (in the form of a loan, capital contribution or otherwise) in, any Subsidiary of the
Company or any other person.
(e) No bonds, debentures, notes, or other indebtedness of the Company or
any of its Subsidiaries having the right to vote (or which are convertible into or exercisable for
securities having the right to vote) (collectively, "Company Voting Debt") on any matters on
which Company shareholders may vote are issued or outstanding nor are there any outstanding
Options obligating the Company or any of its Subsidiaries to issue or sell any Company Voting
Debt or to grant, extend or enter into any Option with respect thereto. .
SECTION 2.3. Authority Re ative to his Agreement.Each of the Seller Parent
and the Seller has full corporate power and authority to enter into this Agreement, and, subject to
obtaining the Seller Parent Shareholders' Approval, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of the Seller Parent and the Seller and the consummation by each of
them of the transactions contemplated hereby have been duly and validly approved by their
respective Boards of Directors (and, in the case of the Seller, all of its direct shareholders), and
no other corporate proceedings on the part of the Seller Parent or the Seller are necessary to
authorize the execution, delivery and performance of this Agreement by the Seller Parent and the
. Seller and the consummation by the Seller Parent and the Seller of the transactions contemplated
hereby, other than obtaining the Seller Parent Shareholders' Approval.
The Board of Directors of the Seller Parent has unanimously passed a resolution
declaring the advisability of this Agreement and the purchase and sale of the Shares (the "Share
Purchase ) and the other transactions contemplated hereby and resolving that the same be
submitted for consideration by the shareholders of the Seller Parent. This Agreement has been
duly and validly executed and delivered by the Seller Parent and the Seller and constitutes a
legal, valid and binding obligation of each of them enforceable against each of them in
accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 2.4. Non-Contravention: Approvals and Consents. (a) The execution
and delivery of this Agreement by the Seller Parent and the Seller do not, and the performance
by each of them of its obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under, result in or give to any person any right
of payment or reimbursement, termination, cancellation, modification or acceleration of, or result
in the creation or imposition of any Encumbrances upon any of the assets or properties of the
Seller Parent, the Seller, the Company or any of the Company s Subsidiaries or any of the Joint
Ventures under, any of the tenDs, conditions or provisions of (i) the Organizational Documents
of the Seller Parent, the Seller, the Company or any of the Company s Subsidiaries, or
(ii) subject to the obtaining of the Seller Parent Shareholders ' Approval and the taking of the
actions described in Section 2.4(b), (x) any statute, law, rule, regulation or ordinance (together
laws ), or any judgment, decree, order, writ, permit or license (together
, "
orders ), of any
court, tribunal arbitrator, authority, agency, commission, official or other instrumentality of the
United States, any foreign country or any domestic or foreign state, county, city or other political
subdivision (a "Governmental or Regulatory Authority") applicable to the Seller Parent, the
Seller, the Company or any of the Company s Subsidiaries or any of the Joint Ventures or any of
their respective assets or properties, or (y) except as disclosed in Section 2.4 of the Seller Parent
Disclosure Letter, any note, bond, mortgage, security agreement, indenture, license, franchise
permit, concession, contract, lease or other instrument, obligation or agreement of any kind
(together
, "
Contracts ) to which any of them is a party or by which any of them or any of their
respective assets or properties is bound, excluding from the foregoing clauses (x) and (y)
conflicts, violations, breaches, defaults, rights of payment or reimbursement, terminations
cancellations, modifications, accelerations and creations and impositions of Encumbrances
which, individually or in the aggregate, would not reasonably be expected to have a material
adverse effect on the Company and its Subsidiaries taken as a whole or on the ability of the
Seller Parent or the Seller to consummate the transactions contemplated by this Agreement.
(b) Except (i) for the filing of a premerger notification report by the Company
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the "HSR Act"), (ii) for the approval by the United Kingdom Listing
Authority (the "UKLA") of the Seller Shareholder Disclosure Documents, (Hi) for the filings
with and notices to the Securities and Exchange Commission (the "SEC") pursuantJo the
Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
Exchange Act"), (iv) for the filings with, notices to, and orders, consents and approvals of, the
SEC pursuant to the 1935 Act, (v) for the filing of an application under Section 203 of the Power
Act for the sale or disposition of jurisdictional facilities of the Company, (vi) for the filings with
notices to, and orders, consents and approvals of, the Nuclear Regulatory Commission ("NRC"
(vii) for the filings with, notices to, and orders, consents and approvals of, the Federal
Communications Commission ("FCC"), (viii) for the filings with, notices to, and orders
consents and approvals of, the state public utilities commission (including, without limitation
the state utility regulatory agencies of California, Idaho, Oregon, Utah, Washington and
Wyoming), and (ix) as disclosed in Section 2.4 of the Seller Parent Disclosure Letter, no consent
approval or action of, filing with or notice to any Governmental or Regulatory Authority or other
public or private third party is necessary or required under any of the terms, conditions or
provisions of any law or order of any Governmental or Regulatory Authority or any Contract to
which the Seller Parent, the Seller, the Company or any of the Company s Subsidiaries or any of
the Joint Ventures is a party or by which the Seller Parent, the Seller, the Company or any of the
Company s Subsidiaries or any of the Joint Ventures or any of their respective assets or
properties is bound, for the execution and delivery of this Agreement by the Seller Parent and the
Seller, the performance by the Seller Parent and the Seller of their respective obligations
hereunder or the consummation of the transactions contemplated hereby, other than such
consents, approvals, actions, filings and notices which the failure to make or obtain, as the case
may be, individually or in the aggregate, would not reasonably be expected to have a material
adverse effect on the Company and its Subsidiaries taken as a whole or on the ability of the
Seller Parent or the Seller to consummate the transactions contemplated by this Agreement.
SECTION 2.5. SEC Reports. Financial Statements and Utility Reports
(a) The Seller Parent has delivered or made available to the Buyer via
EDGAR filings with the SEC a true and complete copy of each form, report, schedule
registration statement, registration exemption, if applicable, definitive proxy statement and other
document (together with all amendments thereof and supplements thereto) filed by the Company
or any of its Subsidiaries with the SEC under the Securities Act and the Exchange Act since
March 31 , 2003, and the draft annual report on Form 10-K of the Company, dated May 20, 2005
labeled Draft No. 12, for the fiscal year ended March 31 , 2005 (the "Draft 200510-) (as such
documents have since the time of their filing been amended or supplemented, the "SEC
Reports ), which are all the documents (other than preliminary materials) that the Company and
its Subsidiaries were required to file with the SEC since such date. As of their respective dates
the SEC Reports (assuming, in the case of the Draft 2005 10-, that the Company s consolidated
. unaudited financial statements contained therein for the fiscal year ended March 31 , 2005 are
equivalent to audited financial statements) (i) complied as to form in all material respects with
the requirements of the Securities Act and the Exchange Act (in each case, to the extent
applicable), and (ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. For purposes of this
Agreement, both the Draft 2005 10-K and the Company s actual report annual report on Form
10-K for the fiscal year ended March 31 , 2005 shall be deemed SEC Reports, with the Draft
2005 10-K being assumed to have been filed with the SEC on May 20 2005. The Seller Parent
has, on or before May 20 2005, delivered to the Buyer the unaudited consolidated financial
. statements of the Company as of and for the year ended March 31 , 2005 as contained in the Draft
2005 10-K (the "FY 2005 Statements
).
The FY 2005 Statements and the audited consolidated
financial statements and unaudited interim consolidated financial statements (including, in each
case the notes, if any, thereto) included in the SEC Reports (collectively, the "Company
Financial Statements ) complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with U.S. generally
accepted accounting principles applied on a consistent basis during the periods involved (except
as may be expressly indicated therein or in the notes thereto and except with respect to unaudited
statements (other than the FY 2005 Statements) as permitted by Form 10-Q under the Exchange
Act) and fairly present (subject, in the case of the unaudited interim financial statements, to the
absence of footnotes ~onnally contained therein and nonnal year-end audit adjustments (which
are not expected to be, individually or in the aggregate, materially adverse to the Company and
its Subsidiaries taken as a whole)) the consolidated financial position of the Company and its
consolidated subsidiaries as at the respective dates thereof and the consolidated results of their
operations and cash flows for the respective periods then ended. Except as set forth in Section
5 of the Seller Parent Disclosure Letter, each Subsidiary of the Company is treated as a
consolidated subsidiary of the Company in the Company Financial Statements for all periods
covered thereby.
(b) The Company, its Subsidiaries and the Joint Ventures are in compliance in
all material respects with the applicable provisions of the Sarbanes-Oxley Act of 2002 and the
related rules and regulations promulgated thereunder or under the Exchange Act (the "Sarbanes-
Oxley Act"
).
Except as permitted by the Exchange Act, including, without limitation
Sections 13(k)(2) and (3) thereof, since the enactment of the Sarbanes-OxleyAct, neither the
Company nor any of its affiliates has made, arranged or modified (in any material way) personal
loans to any executive officer or director of the Company or any of its Subsidiaries.
(c) The Company its Subsidiaries and the Joint Ventures required to file
documents with or furnish documents to the SEC pursuant to the Securities Act or the Exchange
Act (a "Company Reporting Entity") has (i) designed disclosure controls and procedures to
ensure that material infonnation relating to it and its consolidated Subsidiaries, is made known to
its management by others within those entities and (ii) to the extent required by applicable laws
disclosed, based on its most recent evaluation, to its auditors and the audit committee of its
Board of Directors (A) any significant deficiencies and material weaknesses in the design or
operation ofintemal controls over financial reporting (as defined in Rule 13a-15(t) of the
Exchange Act) which are reasonably likely to adversely affect its ability to record, process
summarize and report financial information and (B) to the knowledge of the Seller Parent, any
fraud, whether or not material, that involves management or other employees who have a
significant role in such entity's internal control over financial reporting.
(d) The Company and each Company Reporting Entity has complied with the
applicable requirements of Section 404 of the Sarbanes-Oxley Act on or before the date by
which they must comply with such requirements.
(e) Through the date hereof, the Seller Parent has delivered to the Buyer
copies of any written notifications it has received since December 31 , 2002 of a (i) "reportable
condition" or (ii) "material weakness" in the Company s internal controls. For purposes of this
Agreement, the terms "reportable condition" and "material weakness" shall have the
meanings assigned to them in the Statements of Auditing Standards No. 60, as in effect on the
date hereof.
(f) All material filings required to be made by the Company or any of its
Subsidiaries since December 31 , 2002 under the 1935 Act, the Power Act and applicable state
public utility laws and regulations, including, but not limited to, all material written forms
statements, reports, agreements and all material documents, exhibits, amendments and
supplements appertaining thereto, including, but not limited to, all material rates, tariffs
franchises, service agreements and related documents, (i) have been filed with the SEC, the
Federal Energy Regulatory Commission (the "FERC"), the Department of Energy (the "DOE"
or any appropriate state public utilities commission (including, without limitation, the state utility
regulatory agencies of California, Idaho, Oregon, Utah, Washington and Wyoming), as the case
may be, (ii) have been timely filed (in respect of filings with the SEC and the FERC), and (iii)
complied, as of their respective dates, in all material respects with all applicable requirements of
the appropriate statute and the rules and regulations thereunder.
SECTION 2.6. Absence of Certain Changes or Events Except as disclosed in
the SEC Reports filed on or prior to the Cutoff Date, the FY 2005 Statements or Section 2.6 of
the Seller Parent Disclosure Letter, since March 31 , 2005, (a) there has not been (i) any change
event or development that would reasonably be expected to have individually or in the aggregate
a material adverse effect on the Company and its Subsidiaries taken as a whole (other than those
changes, events or developments occurring as a result of weather conditions or general economic
or financial conditions, in each case which are not unique to or do not disproportionately affect
in a material manner (in relation to the effects on other entities who participate or are engaged in
the lines of business in which the Company and its Subsidiaries are engaged) the Company and
its Subsidiaries),- nor (ii) any transaction that would have been prohibited by Section 4. (a)(ii),
(iii) or (iv), 4.1(b) through 4.1 (r), inclusive, 4., 4.4 or 4., as if such provisions had been in
effect on March 31 , 2005 (it being understood that for purposes of this Section 2.6(a)(ii), all
references in Section 4.1 (i) to "the date hereof' shall mean March 31 , 2005), and (b) the
Company and its Subsidiaries and the Joint Ventures have conducted their respective businesses
only in the ordinary course consistent with past practice.
SECTION 2.7. Absence of Undisclosed Liabilities. Except for matters reflected
or reserved against in the balance sheet for the period ended March 31 , 2005 included in the
Company Financial Statements (including the notes thereto) or as disclosed in the SEC Reports
. filed on or prior to the Cutoff Date or in Section 2.7 of the Seller Parent Disclosure Letter
neither the Company nor any of its Subsidiaries had at such date, or has incurred since such date
any liabilities or obligations (whether absolute, accrued, contingent, fixed or otherwise, or
whether due or to become due) of any nature that would be required by U.S. generally accepted
accounting principles applied on a consistent basis to be reflected on a consolidated balance
sheet of the Company and its consolidated subsidiaries (including the notes thereto), except
liabilities or obligations (i) which did not so exist on or before March 31 , 2005 and were incurred
in the ordinary course of business consistent with past practice or (ii) would not reasonably be
expected to have individually or in the aggregate, a material adverse effect on the Company and
its Subsidiaries taken as a whole.
SECTION 2.8. Legal Proceedings Except as disclosed in the SEC Reports filed
on or prior to the Cutoff Date, the FY 2005 Statements or in Section 2.8 of the Seller Parent
Disclosure Letter and except for environmental matters which are governed by Section 2., (i)
there are no actions, suits, arbitrations or proceedings (including, without limitation
Governmental or Regulatory Authority investigations or audits), pending or, to the knowledge of
the Seller Parent, threatened in writing against the Seller Parent, the Seller, the Company or any
of the Company s affiliates or any of the Joint Ventures or any of their respective officers
directors, employees (in each case in their capacity as such), assets and properties which
individually or in the aggregate, have had, or would reasonably be expected to have, a material
adverse effect on the Company and its Subsidiaries taken as a whole or on the ability of the
Seller Parent or the Seller to consummate the transactions contemplated by this Agreement, and
(ii) none of the Seller Parent, the Seller, the Company nor any of the Company s Subsidiaries is
subject to any order of any Governmental or Regulatory Authority which, individually or in the
aggregate, is having, or would reasonably be expected to have, a material adverse effect on the
Company and its Subsidiaries taken as a whole or on the ability of the Seller Parent or the Seller
to consummate the transactions contemplated by this Agreement.
SECTION 2.9. Seller Parent Circular. (a) The Class 1 circular required by the
Listing Rules (the "Listing Rules ) of the UKLA to. be issued to shareholders of Seller Parent
(the "Circular ) (together with any amendments or supplements thereto, the "Seller Parent
Disclosure Documents )) will, at all relevant times, include all infonnation, which, in each case
is required to enable the Seller Parent Disclosure Documents, the parties hereto and the
Company to comply (in respect of the transactions contemplated hereby) in all material respects
with all United Kingdom statutory and other legal and regulatory provisions (including, without
limitation, the Companies Act of 1985 of the United Kingdom (the "Companies Act"), the
Financial Services and Markets Act 2000 of the United Kingdom and the rules and regulations
made thereunder, and the rules and requirements of the UKLA and all such infonnation
contained in such documents will be in accordance with the facts and will not omit anything
material likely to affect the import of such infonnation.
(b) Notwithstanding the foregoing provisions of this Section 2., no
representation or warranty is made.by the Seller Parent or the Seller with respect to statements
made or incorporated by reference in the Seller Parent Disclosure Documents based on
infonnation supplied by Buyer expressly for inclusion or incorporation by reference therein.
SECTION 2.10. Pennits: Compliance with Laws and Orders. The Company, its
Subsidiaries and the Joint Ventures hold all pennits, licenses, authorizations, franchises
variances, exemptions, orders and approvals of all Governmental and Regulatory Authorities
(other than environmental permits which are governed by Section 2.15) necessary for the lawful
conduct of their respective businesses (the "Company Permits ), except for failures to hold
such Company Permits which, individually or in the aggregate, are not having, and would not
reasonably be expected to have, a material adverse effect on the Company and its Subsidiaries
taken as a whole. The Company, its Subsidiaries and the Joint Ventures are in compliance with
the terms of the Company Permits, except failures so to comply which, individually or in the
aggregate, are not having, and would not reasonably be expected to have, a material adverse
effect on the Company and its Subsidiaries taken as a whole. Except as disclosed in the SEC
Reports filed on or prior to the Cutoff Date or Section 2.10 of the Seller Parent Disclosure Letter
the Company, its Subsidiaries and the Joint Ventures are not (and since December 31 , 2002, have
not been) in violation of or default under any law or order of any Governmental or Regulatory
Authority, except for such violations or defaults which, individually or in the aggregate, are not
having, and would not reasonably be expected to have, a material adverse effect on the Company
and its Subsidiaries taken as a whole. No modification, suspension or cancellation of any of the
Company Permits is pending or, to the knowledge of the Seller Parent, threatened, except where
the modification, suspension or cancellation of any of the Company Permits, individually or the
aggregate, has not had, and would not reasonably be expected to have, a material adverse effect
on the Company, its Subsidiaries and the Joint Ventures, and no notice of violation of any of the
Company Permits has been received or, to the knowledge of the Seller Parent, threatened, except
for violations of any of the Company Permits that would not, individually or in the aggregate
reasonably be expected to have a material adverse effect on the Company. With respect to any
of the Company Permits that are required to be renewed or reissued in order for the Company to
continue its business as conducted on the date hereof, to the knowledge of the Seller Parent, there
are no actions, events or circumstances that could reasonably be expected to adversely affect the
renewal, extension or reissuance of any such Company Permit, except those that would not
individually or in the aggregate, reasonably be expected to have a material adverse effect on the
Company.
SECTION 2.11. Compliance with Agreements Except as disclosed in the SEC
Reports filed on or prior to the Cutoff Date, the FY 2005 Statements or Section 2.11 of the Seller
Parent Disclosure Letter:
(a) neither the Company nor any of its Subsidiaries nor any of the Joint
Ventures nor, to the knowledge of the Seller Parent, any other party thereto is in breach or
violation of, or in default in the performance or observance of any t~rm or provision of, and no
event has occurred which, with notice or lapse of time or both, would reasonably be expected to
result in a default under, (i) the Organizational Documents of the Company or any of its
Subsidiaries or (ii) any Contract to which the Company or any of its Subsidiaries or any of the
Joint Ventures is a party or by which the Company or any of its Subsidiaries, or any of the Joint
Ventures or any of their respective assets or properties is bound, except in the case of this clause
(ii), for breaches, violations and defaults which, individually or in the aggregate, are not having,
and would not reasonably be expected to have, a material adverse effect on the Company, its
Subsidiaries and the Joint Ventures taken as a whole;
(b) neither the Company nor any of its Subsidiaries nor any of the Joint
Ventures is a party to or bound by any Contract that (i) would, after giving effect to the
consummation of the transactions contemplated by this Agreement, limit or restrict the Company
or any of its Subsidiaries or any successor thereto, from engaging or competing in any line of
business or in any geographic area or that contains restrictions on pricing (including most
favored nation provisions) or exclusivity or non-solicitation provisions with respect to customers
(ii) limits or otherwise restricts the ability of the Company, any of its Subsidiaries or any Joint
Venture to pay dividends or make distributions to its shareholders, (Hi) provides for the operation
or management of any operating assets of the Company or any of its Subsidiaries by any person
other than the Company and its Subsidiaries or (iv) is a material guarantee or contains a material
guarantee by the Company, any of its Subsidiaries or any Joint Venture of any indebtedness or
other obligations of any person and has had, or would have, individually or in the aggregate, a
material adverse effect on the Company and its Subsidiaries taken as whole; and
(c) each Contract to which the Company, any of its Subsidiaries or any Joint
Venture is a party is valid, binding and enforceable against the parties thereto, and is in full force
and effect, except for such failures to be valid, binding and enforceable or to be in full force and
effect, as, individually or in the aggregate, are not having, and would not materially be expected
to have, a material adverse effect on the Company and its Subsidiaries taken as a whole.
SECTION 2.12. Taxes.
