20060606Exhibit A.pdf

,.., ,
CERTIFICATE EXInBIT A
Sta te 'of Oregon.
, . -
OFFICE OF THE SECRETARY OF STATE
Corporation Division PAG--6""'O 1
/,
BILL BRADBURY, Secretary of State of Oregon, and Custodian of the Seal
of said State, do hereby certify:
That the attached copy of the
Third Restated
Articles of Incorporation
filed on
August 11, 1987
and all amendments thereto
for
P A CIFICORP
is a true copy of the original document
that has been filed with this office.
In Testimony Whereof, I have hereunto set
my hand and affixed hereto the Seal of the
State of Oregon.
BILL BRADBURY, Secretary of State
February 13,2006
Come visit us on the Intemet at http://www.filinginoregon.com
FAX [phone] .
1106
' "
Submillh8 original
and on. lrue copy
" $10,
, - ' " ", ,
, THIS$)o~aFOAoFFaUSE OHlY"
, '~;;':-;''~':'~"',.-~",, "
~.i.lV20/96 4:f!Jl~!.~6 $10~OO~:':i
' ~ ", ~~~
2 0 199& '
SECRETARY OFSTA-n '
, ", '::", , ":~~~ :~~" , ." "" , ,,-'
Jobn M. Schweitzer (~n 4821am~ '
, '
aytime phone number'
Makes checks payal;)le to the Corporation DivISion. SUbmlt't ~e completed fonn and f~ to: Corpori~n DIVISIO110
, Business Registry, 15812th Slreet NE;Salem"Oregon 9731()'O~10. '
~ ." ~ ': ' ;
eC-4(4J90)
, ,' ';'
' O
,,'
(;l.,
: ,, ,~:,,-:~'::'
:';1:"'r;-.
,)~~~:, : " " . ~: '
~:i;"
;':~":::"
:i;:,;,;~~;
~~:;~~"..
;h;;;~:.-iio
~~:~~
ii.;i;,
~...:
~i.-#:~l'::.;~~~~J'
- :..
S~CRET.4RYOF STATE
CotpOt811olt'DlvIslon
"~B.~liless Reglst~
, "
L ;"1~"2thSlre:etNe '
Registry Number.
" .. ... '
~Sat8~ 08,7310:-0210
(,~FQ..q'7-
;:"
' :(5~~378~1~
- -- ~~ESTATE(iA~JjCltES(OF,INCciR POAAT.-iON'
" :", ,
~;~~~!!~i~,
~~~-
~~~~J~~:~
:;,~~:/:~;, , ' '' "", ...:,: -,' ~...." -" ,,~ ~':'" ,,-.,. .--
:".,yo::"
,,, ", ""'-":':":;".--" ".", ~, '' " ,, '' '
~~LEA'SE TV PEp A PAINTLEGIBLX ,CKINK ,
, ,. ", ", "":"-;~""";:"":,
1. Name of the corporation pri~r to ~en~ent
( - '' ,, ,. ,
PacifiCorp ,
2. New name of the corporation Qf Changed):
3. A copy ~nhe restated articles Is attached.
,. ,
4. Check the appropriate stat9JT1ent(s):
(j) The restated article~ ~ntain amendments which do' not fequlr~ sJ1areholder approval.
These amendments were ~Iy adopted by the board ordiredors~'
The restatSd articles cPotain amendments whIch rec:iul~~ shareholder approval~ The
date of adoption of the restated articles was 19---- which, is the
data of adoption of 'amendments included in the restated articles., The vote of the $hare-
holders was as follows:
' ,
Class or series of Number of shares Number of votes Number of votes Nurr.ber~' votes
shares oulstanding,entitled to be cast castfor 'cast, against
, ,- -- ,-
5; Other provisions. if applicable:
Execution:Richard T. 0' Brien Senior Vnnted name QUe! Financi
Person to contad abp,ut, this filing:
!:;..
::;:~
lr~
~.' , , ,::,: '
THnm'REsTAJE)'
~~~~~' ,
INCORPoRA~9~
. ..
~1;O
tlQ(2~,
~:
sECRETARY OF STATE
P ACIFICQRP
ARTI~ I
The name of the Company is PacifiCorp.
ARTICLE U
.-'
ThepuIpO!;eS f9i' wl1Jcb the Company is crga";:-~11&"': tl'.e m:;1;uf4cture., production.
generation. storage. ~rzation.
~.
sale; supply.~ission, di~but~on. or disposition
of electric energy, nawral '0(, artU.ci31 gas"water or Steam" or po-wer produced thereby; and the
tranSaCtion of any and' all other lawful buSinesses for which corporations may be organized under
the Oregon Business Corporation 'Act.
, .
ARTI~;,
(I)
, ,, , ,,
ThC tOtil :lmoUnt of "hf8 au!!!Qr'~~
~~
~..cc~ 'of ;h~Cviiip4iiY is 76;,626.533
.:
shares. divided in1o 126,533 shares,ot ~% Prefe~, Stock of the stated value of $100 per share.
, .....;
500,000 sruues 'of SePa1 Pn;,ferred Stock of the stated' value of ,$100 per share. 16.000,000
shares of No Par Serial,Preferred Stock (the 5% Pref~ Stoc " the, Se~a1 Preferred Stock and
the No Par Serial Prefefred Stock C()lIectively referred to herein as the .Senior Securities
--'
and
- '
750.000,000 shares iof Common StOck.
The % Preferred S~k~ pari with the oilier Senior Securities. shall be
, ,~;,:;~ '
(2)
entitled. but only when as declared by the Board of Directo~, out of funds legally available
, for the pa~nt, of dividends. in preference to thC Common Stock. to dividends at the rate of
LLOl-SlU).
, ,
5 per ce~(5$) perammm of the stated value thereof, and 00 more. payable quarterl,y on
Fcb~:15. May Ij. AU~ 15' and November 15 of ea~ y or otherWise as the Board,
Directors may, de (such d3tCs~ including any changes thereof, tx:ing ~ereinaftei refe~
to as the .Payment. DileS.). to -s~tiolders of record as of a' date to be fIXed by the Board of
Directors. Dot
~~~g,
thirty (30) days not less than ten (10) days' preceding the Paym,ent
" ""- ', '-
Dates. such~ivid~ to be Cum~lative fro~ the day immediately fol1owing the last periOd for
which dividends '~n the S$ Preferred Stock of PacifiCorp. a Maine corporation. have been
declared (SQCh date being hereinafter referred to as the . Accrual Date ). The Serial P~ferred
Stock., pari passu with du: other S~nio~~rides, s!-..2!! !r- entitled. ,but only when and as
declared by the Board of Directors. out of funds legally available for the payment of dividends.
in preference to the Common Stock, to dividc:ndS at the rate or rates. which may be subject to
adjusnnent, as to each series thereof, fIXed and detennined 'pursuant to Section (5) or (6) of this
Article at the tinie of the creation of such series. and no more. payable as the Board of Directors
may from time to time determine. '5\K;h dividerxJs to be cumulative from the date of issue of such
Stock or as otherwise provided in Section (6) of "'is Art.kle. ,11-- No P:r Scr.al Preferred Stoc~
pari
p~ ,
with the other Senior :securities, shall be entitled, but only when and as declared by
Board of. Directors, out of ~legaUy a~le for the paytnen1 of dividends. in preference
to the Common Stock, to di~ 3:t the rate or rates, which may be subj~t to adjustment, as
to each series t,bereof. fIXed and, detennined pursuant to Section (5) o~ (7) of thiS Article ,at the
time of the creation of such series, and no' more, payable as the Board of Directors may from
time to Urne determine, such, dividends to be cumulative from the date of issue of such stOCk or
as othe",:ise provided in Section (7) of this Article.
LLOJ,-SI20.SIICHI-GOU
, ,, ,
~'!~~~~?f?;~"'
""'' '- ',:~,""""""""'-~"""""""
(3)In the event of any voluntary liquidation. dissolution or winding up'
of tile
Company. the 5 %' Pref~rred 'Stock. pari passu with the other Senior Securities, also have
a preference ovef.~ ~~Stock until $110 per share and five per centUm (5%) per annum
". ,'-'~ "
on the stated vaiue thUeof -from and after the date on winch dividends on suCh stock beCame
cumulative:. s~r ~ve been ~d by dividends or distribution; the Serial Preferred Stoclc. pari
passu with the 'Qther Senior Securities.. shall also have a preference over the Common Stock,
until there shall have been paid. by dividends or distribution on each share of the Serial
. '
Preferred StoCk, the amount as to each series thereof fIXed and determined by resolution of the
Board of Directors or pursu!lnt to Section (6) of this Article 3t the time of the creation of each
such series. plus, the,amowu; if any. by which dividends at JPe 9r rateS, fIXed and determined
for sucJt stock pursuant to Section (5) or (6) of this At:ticle. from and after the respective dates
on which dividends on such stock became cumulative to the date of such distribution. exceed the
dividends acroally paid thereon or declared and set apan for payment t!=reon-. emd the No Par
serial Preferred StoCk. pari passu with the other Senior Securities. shall also have a preference
over the Common St~k. until there shan hive been paid. by dividends or distribution on each
. \
share of the No Par Serial Preferred Stock. the amount as to each' series thereof \ fIXed and
detennined by resolution of the Boald of Directors or pursuant: to Section (1) of this Anicle at
the time of the creation of each such series. plus the amount, if any. by which dividends at the
rare or rates fIXed and determined for such stock p~t to Section (5) or (7)' of this Article,
from and after the respective dates on which dividends aD such stock became cumulative to the
date of such distribution, exceed the dividends achlaUy paid L'lereon or declUed and set apaI1
for payment thereon.
UoCIloS12C1.SlIGC.oaU
!,;
.~'
;;:~r:";
;,;,:!:",:,:~"":,:-:"':-~
t~,:,
~""~'"' ,, ,.. ,"" """-"'~-"-:";'
, (4)In' ~,evei1t of any invoIUnw.y'liquidation; dissolution or winding up of the
Company, which shaD iDclu~'~ such,liqiaidation. disSolution or winding up which may arise
, ,
out of or 'result, from~~~~tion orpurcbase of aU or a major portion , of the properties
, ,
of the Company by (i) UclU:d S!--..::s GoV~lWnem or any authority, agency or instr1lJDentality
thereof, (ii) a Stale of the United StJtcs .or any ~uthoriry, agency or instrumentality thereof. or
(iii) a disuict, cooperative .or othe~ association or: enrlry not organized for profit,
Preferred Stock, pari
p~
with the other Senior Securities. shall also have a preference over
rhe Common Stock until the full stated , value thereof and five' per centUm (5 %) per annum
thereon from and after thI:. dale on which dividends on such stock becaIi1e cumulative, shall hav!=
been paid by dividends or distribution; the Serial Preferred Stock, pari passu with rhe other
Senior Securities. shall also have a preference over the Common Stock~ntil there shall' have
been paid. by dividends or distribution on each share of the Serial Preferred Stock, the full
stated ,v..al..ue thereof. plus the amoun~ if any, by which dividends at the rate or rates 11Xed and
determined for such stock pursuant to Section (5) or (6) of this ' Anicle. from and after the
.-w-t"=~:i;;e on which .dividendS on such stock ~e cumulative to the date of such
, t, I
distribution"exceed the dividends acma11y paid thereon or declared aDd set apan for payment
thereon; and the No Par Serial Prd'em:d Stock, 'pari passu with the other Senior Securities. shall
al5'" have a preference over the ,Common Stock until there shall have been paid. by, dividends
or distribution 0.. each share of the No Par Serial Preferred Stock. the amOUDtas to each series
thereof fixed and detennined by resoi~tion of the Board ' of Directors as the consideration
ulClcior or pursuant to ~n (7) of thiS Article.at the time of creation of each such series. plus
the amount. if any, by whkb dividends at Ihe rate or rates fIXed and detennined for such stock
um..."a,. !!!~
~::.. ,: .. ,:'-
I~
' "" ,(:'~:::,
:i:
it!
;;",",, "~~:, ':;":',-.;
f-, ,
-\:'
f"i
"' '-",...' ,
jr'
, ,:::"~,,, ~;::;
i: :
~':'~:'"-"'~~:~~,' ~
I,
" ".., -, '", , ,
pursuant to Section (5) or (1) of this Article.
fro~ and after ' the, reSpeCtive dates o~ which
dividends on such stock bi:Camc cumulative to the dare of such dlstti-bution. exceed the dividends
aCtually paid thereon or decIa.re4 aDd ~t apaIt for payinent '~~ii.
(5)
, "
The, BQ3td, of Directors shall have auttiQrity by, resolution to divide the: Serial,
-, , ,, , --
Preferred Stock into series designated" % Serial Preferred Stock" or the ..Serial Preferred
Stock." as appli&#lc to divide the No Pat Se~al Pre~erred ' S!ock into series designated
No PM Serl3t ~ferred stoCk- or the ..No Par Serial ~fened Stock." as applicable
(i~rtigg. in eac~ ,
~,
the annual divide~rate. as fIXed and determined by thC Board of
" '
Qirectors for eac~ serieso.r. if the rate of dividends is subject' to ~djustment. so indiCating by
appropriate languag~). ~l shares of Serial Preferred Stock, inespective of series. shall
constitUte one and the same class of stOCk. and all shares of NQ Par Serial Preferred Stock.
irrespective of series. shan constiOlte one and the same c~ass of stock. Within each such class
of stock. all shares shall be of equal rank and, shall be identical in aU respects except as to
d~signation theret?f and except that 'in establishing series wi~ eirho:r cf d::.:"
. ::.
Board of Directors may fIX- and determine the re!ative rights and preferences of ~ch series as
to any of-the following:
(a)The dividend: rate or rates. which may be subject to adjustmCD1 in
accordanCe with method adopted by resolution of the Board of Directors at, the time of the
creation of such series;
(b)The date 'or dates from which dividends on shares of each series shall be
cumulative;
(c)The dividend payment dates;
UAI,-sUCJ,$1_.0036
~:::'-" ""
:4l:~4lti,~"9:;
:, ::~, . " '- - !"~;"~:;,-':~
'i::-
~;::" -"~~:,:'::, "".'
,~~~~~-k.. ~"C--"""-"I' ,-:'('.Ii
. -.. -
"Jli
~5; ry :;t'"
, .
corpor3n~~. aiXi U~'~9We1".&)~i~:company, ~ UtabcorPora~on. into th~ Company, being
the ~tial series and. die t~u~ tbrou~ d1irteC:nd1 series, inclUsive, thereof.
- ' . ,
(a) is~yqeated an.wtial series of the. Compa~s Serial Preferred
. Stock ' which s~i(~~~~igna~:aS 4~52" Sem.t ~referrCd StOclc. and which shall consist of
2~O65 shares.
, The a
~~~
di~ r-..t: of said iuiiia1 selia ui the Company s Serial Preferred
Stock sba1l be. four ~:r1fty-two, ~rie-htmIredtbS Per centUD1'(4.52%) of iI1e stated value thereof.
., .
The ,~te or daf7i ~,dividends on shares of said initial ~ries of the Company s Serial
Pref~rred StoC~ shz1l ~ Cym~ve sbal1 be tbe ..\ccr.l:1I D~te. The dividend payment dates for
the payment of ~ivi~ On sh3re; of said initial series. of the Company s Serial Preferred Stock
. .
shall be the Payme~ Dates.
The amount to be. paid upon redemption of shares of said initial series of the
Company s Serial Preferred Stock shall be $103.50 per share, plus unpaid accu:nulated
. ' dividends. if any. tQ the ~te of redemption.
TIle amountS to be paid in respect of s~ of said initial series of the Company
Serial Prefe~ Stock in the event of volunta..')' liquidation, dissolU\ion or winding up of the
Company $ha1l be as follows: In me event of any voluntary liquidation, dissolution or winding
up of the Company. said initial series of the Company s Serial Preferred Stock. pad p3SS'.1 ~:ith
the other Seniol;'. ,~rities. shall have a preference over the Common Stock, until there shall
have been paid. by dividends or distribution on each share of said initial series of the Company
Seri:a! P~!~~ S:::::~, au .uuuuui cquai w Ute redempuon price applicable to shares of said
initial series of the Company s Serial Preferred Stock, plus the amount. if any. by which
u.D1.SUU,U8CM-OO28
" ,. ::':.
:i~~::~:1F:j~ia:l~i~~~:ft~
. :'
:t:
, ;/~.
i~~!i:;~::
~~;:.".:" :., .~..: ,~,,::"/;~~:;. ,::... ,
dividem.s at the rate of S2 % per on the stated vaiue thet:eOf. from and after date
on which dividends on such stWes became cumulative
to the date of such di.~!ribution. e" ,a..d
the dividends ac~ly pai~ thereon or declared and set apart for payment thereon.
. (The mflhird series of the Serial Preferred Stock of PacifiCotp. a Maine
corporation. were redeem~ on September 6. 1963 and March 5. 1965, respective!y.
(h)"J'hPre !5 ~hy
~~ :
!c.:.--:h
;;...
w uf u'i.; CUlilpilllY S 5eriai Fteierred
Stock which ~U be designated as 7.00% Serial Preferred Stock and which shall .consist of
18.060 shares.
The annual dividend rare of said fQi.!!'~.-Series'cf the Company s Se~"I1 Preferred
Stock shall be se~en per centUm (7.00%S of. the stated value thereof.. The date from which
dividends on shareS of .said fouM series of the Compmy s Seri:l Preferred Stock sball be
cumulative shall be the Accrual Date. The divide~ payment dates for the payment of dividends
on shares of said fourth seri~ of the Company s Serial Preferred Stock shall be tire Payment
Dates.
The amounts to be paid in respect of said rounh series of the Company s Serial
PrefeIred St?Ck in the event of voluntary liquidation. dissolution or ..,.inding up- of the Company
shall be as follows: In the event of .3.ny vpl~ntary liquidation. dissolution .or winding up of thC
Company, said fourth series of ~ Company s Serial Preferred Stock. pari passu with the other
Senior Securities. shall have a preference over the Common Stock. until there shall have been
paid. by dividends or distn"bution on each share of said -foon" series of ~ Comp3ny s ScrMd
o-F-~ c-.__I- ~- --- -,.-
. - ---." ,
(eo lue ereof plus the amount any
.-.-.- """'"". ....