(a) 'Except as disclosed in the SEC Reports filed on or prior to the Cutoff
Date, the FY 2005 Statements or Section 2.12 of the Seller Parent Disclosure Letter:
(i) The Seller is the common parent of an affiliated group of
corporations (within the meaning of Section 1504(a) of the Internal Revenue Code of 1986, as
amended (the "Code )) that file consolidated federal income.Tax Returns and the Company and
its Subsidiaries are members of such group. Each of the Company and its Subsidiaries has filed
or has joined in the filing of, all material Tax Returns required to be filed by or with respect to it
or requests for extensions to file such Tax Returns have been timely filed or granted and have not
expired, and all Tax Returns are complete and accurate in all respects, except to the extent that
such failures to either file, to have extensions granted that remain in effect or to file returns
complete and accurate in all respects, as applicable, do not have, and would not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on the Company and
its Subsidiaries taken as a whole. The Company and each of its Subsidiaries has paid (or the
Seller has paid on its behalf) all Taxes shown as due on such Tax Returns. No deficiencies for
any Taxes have been proposed, asserted or assessed against the Company or any of its
Subsidiaries that are not adequately reserved for, except for inadequately reserved Taxes and
inadequately reserved deficiencies that do not have, and would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on the Company and its
Subsidiaries taken as a whole. No requests for waivers or extensions of the time to assess any
Taxes against the Company or any of its Subsidiaries have been granted or are pending, except
for requests with respect to such Taxes that have been adequately reserved for in the FY 2005
Statements or, to the extent not adequately reserved, the assessment of which has not had, and
would not reasonably be expected to have, individually or in the aggregate, a material adverse
effect on the Company and its Subsidiaries taken as a whole.
(ii) Except as disclosed in Section 2.12 of the Seller Parent Disclosure
Letter or has not had, and would not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the Company and its Subsidiaries taken as a whole
neither the Company nor any of its Subsidiaries is obligated to make any payment, or is a party
to any agreement that obligates it to make any payments that will not be deductible under Code
Section 280G.
(iii) Each of the Company and its Subsidiaries has' disclosed on its
federal income Tax Returns all positions taken therein that could give rise to a substflntial
understatement of United States federal income tax within the meaning of Code Section 6662
and the regulations in respect thereof in existence on the date hereof.
(iv) Neither the Company nor any of its Subsidiaries has in any year for
which the applicable statute of limitations remains open distributed stock of another person, or
has had its stock distributed by another person, in a transaction that was purported or intended to
be governed in whole or in part by Section 355 or Section 361 of the Code.
(v) All Taxes which the Company or any of its Subsidiaries are
required to withhold or collect, including, but not limited to, Taxes required to have been
withheld in connection with amounts paid or owing to an employee, independent contractor
creditor, shareholder or other third party and sales, gross receipts and use taxes, have been duly
withheld or collected and, to the extent required, have been paid over to the proper governmental
agency or are held in separate bank accounts for such purpose. The Company and its
Subsidiaries have duly and timely filed all Tax Returns with respect to such withheld Taxes.
(vi) No claim has been made in writing by a Governmental or
Regulatory Authority in a jurisdiction where the Company or any of its Subsidiaries does not file
Tax Returns such that the Company or any of its Subsidiaries is or may be subject to taxation by
that jurisdiction.
(vii) No material Encumbrance for Taxes exists with respect to any
property or assets of the Company or any of its Subsidiaries, except Encumbrances for current
Taxes not yet due and payable or Taxes being contested in good faith by appropriate proceedings
and for which adequate reserves are being maintained on the most recent financial statements
contained in the SEC Reports or in the FY 2005 Statements.
(viii) No closing agreements, private letter rulings, technical advice
memoranda or similar agreements or rulings with respect to Taxes have been entered into with or
issued by any governmental authority or requested from any governmental authority with respect
to the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries has
executed or filed any power of attorney with respect to Taxes which is currently in force.
(ix) The Company and its Subsidiaries are, and have at all times been
in compliance with the provisions of Sections 6011 , 6111 and 6112 of the Code relating to tax
shelter disclosure, registration and list maintenance and with the Treasury Regulations
thereunder, and neither the Company nor any of the Subsidiaries has at arty time, engaged in or
entered into a "listed transaction" within the meaning of Treasury Regulation Sections 1.6011-
4(b)(2), 301.6111-2(b)(2) or 301.6112-1(b)(2)(A). No IRS Form 8886 has been filed with
respect to any Company or any Subsidiary. Neither the Company nor any of its Subsidiaries has
entered into any tax shelter or listed transaction with the sole or dominant purpose of the
avoidance or reduction of a Tax liability in a jurisdiction outside the United States with respect to
which there is a significant risk of challenge of such transaction by a governmental authority in a.
jurisdiction outside the United States.
(b) The unpaid Taxes of the Company and its Subsidiaries for any taxable
year or period ending on or before March 31 , 2005 (or for any taxable year or period beginning
. on or before and ending after March 31 , 2005, the portion of such taxable year or period) for
which Tax Returns have not yet been filed do not exceed in any material amount the reserve for
actual Taxes (as opposed to any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) taken into account on the Company Financial
Statements.
(c) Except as set forth in Section 2.12 of the Seller Parent Disclosure Letter
neither the Company nor any of its Subsidiaries is a party to, bound by or otherwise obligated
under any Tax allocation, indemnity or sharing agreement or any similar contract or
arrangement. Section 2.12 of the Seller Parent Disclosure Letter contains a true and correct copy
of each agreement listed therein. No amounts are or will be due by the Company or any
Subsidiary under any such agreement other than the Amended Tax Allocation Agreement, dated
as of April 1 , 2004, by and among the Seller and its Subsidiaries, a copy of which has been
provided to the Buyer, and other than amounts reserved for on the FY 2005 Statements. Neither
the Company nor any of its Subsidiaries (i) has been a member of an affiliated group filing a
consolidated federal income tax return (other than a group the common parent of which is the
Seller, or a predecessor thereof) or (ii) has any material liability for the Taxes of any person
(other than any member of the Seller federal consolidated tax group) under United States
Treasury RegulationSection 1.1502-6 (or any similar provision or state local, or foreign law), as
a transferee or successor, by contract, or otherwise.
SECTION 2.13. Employee Benefit Plans: ERISA
(a) Employee Benefit Plans: ERISA Except as disclosed in Section 2.13 of
the Seller Parent Disclosure Letter, the SEC Reports filed on or prior to the Cut-Off Date or as
would not be reasonably expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole, (i) all Company Employee Benefit Plans are in compliance with
all applicable requirements of law, including without limitation ERISA and the Code, and (ii)
neither the Company nor any of its Subsidiaries has any liabilities or obligations with respect to
any such Company Employee Benefit Plans, whether accrued, contingent or otherwise, nor to the
knowledge of the Seller Parent are any such liabilities or obligations expected to be incurred.
Except as specifically set forth in Section 2.13 of the Seller Parent Disclosure Letter, the
execution of, and performance of the transactions contemplated by, this Agreement will not
(either alone or upon the occurrence of any additional or subsequent events) constitute an event
under any Company Employee Benefit Plan that will, or could reasonably be expected to, result
in any payment (whether of severance payor otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund benefits with respect
to any employee in an amount that could reasonably be expected to have a material adverse
effect on the Company and its Subsidiaries taken as a whole. The only severance agreements or
severance policies applicable to the Company or any of its Subsidiaries are the agreements and
policies specifically referred to in Section 2.13 of the Seller Parent Disclosure Letter.
(b)As used herein:
. "
Employee Benefit Plan" means any material Plan (other than any
multi employer plan " as that term is defined in Section 4001 of ERISA) entered into
established, maintained, sponsored, contributed to or required to be contributed to ~y the Seller
Parent or any of its Subsidiaries for the benefit of the current or former employees or directors of
the Company or any of its Subsidiaries (including any of the Company s former Subsidiaries)
and existing on the date hereof or at any time subsequent thereto and, in the case of a Plan which
is subject to Part 3 of Title I of the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder ("ERISA"), Section 412 of the Code or Title
IV of ERISA, at any time during the five-year period immediately preceding the date of this
Agreement;
Plan" means any employment, bonus, incentive compensation, deferred
compensation, long term incentive, pension, profit sharing, retirement, stock purchase, stock
option, stock ownership, stock appreciation rights, phantom stock, leave of absence, layoff
vacation, day or dependent care, legal services, cafeteria, life, health, medical, accident
disability, severance, separation, termination, change of control or other benefit plan, agreement
practice, policy, program, scheme or arrangement, whether written or oral, and whether
applicable to only one individual or a group of individuals, including, but not limited to any
employee benefit plan" within the meaning of Section 3(3) of ERISA; and
ERISA Affiliate" means any person, who on or before the Closing, is
under common control with the Company within the meaning of Section 414 of the Code.
(c) Complete and correct copies of the following documents have been made
available to Buyer, on or before the date hereof: (i) all Employee Benefit Plans and any related
trust agreements or related insurance contracts and pro forma option agreements, (ii) the most
current summary plan descriptions of each Employee Benefit Plan subject to the requirement to
give a summary plan description under ERISA, (iii) the most recent Form 5500 and Schedules
thereto for each Employee Benefit Plan subject to such reporting, (iv) the most recent
determination of the Internal Revenue Service with respect to the qualified status of each
Employee Benefit Plan that is intended to qualify under Section 401(a) of the Code, (v) the most
recent accountings with respect to each Employee Benefit Plan funded through a trust and (vi)
the most recent actuarial report of the qualified actuary of each Employee Benefit Plan with
respect to which actuarial valuations are conducted.
(d) Except as set forth in Section 2.13 of the Seller Parent Disclosure Letter
neither the Company nor any Subsidiary maintains or is obligated to provide benefits under any
life, medical or health Employee Benefit Plan (other than as an incidental benefit under a Plan
qualified under Section 40 (a) of the Code) which provides benefits to retirees or other
terminated employees other than benefit continuations rights under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended.
(e) Except as set forth in Section 2.13 of the Seller Parent Disclosure Letter
each Employee Benefit Plan covers only employees who are employed by the Company or a
Subsidiary (or former employees or beneficiaries with respect to service with the Company or a
Subsidiary).
(t) Except as set forth in Section 2.13 of the Seller Parent Disclosure Letter
neither the Company~ any Subsidiary nor any ERISA Affiliate has at any time during the five (5)
year period preceding the date hereof contributed to any "multi employer plan , as that term is
defined in Section 4001 of ERISA. Except as set forth in Section 2.13 of the Seller Disclosure
. Letter, with respect to each "multi employer plan , as defined above, in which the Company, any
Subsidiary or apy ERISA Affiliate participates or has participated, (i) neither the Company, any
Subsidiary nor any ERISA Affiliate has incurred, any withdrawal liability that could reasonably
be expected to result in a material adverse effect on the Company and its Subsidiaries taken as a
whole; (ii) neither the Company, any Subsidiary nor any ERISA Affiliate has received any notice
that (A) any such plan is being reorganized in a manner that will result, or would reasonably be
expected to result, in material liability, (B) increased contributions of a material amount may be
required to avoid a reduction in plan benefits or the imposition of an excise tax or (C) any such
plan is, or would reasonably be expected to become, insolvent; and (iii) on the knowledge of the
Seller Parent, there are no PBGC proceedings against any such plan.
(g) '
Except as set forth in Section 2.13 of the Seller Parent Disclosure Letter
no transaction contemplated by this Agreement will result in liability to the Pension Benefit
Guaranty Corporation ("PBGC") under Section 302(c)(11), 4062, 4063 , 4064 or 4069 of ERISA
or otherwise, with respect to the Company, any of its Subsidiaries, Buyer or any corporation or
organization controlled by or under common control with any of the foregoing within the
meaning of Section 4001 of ERISA, and, to the knowledge of the Seller Parent, no event or
condition exists or has existed which would reasonably be expected to result in any material
liability to the PBGC with respect to the Buyer, the Company, any Subsidiary or any such
corporation or organization. To the knowledge of the Seller Parent, except as disclosed in the
FY 2005 Statements or Section 2.13 of the Seller Parent Disclosure Letter, no event has occurred
and there exists no condition or set of circumstances in connection with any Company Employee
Benefit Plan, under which the Company or any Subsidiary, directly or indirectly (through any
indemnification agreement or otherwise), could reasonably be expected to be subject to any risk
of material liability under Section 409 of ERISA, Section 502(i) of ERISA, Title IV of ERISA or
Section 4975 of the Code.
(h) Except as set forth in Section 2.13 of the Seller Parent Disclosure Letter
no "reportable event" within the meaning of Section 4043 of ERISA has occurred with respect to
any Employee Benefit Plan that is a defined benefit plan under Section 3(35) of ERISA other
than "reportable events" as to which the requirement of notice to the PBGC within thirty days
has been waived that could reasonably be expected to result in a material adverse effect on the
Company and its Subsidiaries taken as a whole.
(i) Except as set forth in Section 2.13 of the Seller Parent Disclosure Letter
no employer securities (including, without limitation, securities of the Seller Parent and its
Subsidiaries), employer real property or other employer property is included in the assets of any
Employee Benefit Plan.
G) Each of the actuarial reports disclosed in Section 2.13 of the Seller Parent
Disclosure Letter is the most up to date actuarial report prepared with respect to the Employee
Benefit Plan to which such report relates.
SECTION 2.14. Labor Matters. (a) Except as disclosed in the SEC Reports
filed on or prior to the Cutoff Date, the FY 2005 Statements or in Section 2.14 of the Seller
Parent Disclosure Letter, neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement or other labor agreement with any union or labor organization.
Except as disclosed in the SEC Reports filed on or prior to the Cutoff Date, the FY fO05
Statements or in Section 2.14 of the Seller Parent Disclosure Letter, there are no disputes
pending or, to the knowledge of the Seller Parent, threatened in writing between the Company or
any of its Subsidiaries or any of the Joint Ventures and any trade union or other representatives
of its employees, except in each case for such disputes as have not had, and would not
reasonably be expected to have, individually or in the aggregate, a material adverse effect on the
Company and its Subsidiaries taken as a whole, and, to the knowledge of the Seller Parent
except as set forth in Section 2.14 of the Seller Parent Disclosure Letter, there are no material
organizational efforts presently being made involving any of the now unorganized employees of
the Company or any of its Subsidiaries or any of the Joint Ventures. Since December 31 , 2002
there has been no work stoppage, or strike by employees of the Company or any of its
Subsidiaries or any of the Joint Ventures except for such work stoppages or strikes as have not
had, and would not reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the Company and its Subsidiaries taken as a whole.
(b) To the knowledge of the Seller Parent, neither the Company nor any of its
Subsidiaries nor any of the Joint Ventures is in material violation of any labor laws in any
country (or political subdivision thereof) in which they transact business except for such violations
as have not had, and would not reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the Company and its Subsidiaries taken as a whole.
SECTION 2.15. Environmental Matters Except as disclosed in the SEC
Reports filed on or prior to the Cutoff Date, the FY 2005 Statements or in Section 2.15 of the
Seller Parent Disclosure Letter or except as would not reasonably be expected to have
individually or in the aggregate, a material adverse effect on the Company and -its Subsidiaries
taken as a whole:
(a) (i) Each of the Company, its Subsidiaries and the Joint Ventures is in
compliance with all applicable Environmental Laws; and
(ii) Neither the Company nor any of its Subsidiaries nor any of the
Joint Ventures has received any written communication since January 1 , 2001 from any person
or Governmental or Regulatory Authority that alleges that the Company or any of its
Subsidiaries or any of the Joint Ventures is not in such compliance with applicable
Environmental Laws, except for any such non-compliance that has been settled or resolved.
(b) Each of the Company, its Subsidiaries and the Joint Ventures has obtained
or maintains all environmental, health and safety pennits and governmental authorizations
(collectively, the "Environmental Permits ) necessary for the construction of its facilities and
the conduct of its operations as currently conducted, as applicable, and all such Environmental
Permits are in good standing or, where applicable or a renewal application or an application for
any new operations that has been timely filed and is pending agency approval, and the Company,
its Subsidiaries and the Joint Ventures are in compliance with all terms and conditions of the
Environmental Permits.
(c). There is no Environmental Claim pending:
(i)against the Company or any of its Subsidiaries or any of the Joint
Ventures;
. (ii) to the knowledge of the Seller Parent, against any person or entity
whose liability for such Environmental Claim the Company or any of its Subsidiaries or any of
the Joint Ventures has or may have been retained or assumed either contractually or by operation
of law; or
(iii) against any real or personal property or operations which the
Company or any of its Subsidiaries or any of the Joint Ventures currently owns, leases or
manages, in whole or in part.
(d) To the knowledge of the Seller Parent, there have not been any Releases or
threatened Releases of any Hazardous Material that would be reasonably likely to fonn the basis
of any Environmental Claim against the Company or any of its Subsidiaries or any of the Joint
Ventures, or against any person or entity whose liability for any Environmental Claim the
Company or any of it Subsidiaries or any of the Joint Ventures has or may have been retained or
assumed either contractually or by operation of law.
(e) With respect to any predecessor of the Company or of any of its
Subsidiaries, to the knowledge of the Seller Parent, there is no Environmental Claim pending or
threatened and there has been no Release or threatened Release of Hazardous Materials that
would be reasonably likely to form the basis of any Environmental Claim.
(f) To the knowledge of the Seller Parent, there are no material facts arising
since November 29, 1999, that have not been disclosed to the Buyer, which are reasonably likely
to form the basis of an Environmental Claim against the Company or any of its Subsidiaries or
any of the Joint Ventures arising from (i) environmental remediation or mining reclamation
activities, (ii) obligations under the federal Clean Air Act, as amended, or any similar state air
emissions permitting law relating to the construction of or modifications to facilities by the
Company, its Subsidiaries and the Joint Ventures or such remediation or reclamation facility
construction or modification costs known to be required in the future, or (iii) any other
environmental matter affecting the Company or its Subsidiaries or any of the Joint Ventures.
(g)
As used in this Section 2.15:
Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, directives, claims, liens, investigations
proceedings or written notices of noncompliance, liability or violation by any person or entity
(including, but not limited to, any Governmental or Regulatory Authority) alleging potential
liability of the Company or any of its Subsidiaries or any of its Joint Ventures (including,
without limitation, potential responsibility or liability for enforcement, investigatory costs
cleanup costs, governmental response costs, removal costs, remedial costs, natural resources
damages, property damages, personal injuries or penalties) arising out of, based on or resulting
from:
(A) the presence, or Release or threatened Release into the
environment, of any Hazardous Materials at any location, whether or not owned
operated, leased or managed by the Company or any of its Subsidiaries or a~y of the JointVentures'
(B) circumstances fonning the basis of any violation, or alleged
violation, of any Environmental Law; or
(C) any and all claims by any third party seeking damages, remediation
costs, contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from the presence, Release or threatened Release of any Hazardous Materials
into the environment;
Environmental Laws" means all Federal, state and local laws, rules and
regulations relating to pollution, the environment (including, without limitation, ambient air
surface water, groundwater, land surface or subsurface strata or rare, threatened or endangered
spe~ies and critical habitat), mining or protection of human health as it relates to the Release of
Hazardous Materials or mining including, without limitation, the Mine Safety and Health Act (30
C. ~ 80let seq.) and other laws and regulations relating to Releases or threatened Releases
of Hazardous Materials, or otherwise relating to the manufacture, processing, distribution, use
treatment, storage, disposal, transport or handling of Hazardous Materials;
Hazardous Materials" means (a) any petroleum or petroleum products
radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde
foam insulation, and transfonners or other equipment that contain dielectric fluid containing
polychlorinated biphenyls; (b) any chemicals, materials or substances which are now defined as
or included in the definition of "hazardous substances
, "
hazardous wastes
, "
hazardous
materials
, "
extremely hazardous wastes
, "
restricted hazardous wastes
, "
toxic substances
toxic pollutants ; or words of similar import, under any Environmental Law; and (c) any other
chemical, substance or waste, exposure to which is now prohibited, limited or regulated under
any Environmental Law in ajurisdiction in which the Company or any of its Subsidiaries or any
of its Joint Ventures operates or any jurisdiction which has received such chemical, substance or
waste from the Company or its Subsidiaries; and
Release" means any release, spill, emission, leaking, injection, deposit
disposal, discharge, dispersal, leaching or migration into the atmosphere, soil, surface water
groundwater or real or tangible property.
(h) This Section 2.15 contains the sole and exclusive representations and
warranties of the Seller Parent and the Seller with respect to environmental matters arising under
any Environmental Law or relating to Hazardous Materials.
SECTION 2.16. Intellectual PropertY The Company and its Subsidiaries have
all right, title and interest in, or a valid and binding license to use, all Intellectual Property
individually or in the aggregate material to the conduct of the businesses of the Company and its
Subsidiaries taken as a whole. Except as disclosed in Section 2.16 of the Seller Parent
Disclosure Letter, neither the Company nor any Subsidiary of the Company is in default (or with.
the giving of notice or lapse of time or both, would be in default) under any license to use such
Intellectual Property and, to the knowledge of the Seller Parent, such Intellectual Property is not
being infringed by any third party, and neither the Company nor any Subsidiary of the Company
is infringing any Intellectual Property of any third party, except for such defaults and
infringements which, individually or in the aggregate, are not having and would not reasonably
be expected to have, individually or in the aggregate, a material adverse effect on the Company
and its Subsidiaries taken as a whole. For purposes of this Agreement
, "
Intellectual Property"
means patents and patent rights, trademarks and trademark rights, trade names and trade name
rights, service marks and service mark rights, service names and service name rights, copyrights
and copyright rights and other proprietary intellectual property rights and all pending
applications for and registrations of any of the foregoing.