",UVU11~ atU41 IU UI WI UI
. ,
which dividends at the rate of 7.00% per annum on the stated value thereof, from and after the
I.LO1-S12CJ,SlIu.onc
. .. ., '. :,~:.,;.?;.-~~::.,,. .. ~.
- ' ...,...-
~~~~"..::::.z~~;:::~
~':'-"::::"':;~~::'" ,
date on which dividends on such' shares became cumulative to die date of Such diStribution.
exceed the dividends actW!!1y p:!d thereon or da:iaa-ed auu set apan for paymcnt tIicn:on..
(c) .is bcrcby created a fi~ series of the Company s Serial Preferred
Stock which shall be designated as 6.00% Serial Preferred Stock and which sball consist of
932 shares.
T'uc annuai dividend rate of said fifth series of the Company s ScriaI Preferred
Stock sball be six per centum (6J)O%) of the stated value thereof. The .date from which
dividends on shares of said f.rth .Series of the Company s Serial Preferred : Stock sball be
cumulative shaI1 be the Date. The dividend payment dates for the payment of dividends
on shares of said f1ftb series of the Company s Senal Preferred Stock shaD be the Payment
Dates.
The amoUDIS to be pai~ in respect of said fifth series of the Company s Serial
Preferred Stock in the event of voluntarY liquidation, dissolution or winding up of the Company
shall be as follows: In the event of any volun~ liquidation. dissolution or winding up of the
i.....
Comp~y ~ said. fifth series of the Company s Serial Preferred Stock. pari passu with the other
Senior Securities. shall have preference over the Common Stock until there shall have bccD
II,
, -
paid. by dividends or dislqoobo)t on each share of said fifth series of thC Company s Serial
Prefelted ,Stoek" an amount equal to the full stated value thereof. plus' the ainount. if any. by
which dividelds at the rare of 6.00% per annum on the stated value thereof. from aDd after the
date on which divideoos on S'.:cl::;~.:a-w bc-i:4iilc cwnuiativeto the date of such disttibution.
exceed the dividends acroally paid thereon or declared ~nd set apart for payment thereon.
um,-SUC),,,_,Mas
. '' .,' -- ::," .~,.::~.-::~;~~:~~~
i.~~::t:;L~i~~:i~~i~~,
- . . -
h"""-
' _.. ", '- ""'-'---"..-":":-,
(d)Thi:re is hereby crea~ a sixth series of the Company s Serial Preferred
Stock which shall be-designated as 5.00% Serial Preferred Stock and which shall consist of
42.000 shares.
The anmDfdi~iciend rate of said sixth series of the Company s Serial Preferred
Stock shall be five pel.
~ _
(5.00%) of the stated value thereof. The date from which'
dividends on shareS~f Said sixth series' of the Company s Se~ Preferred Stock shall be
, '- :
cumulative slvd!'be the A~ Date. The dividend Payment da~ for the payment of dividends
on shares of said s~ ~ries of the Company s Serial Prefen,-ed Stock- shall be the PaymeDt
Dates.
The amount to be p~id upon redemption of shares of said sixth series of the
Company s Serial Prefeired Stock shall be $100 per share, plus unpaid accumulated dividends,
if any. to the date of redemption.
The to b: Pm in resPeclofsbares of said si."tth series of the Company
Serial Preferred Stock. in the event of voluntary- liquidation. dissolution or winding up of the
Company shall be as -follows: In the event of any voluntary liquidation. dissolution or winding
up of the Company, said sixth series- of the Company s Serial Preferred Stock. pari passu with
the orl:\e.r Senior Sec'.l..~ties, sballi&ave a preference over the Common Stock. until the:'= shall
. have been paid. by dividends or distribution on each share -of said sixth series 'of the Company
Serial Preferred StoCk. an am:" : equal to the full stated value thereof, plus the amount, if any,
, '
by which dividet1ds at the rate of 5.00-% per annum on the stated value thereof, from and after
the date on which dividends on such shares became cumulative to the date of such distribution.
exceeds the dividends acmaUy paid thereon or declared and set apan for pa~ent thereon.
u.Q1-SU&).1 51-,0031
::"
;~~~~~:~~~fJ~ii:
, -, - ::/-~::~-\,-
-:f'
- '::- :".- '" '
Ii'.-
i'.
:~:,~;.:~-~...~~~':",
date of such distribution. exceed the dividends acmal1y pai(l the~n or
~~
:md :p:u:
for paym.ent thereon.
. isbereby created an eighth ~riesof the Compaily's Serial Preferred
Stock which sliall be designated as 4.72% Serial Preferred 'StOCk' and which shall consist of
69,890 shares.
The dividend rate of said eighth series of the Company s Serial Preferred
Stock shall be, four and seventy-two one-hundredths per centum (4.72%) of the stated vafue
thereof. 1be date from which dividends on shares 'of said eigh~ series of theCompany s ~ria1
Preferred Stoclc sha1l be gunulative shall be the Accrual Date. The dividend payment dates for
the payment of dividends.on shares of said ei~ series'of the Co~s Serial Preferred Stoc:k
,. ,
shall be'the Payment Dates.
The amount to be paid upon redemption of shares of said eighth series of the
Company s Serial Preferred Stock shall be $IO3 50 per share. p!!JS unpaid accumulated
dividends'~ if any, to the date of redempti~n.
The amounrs to be paid in respect of stw.res of said eighth series of the Company
Serial' Preferred Stock in the event of voluntary liquidation. dissolution or winding 'Jp of the
Company shall be as follows: In.me event of any volu~ry 'liquidation. dissolutio~ or winding
, J
up of the Company. said eighth series of the Company s Serial Preferred Stock, pari passu with
!h~
~~:
~::,.i~:-
~. ~;
WiVe: a prdcrt:DCc over thC Common Stock. until there shaD-
have been paid. by divide~ or distribution on each share of said eighth series of the
Company s Serial Preferred Stock. an amount'~ to the redemption price applicable to 'shares
of said eighth series of the Company s Serial Preferred Stock. plus the amount. if any. by which
1..IUIl-SUeJ,SII06-00U
, . . '
of.
~ '.. ,' " .
c",
;~;,,;,,~*.
~4i
Stock which shan be designared "-!S 4.56% &ri,.1 P!!:f!:cid s!C'"-~ ::-.d wh::h :::-.:11 C\iiWi3t \if
. . , (g).
is hereby created a ninth' series of the Company s serial Preferred
: .:' . , , ':" ,.':" ',~-.,
dividends at the rate of 72% per annum on the stated value thereof. from and after the dare
on which dividends on such shares became cumulative to the date of such distribution, exceed
the divid~~ actually paid, thereon vi declared and set apart
for paymt:nt thereon.
84,592 shareS.
, The aimua~ dividend rate of said ninth series of the Company s Serial Preferred
Stock shalt be f~ aIKlflftY-six o~-hundredths per centUm (4.56%) of the Stated value thereof.
"The date from whiCh diVideJXfs on shares of said ninttl series of theCompany s Serial Preferred
Stock shall be cumulathe shall be the A:ccroal Date. The dividend' payment, dates for the
payment .of dividends on shares of . said ninth series of die Company s Serial Preferred Stock
shall be the Payment Dates.
The amount to be paid upon redemption of shares of said ninth series of the
Company s Serial Preferred Stcc~ s!ia!1 be $102.34 per share, plus unpaid accumulated
dividends. if any, to the date of redemption.
The amountS to be' paid in respect o( shares of said rjnth series of the Company
serial Preferred Stock in tne' ev:enr of voluntary liquidation, dissolution or winding up of the
Company sba1I be as follows: In the event of any voluntal')r liquidari,
. ,
10 or winding
up of the Company. said ninth series of the Company
' s Serial Pre ~ ..... ~ :)L(,. " pari passu with
the other Senior Securiti~, shall have a preference
over the Comm'Jn Stock, until there shall
have been paid, by dividends or distribution on each share of said ninth series of the Company
Serial Preferred Stock. an amount equal to the redemption price applicable to shares of said
, :
L 'LLO1-Sun,l ,"0&-00128
, '! ", . '. -,- ':;'::"'" ,,' -, : ' ', '-_-... -, ,
ninth series of the Company s Seri~tl Preferred Stock. plus the a~ount, if any, by which.
dividends at the rate of 4.56% per annum on the stated value thereof. Crom and after the date
on which dividends on such shares became,cumulative to the date of such distribution. exceed
the dividends actUally paid thereon or deClared and set apart for payment thereon.
(The tenth. eleventh am twelfth series ~f the Serial Preferred Stock of PacifiCorp.
an Oregon corporation~ were redeemed on July 12, 1996. ";he thirteenth series of Serial
. '
Prefened StOCk of ?a~ifiCorp, an Oregon corporation, was redeemed on October to. 1989. The
fourteenth series of the Serial Preferred Stock of PacifiCorp. a Maine corporation. was redeemed
on January 11, i987.