SECTION 2.17. Regula ion as a Utility. (a) The Company is not regulated as a
public utility by any state other than the States of Cali fomi a, Idaho, Oregon, Utah, Washington
and Wyoming. Section 2.17 of the Seller Parent Disclosure Letter lists each Subsidiary of the
Company which is a public utility or is otherwise engaged in the regulated supply (including, but
not limited to, generation, transmission or distribution) of electricity, natural gas and/or
telecommunications. Except as set forth above and in Section 2.17 of the Seller Parent
Disclosure Letter, neither the Company nor any "subsidiary company" or "affiliate" of the
Company is subject to regulation as a public utility or public service company (or similar
designation) by any state in the United States or any foreign country. The Company is not a
public utility holding company under the 1935 Act.
(b) As used in this Section 2., the terms "subsidiary company" and
affiliate" shall have the respective meanings ascribed to them in Sections 2(a)(8) and 2(a)(11)
of the 1935 Act.
SECTION 2.18. Insurance. Section 2.18 of the Seller Parent Disclosure Letter
identifies as of the date hereof the material insurance policies of the Company and its
Subsidiaries, and, to the extent applicable to the Company or any of its Subsidiaries, the material
occurrence-based insurance policies and in respect of periods prior to the Closing, the material
claims-made insurance policies of the Seller Parent and its affiliates.' The Seller Parent has made
available to the Buyer true and correct copies of each insurance policy identified in Section 2.
of the Seller Parent Disclosure Letter. Except as set forth in Section 2.18 of the Seller Parent
Disclosure Letter, each of the Company and its Subsidiaries is, and has been continuously since
January 1 2000, insured with financially responsible insurers in such amounts and against such
risks and losses as are customary in all material respects for companies conducting the business
conducted by the Company and its Subsidiaries during such time period. Except as set forth in
Section 2.18 of the Seller Parent Disclosure Letter, since March 31 , 2003 neither the Company
nor any of its Subsidiaries has received any written notice of cancellation or termination with
respect to any material insurance policy of the Company or any of its Subsidiaries, or any
. recommendation from any insurer with respect to any such policy that the Company or any of its
Subsidiaries make any material improvements in, or repairs to, the assets or operations of the
Company or any of its Subsidiaries. The material insurance policies of the Company and each of
its Subsidiaries are valid and enforceable policies. Except as set forth in Section 2.18 of the
Seller Parent Disclosure Letter, the insurance policies of the Company and each of its
Subsidiaries are owned by the Seller Parent and, except for occurrence~based policies in respect
of occurrences before the Closing and except for claims-made policies in respect of claims made
before the Closing, will cease to cover the Company and its Subsidiaries upon Closing.
SECTION 2.19. Vote Required The only votes of the holders of any class of
securities of the Seller Parent or the Company required to approve the transactions are the
affirmative vote of a majority of the votes cast by such ordinary shareholders of the Seller Parent
as (being entitled to do so) are present and vote in person or by proxy at the Seller Parent
Shareholders' Meeting in relation to the approval of the Share Purchase.
SECTION 2.20. Affiliate Transactions. Section 2.20 of the Seller Parent
Disclosure Letter sets forth each material transaction since April 1 , 2003 between the Company
and its Subsidiaries and the Joint Ventures, on the one hand, and the Seller, the Seller Parent
and/or any of their respective affiliates (other than the Company and its Subsidiaries) on the
other.
SECTION 2.21. Trading. The Company has established risk parameters, limits
and guidelines in compliance with the risk management policy approved by the Company
Board of Directors (the "Company Trading Guidelines ) to restrict the level of risk that the
Company, its Subsidiaries and the Joint Ventures are authorized to take with respect to, among
other things, the net position resulting from all physical commodity transactions, exchange-
traded futures and options transactions, over-the-counter transactions and derivatives thereof and
similar transactions (the "Net Company Position ) and monitors compliance by the Company,
its Subsidiaries and the Joint Ventures with such Company Trading Guidelines. The Seller
Parent has provided a copy of the Company Trading Guidelines to the Buyer prior to the date of
this Agreement. At no time between March 31 , 2005 and the date hereof, (i) has the Net
Company Position not been within the risk parameters that are set forth in the Company Trading
Guidelines, or (ii) has the exposure of the Company and its Subsidiaries with respect to the Net
Company Position resulting from all such transactions been material to the Company and its
Subsidiaries taken as a whole. From March 31 , 2005 to the date hereof, the Company and its
Subsidiaries have not, in accordance with generally recognized mark to market accounting
policies, experienced an aggregate net loss in its trading and related operations that would be
material to the Company and its Subsidiaries taken as a whole.
SECTION 2.22. Article VII of the Company s Articles of Incorporation and
Sections 60.825-60.845 of the BCANot Applicable. The Seller Parent has caused the Company
to take all necessary actions so that neither the provisions of Article VII of the Company
Articles of Incorporation nor the provisions of Sections 60.825-60.845 of the BCA (Le., affiliated
transactions and fair price provisions) nor the Oregon Control Share Statute nor any other
business combination statute or similar statutory provision will, before the tennination of this
Agreement, at any time apply to this Agreement or the transactions contemplated hereby.
SECTION 2.23. Sufficiency and Condition of Assets The assets of the
Company and its Subsidiaries are sufficient and adequate to carry on their respective businesses
as presently conducted.
SECTION 2.24. Joint Venture Representations.Each representation or warranty
made in this Article II relating to a Joint Venture that is neither operated nor managed by the
Company or a Subsidiary of the Company shall be deemed to be made only to the Seller Parent'
knowledge.
AR TI CLE III.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller Parent and the Seller, as of the
date hereof and as of the Closing Date, as follows:
SECTION 3.1. Organization. The Buyer is a corporation duly incorporated
validly existing and in good standing under the laws of Iowa.
SECTION 3.2. Authori Relative to This A eement The Buyer has full power
and authority to enterointo this Agreement, to perform its obligations hereunder, and to
consummate the transactions contemplated hereby. The execution, delivery and perfonnance of
this ,agreement by the Buyer of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of the Buyer, and no other corporate proceedings on the part
of the Buyer or its shareholders are necessary to authorize the execution, delivery and
perfonnance of this Agreement by the Buyer, and the consummation by the Buyer of the
transactions contemplated hereby. This Agreement has been duly and validly executed and
delivered by the Buyer and constitutes a legal, valid and binding obligation of the Buyer
enforceable against the Buyer in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
SECTION 3.3. Non-Contravention; Approvals and Consents. (a) The execution
and delivery of this Agreement by the Buyer do not, and the perfonnance by the Buyer of its
obligations hereunder and the consummation of the transactions contemplated hereby will not
conflict with, result in a violation or breach of, constitute (with or without notice or lapse of time
or both) a default under, result in or give to any person any right of payment or reimbursement
tennination, cancellation, modification or acceleration of, or result in the creation or imposition
of any Encumbrance upon any of the assets or properties of the Buyer or any of its Subsidiaries
under any of the tenDs, conditions or provisions of (i) the Organization Documents of the Buyer
or any of its Subsidiaries, or (ii) subject to the taking of the actions described in Section 3.3(b),
(x) any laws or orders of any Governmental or Regulatory Authority applicable to the Buyer or
any of its Subsidiaries or any of their respective assets or properties, or (y) any Contracts to
which the Buyer or any of its Subsidiaries is a party or by which the Buyer or any of its
Subsidiaries or any of their respective assets or properties is bound, excluding from the foregoing
clauses (x) and (y) conflicts, violations, breaches, defaults, rights of payment or reimbursement
terminations, modifications, accelerations and creations and impositions of Encumbrances
which, individually or in the aggregate, do not have, and would not reasonably be expected to
have, a material adverse effect on the ability of the Buyer to consummate the transactions
contemplated by this Agreement.
(b) Except (i) for the filing of a premerger notification report under the HSR
Act, (ii) filings with the SEC under the Exchange Act and with various state securities authorities
that are required in connection with the transactions contemplated by this Agreement, (iii) the
approval of the FERC pursuant to Section 203 of the Power Act, (iv) to the extent r~quired
notice to and approval of the applicable state public utility commissions, (v) registration
consents, approvals and notice required under the 1935 Act, and (vi) required pre-approvals of
license transfers with the FCC, no consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority or other public or private third party is necessary or
required under any of the tenns, conditions or provisions of any law or order of any
Governmental or Regulatory Authority or any Contract to which the Buyer or any of its
Subsidiaries is a party or by which the Buyer or any of its Subsidiaries or any of their respective
assets or properties is bound for the execution and delivery of this Agreement by the Buyer of its
obligations hereunder or the consummation of the transactions contemplated hereby, other than
such consents, approvals, actions, filings and notices which the failure to make or obtain, as the
case may be, individually or in the aggregate, would not reasonably be expected to have a
material adverse effect on the ability of the Buyer and any of its Subsidiaries to consummate the
transactions contemplated by this Agreement.
SECTION 3.4. Financing. Buyer has sufficient cash and/or available sources of
financing to pay the Purchase Price and to make all other necessary payments of fees and
expenses in connection with the transactions contemplated by this Agreement, such that
immediately following the Closing, the Buyer s credit rating is expected to be maintained or
improved.
ARTICLE IV.
COVEN ANTS
SECTION 4.1. Covenants of the Seller Parent and Seller. At all times from and
after the date hereof until the Closing, the Seller Parent and the Seller, jointly and severally,
covenant and agree that (except as required, or expressly pennitted, by this Agreement, as set
forth in Section 4.1 of the Seller Parent Disclosure Letter, or to the extent that the Buyer shall
otherwise previously consent in writing, which consent (except as provided in Section
4. 1 (a)(viii)) shall not be unreasonably withheld, conditioned or delayed) they shall:
(a) (i) make a cash capital contribution to the Company (for no
consideration) (x) on or before the last day of June, September, December and March in the
Company s fiscal year ending March 31 , 2006 equal to $125 million; provided, that if the
Closing occurs prior to the end of any fiscal quarter in the fiscal year ending March 31 , 2006, a
cash capital contribution shall be made at Closing in an amount equal to the product of $125
million and a fraction (the "Pro-Ration Fraction ) with a numerator equal to the number of
days elapsed in such quarter and a denominator equal to the number of days in such quarter; and
(y) on or before the last day of June, September, December and March in the Company s fiscal
year ending March 31 , 2007 equal to $131.25 million;
(ii) not grant any options to purchase ordinary shares of Seller Parent
or a related appreciation right to the extent the same are to be assumed by the Buyer or the
Company;
(iii) not willfully take or fail to take any action that would reasonably
expected to result (x) in a material breach of any provision by any of them of this Agreement, or
. (y) in any of their representations and warranties set forth in this Agreement being untrue on and
as of the Closing Date;
(iv) not take (and not permit the Company or any of its Subsidiaries to
take) any action that would be reasonably likely to jeopardize the qualification of any amount of
outstanding revenue bonds of the Company, its Subsidiaries or the Joint Ventures which qualify
on the date hereof under Section 142(a) of the Code as "exempt facility bonds" or as tax-exempt
industrial development bonds under Section 103(b)(4) of the Internal Revenue Code of 1954, as
amended, prior to the enactment of the Tax Reform Act of 1986;
(v) confer with the Buyer on a regular and frequent basis with respect
to the Company s business and operations and other matters relevant to the Share Purchase, and
to promptly advise the Buyer, orally and in writing, of any material change or event, including,
witbout limitation, any complaint, investigation or hearing by any Governmental or Regulatory
Authority (or communication indicating the same may be contemplated) or the institution or
threat of materia1litigation; provided, that none of the Seller Parent, the Seller, or the Company
shall be required to make any disclosure to the extent such disclosure would constitute a
violation of any applicable law or regulation, the Seller Parent and the Seller hereby agreeing to
(and to cause the Company to) use commercially reasonable efforts to cause any such disclosure
to be permitted under such law or regulation;
(vi) (x) notify the Buyer in writing of, and use all commercially
reasonable efforts to cure before the Closing, any event, transaction or circumstance, as soon as
practical after it becomes known to any of them or the Company, that causes, or is reasonably
likely to cause, any covenant, or agreement of any of them or the Company under this
Agreement to be breached or that renders, or is reasonably likely to render, untrue in any
material respect as of the Closing Date any representation or warranty of the Seller Parent or the
Seller contained in this Agreement, and (y) notify the Buyer in writing of, and use (at the Seller
Parent's or Seller s sole cost and expense) all commercially reasonable efforts to cure, before the
Closing, any violation or breach, as soon as practical after it becomes known to any of them or
the Company of any representation, warranty, covenant or agreement made by the Seller Parent
or the Seller that is having, or is reasonably likely to have, a material adverse effect on the
Company, its Subsidiaries and the Joint Ventures, taken as a whole. No notice given pursuant
this paragraph shall have any effect on the representations, warranties, covenants or agreements
contained in this Agreement for purposes of determining satisfaction of any condition contained
herein; and
(vii) subject to the terms and co.nditio.ns o.fthis Agreement, take o.r
cause to be taken all co.mmercially reasonable steps necessary o.r desirable and to pro.ceed
diligently and in goo.d faith to satisfy each co.ndition to. Clo.sing co.ntained in Article VI o.f this
Agreement and to. consummate and make effective the transactio.ns co.ntemplated by this
Agreement, and not take o.r fail to. take any action that wo.uld reasonably be expected to. result
the nonfulfillment o.f any such co.nditio.n; and
(viii) no.t make any sale, dispo.sitio.n, issuance o.r o.ther transfer o.f any
capital stock o.f the Seller, Sco.ttishPo.wer NA 1 Limited or Sco.ttishPo.wer NA 2 Liwited without
the prio.r co.nsent and approval o.fthe Buyer, which shall no.t be withheld or delayed in any case
invo.lving a transfer o.f such capital stock which do.es no.t adversely affect (and could no.t
reasonably be expected to. adversely affect) the rights o.r obligatio.ns of the Buyer under this
Agreement, the ability o.f the parties and the Co.mpany to fulfill their o.bligatio.ns hereunder and
to. timely co.nsummate the transactio.ns contemplated hereby, o.r the financial condition, results of
o.perations, business, prospects, assets o.r liabilities of the Co.mpany, its Subsidiaries o.r the Jo.int
Ventures; and
they shall cause and, in the case of the Joint Ventures, shall use their reasonable effo.rts to. cause:
(b) Ordinary Course The Company and each o.f its Subsidiaries to. co.nduct
their businesses o.nly in, and not to. take any actio.n except in, the o.rdinary course consistent with
past business practice and witho.ut limiting the generality o.f the foregoing to. use all
co.mmercially reasonable effo.rts to. preserve intact in all material respects their present business
organizations, to. maintain in effect all existing material permits, to. keep available the services o.f
their key officers and employees, to maintain their assets and pro.perties in go.o.d wo.rking o.rder
and conditio.n, ordinary wear and tear excepted, to. maintain insurance o.n their tangible assets and
businesses in substantially the same amounts and against substantially the same risks and losses
as are currently in effect, to preserve their relatio.nships with custo.mers and suppliers and o.thers
having significant business dealings with them and to comply in all material respects with all
laws and o.rders o.f all Governmental o.r Regulatory Authorities applicable to. them.
(c) Charter Do.cuments. The Co.mpany and its Subsidiaries not to. amend o.r
make any public (in respect of the Organizational Documents of the Company) o.r binding
propo.sal to amend its Organizational Documents.
(d)Dividends The Co.mpany and its Subsidiaries not to:
(i) declare, set aside or pay any dividends on or make other
distributio.ns in respect of any of their respective capital stock, except:
(A) that the Company may co.ntinue the declaration and payment
o.f (x) regular and required cash dividends o.n the Co.mpany Preferred Sto.ck, with
usual record and payment dates for such dividends in acco.rdance with past
dividend practice, and(y) cash dividends on the Shares at the rate o.f$53.7 millio.n
in aggregate per fiscal quarter in the Company s fiscal year ending March 31
2006 and at the rate o.f$60.575 millio.n in aggregate 'per fiscal quarter in the
Co.mpany s fiscal year ending March 31 2007, each such dividend not to be paid
before the last day of the applicable fiscal quarter; provided, that (1) $50.8 million
of the dividend for the fiscal quarter ending June 30, 2005 may be paid on May
2005 and the remaining $2.9 million of such dividend may be paid on June 30
2005, and (2) if the Closing occurs before the last day ofa fiscal quarter, the
Company may pay a dividend to the Seller in respect of such quarter equal to the
product of$53.7 million (for fiscal quarters in the fiscal year ending March 31
2006) ,or $60.575 million (for fiscal quarters in the fiscal year ending March 31
2007), as applicable, and the Pro-Ration Fraction in respect of such quarter; and
(B) for the declaration and payment of dividends by (x) a wholly
owned Subsidiary of the Company organized under the laws of a jurisdiction in
the United States solely to the Company, (y) Bridger Coal Company in
accordance with past practice and (z) Subsidiaries of regular cash dividends to the
Company or another Subsidiary with usual record and payment dates (including,
but not limited to, increases consistent with past practice) in accordance with past
dividend practice;
(ii) split, combine, reclassify or take similar action with respect to any
of their respective capital stock or share capital or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of or in substitution for shares of its capital stock or
comprised in its share capital;
(iii) except as disclosed in Section 4.(d) of the Seller Parent
Disclosure Letter, adopt a plan of complete or partial liquidation or resolutions providing for or
authorizing such liquidation or a dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization; or
(iv) redeem, repurchase or otherwise acquire any shares of its capital
stock or any Option with respect thereto; provided, that a wholly owned Subsidiary of the
Company organized under the laws of a jurisdiction in the United States may redeem, repurchase
or otherwise acquire such shares from its parent corporation.
( e) Share Issuances. The Company and its Subsidiaries not to issue, deliver or
sell, or authorize or propose the issuance, delivery or sale of, any shares of its capital stock or
comprised in its share capital or any Option with respect thereto (other than the issuance by a
wholly owned Subsidiary of its capital stock to its parent corporation or the issuance of shares of
Common Stock to the Seller as set forth in the Company Budget), or modify or amend any right
of any holder of outstanding shares of capital stock or Options with respect thereto.
(f) Acquisitions. Except as set forth in Section 4.1(f) of the Seller Parent
Disclosure Letter and other than as provided in the fiscal year 2006 operating budget of the
Company, a copy of which is set forth in Section 4.1(f) of the Seller Parent Disclosure Letter and
which has been discussed with Buyer, or any other budget of the Company thereafter approved
by Buyer, which approval shall not be unreasonably withheld, conditioned or delayed
. (collectively, the "Company Budget"), including a 10% increase in the relevant items therein
stated, the Company and its Subsidiaries not to acquire (by merging or consolidating with, or by
purchasing an equity interest in or a portion of the assets of, or by any other manner) any
business or any corporation, partnership, association or other business organization or division
thereof in excess of $1 0 million in anyone transaction (or related series of transactions) and $40
million in the aggregate; provided, that (i) in the case of an acquisition by the Company, the
equity interest or assets so acquired are included in the rate base of the Company and (ii) ten
days' prior written notice of any such transaction (or series of related transactions) not otherwise
provided for in the Company Budget (including a 10% increase in the relevant items therein
stated) involving consideration in excess of $5 million has been given to the Joint Executive
Committee; and provided further, that this Section 4.1 (f) shall not prohibit any capital
expenditures made in accordance with Section 4.(k).
(g)
Dispositions.Other than as set forth in Section 4.(g) of the Seller Parent
Disclosure Letter, the Company and its Subsidiaries not to sell, lease, grant any Encumbrances
on or otherwise dispose of or Encumber any of their respective assets or properties, other than (i)
as expressly provided in the Company Budget (including up to a 10% increase in the relevant
amounts therein stated) or (ii) dispositions in the ordinary course of its business consistent with
past practice and having an aggregate value of $1 0 million or less in anyone transaction (or
related series of transactions) and less than $40 million in the aggregate; provided.that ten days
prior written notice of any such transaction (or series of related transactions) not otherwise
provided for in the Company Budget (including a 10% increase in the relevant items therein
stated) involving consideration in excess of $5 million has been given to the Joint Executive
Committee.
(h) Indebtedness. Other than as expressly provided in the Company Budget
(including up to a 10% increase in the relevant amounts therein stated), the Company and its
Subsidiaries not to incur or guarantee any indebtedness (including any debt borrowed or
guaranteed or otherwise assumed, including, without limitation, the issuance of debt securities or
warrants or rights to acquire debt) or enter into any "keep well" or other agreement to maintain
any financial condition of another person or enter into any arrangement having the economic
effect of any of the foregoing (any such guarantees, agreements or arrangements, collectively,
Guarantees ), other than (i) indebtedness entered into in connection with the refinancing of
indebtedness outstanding on the date of this Agreement or of indebtedness otherwise incurred
pursuant to this Section 4.1(h) (such refinancing not to increase the availability of indebtedness
that may thereafter be incurred pursuant to this Section 4. (h)), and (ii) indebtedness incurred
pursuant to Section 5.4(b )(vi).
(i) Employee Benefits Except as set forth on Section 4.1 (i) of the Seller
Parent Disclosure Letter, the Company and its Subsidiaries not to (x) enter into, adopt, amend
(except as may be required by applicable law) or terminate any Employee Benefit Plan, or
increase in any manner the compensation or fringe benefits of any employee (or former
employee) of the Company or its Subsidiaries, or pay any benefit not required by any plan or
arrangement in effect as of the date hereof to any employee (or former employee), in each case
other than such normal increases or payments to employees who are not officers or directors of
the Company or its Subsidiaries and that have been made in the ordinary course of business
consistent with past practice and that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company and its Subsidiaries taken as a whole, or (y)
grant to any employee (or former employee) any rights or allow any such employee (or former
employee) to become a participant in any plan or arrangement that grants any rights, in each case
that are not in effect on the date hereof to any payment (whether of severance pay, supplemental
executive retirement plans or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or increase in obligations to fund benefits with respect to any
employee (or fonner employee) resulting from a change in control or change in ownership of the
Company or any of its Subsidiaries or otherwise, or resulting from such employee s continued
employment with the Company or any of its Subsidiaries for any specified period of time
(including as a result.of a tennination prior to such specified period); provided however, that the
Company and its Subsidiaries shall not be prevented by reason of this clause (y) from entering
into any retention agreement with any non-management employee of the Company or any of its
. Subsidiaries so long as such retention agreement does not relate to the transactions contemplated
by this Agreement and such retention agreement (or similar agreements) is not made for the
benefit of a class or classes of employees. Except as required by a collective bargaining
agreement to which the Company is a party, or in the ordinary course of business of the
Company and its Subsidiaries consistent with past practice, or as otherwise expressly pennitted
by the tenns of this Agreement, the Company and its Subsidiaries shall not make any
contributions to any trust or other similar funding arrangement relating to any deferred
compensation plan, agreement or arrangement, including, without limitation, the Company
Supplemental Executive Retirement Plan.
G) Affiliate Contracts~ Except as disclosed in Section 2.20 of the Seller Parent
Disclosure Letter, the Company and its Subsidiaries and, within the exercise of its reasonable
commercial efforts, the Joint Ventures, not to enter any transaction with the Seller, the Seller
Parent or any of their respective affiliates (other than the Company and its Subsidiaries).
(k) Capital Expenditures The Company and its Subsidiaries not to make any
capital expenditures or commitments other than (i) as required by applicable law, (ii) capital
expenditures incurred in connection with the repair or replacement of facilities destroyed or
damaged due to casualty or accident (whether or not covered by insurance), and (iii) other capital
expenditures not in excess of 110% of the aggregate amount provided for such purposes in the
Company Budget.
(1) 1935 Act.The Company and its Subsidiaries not to engage in any
activities which would cause a change in its or their status under the 1935 Act or that would
impair the ability of the Buyer to obtain the approval of the SEC under the 1935 Act for the
consummation of the Share Purchase or the other transactions contemplated hereby.
(m) Regulatory Status The Company and its Subsidiaries not to agree or
consent to any material agreements or modifications of material existing agreements with any
Government or Regulatory Authority in respect of the operations of their businesses except
where following discussion with the relevant authority such agreements or modifications areimposed upon the Company.
(n) Transmission. Generation Except as required by, or pursuant to tariffs or
rate schedules on file with, any Governmental or Regulatory Authority as of the date hereof, or
as necessary to fulfill service commitments required by any Governmental or Regulatory
Authority (with any regulatory order potentially imposing any such obligation to be immediately
forwarded to the Buyer), or as set forth in Section 4.1(n) of the Seller Parent Disclosure Letter
the Company and its Subsidiaries not to:
(i) commence construction of (or commit to construction of) any
additional generating, transmission or delivery capacity; provided, that the Company s or any of
its Subsidiaries' applying for or obtaining permits or engaging in development planning in
respect of any such construction shall not be deemed to be a commencement of construction or a
commitment to do the same for purposes of this clause (i);
(ii) obligate the Company or any of its Subsidiaries to purchase or
otherwise acquire, or to sell or otherwise dispose of, or to share, any additional generating,
transmission or delivery plants or facilities, in an amount in excess of 110% percent of the
aggregate amount provided for such purposes in the Company Budget; or
(Hi) retire, commit to retire or otherwise indicate an intention to retire
any generation facility of the Company or any of its Subsidiaries.
(0) Trading. The Company and its Subsidiaries not to amend or modify the
Company Trading Guidelines in a manner that results in such Company Trading Guidelines
being less restrictive than the Company Trading Guidelines in effect on the date hereof or, other
than in the ordinary course of business consistent with past practice, terminate the Company
Trading Guidelines; provided that, in the case of any such termination, new Company Trading
Guidelines are adopted that are at least as restrictive as the Company Trading Guidelines in
effect on the date hereof or, take any action that violates the Company Trading Guidelines or
cause or permit the Net Company Position to be outside the risk parameters set forth in the
Company Trading Guidelines; and if at any time the Net Company Position becomes outside the
risk parameters set forth in the Company Trading Guidelines due to a move in market prices then
action will be taken to bring the Net Company Position back inside the parameters to the extent
required by the Company Trading Guidelines.
(P) Accounting The Company and its Subsidiaries not to make any material
changes in their accounting methods, except as required by law, rule, regulation or applicable
generally accepted accounting principles.
(q)
Contracts Binding Affiliates. The Company and its Subsidiaries not to
enter into any Contract that, after the Closing, (i) is binding on the Buyer or its Subsidiaries
(other than the Company and its Subsidiaries), or (ii) provides that the Company or any of its
Subsidiaries may be in breach or default thereunder based on any action or inaction of the Buyer
or its Subsidiaries (other than the Company and its Subsidiaries).
(r) No Litigation. The Company and its Subsidiaries not to initiate any
material actions, suits, arbitrations or proceedings excluding any state rate case proceedings.
SECTION 4.2. Covenants of the Buyer.At all times from and after the date
hereof until the Closing, the Buyer covenants and agrees that (except as required or expressly
permitted by this Agreement, or to the extent that the Seller Parent shall otherwise previously
consent in writing, which consent shall not be unreasonably withheld or delayed):
(a) No Breach The Buyer shall not willfully take or fail to take any action
that would or is reasonably likely to result (i) in a material breach by the Buyer of any provision
of this Agreement, or (ii) in any of its representations and warranties set forth in this Agreement
being untrue on and as of the Closing Date.
(b) Advice of Changes . The Buyer shall promptly advise the Seller Parent
orally and in writing~ of any material change or event, including, without limitation, any
complaint, investigation or hearing by any Governmental or Regulatory Authority (or
communication indicating the same may be contemplated) or the institution or threat of
. litigation, having, or which, insofar as can be reasonably foreseen, could have, a material adverse
effect on the ability of the Buyer to consummate the transactions contemplated hereby; provided
that the Buyer shall not be required to make any disclosure to the extent such disclosure would
constitute a violation of any applicable law or regulation.
(c) Notice and Cure The Buyer will notify the Seller Parent in writing of
and will use all commercially reasonable efforts to cure before the Closing, any event
transaction or circumstance, as soon as practical after it becomes known to the Buyer, that causes
or will cause any covenant or agreement of the Buyer under this Agreement to be breached or
that renders or will render untrue any representation or warranty. of the Buyer contained in this
Agreement. The Buyer will also notify the Seller Parent in writing of, and will use all
commercially reasonable efforts to cure, before the Closing, any violation or breach, as soon as
practical after it becomes known to the Buyer, of any representation, warranty, covenant or
agreement made by the Buyer. No notice given pursuant to this paragraph shall have any effect
on the representations, warranties, covenants or agreements contained in this Agreement for
purposes of determining the satisfaction of any condition contained herein.
(d) Fulfillment of Conditions. Subj ect to the terms and conditions of this
Agreement, the Buyer will take or cause to be taken all commercially reasonable steps necessary
or desirable and proceed diligently and in good faith to satisfy each condition to the Closing
contained in Article VI of this Agreement and to consummate and make effective the
transactions contemplated by this Agreement, and the Buyer will not take or fail to take any
action that would reasonably be expected to result in the nonfulfillment of any such condition.
SECTION 4.3. Tax Matters.
(a) Except as set forth in Section 4.3 of the Seller Parent Disclosure Letter
the Seller Parent and the Seller jointly and severally shall not, nor shall any of them pennit the
Company or any of its Subsidiaries to, make, change or rescind any material express or deemed
election relating to Taxes, or change any of its methods of reporting income or deductions for
Tax purposes, or other Tax accounting, from those employed in the preparation of its Tax
Retum(s) for the prior taxable year, except as may be required by applicable law or as agreed to
by the Buyer, in each case or the same related to the Company or its Subsidiaries. The Seller
Parent and the Seller shall inform the Buyer regarding the progress of any material claim, action
suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes in
respect of the Company or its Subsidiaries and shall obtain the consent of the Buyer (such
consent not to be unreasonably held or delayed) before entering into any settlements or
compromises with regard to such matters that affect the Tax liability of the Buyer, the Company
or any of the Company s Subsidiaries for the Tax periods ending after March 31 2005.
(b) The Seller shall provide the Buyer on the Closing Date, duly executed and
acknowledged affidavits of the Seller certifying that it is not a foreign person as described in
Treasury Regulation Section 1.1445-2(b )(2).
(c) If the Buyer, the Company or any of the Company s Subsidiaries receives
an amount from or on behalf of the Seller Parent or any affiliate thereof that is a return of tax
sharing agreement payments previously made by the Company or a Subsidiary pursuant to any
tax sharing agreement described in the second sentence of Section 2.12(c), and such amount is so
returned pursuant to an Order of a Governmental or Regulatory Authority, the Buyer agrees to
pay, or cause the Company or any Subsidiary to pay, any such amount so received by the Buyer
the Company or any Subsidiary to the Seller or the Seller s designee as additional purchase price
unless such Order prohibits or restricts such payment to the Seller or the Seller s designee or
requires the use of such returned amount for the benefit of rate payers.
SECTION 4.4. Discharge of Liabilities. The Seller Parent and the Seller jointly
and severally, shall not permit the Company or its Subsidiaries to pay, discharge or satisfy any
material claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice (which includes the payment of final and unappealable judgments)
or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated
by, the FY 2005 Statements, or incurred in the ordinary course of business consistent with past
practice.
SECTION 4.5. Contracts. The Seller Parent and the Seller jointly and severally,
shall not permit the Company or its Subsidiaries or, within the exercise of its reasonable business
efforts, the Joint Ventures to, except in the ordinary course of business consistent with past
practice, modify, amend, terminate, fail to renew or fail to use reasonable business efforts to
renew any material contract or agreement to which the Company, any such Subsidiary or such
Joint Ventures of such party is a party or waive, release or assign any material rights or claims.
SECTION 4.6. No Solicitations. The Seller Parent agrees (i) that neither it nor
any of its Subsidiaries or other affiliates nor their respective Representatives shall initiate, solicit
or encourage, directly or indirectly, any inquiries or the making or implementation of any
proposal or offer (including, without limitation, any proposal or offer to its shareholders) with
respect to a merger, consolidation or other business combination involving the Company or any
of its Subsidiaries or any acquisition or similar transaction (including, without limitation, a
tender or exchange offer) involving the purchase (or indirect purchase through the purchase of
capital stock of Subsidiaries of the Seller Parent) of (A) all or any significant portion of the
assets of the Company and its Subsidiaries taken as a whole or (B) any shares of capital stock of
the Company or any of its material Subsidiaries (any such proposal or offer being hereinafter
referred to as an "Alternative Proposal"), or engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions wit\1, any person or group
relating to an Alternative Proposal (excluding the transactions contemplated by this Agreement),
or otherwise facilitate any effort or attempt to make or implement an Alternative Proposal; (ii)
that it will immediately cease and cause to be terminated any existing activities, discussions or
negotiations with any parties with respect to any of the foregoing, and it will take the necessary
steps to inform such parties of its obligations under this Section; and (iii) that it will notify the
Buyer promptly if any such inquiries, proposals or offers are received by, any such information
is requested from, or any such negotiations or discussions are sought to be initiated or continued
with, it or any of such persons provided however, that nothing contained in this Section 4.6 shall
prohibit the Board of Directors of the Seller Parent, until such time as the Seller Parent shall have
obtained the Seller Parent Shareholders' Approval, from furnishing information to (but only
pursuant to a confidentiality agreement in customary form and having terms and conditions no
less favorable to the Company than the Confidentiality Agreement) or entering into discussions
or negotiations with any person or group that makes an unsolicited bona fide Alternative
Proposal, if, and only to the extent that, prior to receipt of the Seller Parent Shareholders
Approval, (A) the Board of Directors of the Seller Parent, based upon the advice of the Seller
Parent's external legal advisors, determines in good faith that a failure to perform such action
could reasonably be expected to result in a breach of its fiduciary duties imposed by law, (B)
such Board of Directors has reasonably concluded in good faith (after consultation with its
financial advisors) that the person or group making such Alternative Proposal is likely to have
adequate sources of financing to consummate such Alternative Proposal, (C) such Board of
Directors has reasonably concluded in good faith that such Alternative Proposal is more
favorable to the Seller Parent than the Share Purchase contemplated hereby, (D) prior to
furnishing such information to, or entering into discussions or negotiations with, such person or
group, the Seller Parent provides written notice to the Buyer to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person or group, which
notice shall identify such person or group in reasonable detail, and (E) the Seller Parent keeps the
Buyer appropriately informed of the status of any such discussions or negotiations; provided
further, that if the Seller Parent is unable to comply with the obligations set out in sub-clauses
(D) or (E) above as a result of any obligation of confidentiality, the right to negotiate or provide
information in the foregoing proviso shall be suspended (as if it had not been in effect since the
date hereof) until such time as it is able to do so comply and has complied. Nothing in this
Section 4.6 shall (x) permit the Seller Parent or the Seller to terminate this Agreement, (y) permit
the Seller Parent or the Seller to enter into any agreement with respect to an Alternative Proposal
for so long as this Agreement remains in effect (it being agreed that for so long as this
Agreement remains in effect, the Seller Parent or the Seller, jointly and severally shall not enter
into any agreement with any person or group that provides for, or in any way facilitates, an
Alternative Proposal), or (z) affect any other obligation of the Seller Parent or the Seller under
this Agreement.
SECTION 4.7. Third Party Standstill Agreements.After the date hereof, neither
the Seller Parent or Seller shall, and, until Closing, the Seller Parent and Seller, jointly and
severally, shall not permit the Company nor any of its Subsidiaries to, terminate, amend, modify
or waive any provision of any confidentiality or standstill agreement in respect of the Company
and its Subsidiaries to which it is a party. After the date hereof, the Seller Parent and Seller
jointly and severally, shall enforce, to the fullest extent permitted under applicable law, the
provisions of any such agreement, including, but not limited to, by obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the terms and provisions
thereof in any court having jurisdiction.
SECTION 4.8. Joint Executive Committee. As soon as practicable after the date
hereof, the Buyer and the Seller Parent shall establish a joint executive committee (the "Joint
Executive Committee ) which shall be compromised of three nominees of the Buyer and three
nominees of the Seller Parent. Each of the members of the Joint Executive Committee may be
removed, with or without cause, by the person appointing the same. Vacancies shall be filled by
the person appointing the member whose departure gives rise to such vacancy. The Joint
Executive Committee shall be jointly chaired by a nominee of the Buyer and a nominee of the
Seller Parent and shall have the objective of facilitating and achieving (including, without
limitation, obtaining the consents and approvals in respect of the Company, its Subaidiaries and
the Joint Ventures contemplated by Section 5.3) the transactions contemplated in this
Agreement, integration planning, strategic development, developing recommendations
concerning the structure and the general operation of the Company prior to the Closing subject to
applicable law. The Joint Executive Committee shall meet monthly in the United States or upon
such other date or dates, and in such other places, as the Buyer and the Seller Parent may agree
from time to time and may be convened by telephone, video conference or similar means. All
decisions of the Joint Executive Committee shall require the vote, by person or proxy, of a
majority of the members thereof, whether or not in attendance at the meeting in which such
decision is made, or the written consent of a majority of the members of such committee. The
provisions of this Section 4.8 are subject to the provisions of Section 4.
SECTION 4.9. QQillrQJ of Other Party's Business. Nothing contained in this
Agreement shall give the Buyer, directly or indirectly, the right to control or direct the
Company s operations prior to the Closing. Prior to the Closing, each of the Seller Parent, Seller
and the Company shall exercise~ consistent with the other terms and conditions of this
Agreement, complete control and supervision over its operations.
ARTICLE V.
ADDITIONAL AGREEMENTS
SECTION 5.1. Access to Information Each of the Seller Parent and the Seller
jointly and severally, shall, and shall cause each of the Company and its Subsidiaries and, so
long as consistent with its confidentiality obligations under its Joint Venture agreements , shall
use commercially reasonable efforts to cause the Joint Ventures to, throughout the period from
the date hereof to the Closing, (i) provide the Buyer and its Representatives with full access
upon reasonable prior notice and during nonnal business hours, to all officers, employees, agents
and accountants of the Company and its Subsidiaries and, to the extent possible, the Joint.
Ventures and their respective assets, properties, books and records, but only to the extent that
such access does not unreasonably interfere with the business and operations of the Company
and its Subsidiaries and the Joint Ventures, (H) furnish promptly to such persons (x) a copy
each report, statement, schedule and other document filed or received by the Company, or any of
its Subsidiaries or the Joint Ventures pursuant to the requirements of federal or state securities
laws and each material report, statement, schedule and other document filed with any other
Governmental or Regulatory Authority, and (Hi) upon request from the Buyer, furnish to the
Buyer audited financial statements of the Company and its Subsidiaries for each of the last three
fiscal years ended prior to the date of the request and unaudited quarterly financial information
for such periods, together with the related financial information, and to use its commercially
reasonable efforts to cause the Company s auditors to provide consents requested by the Buyer
and (y) all other infonnation and data (including, without limitation, copies of Contracts
Employee Benefit Plans, and other books and records) concerning t~e business and operations
the Company and its Subsidiaries and the Joint Ventures as the Buyer or any of its
Representatives reasonably may request. No investigation pursuant to this paragraph or
otherwise shall affect any representation or warranty contained in this Agreement or any
condition to the obligations of the parties hereto. Any such infonnation or material obtained
pursuant to this Section 5.1 shall be governed by the tenns of the letter agreement between the
Buyer and the Seller Parent relating to confidential infonnation concerning the Company (the
Confidentiality Agreement"
SECTION 5.2. Approval of Shareholders
( a) The Seller Parent shall, through its Board of Directors, duly call, give
notice of, convene and hold a general meeting of its ordinary shareholders (the "Seller Parent
Shareholders' Meeting ), for the purpose of voting on and approving the Share Purchase (the
SeDer Parent Shareholders' Approval"). Subject to Section 5.2(b), the Seller Parent shall
through its Board of Directors, include in the Circular the recommendation of the Board of
Directors of the Seller Parent that the shareholders of the Seller Parent approve the Share
Purchase. The Seller Parent shall use its.reasonable best efforts to obtain such approval as
promptly as practicable but, in any event, on or before August 1 2005 , but the failure to obtain
such approval shall not, in and of itself, be deemed to be a breach of this Agreement.
(b) The recommendation of the Board of Directors of the Seller Parent
included in the Circular (or if such Circular has not been dispatched, the resolution of the Board
of Directors of the Seller Parent described in the first sentence of the second paragraph
Section 2.3) may be withdrawn if the Board of Directors of the Seller Parent detennines in good
faith that the failure to withdraw such recommendation (or resolution) could reasonably be
expected to result in a breach of its fiduciary duties by reason of an unsolicited bona fide
Alternative Proposal having been made; provided, that:
(i) in making its detennination, the Board of Directors of the Seller
Parent shall conclude that the person or group making such Alternative Proposal will have
adequate sources of financing to consummate such Alternative Proposal and, in that regard, the
Seller Parent shall take advice from and have regard to the opinion of its financial advisors;
(ii) such Board of Directors has reasonably concluded in good faith
that such Alternative Proposal is more favorable to the Seller Parent than the Share Purchase
contemplated hereby;
(iii) such Board of Directors shall have been advised by its external
legal counsel as to its applicable fiduciary duties and shall have been advised that a failure to
withdraw such resolution or recommendation as a result of such Alternative Proposal could
reasonably result in a breach of its fiduciary duties; and
(iv) prior to any such withdrawal, the Seller Parent shall, and shall
cause its respective financial and legal advisors to, negotiate with the Buyer to make such
adjustments in the terms and conditions of this Agreement as would enable the Seller Parent and
the Seller to proceed with the transactions contemplated herein on such adjusted terms.