) -
(7)Without .limitation of the foregoing authority conferred upon the Board of
Directors. there follows a statement of the rights and preferences of the respecti\;e series of
Par ,Serial Preferred Stock created on the effective date of the merger of PacifiCorp, a Maine
corporation. am Utah Power & Light Company.. a Utah corporation, into the Company, being
~e second series and the sixth through thineenth series. inclusive. thereof. and the respective
series of No Par Serial Preferred ~tock created thereafter and prior to the date of this
restatement. being the fourteenth through twentieth series. inclusive, thereof.
. (The initial serres...-of the No P;\r Serial Preferred Stock of PacifiCorp, a Maine
corporation. was redeemed on,May IS, 198"1. Th: second series of the No Par Serial Preferred -
Srock of PacifiCorp. an Oregon corporation. was redt,:med on juty 12. 1996. The third. fourth
and fifth series of No Par Serial Preferred St\X:Jr of PacifiCorp, a Maine corporation. were
redeemed on May J5. 1987, October 3. 1984 am June 15. 1986. respectively. The sixth series
LUll-snn,",~-002'
.. "
- !:!f:
:;,...
.- . ~-f!T.~. .
' ,:. :.., .
. - I.
.", ,.... ...-...
- ,
aM seventh.series of N~ Par serial~feried St~k of PacifiCorp, an ~gon cof'PO.ratio~" were
exchanged and re~ on June 29, 1992).
(a)Thete is .~by created .an eighth series of the Company s No Par Serial
Preferred StoCk, w~ ~l IX: ~ignated as ~.12 No Par Serial Preferred Stock. S~d eigbih
series of No Par Serial Preferred Stock shall consist of 500,000 shareS. slUdt have a stated value
of SI00 per share an4 sJ1aIl hav~ ~.re.~a~~~.
~~~
and preferences as , follows:
" .
The annual divideOci on sa1d eiglith'seri~ of the Company s No Par Serial
Preferred Stock sha~~, be $7.12 per share.
The dat.e f'ro!n which ,dividends on shares of said. eighth series of the Company
No Par Serial Preferred Suxk shall he cumulative shall be the Accrual Date. The dates for the
payment of divideBis on shares of said eighth series of the CoD:1pany s No Par Serial Preferred
Stock shall be the Payment Dates.
. The amounts to be paid upon optional redemption of t-'te ~.:l"'es of said eighth
. series of th~ Company's No Par Serial' Pref~rred Stock shall be. for the period from the date
i :'
I .
upon which dividends on said eighth series became cwnu1ative to and including March 31. 1992.
$107.12 per share; thereaftet: to and in,:luding March 31.1997. $104.75 per share; thereafter
to and including Marc;h 31-; 2~..:S102.38 per share; and thereafter:$lOO per share; plus, in
each case, unpaid accumulated dividends. if any. to the date~'of redemption; provided. however,
that shares of said eighth. series of the Company s No Par Serial Prefeqed Stock shall not be
redeemable prior to April I, 1992. dlrectly or indirectly, as pan of. or in anticipation of, any
refunding operation involving the, incurring of ind~btedness or the issuance of shares of preferred
stock ra~ing equally with or prior to shares of said eighth'series of the Company s No Par
u.c1-SU4;J.5110&-0026
:.1
,. .' ",",, ." .
" ,".' '.;" ~);'"
jJ
, ~:~(,"",' ,
'i!~" ,
::: '.-;~;(., ," '..,, !~'':::
;'t:
l:,
, ('~:'
1:,
~:',~," , , ,,
' h -0'
" ~, ', ... :
'.;.." , ' c
\ , ' , -- "
Seria1 Preferred Stock ,as to divideDds or on liqUidation. if the, intereSt on sUch indebtedness' or
, '' "
-:.:~:\~::;t~;JJ"
, ':' ,' '
the dividends on sJW:Cs ,an('su~:p~ferred stCick would result in an effective cost to
, ": ":'~. "
:0 ,',
; "
Company (computed iJi ~:~~i~y acCepted fmm:ial
p~)
of less than, 7.18%
:.. '' ". "
per annum.
, ,' ,~~ '
~~ ~f 5aJd eigbthseriesofllQ Par Seri;d
Ptefemd Stock. tb.:
Company shall red~~:~t of ~legally' available therefor. on March 31 of each year.
, "
beginiUng With~,~l.~i:r ~
th3n IS.0Q0 shares nor more than 30,000 shales of said
eighth- series ?f ~.~o~~~~,s ,Par~riaI Preferred Stock at:a rede~~~on price equal ~
$100 per shai'e p~us ~d
~~
dividends. if any, to the date of redemption; the option
to'fedeem in excess of '15.000 'sliares:of said eighth- series of No Par Serial Preferred Stock on
any March 3 i shall not .,e ~I~tive; shares ofSaiifeighthseries 'of No Par Serial Preferred
Stock acquired or redeemed by ' thc' Co~pany otherwise than through "operation of the sin1dng
fund may. at Ihe option of the 'Company, be credi~ against subsequent minimum sinldIig fund
requirements; if the Comp~Y ,shan pn:...ented. because of restriction or for any other reason
f.u,..acq-ui1~ ur,il:UCc:mj~on any Maicn 31 the Dumber ofshares'of said eighth-series of No
" ;.-
Par Serial Preferred Stock that in' th-e absence of such res~ction or other reason it would be
required to acquire or redeeor sUch date. tbe deficit shall be m~'de good on me fUst
succeeding March 31 on ~hich ihe Company shall 'not be prevent~ by such restriction or other
reason from acquiring or red~ sf:1ares of said eighth series of No ,Par Serial Preferred,
Stock:. If tbe Company shaI1 be ~ arrears in the redemption of shares of said eighth series of
:':u cat: &t'w Freferred StocK, no dividends (oth~r than dividends payable in Common 'Stock:)
sball be paid or any otber'distribution of assets made. by purchase of shares or otherwise. on
UA'-C"~~ ~
~!~-~~:~,, "', ~':'" ,~~:,:,, ':"'::;;:',.-,,'
e.,
11't'.
, ~",,~,
t: -
...',-=-"
~~t',
'.', '
~t~~
~:~
1,;:
. .
t:.;
:' ,-",. ..' .: '' ,. .-,;; :. :
Common Stock or on anY other stock of die Company over which the No Par SeriaI PrctenCd
Srock has preference' is to the 'payment of dividerKss or as to assetS.
. ', ~'
event of any involuntlr)' liquidation, dissolution or winding up .o~.
Company. sakfei~ ~s of the Company s ~o Par Serial Preferred Stock. pari Wi~
, -:~' '. ~~ :.'. :" '.. '. .:' .
the orher Senfor' SecU#dCs,. shall have a preference over the Conunan Stock wuil there shall have
. '
been paid. by'di~ ~r distribution on each sha~ of said eighth ~eries of the Company s No
Par Serial Pref~'S(oCk, an amount e9ual (0 $100, plus the amount, if ~y" by' which
dividends '0t.~1.12 per aniwm. from and after the date on which dividends on suchshares
became cumUlati~e t~ thc:.date of such diStribution, exceed the dividends IIctUaJly paid thereon
or declared and set apan ror payment thereon.
, In the event of any voluntary liquidation; dissolution or winding up of the '
Company, said eig~tb serics"of the Company s No Par Serial Preferred Stock, pari passu with
the other Senior Securities. shalt have a preference over the Con:unon Stock, until there sball
have been' paid, by dividends or distributi,on on each share of AAid eighth ~~.es' of
Company s No. P3r .seriaI Preferred Siock: an amount equal to the. then current redemption. pri~
applicable to S~of~ eighth seri~s of the Company s No Par Serial'Preferred Stock, plus
the amount. if any, by which dividends of S7 .12 per annum, from and aftcr the date on which
..
dividends' on sucli shares' becamt cumulative to the date of such distribution~ exceed the
dividends ac~lIy paid thereon or declared and set apan for paymentlhereon.
Every holder of record of said eighth series of the Company s No Par Serial
Preferred Stock. or his legal representative. at 'he record date for the determination of I'Ct'SC?Ds
&,(,IIS-'Utl.1 ,_."at
. "
~..t"-'-?-
~~;:::";"--:'-':"';:~----'-''::~'-::'- -,- -
entitled to vote' at a meeong-:~f shaidJOidCrs. ~1 be eo~t1ed to one vote for each -shari: of ~ch
srock ~ing in his name- on the ~kS- of Company.
(b)There is hereby crea~ a ninth series of the Company s No Par Serial
Preferred Stock whichshaii ~ desi~~- $1.28 No Par Serial:Prefe~ StoCk~ - Said Jundt
series of No Par Serial Preferred Stoclc_sh31Icomist of 490.000 shares. shall have a ~tated value
of S2S per share -and s~,- hive the rC~e rights and preferences as follows:
The annual dividend on said ninth series of the Company s No Par Serial
Preferred Stock shall be $1.28 per share.
The d~(e froEl which dividends- on sharCs, of said ninth series of me Company
No Par Serial Preferred Stock shall be-cumulative shall be, the day immediately following the
la~t period for which dividends on the Cumulative Preferred Stack. $25
p~
value, of Utah
- -:,
PoWer &. Light -Company. a Utah corporation. have been declared (such date being hereinafter- '
referred to as the "UP&L-Accrual Date ). The dates for the p~yment of dividends 00 shares
of said ninth series of die Companis No Par Serial Preferred Stock shall be the Payment Dates.