(c) In connection with the Seller Parent Shareholders' Meeting, (i) the Seller
Parent shall promptly publish the Circular and dispatch the Circular to its shareholders in
compliance with all legal requirements applicable to the Seller Parent Shareholders' Meeting and
the Listing Rules and (ii) if necessary, after the Circular has been so dispatched, promptly
publish or circulate amended, supplemental or supplemented materials and, if required in
connection therewith, resolicit votes. In the event that the Seller Parent Shareholde~s' Approval
is not obtained without the vote having been taken on the date on which the Seller Parent
Shareholders' Meeting is initially convened , the Seller Parent agrees to use its reasonable best
efforts to adjourn such Seller Parent Shareholders' Meeting for the purpose of obtaining the
Seller Parent Shareholders' Approval and to use reasonable best efforts during any such
adjournments to promptly obtain the Seller Parent Shareholders' Approval.
SECTION 5.3. Regulatory and Other Approvals. Subject to the terms and
conditions of this Agreement and without limiting the provisions of Section 5., each of the
Buyer and the Seller Parent shall jointly, through the Joint Executive Committee, develop a
regulatory approval plan and proceed cooperatively and in good faith to, as promptly as
practicable, (i) obtain all consents, approvals or actions of, make all filings with and give all
notices to Governmental or Regulatory Authorities or any other public or private third parties
required of the Buyer, the Seller, the Seller Parent, the Company or any of the Company
Subsidiaries or the Joint Ventures to consummate the Share Purchase and the other transactions
contemplated hereby (including without limitation those set forth on Section 2.4 of the Seller
Parent Disclosure Letter), and (ii) provide such other information and communications to such
Governmental or Regulatory Authorities or other public or private third parties as any of the
Seller, the Seller Parent or the Buyer or such Governmental or Regulatory Authorities or other
public or private third parties may reasonably request in connection therewith. In addition to and
not in limitation of the foregoing, each of the parties will (w) take promptly all actions necessary
to make the filings required of the Buyer, the Seller, the Seller Parent and the Company or their
Affiliates under the HSR Act and to comply with filing and approval requirements of the FERC,
the SEC, the FCC and each State Governmental or Regulatory Authority, (x) comply at the
earliest practicable date with any request for additional information received by such person or
its affiliates from the Federal Trade Commission (the "FTC") or the Antitrust Division of the
Department of Justice (the "Antitrust Division ) pursuant to the HSR Act, (y) cooperate with
each other in connection with filings of the Buyer, the Seller Parent, the Seller, the Company, the
Company s Subsidiaries and any Joint Ventures under the HSR Act and in connection with
resolving any investigation or other inquiry concerning the Share Purchase commenced by either
the FTC or the Antitrust Division or state attorneys general or by the FERC, the SEC, the FCC or
any State Governmental or Regulatory Authority having jurisdiction with respect to the Share
Purchase or another transaction contemplated by this Agreement, and (z) provide to the other
promptly copies of all correspondence between the Buyer (in the case of the Buyer so providing
such information) or the Seller Parent, the Seller, the Company, the Company s Subsidiaries in
the Joint Venture (in the case of the Seller Parent providing such information) and the applicable
Governmental or Regulatory Authority with respect to any filings referred to in this Section 5.
and shall give the Seller Parent or the Buyer, as the case may be, the opportunity to review such
filings and all responses to requests for additional infonnation by such Governmental or
Regulatory Authority prior to their being filed therewith. Anything in this Agreement to the
contrary notwithstanding, the Seller Parent and the Seller, jointly and severally, shall not pennit
the Company, its Subsidiaries or the Joint Ventures to incur any liability or obligation (other than
ordinary and reasonably attorneys' fees and other third party costs directly related to the
obtaining of necessary Final Orders from state public utility commissions) or grant any state
concessions or to enter into any agreement or arrangement (including, without limitation, any
amendment, waiver or modification of the tenns of any rate agreement, Order, Contract or
Company Pennit) that has or is reasonably likely to have a "meaningful adverse effect" on the
business, properties, assets, liabilities, financial condition, revenues, net income, results of
operations or prospects of the Company and its Subsidiaries. For purposes of the immediately
preceding sentence and the provisions of Section 6.(d)(ii), "meaningful adverse effect" shall be
deemed to be equivalent to a material adverse effect on an entity otherwise identical to the
Company and its Subsidiaries but having only 25% of the business, properties, assets, liabilities
financial condition, revenues, net income, results of operations and prospects of the Company
and its Subsidiaries.
SECTION 5.4. Employee Benefit Plans
(a) Buyer Agreements. The Buyer shall use its reasonable best efforts to
cause the Company Employee Benefit Plans (other than such plans in respect of equity of the
Company, the Seller or the Seller Parent (collectively, "Equity Plans )) in effect at the date of
this Agreement that have been disclosed to the Buyer prior to such date to remain in effect until
the date (the "Termination Date ) which is the later of 24 months after the date of this
Agreement or six months after the Closing. To the extent the Buyer elects not to continue any
such Company Employee Benefit Plans at any time prior to the Tennination Date, the Buyer will
maintain benefit plans during such period generally of the same type and of the same or
comparable aggregate value as the Company Employee Benefit Plans (other than Equity Plans)
not so continued, on tenns substantially similar to those applicable to other employees of the
same general status of the Buyer or its Subsidiaries; provided however, that nothing contained
herein shall be construed as requiring the Buyer or the Company to continue any specific plan or
as preventing the Buyer or the Company from (i) establishing and, if necessary, seeking
shareholder approval to establish, any other benefit plans in respect of all or any of the
employees covered by such Company Employee Benefit Plans or any other employees, (ii)
amending such Company Employee Benefit Plans (or any replacement benefit plans thereof)
where required by applicable law including, without limitation, any amendments necessary to
avoid application of Section 409A of the Code, or where such amen~ment is with the consent of
the affected employees or as otherwise effected in accordance with the tenns of such plans, or
(iii) amending the Company Employee Benefit Plans in the ordinary course of business so long
as the second sentence of this Section 5.4(a) remains true. From and after the Closing Date, the
Buyer shall cause the Company and its Subsidiaries to honor, in accordance with its express
terms, each existing collective bargaining, employment, change of control, severance and
termination agreement between the Company or any of its Subsidiaries, and any representative
union, officer, director or employee of such company, including without limitation all legal and
contractual obligations pursuant to outstanding restoration plans, severance plans, bonus deferral
plans, vested and accrued benefits and similar employment and benefit arrangements, policies
and agreements that have been disclosed to the Buyer as of the date hereof and other obligations
entered into in accordance with Section 4.1 (i).
(b)Seller Agreements
(i)Definitions. As used herein:
Transferred Group Entity" means the Seller Parent or any current or
fonner affiliate of the Seller Parent, other than the Company or any of its Subsidiaries.
Transferred Group Pension Plan" means a defined benefit pension
plan and trust to be established by a Transferred Group Entity on or prior to the Closing Date that
is intended to qualify under Sections 40 I (a) and 501(a) of the Code.
Transferred Group Savings Plan" means a defined contribution plan
and trust to be established by a Transferred Group Entity on or prior to the Closing Date that is
intended to qualify under Sections 401(a) and 501(a) of the Code.
Transferred Group Post Retirement Welfare Plans" means health and
welfare benefit plans to be established by a Transferred Group Entity on or prior to the ClosingDate.
Transferred Individuals" means (i) any present or fonner employee of
any Transferred Group Entity, but shall exclude any former employee of any Transferred Group
Entity who is currently employed by the Company or any Subsidiary or retired while an
employee of the Company or any Subsidiary, and (ii) any present or former employee of any
entity or business relating to the Centralia coal mine or the Centralia steam electric generating
plant or any of the businesses related thereto that was disposed of by the Company or any of its
Subsidiaries, including such individuals' beneficiaries, but shall exclude any such employee who
is currently employed by the Company or any Subsidiary or retired while an employee of the
Company or any Subsidiary from a business other than a business relating to the Centralia coal
mine or the Centralia steam electric generating plant or any of the businesses related thereto that
was disposed of by the Company or any of its Subsidiaries. The individuals described in clause
(ii) shall be identified by reasonable efforts on the basis of employment and benefit records
reasonably available to the Company.
(ii) General.Except as otherwise set forth herein, the Seller Parent
hereby agrees to assume, or to cause a Transferred Group Entity to assume, all liabilities
(regardless of when or where such.liabilities arose or arise or were or are incurred) accrued or
earned by, whether vested or unvested, Transferred Individuals under the Employee Benefit
Plan, to the extent a Transferred Group Entity has not previously funded such liability by
payment to the Company or any Subsidiary (it being understood that with respect to claims made
by participants under any Employee Benefit Plans which are fully insured welfare benefit plans
all liabilities arising from claims made prior to the Closing shall remain liabilities of the
Company and its Subsidiaries). Effective as of the Closing Date, each Transferred Group Entity
shall cease to be a "participating employer" in the Employee Benefit Plans.
(iii)Defined Benefit Plan Assets.
(A) As soon as reasonably practicable after the Closing, the
Seller Parent shall cause the transfer of a reasonably representative cross-section of assets
from the trust of the Company s Retirement Plan to the trust of the Transferred Group
Pension Plan in an amount equal to the amount of trust assets required to be transferred as
of the Closing Date in respect of the Transferred Individuals under Section 414(1) of the
Code, using (to the extent permitted thereunder) the "safe harbor" rates and assumptions
set forth in the regulations under Section 4044 of ERISA increased by a reasonable rate
of interest agreed upon by the Plan Actuary and the Buyer Actuary (or if they cannot
agree, the independent third party actuary described below) from the Closing to the date
of transfer (the "Pension Transfer Amount"
).
(B) For purposes of this Section 5.4(b)(iii), the amount
transferred shall be determined by the actuary for the Company s Retirement Plan (the
Plan Actuary
),
provided. however, that the Plan Actuary shall provide the actuary
selected by the Buyer (the "Buyer Actuary ) with all documentation reasonably
necessary for the Buyer Actuary to verify the Pension Transfer Amount; provided
further however, that if the Buyer Actuary certifies, in writing within 30 days of
receiving such supporting documentation, that the Buyer Actuary disagrees with the Plan
Actuary s determination of the Pension Transfer Amount then, first the Seller Parent and
the Buyer shall negotiate in good faith to resolve such dispute, and if unable to come to
an agreement, then the Buyer and the Seller Parent shall select an independent third
enrolled actuary to settle such disagreement. The determination of such third actuary
shall be binding on the Buyer and the Seller Parent. The fees, costs and expenses of said
third actuary shall be divided equally between the Buyer and the Seller Parent.
(iv) Defined Contribution Plan Accounts. On or prior to the Closing,
the Seller Parent shall cause the accounts (including any outstanding loans) of the Transferred
Individuals under the Company s Employee Savings and Stock Ownership Plan which are held
by its related trust to be transferred to the Transferred Group Savings Plan and its related trusts.
The amounts to be transferred pursuant to this Section 5.4(b)(iv) shall be in kind.
(v)Post Retirement Welfare Plans Assets.
(A) On or prior to the Closing, the Seller Parent shall cause the
transfer in kind from each of the Company s voluntary employee benefits associations
VEBAs ) and 401 (h) accounts under any qualified pension plan (with VEBAs
Funded Accounts ) to one or more Funded Accounts established by any Transferred
Group Entity for the purpose of funding the liabilities under the Transferred Group Post
Retirement Welfare Plans, an amount (the "Medical Transfer Amount") equal to the
fair market value of the assets of the Company s Funded Accounts, determined as of the
date of such transfer, multiplied by a fraction, the numerator of which shall be the
difference between (a) the aggregate contributions made by each Transferred Group
Entity to the Company s Funded Accounts, and (b) the aggregate distributions made to
Transferred Individuals from the Company s Funded Accounts, and the denominator of
which shall be the difference between (x) the aggregate contributions made to the
Company s Funded Accounts, and (y) the aggregate distributions made from the
Company s Funded Accounts.
(B) For purposes of this Section 5.4(b)(v), the amount
transferred shall be determined by the Plan Actuary; provided however, that the Plan
Actuary shall provide the Buyer Actuary with all documentation reasonably necessary for
the Buyer Actuary to verify the Medical Transfer Amount; provided further however
that if the Buyer Actuary certifies, in writing within 30 days of receiving such supporting
documentation, that the Buyer Actuary disagrees with the Plan Actuary s determination
of the Medical Transfer Amount then, first the Seller Parent andthe Buyer shall negotiate
in good faith to resolve such dispute, and ifunable to come to an agreement, then the
Buyer and the Seller Parent shall select an independent third enrolled actual)' to settle
such disagreement. The determination of such third actuary shall be binding on the
Buyer and the Seller Parent. The fees, costs and expenses of said third actuary shall be
divided equally between the Buyer and the Seller Parent. If, as a result of any dispute
under this Section 5.4(b)(v), the asset transfer contemplated hereby is delayed until after
the Closing, the amount that should have been transferred to the Funded Account of any
Transferred Group Entity shall be increased by a reasonable rate of interest agreed upon
by the Plan Actuary and Buyer Actuary (or if they cannot agree, the independent third
party actuary described above) from the Closing to the date of transfer.
(vi) Additional Contributions to the Company Retirement Plan
Following the date hereof and through the Closing, upon the written request of the Buyer, the
Seller Parent shall cause the Company to make any additional contributions to the Company
Retirement Plan necessary to avoid the requirement to provide participants with notice under
Section 4011 of ERISA. The Company shall be permitted to incur indebtedness, in an amount
not to exceed the amount of such requested contribution, in addition to the indebtedness
otherwise permitted by Section 4.1(h) on terms and conditions reasonably acceptable to the
Buyer to fund such contribution.
(c) The Seller Parent shall have caused the Company, on or before October
2005, to take such actions as set forth in Section 5.4 of the Seller Parent Disclosure Letter.
SECTION 5.5. Directors' and Officers ' Indemnification and Insurance.
(a) Except to the extent required by law, until the sixth anniversary of the
Closing, Buyer will not take any action so as to amend, modify or repeal the provisions for
indemnification of directors or officers contained in the Organizational Documents of the
Company and/or its Subsidiaries in such a manner as would adversely affect the rights of any
individual who shall have served as a director or officer of the Company or any of its
Subsidiaries prior to the Closing to be indemnified by such corporations in respect of their
serving in such capacities prior to the Closing.
(b) From and after the Closing, the Buyer shall cause the Company, until the
sixth anniversary of the Closing, to cause to be maintained in effect, to the extent available, the
policies of directors ' and officers ' liability insurance maintained by the Company and its
Subsidiaries as of the date hereof (or policies of at least the same coverage and amounts
containing terms that are no less favorable to the insured parties) with respect to claims arising
from facts or events that occurred on or prior to the Closing; provided that in no event shall the
Buyer be obligated to cause the Company to expend in order to maintain or procure insurance
coverage pursuant to this paragraph any amount per annum in excess of two hundred percent
(200%) of the aggregate premiums payable by the Company and its Subsidiaries in 2004 for such
purpose.
(c) From and after the Closing, the Seller Parent shall not, nor shall it pennit
any of its Subsidiaries to, bring or continue legal proceedings against any director or officer
the Company and/or any of its Subsidiaries benefiting from the agreements in Section 5.5(a) or
(b), such that any such person could reasonably have a claim against any insurer in respect of the
insurance policies described in Section 5 .5(b) or against the Company or any of its Subsidiaries
. (whether by way of indemnity, contract, operation of law or otherwise).
SECTION 5.6. Additional Matters Immediately following the Closing, the
Company s headquarters shall continue to be located in Portland, Oregon. If requested by the
Buyer, on or prior to the Closing Date, the Seller Parent shall use reasonable best efforts to cause
those trustees of The PacifiCorp Foundation designated by the Buyer in writing at least three
days before the Closing to resign and cause to be appointed designees of the Buyer in their place.
SECTION 5.7. Expenses. Except as set forth in Section 7., whether or not the
Closing occurs, all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby or any Alternative Proposal by the Buyer on the one hand, or
the Seller Parent, the Seller, the Company or any of the Company s Subsidiaries on the other
shall be paid by the Buyer or the Seller Parent, as the case may be; provided, that, subject to
Section 5.3, any and all out-of-pocket costs and expenses incurred by the Company or any of its
Subsidiaries which are necessary to obtain the consents of Governmental or Regulatory
Authorities required to consummate the Share Purchase and incurred after the date hereof shall
be paid by the Company.
SECTION 5.8. Brokers or Finders Each of the Buyer and the Seller Parent
represents, as to itself and its affiliates, that no agent, broker, investment banker, financial
advisor or other finn or person is or will be entitled to any broker s or finder s fee or any other
commission or similar fee in connection with any of the transactions contemplated by this
Agreement except Houlihan Lokey Howard & Zukin, whose fees and expenses will be paid by
the Buyer in accordance with the Buyer s agreement with such finn, and Morgan Stanley and
DBS, each of whose fees and expenses will be paid by the Seller Parent in accordance with the
Seller Parent's agreement with such finn, and the Buyer shall indemnify and hold hannless the
Seller Parent and the Seller from and against, and the Seller Parent shall indemnify and hold the
Buyer, the Company and its Subsidiaries from and against, any and 'all claims, liabilities or
obligations with respect to any other such fee or commission or expenses related thereto asserted
by any person on the basis of any act or statement alleged to have been made by such party or its
affiliate.
SECTION 5.9. Conveyance Taxes . The Buyer shall, and the Seller Parent and
the Seller, jointly and severally, shall, and shall cause the Company to, cooperate in the
preparation, execution and filing of all Tax Returns, questionnaires, applications or other
documents regarding any real property transfer or gains, sales, use, transfer, value added, stock
transfer and stamp taxes and duties, any transfer, recording, registration and other fees, and any
similar taxes or fees (including any penalties and interest thereon) which become payable in
connection with the transactions contemplated by this Agreement.
SECTION 5.10. Rate Matters Except as provided in the Company Budget
during the period commencing on the date hereof and ending on the Closing Date, the Seller
Parent and the Seller, jointly and severally shall cause the Company and its Subsidiaries to obtain
Buyer s approval, not to be unreasonably withheld or delayed, prior to initiating any general rate
case and to consult with the Buyer prior to making any material changes in the Company s or its
Subsidiaries' rates or charges, standards of service or accounting from those in effeq~on the date
hereof and to further consult with the Buyer prior to making any filing (or any amendment
thereto), or effecting any agreement, commitment, arrangement or consent, whether written or
oral, fonnal or infonnal, with respect thereto.
SECTION 5.11. Seller Parent Cure. If the condition to closing in Section
6. 1 (d)(ii), Section 6.2(a) (as a result of the breach or inaccuracy of the representation and
warranty in Section 2.6(a)(i)) or 6.2(c) is not fulfilled at Closing, the Seller Parent (at it or the
Seller s sole cost and expense) may, but shall not be required to, make such payments to the
Company to promptly cure such inaccuracy or breach; provided, that such payment, in the
Buyer s reasonable judgment, cures such inaccuracy or breach.
SECTION 5.12. Post Closing Payments
(a) On each anniversary of the Closing Date until and including the twenty-
fifth anniversary thereof, the Seller shall cause the Seller s wholly owned subsidiary, PacifiCorp
Financial Services, Inc. ("PFS"), to pay to the Buyer cash in the amount of $4.0 million.
Without limiting the Buyer s rights and remedies at law and inequity, (i) PFS shall pay interest
on any amount otherwise due and payable pursuant to this Section 5.12(a) at an annual rate equal
to the prime rate of JPMorgan Chase Bank at the time such payment was due and payable plus
two percent (2%), accruing from the due date to the date of payment, and (ii) all amounts
required to be paid pursuant to this Section 5.12 shall become immediately due and payable, at
the option of the Buyer, on the date that is 30 days after the Buyer gives a second notice to the
Seller Parent notifying the Seller Parent of such default (which notice may not be given sooner
than 60 days after the scheduled due date or sooner than 15 days after a first default notice) and
advising of the Buyer s election to accelerate the remaining amounts due under this Section 5.
to the date that is 30 days after the date of the notice unless all amounts required to be paid have
been paid on or before the date that is 90 days after the date on which such amounts are required
to be paid pursuant to this Section 5.12(a).
(b) The Seller Parent hereby irrevocably and unconditionally guarantees and
agrees to pay in full to the Buyer all of the payments owing under Section 5.12(a) as and when
due, regardless of any defense, right of set off or counterclaim that any of the. Seller Parent, the
Seller, PacifiCorp Financial Services Inc. or any their respective direct or indirect subsidiariesmay have or assert.