1be amount to be paid upon redemption of the shares of said ninth series of the
' "
Co~pany's No Par Serial Preferred ~toCk 'shall' be $26.35 -share. plus unpaid a~uIated
dividends. if any. to the_dace of ~~tion.
In the event;of any invohmtary, liquidation. dissolution or winding .up of the
. - -- - --
CompanY. said ninth series of ~ C~pany s No Par Serial Preferred StOCk. pari passu with the
other Senior Securities, shall have a pref~,rence over the ~ommon Stock until there- shall have
- -
been paid. by dividends or distributiol.1 on each share of said ninth series of the Company s No
Par Serial Preferred Stock, ~ amount equal to $25. plus the am~. if any. by which dividends
- ,
U.Q1-1UU.51..1-002&
:1' :. UD&-'UU.
& "
'M-on,
1 I:t,:::.
:. . .'.!~~.:~* :~~y
it)'
?"
fftA:fi&~!~;u.~&iJi;"
~if.~
~1i
::"".
:f:::
. \,. :;.
F':
i!:
!\,
~r.
~ ;,:., .': ., :
i. -
-f;
~:'
1 '
-j. ~'
1 ;'
, ;:. ..' "
It.
j ~. .
i .
L:..
, '- -. -' ".. ',--.......;:,;;;~&":,,,~,;,,-;: .- --
/:~~t-
. ,: ': .:' '. .' ...' -
of $1.28 per 'annumi::f~'ifter me date on wlJich,div~en~ on such sharcs:became
cumulative !o ~,. ~te o( ~~, d~bution. e~~ me dlvid~ actually paid th~reon or
d~lared- and ~' aPa? f~r:p*Y#i~~~ ~reon.
I~j6fYVeDt . o( any. v~lu~: Ii~idation.. dissOlution or winding up of the
..
, Company, said .
~~,~~
\?( dIe Company s No Par
~ -
Preferfed Stock" pari passu with the
other Senior S:curi9~:( s~i have a preference over the Common Stock. uD:til ttu:~ shalt - hayC".
been paid, by divide~: ~r disiribution on each s~ of said ninth series of the Company s No
I'""..&' 5;r"1iU PJ:trc~:~(pcic. an amOunt equal to the redempti~~, price applicable to shares of said
nind1' series of ~ompaD)"s No Par Serial Prefer:rcd Stock. plus the amo~ntt if any, by which
divid~nds of $1.28 per annum, from and after the date on which dividends on such shares
became cumulative to the date, of such distribution, exceed the dividends actually paid thereon
or declared and set apart for payment ~ereon.
The hol~e~ of shares of said ninth series of the Company s No Par Serial
Preferred, ~tock shall have no voting righ~ except as provided in these ~stated Articles of
Incorporation and except as otherwise "required by law; Whenever holders of shares. C?f said
ninth' series of the Company s.. No Par Serial Preferred Stock shall he entitled to vote, every
holder, or his )cgal representa~ive.L at the record dale for the detennination of persons entitled
to vote at a mee~ing of shafeholders, shall be entitled to one-quarter (114) of it VOle for each
share. of such stock standing in his name ,on the bOoks of the Company.
'-
The shares" of said nind1 series of the Company ~ No Par SeriarPreferred Stock,
by ,Iheir tenDS, shall' not he entitled to a sinkin! fund Of' !,n.,..h~~ ft~
::!::!! :.::
~~::...::::~~: i;"~ vi' ~A\:~i8~ic ior shares or any other class or series.
19'
. "- '
V~)~:
. ~~:;:~~: ~:~/:
: _.. ".' ,
...I
(c)There is hereby created a renth series of the,Com
:~.
No Far Serial
Prefermi StOck which shall be designa~ as $1.18 No Par SerialPrefe~::Stoclc.: Said tenth
, ,
SerieS ot-No Par serial-Preferred Stock shaD conSist of 480,000 shares, shall.i~yc a $wed value
of $25, pe,r' ~hare and slull have the relati~e rights and preferences, as follo~:
The annual dividend on said tenth series of the 'Company's ,No Par Serial
Preferred' Stock shalt be 51.18 per share,
The dare from which dividends on shares of said tenm series: 0; tJiC Company
No Par sCrial Preferjed Stock shalt be cumulative shall be the UP&L Accrual Date. The dares
fof,the 'payment of divid~nds on shares of said tenth series of the Company s No P:1t Serial
Preferred Stock shal' be the Payment Dates.
1be amount to be paid upon redemption of the shares of said 'tenth se~es of the
Company s No Par Serial Preferred Stock shan be $26.15 per share, plus unpaid accumulated
dividends, if any. to the date of redemption.
In the event of any in~oluntary liquidation. dissolution or winding up of the
. ,
Company'; said tenth series of the Company s No Par Serial Preferred Stock, pari passu with the
other Senior Securities. shall have a, preference over the Conunon Stoe" until there shall have
been paid. by divicJends or-distrib~ion on each share of said tenth serieS of the Company s No
Par Serial Preferred Stock. an amount equal to $25, plus the amount. if any. by which dividends
of S1.18, per annum, from and after the da~ on which divideOds on such shares became
cumuJative to the date of such distribution, excF the dividends actually pajd th~reon or
declared and ~( 3!,3n for :'?~~!!! !h=::::::.
UO1-SUIJ.UtK-OGJI
. ,
: o
~ ;: . ::::.-, ,., '" ", ." " -" ";'" '::':;:::", '~---.. ". '
).'"' :
, ~e eV~~ of: any voluntary liquidation. dissolution or ~~ing ,
5.ff~,
Company. said rendi ~,ofthe Par Serial Preferred Stock; pari paSsU w~~~
. '. ,
odJer Senior Secu~~ies. sbaU ~\'e a' preference over the Co~on Stock, until there' shall hive
been paid. by d~v~"~r, disuibu~on on each share of said tenth series of ~ CoD:1~Y sNo
Par Serial Pref S~. an aniount equa11O the redemption price aPPlicab~e to s of sai
tenth series of the c;()~'$ No Par Serial,Preferred Stock. pl\lS the amount. if JlIlY. by'whkh
dividends of $1
' ~'
~~F- 'annum. from and after the date on which. dividends 'on such shares
bec:1me cumulative t~ the date of such distribution. exceed the dividends actuaJly paid thereon
.,
declared..and ~t a~ for paYme!.1~ ther~n.
The holders of sharCs of said tenth series of thC Company s No Par Serial
, .
Preferred Stock 'shall have no vot~g rights ,except as provided in these Restated Articles ,
Incorporation and except as otherwise required byiaw. Whenever holders of shares of said
tenth series of the Company s No Par Serial Preferred\ Stock shal~ be entitled ~; vote.cvery
holder. or his legal a:epresentative. at the record date for the detennination of 'persons entitled
to vote at a meeting of sharehOlders, shall be entitled to one-quarter (1/4) of avore for each
share of such stOCk standing in his nanle on the books of the Company.
The s.wes.of )jii4::tc=nlh series of me Com s No Par Serial Preferied Slock,
by their terms. shall not be entitled to a sinking fund or purchase fund and shall not be
convertible intO or exchangeable for shares of any other class or series.
(d)There is hereby created an elevemh series of the CQmpany s No Par Serial
Preferred Suxk which shallbc designated as S1.16 No Par Serial Preferred StOCk. Said eleventh
LlDa-SUU.'I"'.OOZI
r!~;
'" ~~'
;fh~~i~,~i;~~~ ~~:t;;;!~~:-:!~~~~~k~~~:~:~~"
: ~'
:~ ,;. i,. ;,
, "; ~...: ~" ":.~:;. , .
sc... ... Jf No Par Seri3iPreferred Srock Shan conSist Qf 200,OOOshaCes, shall have a stated value
. ' .. .
of $25 per stWc aiJdshait. ba~e reiative riihts and 'pfefe~es :is follows:
The annual dividend.on Said deVcn~sefics ofabe Company . No Pat ScriaI
Preferred Stock shall be 51.16 per share.
'IbC dare from which divideOds on shares of ~id eleventh series of the Company
No Par Serla1 Prefcm:dSrock shall be cumulative shall be the UP&L Accrual Date. The dates
, ."
for the payment of ~iv!~~ on shares of said elev~nth series of the Company s No Pat Serial
Preferred Slock shall the Payment DaleS.
The amOltnt to be paid upej,n redemption of the shares of said eleveDth senesof
~ ,
the Company s No Ptr Serial Preferred Stock shall be $26.11 per share, plus unpaid
accumulated dividends, ~f any, to the date of redemption.