SECTION 5.13. Tax Returns . (a) The Seller shall prepare or cause to be
prepared, and file or cause to be filed (I) all Tax Returns required to be filed by or with respect
to the Company or any of its Subsidiaries due on or prior to the Closing Date (taking into
account all applicable extensions), and (2) all combined, consolidated or unitary income Tax
Returns under federal, state, local or foreign law that include Seller or any Affiliate and the
Company or any of its Subsidiaries. Unless the written consent of the Buyer is obtained, all such
Tax Returns shall be prepared on a basis that is consistent with the manner in which the Seller
prepared or filed, or had caused to be prepared and filed, such Tax Returns for prior periods.
later than forty-five (45) days prior to the due date of such Tax Returns, the Seller shall provide
the Buyer with copies of (A) in the case of consolidated, combined or unitary Tax Returns that
include the Company or any of its Subsidiaries, pro fonna materials for the Company and its
Subsidiaries to be included in such consolidated, combined or unitary Tax Returns and (B) all
other Tax Returns prepared or caused to be prepared by the Seller pursuant to this Section 5.13.
and (C) suchworkpapers and other documents as may be reasonably necessary to detennine the
accuracy and completeness of such materials or Tax Returns. If the Buyer notifies the Seller
Parent in writing within 14 days after receiving such materials or a Tax Return of any comments
of the Buyer, the Seller Parent shall cause any such reasonable comments provided by the Buyer
to be incorporated therein. If the Seller Parent disputes the reasonableness of any such comment
by the Buyer, such dispute shall be resolved by an accounting finD or law finD mutually agreed
upon by the Buyer and the Seller Parent. Such Tax Returns (or any amendments to such return)
shall be filed in a manner consistent with resolution of such dispute; provided, however, that
Seller Parent may filed a combined, consolidated or unitary Tax Return in an inconsistent
manner but in such event, the tax sharing payment to be made by the Company or any of its
Subsidiaries shall be made in a manner and amount consistentwith the resolution of the dispute.
The Buyer shall be responsible for filing all Tax Returns required to be filed by or on behalf of
the Company and each of its Subsidiaries due after the Closing Date other than such Tax Returns
described in the first sentence of this Section 5.13. The Buyer and the Seller shall reasonably
cooperate with, and shall cause the Company and each of its Subsidiaries and their respective
officers, employees and representatives to reasonably cooperate with, the Seller or the Buyer, as
the case may be, with respect to the preparation and filing of all Tax Returns of the Company
and its Subsidiaries. Upon reasonable written request, the Seller and the Buyer shall share
infonnation with the other party, to the extent reasonably necessary to enable each party to
satisfy its respective Tax filing requirements.
(b) Amended Tax Returns. Neither Buyer nor any Affiliate shall (or shall
cause or pennit the Company or any Subsidiary to) amend, refile or otherwise modify any Tax
Return relating in whole or in part to the Company or any Subsidiary with respect to any taxable
period ending on or before March 31 , 2005 or with respect to any taxable period that begins
before and ends after March 31 , 2005 without the written consent or the Seller Parent, which
consent shall not be unreasonably withheld or delayed.
(c) Tax Elections Except as required by law, Buyer shall not, without the
prior consent of Seller Parent (which may, in its sole and absolute discretion, withhold such
consent), make, or cause to permit to be made, any Tax election, or adopt or change any method
of accounting, or undertake any other extraordinary action on the Closing Date, that would
adversely affect the Seller, whether directly or by reason of any indemnification obligation.
SECTION 5.14. Intercompany Items. On the Closing Date, the Seller Parent
shall pay and cause its Subsidiaries (other than the Company or its Subsidiaries) to pay to the
Company and its Subsidiaries an amount in cash equal to all liabilities that the Seller Parent or
such Subsidiaries have to the Company or its Subsidiaries as the same would be reflected as an
asset on a consolidated balance sheet of the Company as of the Closing Date prepared in
acceptance with U.S. generally accepted accounting principles consistently applied. On the
Closing Date, the Seller Parent shall cause the Company and its Subsidiaries to pay to the Seller
Parent and its Subsidiaries (other than the Company and its Subsidiaries) an amount in cash
equal to all liabilities that the Company and its Subsidiaries have to the Seller Parent or such
Subsidiaries as the same would be reflected as a liability on a consolidated balance sheet of the
Company as of the Closing Date prepared in accordance with U.S. generally accepted accountingprinciples consistently applied.
AR TI CLE VI.
CONDITIONS
SECTION 6.1. Conditions o Each Party's Obligation to EffecUhe Share
Purchase.Therespective obligation of each party to effect the Share Purchase is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:
(a) Shareholder Approval.The ordinary shareholders of the Seller Parent
shall have approved the Share Purchase by the requisite vote as required by the UKLA.
(b) HSR Act.Any waiting period (and any extension thereof) applicable to
the consummation of a merger under the HSR Act shall have expired or been tenninated.
(c) Injunctions or Restraints. No court of competent jurisdiction or other
competent Governmental or Regulatory Authority shall have enacted, issued, promulgated
enforced or entered any law or order (whether temporary, preliminary or pennanent) which is
then in effect and has the effect of making illegal or otherwise restricting, preventing or
prohibiting consummation of the Share Purchase or the other transactions contemplated by this
Agreement.
(d) Governmental and Regulatory Consents and Approvals. (i) All consents
approvals and actions of, filings with and notices to any Governmental or Regulatory Authority
(including, but not limited to, consents, approvals and actions under the HSR Act and the
approval by FERC pursuant to Section 203 of the Power Act, the SEC under the 1935 Act, the
applicable state public utility commissions, the NRC and the FCC) required of the Buyer, the
Seller Parent, the Seller, the Company or any of their Subsidiaries to consummate the Share
Purchase and the other matters contemplated hereby shall have been made or obtained (as the
case may be) and become Final Orders, and (ii) in the case of the applicable state public utility
commissions, and subject to the last sentence of Section 5., such Final Orders shall not
individually or in the aggregate, contain tenns or conditions that have a meaningful adverse
effect on the business, properties, assets, liabilities, financial condition, revenues, net income
results of operations or prospects of the Company and its Subsidiaries unless the Buyer otherwise
approves in writing the tenns of each such Final Order.
A "Final Order" means an action by the relevant Governmental or
Regulatory Authority that has not been reversed, stayed, enjoined, set aside, annulled or
suspended, with respect to which any waiting period prescribed by applicable law before the
transactions contemplated hereby may be consummated has expired, and as to which all
conditions to the consummation of such transactions prescribed by applicable law, regulation or
order have been satisfied.
( e) Other Consents and Approvals. The consent or approval of each person
(other than a Governmental or Regulatory Authority) whose consent or approval is required
the Buyer, the Seller Parent, the Seller, the Company or any of their Subsidiaries under any
Contract in order to consummate the Share Purchase and the other transactions contemplated
hereby shall have been obtained, except for those consents and approvals which, if not obtained
(i) would not have, or would not reasonably be expected to have, a material adverse effect on the
Company and its Subsidiaries taken as a whole or a material adverse effect on the ability
Buyer, on the one hand, or Seller Parent or Seller, on the other to consummate the transactions
contemplated hereby, or (ii) would have, or be reasonably expected to have, such an effect but
which the Buyer elects in writing not to require to be so obtained.
SECTION 6.2. Conditions to Obligation of the Buyer to Effect the Share
Purchase. The obligation of the Buyer to effect the Share Purchase is further subject to the
fulfillment, at or prior to the Closing, of each of the following additional conditions (all or any of
which may be waived in whole or in part by the Buyer in its sole discretion):
(a) Representations and Warranties. (i) The representations and warranties
made by the Seller Parent and the Seller in this Agreement shall be true and correct (without
regard to any qualifier therein as to "materiality,
" "
material adverse effect" or any derivative of
such terms (except that the word "material" shall not be so disregarded as the same modifies (A)
the word "Contracts" or the words "insurance policies " (B) the word "information" in Section
5(c)(i), (C) the word "filings" in Section 2.5(f), and (D)(I) the word "pennits" in Section
(b), (II) the word "agreement" in Section 4.(m), (III) the word "changes" in Section 4.(P),
and (IV) the phrase "actions, suits, arbitrations or proceedings" in Section 4. 1 (r), in each case as
such provisions are referred to in Section 2.6(a)(ii))) in all respects, as of the Closing Date as
though made on and as of the Closing Date or, in the case of representations and warranties made
as of a specified date earlier than the Closing Date, on and as of such earlier date, except (x) in
the case of representations and warranties (other than those contained in Sections 2.1(e), 2.2(a)
and 2.2(b)) if the facts and circumstances causing the failure of such representations and
warranties to be so true and correct, individually or in the aggregate, have not had, and would not
reasonably be expected to have, a material adverse effect on the Company and its Subsidiaries
taken as a whole, or on the ability of the Seller Parent or Seller to perform their obligations
hereunder or (y) as affected by the transactions expressly pennitted by Sections 4.1(d) through
(k), inclusive, and (ii) the Seller Parent and the Seller shall each have delivered to the Buyer a
certificate, dated the Closing Date and executed in the name and on behalf of the Seller Parent by
its Chairman of the Board, President or any Executive or Senior Vice President, and executed in
the name and on behalf of the Seller by its Chainnan of the Board, President or any Executive or
Senior Vice President, to such effect.
(b) Performance of Obligations.The Seller Parent and the Seller shall have
performed and complied with, in all material respects taken as a whole (other than the
agreements, covenants and obligations of the Seller Parent and the Seller in Section 1., which
shall have been performed and complied with in all respects), the agreements, covenants and
obligations which are required by this Agreement to be so performed or complied with by the
Seller Parent or the Seller at or prior to the Closing, and the Seller Parent and the Seller shall
each have delivered to the Buyer a certificate, dated the Closing Date and executed in the name
and on behalf of the Seller Parent by its Chairman of the Board, President or any Executive or
Senior Vice President, and executed in the name and on behalf of the Seller by its Chairman of
the Board, President or any Executive or Senior Vice President, to such effect.
(c) Material Adverse Effect.There shall have not have occurred ~nd be
continuing a material adverse effect with respect to the Company and its Subsidiaries taken as a
whole and there shall exist no facts or circumstances, which in the aggregate would, or insofar as
reasonably can be foreseen, could, when taken together with any breaches or violations of any
representations, warranties, covenants and agreements of the Seller Parent or Seller contained
herein, have a material adverse effect on the Company and its Subsidiaries taken as a whole.
Notwithstanding the provisions of 6.(d), adverse effects arising from Final Orders (other than
those described in Section 6. (d)(ii)) shall be taken into account in the application of this Section
2(c). For purposes of this Section 6.2(c), any adverse effects on the Company and its
Subsidiaries resulting from general weather, economic or financial conditions (unless (x)
disproportionately affecting the Company or its Subsidiaries as compared to other investor
owned utility companies located . in whole or in part, in any of the states of Washington, Oregon
California, Utah, Idaho, Montana, Wyoming, North Dakota, South Dakota, Nebraska, Iowa or
Minnesota, or (y) arising, directly or indirectly, from any nuclear, radiological, biological or
chemical terrorist attack(s) occurring in the United States (a "Terrorist Attack") after which
Terrorist Attack there is a decrease of 10% or more in the Standard & Poor s Electric Utility
Index between the average price of such index at the close of trading for the three trading days
immediately preceding the date of the first of such Terrorist Attack(s) and the closing price for
such index on at least 45 consecutive trading days in the 60 trading day period immediately
following such Terrorist Attack(s)) shall not be taken into account in determining whether a
material adverse effect has occurred under this Section 6.2( c). Anything in this Agreement to the
contrary notwithstanding, if a Terrorist Attack occurs in the United States at any time prior to the
Closing or the termination of this Agreement pursuant to Section 7.1 (b )(i), the Closing Date and
the date on which this Agreement may be terminated pursuant to Section 7.1 (b )(i) shall be the
later of (x) the date on which the Closing or the termination of this Agreement pursuant to
Section 7.1 (b )(i), would otherwise have occurred or (y) the 80th day after the occurrence of the
Terrorist Attack; provided, that nothing in this sentence shall require that the Closing occur if the
conditions to Closing have not been fulfilled on the date to which the Closing is deferred asprovided in this sentence.
(d) Proceedings. All proceedings to be taken on the part of the Seller Parent
the Seller or the Company in connection with the transactions contemplated by this Agreement
and all documents incident thereto shall be reasonably satisfactory in form and substance to the
Buyer, and the Buyer shall have received copies of all such documents and other evidences as
the Buyer may reasonably request in order to establish the consummation of such transactions
and the taking of all proceedings in connection therewith.
(e) Resignations. The directors of the Company and its Subsidiaries
designated by the Buyer in writing at least three days before the Closing shall have delivered
letters of re~ignation from their respective positions to the Buyer in a form reasonably acceptable
to the Buyer.
SECTION 6.3. Conditions to Obligation of the Seller Parent and the Seller to
Effect the Share Purchase The obligation of the Seller Parent and the Seller to effect the Share
Purchase is further subject to the fulfillment, at or prior to the Closing, of each of the following
additionalconditions.(all or any of which may be waived in whole or in part by the Seller Parent
in its sole discretion):
(a) Representations and Warranties . (i) The representations and warranties
made by the Buyer in this Agreement shall be true and correct (without regard to any qualifier
therein as to "materiality" or "material adverse effect") in all respects, as of the Closing Date as
though made on and as of the Closing Date or, in the case of representations and warranties made
as of a specified date earlier than the Closing Date, on and as of such earlier date, except (x) in
the case of representations and warranties if the facts and circumstances causing the failure
such representations and warranties to be so true and correct, individually or in the aggregate
have not, and would not reasonably be expected to have, a material adverse effect on the ability
of the Buyer to perform its obligations hereunder or (y) as affected by the transactions required
by this Agreement or the transactions expressly permitted by Section 4.2 and (ii) the Buyer shall
have delivered to the Seller Parent a certificate, dated the Closing Date and executed in the name
and on behalf of the Buyer by its Chairman of the Board, President or any Executive or Senior
Vice President, to such effect.
(b) Performance of Obligations. The Buyer shall have performed and
complied with, in all material respects taken as a whole (other than the agreement, covenants
and obligations of the Buyer in Section 1., which shall have been performed and complied with
in all respects), the agreements, covenants and obligations required by this Agreement to be so
performed or complied with by the Buyer at or prior to the Closing, and the Buyer shall have
delivered to the Seller Parent" a certificate, dated the Closing Date and executed in the name and
on behalf of the Buyer by its Chairman of the Board, President or any Executive or Senior Vice
President to such effect.
(c) Proceedings. All proceedings to be taken on the part of the Buyer in
connection with the transactions contemplated by this Agreement and all documents incident
thereto shall be reasonably satisfactory in form and substance to the Seller Parent, and the Seller
Parent shall have received copies of all such documents and other evidences as the Seller Parent
may reasonably request in order to establish the consummation of such transactions and the
taking of all proceedings in connection therewith.
AR TI CLE VII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination.This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the Closing, whether
prior to or after the Seller Parent Shareholders' Approval:
( a) By mutual written agreement of the Buyer and the Seller Par~nt hereto
duly authorized by action taken by or on behalf of their respective Boards of Directors;
(b) By either the Seller Parent or the Buyer (except that only the Buyer shall
have the right to terminate this Agreement pursuant to clause (b )(ii)(y) below) upon notification
to the Buyer or the Seller Parent, as the case may be, by the terminating party:
(i) Subject to the last sentence of Section 6.2(c), at any time after the
date which is twelve (12) months following the date of this Agreement if the Share Purchase
shall not have been consummated on or prior to such date and such failure to consummate the
same is not caused by a breach of the representations, warranties or covenants of the Seller
Parent or the Seller contained in this Agreement, in the case the terminating party is the Seller
Parent, or a breach of the representationS, warranties or covenants of the Buyer contained in this
Agreement, in case the terminating party is the Buyer; provided however.that if on such date all
of the approvals required in order to satisfy the conditions set forth in Section 6.1 (d) have not
been obtained, but all other conditions to effect the Share Purchase shall be fulfilled or shall be
capable of being fulfilled, then, at the option of either the Seller Parent or the Buyer (which shall
be exercised by written notice), the term of this Agreement shall be extended, subject to the last
sentence of Section 6.2(c), until the expiration of such date which is 635 days after the date of
this. Agreement;
(ii) if the Seller Parent Shareholders' Approval shall not be obtained
(x) by reason of the failure to obtain the requisite vote upon a vote actually held at a meeting of
such shareholders, or any adjournment thereof, called therefor; or (y) in any event, on or before
September 1, 2005;
(iii) if there has been a material breach of any representation, warranty,
covenant or agreement on the part of the non-terminating party set forth in this Agreement
(determined in all cases as if the qualifiers as to "material
" "
material adverse effect" or any
derivative of such terms were not included in any such representation or warranty (except that
the word "material" shall not be so disregarded as the same modifies (A) the word "Contracts" or
the words "insurance policies " (B) the word "information" in Section 2.5(c)(i), (C) the word
filings" in Section 2.5(t), and (D) (I) the word "permits" in Section 4.(b), (II) the word
agreement" in Section 4.(m), (III) the word "changes" in Section 4.(P), and (IV) the phrase
actions, suits, arbitrations or proceedings" in Section 4.1 (r), in each case as such provisions are
referred to in Section 2.6(a)(ii)), which breach is not waived by the non-terminating party or
curable or, if curable, has not been cured within thirty (30) days foll~wing receipt by the non-
terminating party of notice of such breach from the terminating party which breach, when taken
together with any other breaches of representations, warranties, covenants and agreements of the
non-terminating party contained in this Agreement, has or would reasonably be expected to have
a material adverse effect on the Company and its Subsidiaries taken as a whole or on the ability
of the Seller Parent or the Buyer, as the case may be, to consummate the transactionscontemplated hereby; or
(iv) if any court of competent jurisdiction or other competent
Governmental or Regulatory Authority shall have issued an order making illegal or otherwise
preventing or prohibiting the Share Purchase and such order shall have become final and
nonappealable; or
(c) By the Buyer if the Board of Directors of the Seller Parent or the Seller (or
any committee thereof) (i) shall have withdrawn or modified in a manner materially adverse to
Parent its approval or recommendation of this Agreement or the Share Purchase, (ii) shall fail to
reaffirm such approval or recommendation upon the Buyer s request, (iii) shall have approved
recommended or taken no position with respect to an Alternative Proposal or (iv) shall resolve to
take any of the foregoing actions; or
(d) By the Seller Parent, if, after the date hereof, the Buyer or any of its
affiliates directly or indirectly agrees to, or otherwise publicly announces any proposal to
acquire (i) in excess of 5% of the voting securities of a public utility company which would
require approval under the 1935 Act (or if the 1935 Act is no longer in effect, which would have
required such approval under such act had such act been in effect), (ii) securities (either in the
forin of common equity or common equity equivalents) that represent more than 10% of the
outstanding common stock (on a fully diluted basis) of a public utility company located in the
S. or (Hi) an Energy Property or any equity interest therein in excess of 50% located in
Washington, Oregon, Northern Califomia Idaho, Wyoming or Utah (any such transaction
described in the foregoing clauses (i), (H) or (iii) being a "Competing Transaction ) and such
Competing Transaction directly or indirectly results in the failure of the parties to satisfy any of
the required regulatory conditions precedent to the obligation to complete the transactions
contemplated by this Agreement (whether such approvals be state or federal) and/or otherwise
directly or indirectly creates or imposes additional conditionality or costs which gives rise to an
entitlement on the part of the Buyer such that the Buyer chooses to not complete or to terminate
the Agreement. "Energy Property" shall mean any utility company, gas transmission or
pipeline company or electric generating company or facility, but shall in no event include
interests in or development of oil, gas, natural resources and mineral rights. A Competing
Transaction shall not include construction to expand or improve existing pipelines or otherfacilities.
SECTION 7.2. Effect of Termination.
(a) If this Agreement is validly terminated by either the Seller Parent or the
Buyer pursuant to Section 7., this Agreement will forthwith become null and void and there will
be no liability or obligation on the part of either the Seller Parent or the Buyer (or any of their
respective Representatives or affiliates), except (i) that the provisions of Sections 5.7 and 5.
this Section 7., and Sections 9.8 and 9.9 will continue to apply following any such termination
(H) that nothing contained herein shall relieve any party hereto from liability for willful breach of
its representations, warranties, covenants or agreements contained in this Agreement and (Hi) as
provided in paragraphs (b) and (c) below.