In the event of any involuntary .Iiquidation, dissolution or winding' up of the
Company, said eleventh.scries of the Company No Par Serial Preferred. Stock. pari passu with.
the other Senior Securities, shall have a preference Over the Common Srock wuil there. shall have
been paid. by divide~ds or iUstribution on each share of said eleventh series of the Company
No Par Serial Preferred Stock. an amount eqlJal to S2S, plus the amount. if any, by which
dividends of 5";,.6 per annumL-from and after the date on which dividends on such shares
be~e cumulative co the date of such distribution
~'
exccccfthe dividend~ actually paid thereon
or declared. and set apan for payment thereOn'.-
In the even! of any. voluntary liquidation, dissolution or winding up of the
Company, said eleventh series of the Company No Par Serial Preferred Stocle. pari passu with
the other Senior Securities. shall have a preference over Ihc Common Stock, until there shall
~-lun,,..OI-IOli
~, -,"-~"'" "
1.':
~';'~'"':':"""~"'~"".-:,,~~"
~7r:
~ ,:" ~"!: '", "
~2~
!~~
~r~::::
/: - , :' ,,' ,, ,,', '
have been paid~ by dividends or distribution on eachs~ of saici'eleventh series of the '
.. , Co~s No Par Serial Pre~e~' Stock, an amount equal to the redemPtion price applicable
cp shares of said :~~evemh seri~ 'of~e CompanY's No Par serial '~ferred, Stock~ plus the
amount, if any, JJy which dividends of 51.16 per aMUm, frOm ~fter the date on which
dividends on such shares bcc3ine cumulative to the dace of such diStribution. exceed the
, ,
div~dends actua~ly paid thereon or declared and set apart for pay~enc ~on.
The holders of shares of said eleventh series of the Company s No Par Serial
..,
Preferfed Stock shall have no voting rights except as provided in' these Restated Anicles
, ,
Incorporation and except as otherwise required by law. Whenever hqlders , of shares of said
eleventh seri~ of Ihe Company s No Par Serial PrefelTCd StocksbaU be entitled to vote. every
holder, or his legal representative, at the record date for Ihe decennination ~f persons entitled
to vote at. a meeting of shareholders. shall be entitled to one-quaner (1/4) of a vote for each
share of ~ch stock standing ,in his name on the books of the Company.
The shares of said 'eleventh series of- the Company s No Par Serial Preferred
Stocle, by their tenDS, shall not be entitled to a sinking fund or purchase fund and, shall not be
convertible into or exchangeable for shares of any othe'r' class or series.
(The tWelfth. thtneenm. fow1eenth' a~ fifteenth series of the No Par Serial
, Preferred Stock or- PacifiCorpi,an, Oregon corporation. were redeemed on July 12, 1996,
July 12. 1996, July 29. 199~ and Dccemhcr 19, 1992.
:-:::;::'::
"::1)'
(e). There is hereby created a sixteenth series of the Company s No Par Serial
Preferred Stock which shall be designated as S7. 70 No Par 'Serial Preferred Stock. ThcamouD1
of the consideration received by the Company fIXed as a preference over the Common Stock in
, '
SI"":flU
, .. .. " '" ', "'.. '"",. "
, ;""~.:,"$-, '::';'- " - ",
i: ;
~1~f~~
~':"""'" '""'~"!::-"'
~"""""""'k-"
.)'.""~~"--, ', --~..";',..- '~" ., """"', ,, ,:..
the assets of me' CoriipanyupOo in~ohinwy iiquidaiion andthat consti~tes t~:~'~t~V!I""
said sixtee~th ,~es of the ,~pany s ~o Par Serial Preferred Stock is $100 ~r ,
~~'
, ~i
sixteenth ,series of ~J~ompaJiy's No, Par 'Serial Preferred Stock shall consis(of ,~~opo
:':;;,
;-":;:~';Ti'
' ,,..
shares and'shatfbyiftbe'reladve rigbts and preferences as follows-.
'-"':'
~e ~~, dividend on said sixteenth series of the Company s No Par Serial
PreferredStae ~~ft# $1.70 per share.
;-., , , ,
The dale from which dividends on shares of said, sixteenth:'series 'of the
ComP3D:Y s No ~ria1 PrefelTed Stock shall be cumulative shall be the da~ of issu
~ '
of such
shares. ,The dates 'for the payment of dividends on ~hares of said siXceenth ~nes of die
Company s No Par Senaf Preferred Stock shall be the Payment Dales:
The shares of said sixteenth series of the Company s No Par Serial 'Preferred
Stock shall not be subject to redemption at the option of the Company and shall not be subject
to any sinking fuDd.
On August IS, 1001. Company shall redeem all shares of said sixteenth series
- of No Par Serial Preferred SllJCk then outsranding. out of funds legally available the~for; ,lit a
redemption price equal to $100 per share plus unpaid accumulated dividends; if any. to the date
of redemption.
In the cvent, of any voluntary liquidation. dissolution or winding up of the
- -
Cnm!,Slny. n~
!!.."'.!~~ ~::-=.:: ::!:=
!:=~;'i ~:u rcia 3c:tiai rn:ic:rred Stocie., pari passu with
the other Senior Securities, shall have a pr!=ference over the Common Stock. until there shall
have been paid. by dividendS or distribution on each share of said sixteenth series of the
Company s No Par Serial Preferred Stock. an amount equal to SI00. plus the amount, if any,
!J,O1-SU'J.S.~-GG2'
, ,- ': '~~~:~~~;:::~, - ".; .., '
-""" ,, ' '. .:'-
by which dividends of $7.70 ~r aDrium. from and after th~ tI~!!: on whk!: dir.~....~ vii i'ucli
shares became cumulative to the d~te of such distribution, exceed the dividends acwally paid
thereOn or declared and ~t-apan for Payment- thereon.
Evely bolder of reco~_of shares of said sixteenth series of the Company ' s ' No Par
Serial Preferred SroCk, or his !~3!!! ~:--~:'.t:::.;',::. at the recui\1 ~aic: fur the determuiation
....
persons entitled to vote at a meeting of ~Iders. ,shall be entill~ to one vote for each share
of such stocle standing in his name ~n the booles of the Com~any.
---'
(I), There is hereby crCated a seventeenth series of the Company s N,o Par Serial
Preferred Stock. which shall be designated as $1.98 No Par Serial Preferred Stock. Series 1992.
Said seventeenth _series orNo Par Serial,Preferred Stock sha" consist of 5,000,000 shares~ The
, amowtt of the consideration' received bY'Company fIXed as a prefere~ over the Common
Stock ~n the assets of the Company uPon involuntary liquidation, dissolution or winding up
./
the Company and that conitifutes the stated value of said seventeenth series of the Company
No Par Serial Preferred Stock is $'...5 per share.
The annual dividend on said seventeenth series of the CompaOy's No Par.Serial
, '
Prefem:d Stock- shall be $1~98 per share:
, ..........
The date ttom ";wfijch dividends on shares of said seventeenth series - of the
Companfs No Par Serial Preferred Stock- shall be cumulative shall be the date of issue of such
shares. . The dates for, the payment of dividends on shares of said seventeenth series of thc
Company s No Par Serial Preferred Stock shall be the ,Payment Dates.
1be shares of said seventeenth series of the Company s No Par Serial Preferred
Stock shall not be redeemable by the Company on or before May 31, 1997. After May,
LLOI-SUU,SlIO'~GO21 . 25
. -;~-.'., ::'
~i:-
- ..- . -...""", ,
, ;~~:;,.. ' ,' "". ,' ,
1997, oUtstanding of said sevenreend1 series of d1e Conipany', N~ Par ~al Preferred
Srock shall be ~Ie at option of the Company" in whole or in, JI3R.. oUt of funds legally
available ~for, at a redemption price equal to $25 per share: 'plus unpaid accumulated
divid~, if any, to ~~te of ~ption. 11ic shares of said seventeenth series of the
Company s No Par Selial Prefem'4 'S!ock sh!tl! not b--- s!!bj!:'"-! to :nol ::in!dr.g ~.::-.d.
In the event of any voluntal)' liquidation, dissolution or winding up of the
~d sevenree~,series of ihc Company s No Par Serial Preferred S~k, pari passu
with the other Senior securities" shall have a preference over me Common Stock, until there
shaU have been paid, by gividends or distribution on each share of said seventeenth series of the
Company s No Par Seria1 Preferred Stock. an amount equal to $25. plus the ~ount. if any, by
which dividends of SI.98pcr annum, from and after the, date on which dividends on such shares
became cumulative to the date of such distribution. exceed ihe dividends ,actually paid thereon
or declared and ~t apan for payment Ihcrcon
'-.. ;
Every holder of-record of shares of said scventeelUh series of the Company s No
Par Serial Preferred Stock, or his'legal representative~ at the record date for the detennina~on
of persons entitled to vote at a meeting of shareholders. shall be entitled to onc-quancr vote for
each share of such stOck'Stanmng in his name on the boOks of the Company.
(g)
There is hereby created an eighteenth series of the Company s No Par
Serial Preferred Stock, which shall be designated as 57 .48 No Par Serial Preferred -St~k. Said
eighteenth series of No Par Serial. PrefeIt'Cd, Stock shall consist of 7S0.000 shares~ The amount
of the consider.1tion received by the Company fixCd as a preference over the Conimon Stock in
the assets of the Company upon involunwy liquidation. dissolution or winding up of the
UAII-IU6J.& SI__H
.: '' ,' ":"'
::r-~k"
- -' ,, '- ,, ,"",.. "
"1'
::",;;, ~~::.!;, '!',..'
Company and that co~itures the stated value of said seventeenth series of Ihc: Company s No
Par Serial Prefcm:d Stock is SI00 per share.
The annual dividend on said eighteenth series of the Company s No Pa~ Serial
Preferred Stock shall'~ $7.:48 per s~.
The date from which dividends on shares 'Of said eighteenth series of &he
Company s No Par ScriaiPrefem:d'Stock. shall be cumulative shall be the dale of-issue of such
shares. The dateS for the payment of dividends on shares of said eightecndi series of the
Company\s No Par Serial Preferred Stock. shall be the .Payment Dales.
The shares of said eighteenth series of the Company s No Par Serial Preferred
Stock shall not be subject to redemption at the option of the Company. other than as described
below.
On June 15. 20C11. the Company shall redeem alt shares of said eighteenth series
of No Par Serial Preferred StacIe then outstanding. our of funds legally ~vailable therefor. at a
redemption price equal to $100 per shan: plus unpaid accumulated dividends. if any, to the date
of redemption. As a sinking fund for said eighacenth s,eries of No Par Serial Prcfe~ Stocle,
the Comp~y shalt redeem. out of funds legally available therefor. on June: 15 of each year.
beginning with June 15, 2002 aOO.."1:nding' with June 1
~.
200ti. not less than 37.S00~~han:s nor
more than 75.000 shares ~tsaid eighteenth series of N~ Par ~iaa(Pn:ferred Stoc~, in each case .
at a redemption price equal to 5100 per share plus unpaid accumulated dividends. if any, 10 &he
date of redemption: Ihc option to redeem in excess of 37.500 shares of said eighteenth series of
No Par Serial Preferred Stock on any Jtinc IS from"'2002 through 2006 shall not be cumulative;
shares of said eighteenth series of No Par Serial Preferred Stocle acquired by the, Company
otherwise than through operation of the sinking fund may. at L~ option of the Company, be
u.os-'UU.,.....0036
. '. . .;~~.~~.
ib1~:
~~~;~:
;~l~~,
~~~~'
i~~
, '.;-:'.;', .!;~..,...:;;. (( .
1\'"
(',
f:'
~, .;~.,;:
f..:
!'.....
c .
--'- '."'--/"""' " -"-,~,"-'-
of persons entitled to, vote at meeting ~f sharehold~rs, shall be entitled to one vote for eaCh
share of such stOCk standing in his name on the books of the Company.
(The nineieenth ~entieth seri~, of ~ No Par Serial Pr:fentd Stock of PacirlCorp,
an Oregon corpOraPon. were iedeemed on' August 9; 1996 and Jamwy 25, 1993, respectively).
(8)Su~ject to tIjC rights of the holders of the Senior'Securities. and subordinate
thereto
(~
subjeCt Subordinate to the rights of any class of stock hereafter authorlzed), the
, " "
Comm~ Stock alone shall receive all divi~ends and shares in liquidation, dissolution, winding'
up or distribution
' ,
other than those to be paid' on shares of Senior Securities as provided in
. .
~ections (2) throug~ (1) o(this Article.
(9)Tb~ Comp~y, by a majority vote of its Board of Directors. may ,at any time
redeem all of said 5 % Preferred Stock or may from time to time redeem any pan thereof, by
paying in cash a redemption price of $110 per share. plus unpaid accumulat!=d dividends, if any,
to the dire of redCInption; may at any time redeem all or any part of
~y
one or more series i
Serial Preferied Stack. other than the 7J)()% Serial Preferred 'Stock and the 6.00% Serial
Preferred Stock created at the time of merger of PacifiCorp. a Maine corporation.: and Utah
Power & Light Comparty, a Utah '-corPoration. into the Company, by paying in cash a
redemption price faxed and "determined by resolution of ~e Boar~ of D~tors or pursuant to
Section (6) of this Aniclc' at the time of creat~onof each such series. plus unpaid accumUlated
dividends, if any, to the date of redemption; and may at any time redeem all or any Pan of any
one or more series of No Par Seria1 ?referred Stock by paying in cash a redemption price faxed
aOO detennined by resolution of the ~d of DireCtors or pursuant to Section (7) of this Article
at the time of creation of each such series plus unpaid accumulated dividends. if any, to the date
of redemption- NorjCf'. nf
~~ !!'.!~!!!!~~ !:! :=
!::::::;;::"'7j AU i"~':':\;&ii a ii ur any pan of tile 5;&
LUlI-SUO.U8OC-GG2C
;"', '
i~~~
, "' ', " ,".... '
. .,., ,. "
Prere~ Srock, Serial Preferred Stock, or No Par Se~ Preferred Stock shall be ~Ued not less
than thirty (30) days nor more than sixty (60) days before the date of redemption to each holder
.'~
'M-
;S~
of record 0("5% Preferred Stock. Serial Preferred Stock or No Par ~-~riaJ Preferred Stock to be
rooecmed, at his post offlce,dress as shown by the Company s reCords or,' in lieu of such
mailing, not less than rhiny (30) days nor more than sixty (60) days' notice of such redemption
may be published in such manner as may be prescribed by resoludon of the Board ci,f Diiectors
of die Company; ~nd, in the ' event of such publication, no failure to mail such notice nor any
defect therein or in the mailing thereof shall affect the validitY of the proceedings for the
redemption of any
~~
of % Preferred Stock, Serial Prefe~ Stock or ~o Par S'erial
, -
Preferred Stock so to be rc!deemed'. Contemporaneously with the mailing or d1e p!1blication of
such notice as aforesaid or 3t a.,ny time thereafter prior to the date of redemption, the Company
may deposit the aggregate redemption price (or the ponion thereof. not already paid in the
redemption of such 5 % Pr:fcm:d Stv.:k, Serial Prcrc:rrc:~ St~k '-or No Par Serial Prefericd
-Stocle) with any hanle or t",CI r,:,m:'!1~~ T. !!:: ~:!;'
-:::! !'-!::.:: y~;:;. ~~.:;..-
York, VI ill the City oi
Ponland, Oregon, named in such notice, payable to the order of the reco~d holders of the
Preferred- Stock. Serial ~ferred' Stock or No Par Serial Preferred Stock so to be redeemed, on
the endorsement and'surrender ot-their cenificateS. and thereupon said holders shall cease to be
shareholders with respect to such shares; and from and after the making of such, deposit such
holders shaU have no interest ,in or claim against the Company with respect to said shares, but
shall be. entitled only to receive such moneys from said bank or trust company, with interest. if
any, allowed by such bank or trust company, on such moneys deposited as in this, Section
provided, on endorsement and surrender of their cenificates, as aforesaid. Any moneys so
\ '
deposited, plus interest thereon. if any, and remaining unclaimed at the end of six y~('S from
UDI.SI~n,"1"-"21
' .? ,'"', :., ,, '. ." " " -~ ', ." '",.""" ", ." ,
the d~te fIXed forr~emp~n, ')f. thereafter requesied by.' resolUtion of the Board of Directors,
shall be repaid to the 'Comp~y, aOO
!n the event.
of sUc~ repayment to the Company sUch
holders of recO~ of sh3rCs so,redeemed as shall'not have ~de claim against such moneys
prior to such repa~~nt, to, the Company, shall be deemed to be' unsecured creditors ofEbe
Company for an amount, ~thout inteI""-st, cq'.:h':1!eItt to the amount deposited, plus interest
Ihereon.if any, allQ~ I;Jy such bank or tnJSt company, as above stated, for the redemption of
such shares and so
p~
to the ComPany. If less than aU of the shares of the % PtefelTCd Stock
or of any se~ of ~rial Preferred Stocle or No,Par Sforial P!p"f~f'!'M Steck :!~ t3 be redeemed,
the shares to be redeemed shall ,be selected by lot. in:qJch manner as the Board. of D~rs
the Company shall der.enDine. by an independent bank or trust company selected for that purpose
, ;
by the Board of Directors of the Company. Nothing in this Section contained shaU limit any
right of the Company to purchase or otherwise acquire any shares of % Preferred Stocle
? ~.
riaI
Preferred Stock or No Par Serial Preferred Stock.
(10) ~ Except as hereinafter otherwise provided, every holder of record of 5% Preferred
Stock. of Serial Prefei-red Stock or of Common. Stock. or his legal representative. at the record
date for the detennination pf persons entitled to vote at a meeting of shareholders, . shan be
entitled at such .meeti,tJg to oDe ~ote for each share of such stock standing in his name on the
books of the Company, and every ho1der of record of No Par Serial Preferred Stock, or his legal
representative. at the record dare for the determination of persons entitled to vote at a meeting
of shareholders, shall be entitled to such voting righ~ as shall be fIXed and detennined for the
series of which his share or shares are a pan by Section (7) of this Anicle or the resolution
establishing such series.
UD1-S1UJ.s..,,-ooz,
,~ ~,~~:~:
:~o,
/:':;:/:,: ..-...._~,-,. ~'
t'.
\:.~. ., ~'. .