(b)In the event that
(i) the Seller Parent terminates this Agreement pursuant to
Section 7.(d), then the Buyer shall pay to the Seller Parent, by wire transfer of same day funds
within two (2) business days after termination of this Agreement, a termination fee of
$250 000 000; or
(ii) (x) prior to the Seller Parent Shareholders' Approval (A) any
person or group shall have announced or made to the Board of Directors of the Seller Parent an
Alternative Proposal or (B) announced or made to the Board of Directors of the Seller Parent a
bona fide proposal relating to a proposed transaction that, if consummated, would constitute a
Change of Control (as defined below), (y) prior to the Seller Parent Shareholders' Approval , the
Board of Directors of the Seller Parent shall have reasonably promptly rejected such proposal
and reaffirmed its approval and recommendation of the Share Purchase, and (z) in each case
thereafter, this Agreement is terminated by the Seller Parent or the Buyer pursuant to Section
7. 1 (b)(ii), then the Seller Parent shall pay to the Buyer, by wire transfer of same day funds
within. two (2) business days after termination of this Agreement, a termination fee of $10
million; or
(iii) (x) prior to the Seller Parent Shareholders' Approval, any event in
the immediately preceding clause (ii) occurs, (y) prior to the Seller Parent Shareholders
Approval, the Board of Directors of the Seller Parent (or any committee thereof) shall have taken
any of the actions described in Section 7.1(c), and (z) in each case thereafter this Agreement is
terminated by the Buyer or the Seller Parent pursuant to Section 7.1 (b )(ii), then the Seller Parent
shall pay to the Buyer, by wire transfer of same day funds, within two (2) business days after
termination of this Agreement, a termination fee of $1 00 million.
If a termination fee has been paid or is payable pursuant to Section 7 .2(b )(ii) or (iii) and (I) prior
to the first anniversary of the termination of this Agreement, the Seller Parent, the Seller or any
of their respective affiliates enters into a definitive agreement in respect of, or consummates, an
Alternative Proposal (which agreement or consummation need not be with the person making a
previous Alternative Proposal), or (II) prior to the first anniversary of the termination of this
Agreement, any person announces (which announcement or consummation need not be made by
a person making a previous proposal to effect a Change of Control) a firm intention to make an
offer (for purposes of the United Kingdom s City Code on Takeovers and Mergers), whether by
way of offer or scheme of arrangement, which transaction, when consummated, will result in a
Change of Control or such a Change of Control is consummated, the Seller Parent shall pay to
the Buyer, by wire transfer of same day funds, within two (2) business days after the entering
into such agreement, such consummation or any such announcement, as the case may be, an
additional termination fee of $240 million, in case a termination fee was paid or is payable
pursuant to Section 7 .2(b )(ii) or $150 million in case such fee was paid or is payable pursuant to
Section 7 .2(b )(iii). If an Alternative Proposal or Change of Control. is consummated prior to the
Seller Parent Shareholder Approval and this Agreement is terminated, the Seller Parent shall pay
to the Buyer, by wire transfer of same day funds, within two (2) business days after termination
of this Agreement, a tennination fee of $250 million. The Seller Parent shall in no event be
obliged to pay to the Buyer more than $250 million in the aggregate in tennination fees.
A "Change of Control" shall mean the occurrence of any of the following: (A) any "Person , as
such tenD is used in Sections 13( d) and 14( d) of the Exchange Act, is or becomes the "beneficial.
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Seller Parent representing 30 percent or more of the combined voting power of the Seller
Parent'sissued share capital; (B) the shareholders of the Seller Parent resolve to approve a
proposed Change of Control of the Seller Parent; or (C) a tender or exchange offer is made for
. the ordinary shares of the Seller Parent (or securities convertible into ordinary shares of the
Seller Parent) and such offer results in a portion of those securities being purchased and the
offeror after the consummation of the offer is the beneficial owner (as detennined pursuant to
Section 1 3 (d) of the Exchange Act), directly or indirectly, of securities representing at least 30
percent of the voting power of outstanding securities of the Seller Parent; provided, that a
Change of Control shall not include a transaction initiated and promoted by the Seller Parent and
not involving any unrelated third parties by way of reorganization or reconstruction under which
a new holding company of the Seller Parent ("Newholdco ) acquires the entire issued share
capital of the Seller Parent (and on implementation of such transaction, references to a Change of
Control of the Seller Parent shall apply to Newholdco as they apply to the Seller Parent)
provided, that:
(A)
(B)
(C)
(D)
the proposed transaction is first announced and implemented after
tennination of this Agreement;
immediately after consummation of the transaction, Newholdco is
a publicly listed company and the shareholders of New hold co
immediately after consummation of such transaction are the same
(save as to a de minimis extent) as those of the Seller Parent
immediately prior to the acquisition of the entire issued share
capital of the Seller Parent;
there is no agreement, arrangement or understanding to which the
Seller Parent or Newholdco is a party (whether or not legally
binding) in existence immediately prior to the time the transaction
is implemented whereby there is to be a Change of Control of
Newholdco; and
Newholdco undertakes to the Buyer to be bound by and assumes
all of the outstanding obligations of the Seller Parent under this
Agreement and will be substituted in this Agreement for all
purposes as though it were the Seller Parent.
(c) In the event that this Agreement is tenninated by either the Buyer or the
Seller Parent pursuant to Section 7.1 (b )(ii) in circumstances in which the tennination fee set
forth in clause (b) above is not then payable, the Seller Parent shall pay to the Buyer an amount
equal to $10 000 000.
(d) If the Buyer or the Seller Parent, as the case may be, fails promptly to pay
the amount due pursuant to the preceding paragraphs, and in order to obtain such payment, the
Seller Parent or the Buyer, as the case may be, commences a suit which results in a judgment
against the Buyer or the Seller Parent, as the case may be, for the fee set forth in such paragraph
the Buyer or Seller Parent, as the case may be, shall pay to the Seller Parent or the Buyer, as the
case may be, costs and expenses (including, without limitation, reasonable attorneys' fees and
expenses) in connection with such suit, together with interest on the amount of the fee at an
annual rate equal to the prime rate of JPMorgan Chase Bank in effect on the date such paymentwas required to be made.
SECTION 7.3. Amendment.This Agreement may be amended, supplemented
or modified by action taken by or on behalf of the respective Boards of Directors of the Seller
Parent and the Buyer, whether prior to or after the Seller Parent Shareholders' Approval shall
have been obtained, but after such adoption and approval only to the extent permitted by
applicable law. No such amendment, supplement or modification shall be effective unless set
forth in a written instrument duly executed by or on behalf of the Seller Parent and the Buyer.
SECTION 7.4. Waiver. The Seller Parent (on behalf of itself and the Seller) and
the Buyer maY.to the extent permitted by applicable law (i) extend the time for the performance
of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in
the representations and warranties of the other parties hereto contained herein or in any
document delivered pursuant hereto or (iii) waive compliance with any of the covenants
, .
agreements or conditions of the other parties hereto contained herein. No such extension or
waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of
the Seller Parent or the Buyer, as the case may be, extending the time of performance or waiving
any such inaccuracy or non-compliance. No waiver by any party of any term or condition of this
Agreement, in anyone or more instances, shall be deemed to be or construed as a waiver of the
same or any other tenD or condition of this Agreement on any future occasion.
AR TI CLE VIII.
INDEMNIFICATION
SECTION 8.1. Survival.Subject to Section 8.2(c)(iii), the respective
representations, warranties, covenants and conditions (with the exception of the representations
warranties, covenants and conditions described in the provisos to this Section 8.1) of the parties
hereto contained herein or in any certificates or other documents delivered pursuant to this
Agreement (with the exception of such portion of such certificate or other document pertaining
to the representations, warranties, covenants and conditions described in the provisos to this
Section 8.1) at the Closing shall survive the Closing until the date that is 365 days after the
Closing Date; provided however, that the representations, warranties, covenants and conditions
In:
(a) Article I (Sale and Purchase), subsections (a) (as to Organizational
Documents of the Company) and (e) of Section 2.1 (Organization and Qualification), subsections
(a) and (b) of Section 2.2 (Capital Stock), subsection (a)(ii) (as it applies to Section 4.1(d),
Section 4. (h) (as to Guarantees), Section 4. (i)(x) (as to executive officers and directors of the
Company or its Subsidiaries described therein) and Section 4. 1 (i) (y)) of Section 2.6 (Absence of
Certain Changes or Events), Section 2.19 (Vote Required), Section 2.20 (Affiliate Transactions)
(as to periods commenCing after March 31 , 2005), Section 3.1 (Organization), subsections (a)(i),
(H) and (Hi), (c) (as to Organizational Documents of the Company), (d), (e), (h) (as to
Guarantees), (i)(x) (as to matters involving the officers or directors described therein), (i)(y), G)
and (q) of Section 4.1 (Covenants of the Seller Parent and Seller), Section 4.5 (Contracts),
Section 4.7 (Third Party Standstill Agreements), Section 5.4 (Employee Benefit Plans), Section
5 (Directors ' and Officers ' Indemnification Insurance), Section 5.7 (Expenses), Section 5.
(Brokers or Finders), Section 5.12 (Post Closing Payments), Section 5.14 (Intercompany Items),
. Section 7.2 (Effect of Termination), Section 7.3 (Amendment), Section 7.4 (Waiver), Article
VIII (Indemnification) (including the releases described in Section 8.6) and Article IX shall
survive indefinitely and terminate (if at all) only as therein expressly provided;
(b) Section 2.12 (Taxes), subsection (a)(iv) of Section 4.1 (Covenants of the
Seller Parent and Seller), Section 4.3 (Tax Matters), Section 5.9 (Conveyance Taxes) and Section
13 (Tax Returns) shall survive for a period equal to the applicable statute of limitation in
respect of the Tax involved;
. (c) Section 2.13 (Employee Benefits) and Section 2.15 (Environmental
Matters) shall survive until the third anniversary of the Closing Date; and
(d) Section 4.6 (No Solicitations), Section 4.8 (Joint Executive Committee),
Section 4.9 (Control of Other Party's Business) and Section 5.11 (Seller Parent Cure) shall not
survive the Closing; and
provided further, that a covenant or agreement that has been willfully breached by the Buyer, on
the one hand, or the Seller Parent or the Seller, on the other, shall, as to such breach, survive
indefinitely.
SECTION 8.2. Indemnification Coverage
(a) Notwithstanding the Closing or the delivery of the Shares and regardless
of any investigation at any time made by or on behalf of the Buyer or of any knowledge or
information that the Buyer may have, the Seller Parent shall indemnify and agree to defend, save
and hold the Buyer, the Company and each of their officers, directors, employees, agents and
affiliates (other than the Seller Parent and the Seller) (collectively, the "Buyer Indemnified
Parties ) harmless if any such Buyer Indemnified Party shall at any,time or from time to time
suffer any damage, judgment, fine, penalty, demand, settlement, liability, loss, cost, Tax, expense
(including, without limitation, reasonable attorneys , consultants' and experts ' fees), claim or
cause of action (each, a "Loss ) arising out of, relating to or resulting from:
(i) any breach or inaccuracy (determined without regard to any
qualifier as to "materiality,
" "
material adverse effect" or any derivative of such terms (except
that the word "material" shall not be so disregarded as the same modifies (A) the word
Contracts" or the words "insurance policies " (B) the word "information" in Section 2.5( c )(i),
(C) the word "filings" in Section 2.5(f), and (D)(I) the word "permits" in Section 4.(b), (II) the
. word "agreement" in Section 4.(m), (III) the word "changes" in Section 4.(P), and (IV) the
phrase "actions, suits, arbitrations or proceedings" in Section 4.1 (r), in each case as such
provisions are referred to in Section 2.6(a)(ii)) in any representation by the Seller Parent or the
Seller contained in this Agreement or any certificates or other documents delivered by any of
them pursuant to this Agreement at the Closing;
(ii) any failure by the Seller Parent or the Seller to perfonn or observe
any tenD, provision, covenant, or agreement on the part of any of them to be perfonned or
observed under this Agreement;
(iii) any liability in respect of any business (whether as a transfer of
assets or capital stock) transferred (whether by way of sale, merger, reorganization or
consolidation, distribution or otherwise) or discontinued by the Company or any of its present or
fonDer Subsidiaries after December 6, 1998 to any Person, but only to the extent such liability is
not reflected in the Company s consolidated balance sheet in the FY 2005 Statements;
(iv) any liability resulting by reason of the several liability of the
Company or any of its Subsidiaries pursuant to Treasury Regulations g 1.1502-6 or any
analogous state, local or foreign law or regulation or by reason of the Company or any of its
Subsidiaries having been a member of any consolidated, combined or unitary group on or prior
to the Closing Date, but only to the extent such liability is not reflected in the Company
consolidated balance sheet in the FY 2005 Statements;
(v) any liability for Taxes resulting by reason of the Company or any
of its Subsidiaries ceasing to be a member of any consolidated, combined or unitary group that
includes the Seller, but only to the extent such liability is not reflected in the Company
consolidated balance sheet in the FY 2005 Statements; and
(vi) any liability relating to (x) the Company Employee Retention /
Incentive Program (Apollo Transaction), or (y) any amendment, change, increase, addition or
grant relating to any Employee Benefit Plan that is listed on Section 4.1 (i) of the Seller Parent
Disclosure Letter and effected after March 31 2005 that is not previously approved in writing by
the Buyer or required by any applicable collective bargaining agreement.
(b) Notwithstanding the Closing or the delivery of the Shares and regardless
of any investigation at any time made by or on behalf of the Seller Parent or the Seller of any
knowledge or infonnation that the Seller Parent or the Seller may have, the Buyer shall
indemnify and agree to defend, save and hold the Seller Parent and the Seller and their officers
directors, employees, agents and affiliates (other than the Buyer) (collectively, the "Seller
Indemnified Parties ) hanDless if any such Seller Indemnified Party shall at any time or from
time to time suffer any Loss arising out of, relating to, or resulting from:
(i) any breach or inaccuracy (detennined without regard to any
qualifier as to "materiality" or "material adverse effect" included therein) in any representation
or warranty by the Buyer contained in this Agreement or any certificates or other documents
delivered by the Buyer pursuant to this Agreement at the Closing; and
(ii) any failure by the Buyer to perform or observe any tenD, provision
covenant, or agreement on the part of the Buyer to be performed or observed under this
Agreement.
(c) The foregoing indemnification obligations shall be subject to the
following limitations:
(i) the Seller Parent's aggregate liability under Section 8.2(a)(i) and
the Buyer s aggregate liability under Section 8.2(b)(i) shall not, in either case, exceed 50% of the
Purchase Price (the "Cap
);
provided however, that the Cap shall not be applicable to breaches
of the representations and warranties described in clause (a) of the first proviso to Section 8.1 or
of the representations and warranties in the first two sentences of Section 2.12(c);
(ii)no indemnification for any Losses shall be asserted against:
(x) the Seller Parent under Section 8.2(a)(i) or against the
Buyer under Section 8.2(b )(i) unless and until the cumulative aggregate amount of such
Losses (other than those arising from breaches described in the penultimate sentence of
this Section 8.2(c)(ii)) exceeds $50 million (the "Threshold"), at which point the Seller
Parent or the Buyer, as the case may be, shall be obligated to indemnify the Buyer
Indemnified Parties or Seller Indemnified Parties, as the case may be, only as to the
amount of such Losses in excess of $25 million (the "Deductible ), subject to the
limitation in Section 8.2( c )(i);
(y)
the Seller Parent under Section 8.2(a) (other than in respect
of a breach of Section 4.1 (a)(viii) or of the Seller Parent's or the Seller s representations
warranties, covenants and conditions described in clause (a) of the first proviso to Section.
1 (other than Section 2.6(a)(ii) (as to Section 4.1(h) and (i)), Section 4.1(h) and (i) and
Section 4.5) or in the second proviso to Section 8.1) or the Buyer under Section 8.2(b)
(other than in respect of the Buyer s representations, warranties, covenants and
conditions described in clause (a) of the first proviso to Section 8.1 or in the second
proviso to Section 8.1), if the amount of such Loss, together with all related claims, is
less than $10 000 and in such case, such Loss shall be completely disregarded for the
purposes of contributing toward the Threshold; or
(z) the Seller Parent under Section 8.2(a)(ii) or the Buyer under
Section 8.2(b )(ii) unless and until the cumulative aggregate amount of Loss in respect of
claims arising under Section 8.2(a)(ii) or 8.2(b)(ii), as the case may be, and not arising
from breaches described in the last sentence of this Section 8.2(c)(ii), exceeds $7.
million (the "Covenant Deductible
);
provided, that for purposes of the immediately preceding clauses (y) and (z), a covenant shall be
deemed breached without regard to any qualifier therein as to "materiality,
" "
material adverse
effect" or any derivative of such terms. The Threshold and the Deductible shall not be
applicable to breaches of the representations and warranties described in clause (a) of the first
proviso to Section 8.1 and the first two sentences of Section 2.12(c). The Covenant Deductible
. shall not be applicable to breaches of Section 4. (a)(viii), Section 5.3 or the covenants described
in clause (a) of the first proviso to Section 8.1 (other than Section 4. (h) and Section 4.5)or in
the second proviso to Section 8.
(Hi) no claim may be asserted nor may any action be commenced
(A) against the Seller Parent pursuant to Section 8.2(a), unless written notice of such claim or
action is received by the Seller Parent describing in reasonable detail the facts and circumstances
with respect to the subject matter of such claim or action and the basis upon which indemnity is
claimed on or prior to the date on which the representation, warranty, covenant or condition on
which such claim or action is based ceases to survive as set forth in Section 8.1 (it b.~ing agreed
and understood that if a claim for a breach of a representation, warranty, covenant or condition is
timely made, the representation, warranty, covenant or condition shall survive until the date on
which such claim is finally liquidated or otherwise resolved), or (B) against the Buyer pursuant
to Section 8.2(b), unless written notice of such claim or action is received by the Buyer
describing in reasonable detail the facts and circumstances with respect to the subject matter of
such claim or action and the basis upon which indemnity is claimed on or prior to the date on
which the representation, warranty, covenant or condition on which such claim or action is based
ceases to survive as set forth in Section 8.1 (it being agreed and understood that if a claim for a
breach of a representation, warranty, covenant or condition is timely made, the representation or
warranty shall survive until the date on which such claim is finally liquidated or otherwise
resolved);
(iv) an Indemnified Party shall not be entitled under this Agreement to
multiple recovery for the same Losses;
(v) a Buyer Indemnified Party shall not be entitled under this
Agreement to recover any Loss arising from the breach or inaccuracy of the Seller Parent's or the
Seller s representations and warranties if such breach or inaccuracy resulted from (x) the effects
of the transactions expressly permitted by Sections 4.(d) through (k), inclusive, or (y) obtaining
any consent or approval in respect of the Company, its Subsidiaries or the Joint Ventures of any
Governmental or Regulatory Authority and, in respect of which consent or approval, the actions
taken by the Company, its Subsidiaries and the Joint Ventures were approved by the Buyer or the
Joint Executive Committee as provided in Section 4.8 or 5., as the case may be;
(vi) each of the Buyer and Seller Parent, as the case may be, shall use
reasonable commercial efforts to mitigate Loss otherwise subject to indemnification hereunder.
The Buyer shall, and shall cause the Company to, reasonably cooperate with the Seller Parent in
recovering from the Company s insurers (other than the Buyer and its Subsidiaries and the
Company and its Subsidiaries) or other third parties (including with respect to enforcement of the
Company s indemnification rights), in each case to the extent the same are liable therefor, any
Loss paid by the Seller Parent pursuant to this Article VIII; provided, that the Seller Parent
promptly reimburses the Buyer or the Company, as the case may be, for any third party cost or
expense incurred by any of them or the Company s Subsidiaries in connection with such
cooperation. The Buyer shall, and shall cause the Company to, refrain from searching for
environmental hazards on the property of the Company, its Subsidiaries or the Joint Ventures
except, (x) as required by law, (y) in connection with any financing,. sale or lease in respect of
any such property, or (z) at any time after the Buyer, the Company or any of the Company
Subsidiaries, or any Joint Venture becomes aware of the reasonable possibility of any such
hazard existing, in each case, in the exercise of their prudent business judgment;
(vii) Seller will be entitled to any credits and refunds (including interest
received thereon) in respect of any taxable period ending on or prior to March 31 , 2005, except
to the extent any such creditor refund is specifically reflected in the Company s consolidated
balance sheet in the FY 2005 Statements;
(viii) it is the intention of the parties to treat any indemnity payment
made under this Agreement as an adjustment to the Purchase Price for all federal, state, local and
foreign Tax purposes, and the parties agree to file their Tax Returns accordingly;
(ix) the amount of any Loss shall be reduced by the Tax benefit
actually realized by a Buyer Indemnified Party where a Buyer Indemnified Party is the
Indemnified Party or a Seller Indemnified Party where a Seller Indemnified Party is the
Indemnified Party. If there is no reduction in the amount of any indemnified Loss at the time an
indemnification payment is made because no Tax benefit is actually realized in the Tax year for
which the payment was made, the Indemnified Party will pay the Indemnifying Party an amount
equal to any Tax benefit realized in each subsequent Tax year at the time the Tax Return for each
subsequent Tax year is due (without regard to extensions). In computing the amount of any Tax
benefit, a person shall be deemed to realize the benefit arising from the incurrence or payment
any amount for which indemnification is requested pursuant to this Section 8.2 after the use of
all other items of loss, deduction and credit of such Indemnified Party, including net operating
loss carryforwards. The Indemnified Party will detennine in good faith the time and amount of
any Tax benefit actually realized in any given year and will provide a summary explanation of
such determination to the Indemnifying Party. If the Indemnifying Party disputes the
computation of such benefit by the Indemnified Party, such dispute shall be resolved by an
accounting firm or law firm mutually agreed upon by the Indemnified Party and the
Indemnifying Party;
(x) a Buyer Indemnified Party shall not be entitled to recover under
Section 8.2(a)(i) any incremental environmental remediation or corrective action costs associated
with a material change in the use of the subject parcels from the use of the subject parcels as of
the Closing Date; and
(xi) the indemnification obligations of the Seller Parent hereunder shall
include any Losses (otherwise subject to the Seller Parent's indemnification obligations
hereunder) which are paid or became payable or are otherwise incurred by the Company or its
Subsidiaries at any time after March 31 , 2005.
SECTION 8.3. Procedures. The person providing (as required to provide)
indemnification in respect of a claim pursuant to this Article VIII as herein called, in respect of
such claim, the "Indemnifying Party". Each Buyer Indemnified Party and each Seller
Indemnified Party is, in respect of a claim for which indemnification is sought, is herein called
in respect of such claim, an "Indemnified Party". Any Indemnified Party shall notify the
Indemnifying Party (with reasonable specificity) promptly after it becomes aware of facts
supporting a claim or action for indemnification under this Article VIII, and shall provide to the
Indemnifying Party as soon as practicable thereafter all information and documentation
reasonably necessary to support and verify any Losses associated with such claim or action.
Subject to Section 8.2( c )(iii), the failure to so notify or provide information to the Indemnifying
Party shall not relieve the Indemnifying Party of any liability that it may have to any Indemnified
Party, except to the extent that the Indemnifying Party demonstrates that it has been materially
prejudiced by the Indemnified Party's failure to give such notice, in which case the Indemnifying
Party shall be relieved from its obligations hereunder to the extent of such material prejudice.
The Indemnifying Party shall defend, contest or otherwise protect the Indemnified Party against
any such claim or action by counsel of the Indemnifying Party's choice at its sole cost and
expense; provided however, that the Indemnifying Party shall not make any settlement or
compromise without the prior written consent of the Indemnified Party (which consent shall not
be unreasonably withheld or delayed) unless the sole relief provided is monetary damages for
which the Indemnifying Party has unconditionally acknowledged liability pursuant to the terms
of this Article VIII. The Indemnified Party shall have the right, but not the obligation, to
participate at its own expense in the defense thereof by counsel of the Indemnified Party's choice
and shall in any event use its reasonable best efforts to cooperate with and assist the
Indemnifying Party. If ( a) the Indemnifying Party fails timely to defend, contest or otherwise
protect against such suit, action, investigation, claim or proceeding with counsel reasonably
acceptable to the Indemnified Party, (b) the Indemnifying Party fails to state in a written notice
given to the Indemnified Party not later than 20 days after the Indemnified Party received notice
of a claim pursuant to Section 8.2( c )(iii) that the claim is properly the subject of indemnification
pursuant to this Agreement (subject only to the Cap, Threshold or Deductible, if applicable), (c)
in the reasonable judgment of the Indemnified Party there are conflicts of interest (other than as a
result of this Article VIII) between the interests of the Indemnified Party and the Indemnifying
Party in respect of such claim, or (d) the claim is not solely for monetary relief or the claim
involves a criminal matter, the Indemnified Party shall have the right to control the defense of
such claim with counsel of its own choosing, including, without limitation, the right to make any
compromise or settlement thereof, and the Indemnified Party shall be entitled to recover the
entire cost thereof from the Indemnifying Party, including, without limitation, reasonable
attorneys' fees , disbursements and amounts paid as the result of such suit, action, investigation
claim or proceeding.
SECTION 8.4. Remedy Absent fraud, and except for seeking equitable relief
from and after the Closing the sole remedy of a party in connection with (i) a breach or
inaccuracy of the representations or warranties in this Agreement or any certificates or other
documents delivered pursuant to this Agreement at Closing, or (ii) any failure by a party to
perform or observe any term, provision, covenant, or agreement on the part of such party to be
performed or observed under this Agreement, shall, in each case, be as set forth in this
Article VIII.
SECTION 8.5. Limitation on Claims The Seller Parent and Seller shall not be
liable pursuant to Section 8.2(a)(i) for any Loss in respect of any matter hereunder to the extent
that:
(a) such Loss arises or, such Loss otherwise having arisen, is increased as a
result of any change made after Closing in any accounting or taxation policies or accounting or
taxation practice of the Company and its Subsidiaries or any other member of the Company
consolidated tax group, save to the extent that any such change is required to bring the
accounting or taxation policies or accounting or taxation practice of that company into line with
S. generally accepted accounting or taxation policies or accounting or taxation practice or any
Tax law (as the case may be) as at the Closing Date; or
(b) such Loss is recovered through a rate increase expressly attributable to
such Loss that is approved by the applicable state Governmental or Regulatory Authority (and, to
the extent the Seller Parent has made any payment pursuant to this Article VIII in respect of such
Loss before such recovery, the Buyer shall, or shall cause the Buyer Indemnified Party receiving
. such recovery, to pay the same over to the Seller Parent).
SECTION 8.6. Release of Directors The Buyer shall cause the Company to
release each director of the Company who resigns at the Closing from any and all liability the
same may have to the Company as a director thereof arising on or before the Closing other than
liabilities arising from his negligence, recklessness, criminal conduct or self-dealing; provided
that (a) nothing in said release shall increase the obligations of the Buyer or of the Company
under Section 5.5 or the liability of any insurer to such director in respect of any insurance policy
described in Section 5.5(b) and (ii) such director releases the Company and its affiliates from any
and all liabilities arising on or before the Closing for compensation of any nature (including
directors' fees) or any reimbursement of expenses.
ARTICLE IX.
GENERAL PROVISIONS
SECTION 9.1. Notices. AU notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if delivered
personally or by.facsimile transmission or mailed (first class postage prepaid) to the parties at the
following addresses or facsimile numbers:
If to the Seller or the Seller Parent, to:
Scottish Power pIc
1 Atlantic Quay
Glasgow G2 8SP
Facsimile No.: 011-44-141-248-8300
Attn: Company Secretary
with a copy to:
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, N.Y. 10005
Facsimile No.: [phone]
Attn: M. Douglas Dunn and John T. O'Connor
and to:
Freshfields
65 Fleet Street
London EC4Y IHS
Facsimile No.: 011-44-171-832- 7001
Attn: Simon Marchant
If to the Company, to:
PacifiCorp
825 N .E. Multnomah
Portland, Oregon 97232-4116
Facsimile No.: [phone]
Attn: General Counsel
with a copy to:
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, N.Y. 10005
Facsimile No.: [phone]
Attn: M. Douglas Dunn and John T. O'Connor
If to Buyer, to:
MidAmerican Energy Holdings Company
302 South 36th Street
Suite 400
Omaha, NE 68131-3845
Telephone: [phone]
Facsimile: [phone]
Attn: DouglasL. Anderson
with a copy to:
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019-6099
Telephone: [phone]
Facsimile: [phone]
Attn: Peter J. Hanlon
and to:
LeBoeuf, Lamb, Greene & MacRae LLP
125 West 55th Street
New York, NY 10019
Telephone: [phone]
Facsimile: [phone]
Attn: William S. Lamb
and to:
Herbert Smith LLP
Exchange House
Primrose Street
London
EC2A 2HS
England
Telephone: [phone]
Facsimile No. [phone]
Attn: Henry Davey
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon delivery, (ii) if
delivered by facsimile transmission to the facsimile number as provided in this Section, be
deemed given upon receipt, and (Hi) if delivered by mail in the manner described above to the
address as provided in this Section, be deemed given upon receipt (in each case regardless of
whether such notice, request or other communication is received by any other person to whom a
copy of such notice, request or other communication is to be delivered pursuant to this Section).
Any party from time to time may change its address, facsimile number or other infonnation for
the purpose of notices to that party by giving notice specifying such change to the other parties
hereto.
SECTION 9.2. Entire Agreement Incorporation of Exhibits. (a) Subject to
paragraph (b) below, this Agreement supersedes all prior discussions and agreements among the
parties hereto with respect to the subject matter hereof, other than the Confidentiality Agreement
which shall survive the execution and delivery of this Agreement in accordance with its tenns
and contains, together with the Confidentiality Agreement, the sole and entire agreement among
the parties hereto with respect to the subject matter hereof.
(b) The Seller Parent Disclosure Letter and any Exhibit or Schedule attached
to this Agreement and referred to herein are hereby incorporated herein and made a part hereof
for all purposes as if fully set forth herein.
SECTION 9.3. Public Announcements. Except as otherwise required by law or
the rules of any applicable securities exchange or national market system or any other
Governmental or Regulatory Authority (including, but not limited to, the UKLA and the U.
Takeover Panel), and except as has been approved by the Buyer in favor of the Seller Parent, the
Seller or the Company as of the date hereof, so long as this Agreement is in effect, the Buyer on
the one hand, and the Seller Parent, the Seller and the Company on the other hand, will not, and
will not permit any of their respective Subsidiaries or Representatives to, issue or cause the
publication of any press release or make any other public announcement with respect to the
transactions contemplated by this Agreement without the consent of the Seller Parent or the
Buyer as the case may be, which consent shall not be unreasonably withheld. The Buyer, the
Seller Parent and the Company will cooperate with each other in the development and
distribution of all press releases and other public announcements with respect to this Agreement
and the transactions contemplated hereby, and will furnish the other with drafts of any such
releases and announcements as far in advance as practicable.
SECTION 9.4. Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their respective successors
or permitted assigns, and except as provided in Section 5., Article VIII and Section 9.14 (which
are intended to be for the benefit of the persons entitled to therein, and may be enforced by any
of such persons), it is not the intention of the parties to confer third-party beneficiary rights upon
any other person.
SECTION 9.5. No Assignment: Binding Effect.Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto without the prior
written consent of the other parties hereto and any attempt to do so will be void, except that (a)
the Buyer may assign any or all of its rights, interests and obligations hereunder to any of its
affiliates and (b) the Seller may assign all of its rights, interests and obligations hereunder to the
transferee of the Shares permitted by the proviso immediately following Section 4.(a)( viii)
hereof. This Agreement is binding upon, inures to the benefit of and is enforceable by the parties
hereto and their respective successors and assigns.
SECTION 9.6. Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define, modify or limit the provisions
~~ .
SECTION 9.7. Invalid Provisions . If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future law or order, and if the rights or
obligations of any party hereto under this Agreement will not be materially and adversely
affected thereby, (i) such provision will be fully severable, (ii) this Agreement will be construed
and enforced as if such illegal, invalid or unenforceable provision had never comprised a part
hereof, and (iii) the remaining provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid or unenforceable provision or by its severance
herefrom.
SECTION 9.8. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to a contract executed
and performed in such State, without giving effect to the conflicts of laws principles thereof.
SECTION 9.9. Submission to Jurisdiction: Waivers Each of the parties hereto
agrees to submit to the exclusive jurisdiction of either the Supreme Court of the State of New
York in New York County or the United States District Court for the Southern District of New
York provided.that nothing in this clause shall prevent the Buyer at its discretion from bringing
proceedings against the Seller, the Seller Parent or the Company (A) in any other court of
competent jurisdiction in the United Kingdom, or (B) in any other court of competent
jurisdiction to enforce any order or judgment from any of the aforesaid courts. Any service of
process to be made in such action or proceeding may be made by delivery of process in
accordance with the notice provisions contained in Section 9.1. Each of the Seller, the Seller
Parent, and the Buyer hereby irrevocably waives, and agrees not to assert, by way of motion, as a
defense, counterclaim or otherwise, in any action or proceeding with respect to this Agreement
(a) the defense of sovereign immunity, (b) any claim that it is not personally subject to the
jurisdiction of the above-named courts for any reason other than the failure to serve process in
accordance with this Section 9, ( c) that it or its property is exempt or immune from jurisdiction
of any such court or from any legal process commenced in such courts (whether through service
of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of
judgment or otherwise), and (d) to the fullest extent permitted by applicable law that (i) the suit,
action or proceeding in any such court is brought in an inconvenient forum, (H) the venue of such
suit, action or proceeding is improper and (Hi) this Agreement, or the subject matter hereof, may
not be enforced in or by such courts.
SECTION 9.10. Enforcement of Agreement.The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specified terms or was otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
SECTION 9.11. Certain Definitions. As used in this Agreement:
(a) except as specifically provided otherwise or as used in Sections 2.2(a) and
, the term "affiliate " as applied to any person, shall mean any other person directly or
indirectly controlling, controlled by, or under common control with, that person; for purposes of
this definition
, "
control" (including, with correlative meanings, the terms "controlling,
controlled by" and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the direction of the management
and policies of that person, whether through the ownership of voting securities, by contract or
otherwise;
(b) a person will be deemed to "beneficially" own securities if such person
would be the beneficial owner of such securities under Rule 13d-3 under the Exchange Act
including securities which such person has the right to acquire (whether such right is exercisable
immediately or only after the passage of time);
(c) the term "business day" means a day other than Saturday, Sunday or any
day on which banks located in New York, New York or London, England are authorized or
obligated to close;
(d) the term "capital stock" means any of the various shares of ownership in
a business, including, without limitation, stock of a corporation, membership interests in a
limited liability company and partnership interests in a partnership;
(e) the term "knowledge" or any similar formulation of "knowledge" shall
mean with respect to the Seller Parent or the Seller, the actual knowledge after due inquiry of the
persons set forth in Section 9.11 ( e) of the Seller Parent Disclosure Letter;
(f) any reference to any event, change or effect having a "mater~al adverse
effect" on or with respect to an entity (or group of entities taken as a whole) means such event
change or effect is materially adverse to the business, properties, assets, liabilities, financial
condition or results of operations of such entity (or of such group of entities taken as a whole);
(g)
the term "person" shall include individuals, corporations, partnerships
trusts, other entities and groups (which term shall include a "group" as such term is defined in
Section 13(d)(3) of the Exchange Act);
(h) the "Representatives" of any entity means such entity's directors
officers, employees, legal, investment banking and financial advisors, accountants and any other
agents and representatives;
(i) except as used in Sections 2.2(c) and 2.17, the term "Subsidiary" means
with respect to any party, any corporation or other organization, whether incorporated or
unincorporated, of which more than fifty percent (50%) of either the equity interests in, or the
voting control of, such corporation or other organization is, directly or indirectly through
Subsidiaries or otherwise, beneficially owned by such party;
G) "Tax" (or "Taxes" as the context may require) shall mean any federal
state, local or foreign net income, gross income, gross receipts, severance, property, production
sales, use, license, excise, franchise, employment, payroll, withholding, premium, alternative or
add-on minimum, estimated, ad valorem, value-added, transfer, stamp, or environmental
(including taxes under Section 59 A of the Code) tax, or any other similar tax, customs duty,
withholding, charge, fee, levy or other assessment, including any interest, penalty or addition
imposed on such taxes by any taxing authority of any jurisdiction;
(k) "Tax Return" (or "Tax Returns" as the context may require) shall mean
any return, report, claim for refund, information return, amended return or declaration of
estimated Tax or similar statement (including any schedule attached thereto) filed, or required to
be filed, with respect to any Tax or Taxes; and
(1) any reference to "transactions contemplated hereby,
" "
transactions
contemplated hereunder
" "
transactions contemplated by this Agreement
" "
transactions
contemplated under this Agreement" or any similar formulation shall include the transactions
contemplated by this Agreement.
SECTION 9.12. Counterparts. This Agreement may be executed in any number
of counterparts, each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
SECTION 9.13. WAIVER OF JURY TRIAL. EACH PARTY HERETO
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTION CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR A TIORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGA nON, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (B) ACKNOWLEDGES THA T IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.14. Limitation of Liabili . No recourse shall be had for any claim
based on or otherwise in respect of this Agreement or the transactions contemplated hereby
(including, without limitation, any certificate delivered pursuant to Article VI at the Closing)
against any stockholder of the Buyer or the Seller Parent or any officer, employee, partner
member or director (whether past, present or future) of the Buyer, the Seller Parent, the Seller or
the Company or any of their respective affiliates.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SCOTTISH POWER PLC
By: /s/ James Stanley
Name: James Stanley
Title: Commercial Qirector
ACIFICORP HOLDINGS, INC.
By: /s/ James Stanley
Name: James Stanley
Title: Commercial Director
MID AMERICAN ENERGY
HOLDINGS COMPANY
By: /s/ Douglas L. Anderson
Name: Douglas L. Anderson
Title: Senior Vice President
Signature Page to Stock Purchase Agreement
GLOSSARY OF DEFINED TERMS
Each of the following terms have the meanings ascribed to them in the Section of
this Agreement set forth opposite such term:
Defined Term Section of Aereement
2.1 (a)
11(a)
Preamble
9.11(b)
9.11(c)
Preamble
5.4(b )(iii)(B)
2(a)
2(c)(i)
9.11(d)
7 .2(b )
9(a)
1.2
1.2
2. 12(a)(i)
Recitals
9(a)
Recitals
4.1(f)
5( c)
5(a)
2(a)(ii)
2(e)
1(d)
i4(a)
9.11(a)
2(c)(ii)(z)
2.1 (c)
2( c )(ii)(x)
5(t)
5(a)
13(b)
1.1
7.1 (d)
15(g)
1935 Act
affiliate
Agreement
Alternative Proposal
Antitrust Division
beneficially
business day
Buyer
Buyer Actuary
Buyer Indemnified Parties
Cap
capital stock
Change of Control
Circular
Closing
Closing Date
Code
Common Stock
Companies Act
Company
Company Budget
Company Reporting Entity
Company Financial Statements
Company Permits
Company Preferred Stock
Company Trading Guidelines
Company Voting Debt
Competing Transaction
Confidentiality Agreement
Contracts
control
Covenant Deductible
Cutoff Date
Deductible
DOE
Draft 2005 10-
Employee Benefit Plan
Encumbrances
Energy Property
Environmental Claims
Defined Term
Environmental Laws
Environmental Permits
Equity Plans
ERISA
ERISA Affiliate
Exchange Act
FCC
FERC
Final Order
FTC
Funded Accounts
FY 2005 Statements
Governmental or Regulatory Authority
group
Guarantees
Hazardous Materials
HSR Act
Indemnified Party
Indemnifying Party
In te 11 ectual Property
Joint Executive Committee
J oint Venture
knowledge
laws
Listing Rules
Loss
material adverse effect
material weakness
Medical Transfer Amount
Net Company Position
Newholdco
NRC
Options
orders
Organizational Documents
person
PBGC
Pension Transfer Amount
PFS
Plan
Plan Actuary
Power Act
Pro-Ration Fraction
Purchase Price
Release
Section of A!reement
15(g)
2.15(b)
5.4(a)
2.13(b )
2.13(b )
2.4(b )
2.4(b)
5(f)
6.1 (d)
5.4(b )(v)(A)
5(a)
2.4(a)
9.11(g)
4. 1 (h)
15(g)
2.4(b)
2.16
1(b)
9.11(e)
2.4(a)
9(a)
2(a)
11(f)
5(e)
5.4(b )(v)(A)
7 .2(b )(iii)
2.4(b )
2(a)
2.4(a)
1(a)
9.11(g)
2.13(g)
5.4(b)(iii)(A)
12(a)
2.13(b )
5.4(b)(iii)(B)
1(a)
1'(a)(i)
1.2
15(g)
Defined Term
reportable condition
Representatives
Sarbanes-Oxley Act
SEC
SEC Reports
Securities Act
Seller
Seller Indemnified Parties
Seller Parent
Seller Parent Disclosure Documents
Seller Parent Disclosure Letter
Seller Parent Shareholders' Approval
Seller Parent Shareholders ' Meeting
Share Purchase
Shares
Subsidiary
Tax
Tax Return
Tennination Date
Terrorist Attack
Threshold
transactions contemplated hereby /
transactions contemplated
hereunder / transactions
contemplated by this Agreement /
transactions contemplated under
this Agreement
Transferred Group Entity
Transferred Group Pension Plan
Transferred Group Post Retirement
Welfare Plans
Transferred Group Savings Plan
Transferred Individuals
UKLA
VEBAs
111
Section of A2reement
5(e)
9.11(h)
5(b )
4(b )
5(a)
1(d)
Preamble
8 .2(b)
Preamble
2. 9( a)
1(a)
2(a)
2(a)
2.3
Recitals
11(i)
11 G)
11(k)
5.4(a)
2( c)
2(c)(ii)(x)
11(1)
5 .4(b )(i)
5.4(b )(i)
5 .4(b )( i)
5.4(b )(i)
5.4(b)(i)
2A(b)
5.4(b)(v)(A)