(11)If and when dividends payable on the Senior Securities shall be in default in an
amoum equal to four- fun quarterly payments or more per share. and thereafter until all dividends
on the Senior- Securities in default shall have been paid. the holders of the Senior-Securities.
voting separately. from the Common Stock as ~me class. shall be entitled to elec~ the smallest
number of directors necessary to constitute a majority of the full Board of Directors. and the
holders of the Common Stock. voting separately from the Senior Securities a~ a c:'-.~~~
. ~
!1211
entitled to elect the remaining directors of the Company. anything herein and in the Bylaws of
the Company to the contrary notWithstanding. The terms of office. as directors. of all persons
who may be directors ~(the Company at the time shall terminaie uppn the election of a majority
of the Board of Directo"ts by the holders of the Senior Securities. except that if the holders of
the Common Stock shall not have elected the remaining directors of the Company. then. and
only in that event. the directors of the Company in office just prior to the electio~ of a majority
of the Board of Directors by the holders of the Senior Securities shall elect the remaining
directors of the Company. Thereafter. while such default continues and the majority of the
. Board..is being. elected by the holders of Senior Securities. the,remaining directors. whether
elec;:tcd by directors. ~s aforesaid, or whether originally or later elected by holders of the
Common Stock. shall cootinae.;in office until their successors are elected by holders of the
Common- Stock and shall qualify.
(12)If and when aU dividends then in defau,lt . on the Senior Securities. then outstanding
shall be paid (such dividends to be declared and paid out of any funds legally available therefor
as soon reasonablv oracticahle) rhe hnltt,." nf.th,. c;:....i..... ~.......
:,.;.;.... .."'~
.. i..~ ..I:..~-_
..-
u--, - ----- - ---..._v
...- .,.. ... ............
U& AU!
special right with respect to the election of directors. and the voting power of the holders of
Senior Securities and the holders of the Common Stock shall r~vert to die status existing before
u.ol-512I),5110l-GOU
" -~: .):;~::'::
~;~.i'
;.::' . .....
the first dividend payment date on which dividends on the Senior Securities were not paid in
;1--
fun. but always subject to the same provisions, for vesting such special rights' in the holders Qf
the S~or Securities in the event of funher I~ default or defaults in the payment" of divid~nds
, thereon. Upontennination of any su~~ special voting right upon payment of all accumulated
and defaulted dividendS on the Senior Securities, the term. of office of all peisons who may
have been elected' directors of the 'Company by vote of the holder,; of ~njQ! ~.!..ri~ ~ ~~
. t
~ '
. J
class, pursuant to such special voting right. Shall forthwidl terminate. and the resulting vacancies
~ba1l be filled by the vote of a majority of the remaining directors, :and directors so elected shall
hold office until their successors are eJected and shall qualLfy.
(13):.!he caSe of any v~cancyin the office of a direCtor occurring am~ng the
directors elected by the holders of the Semor Securities. voting separately from the Common
Stock as one class, the remaining directors elected by the holders. of the Senior Securities, by
affIrmative vote of a majority thereof, or the remaining director so elected if there be bUt one,
may elect a successor or successors to hold office for the uneXPired ,term or terms oCtbe director
or directors whose place or places shall be vacant. , Likewise, . in case of any vacancy in the
office ,of a director occ::urring among the directors not elected by holders of the Senior
Securities, the remaining direCtOrs not eJected by the holders of the Senior SCcurities by
II,
affirmative vote of a majority thereof, or the remaining director so elected if there be but one,
may elect a successor or successors to hold off~ for the unexpired tenn or terms of the'director
or directors whose place or places shalJ be vacant.
(14)Whenever the ri!ht c".:!tl h~V~:a~~!'=:! to !.!:: !:~!~::&:; of to"..: ~i'..ivi' Secwiiic::s i.u
elect directors. voting separately from the Common Stock as one class, it shall be the duty of
the Presidept, a Vice-President or the Secretary of the Company fonhwitb to cause notice to be
u.cn.S130.,..0.,0036
:t:.
. ', , "::,':"",,/:::,,~~~;;~::::,' "
given to the shareholders- eD:rlded to vote at a meeti~ to be held a~ Stich time as the Company
officers may fIX, not lesS than ten (10) nor more than sixty (60) daYs, after the accnial of such
right. for the purpose of elecnng ~irCCtors.. At ail m~gs of s~holders held for purpose
of electing directors du~g such time - as - the holders of the Seni~r Securities shall have the
~~
special right, voting separately from the Commo~ Stack as ~nc class, to elect directOrs, the
presence in person or by proxy of the holders of a majority of ~h4: ~.!~~:n1lji!!g C~!!!.~~
shall be required to co~titute a quorum of such class for the election of directors, and- the
, presence in Person o~ ' proxy of. the holders ora majority in voting rightS, of the. outstanding,
Senior Securities shall be required to constitute a quorum of such class for the election of
directors; provided, ho-.yever, that the absence of a quorum of holders of stack of either such
class shall not prevent the election at any such meeting or adjournment thereof of direct?rs by
the other class. if the necessary quorum of the holders of stock of such other class _is 'present in
person ,or by proxy at such meeting ~r any adjournment thereof:and provided further, that in
!the event a quonUn of the: holders of the Common Stock: is pre~nt but a quorum of the holders
of the Senior Securities is- not present, then the eIection of the directors eJected by the holders
of the Cpmmon Stock shall not become effective and the directors so elected by the holders
Conul1u
~ '
Stock snail not"' ass.ke- their ofti~ and duties until the - holders of the Senior
Securities. with a quorum present, shall have elected the directors they shall be entitled to elcct;
and provided further, howe~er, that in the absence of a quorum of holders of stack of either
class. a majority of the holders of the stOck of such class who are present in person or by proxy
shall have power to adjourn the election of the directors to be elected by such class from time
to time without notice other than announcement- at the meeting, until the requisite quorum - of
holders of sUch class shall be made present in person or by proxy, but such adjournment shall
LlDl.SUU."'O'-~1'34 .
~~;;.,~:.-, -:; .".,- ;: ,;~~;,;).'~
.;~-.;:r:~jJ::.c;~i.~~:"7~Af~):;il~li;~i
~:-
:1'
;~';~"':' -~-.' ~~;, :;..;..
i-;;"
~:'
;'t
~~;::~;":-
. "
holders of at.least nvO::thirds. ~f'-the tow ~ber of votes entided to'
~'
by.: ~;.of No .
Par Serial Pref~ired StocJcthen outsrand~:
, .' .
(a). ~reate or- authorize any new stocle ranking prior to such No Par Serial
. .. '
Prefemd stade as to ~ivi~~: in .~idatiQ~, dis~luiion, winding 'up or ~istribu~on~: or c~tc
or authorize- any' security cO#v~rt1oie .into shires of any such stock: or
. .' :" '. .
. (b)
~~~~:
' ~~ter, c~e or repeal any of the expresst~ of such No Par
Serial..PreferredStoc~ Uie~ outstanding in a manner .substantially prejudicial to' the holders
thereof.
(18)So long a;;~ shares 6f the Senior securities are outstanding, the Company sl:Wl .
not, without the consent'(given by vote at a meeting called for that purpoSe) of the .h~lders
a majority of the total vOtiIig power of the Senior Securities then outstanding, voting separately
from the Common Stocle, as one class:
,--.
Ja)merge or consolidate with or into any other corvoratian -or ~orporations;
proyided, that the provisioQS of this subparagraph (a) shall not apply to a purchase or other
acquisition by the Company o~ franchises or ~ssetS of another corporation in any '~3:JUlCf wh!ch
does not involve. a merger or consolidation; or
(b) issue any' ~cured notes, debentures or other securities. repiesenting
...J
' ,
unsecured indebtedness, ~r assume any such unsecured ilKbbtedness,' for purposes odicr than
(0 the refunding of outstanding unsecured indebtedness theretofore ~sued or !!S lm~
!::,' :,"
Company, or (ii). the reacquisition. redemption or other retirement of all outStanding shares
the Senior Securities. if iinmediately after such issue or assumption the tow' principal. amount
of all unsecu~. notes. dcl,entures or other secUrities ' representing UDSeQJred indebtedness issued
o~ 'assumed by the Company, including unseCu~ed indebtedness then to be issued or
UQ1-sun,SII0'.0:2'
1:(:
. '
: ;~;i0'
; :
; j,:;'::;,A .i", ,.
;. , , "_,,. ;, .. '' .
-';:-! -
,-Co
;~-~, -
would exceed Per cennim (30%) of ~aWe~atC of (1) the total principal amaunt af 311
.""
bonds ar ather securi~es represC:ming secured ~eb~~ issued ar assumed by the Campany
and then to be ourstanding, and (2) the capital ~sUrPluS af the ~ampany as then to be stated
01) the boob of.a~~~~ of the Company; or
- '
(c)i~suet sell or otherwiscdispose of any shares af dIe Senior Securities ar
af any adIez: cl~ -af.:stock ranking priar to., ar an a parity with, the Seniar Securities as to.
. -,-"" ' ,
dividends ar distribjitioDS, ~Css the net income of the Compaily determined, 'after provisian far
depreciation and ~ ~es and in accardance with generally accepted accaunting practices, ta
available far thepayinent af dividends far a periodaf twelve' (12) cansecutive calendar manths
widWi the flfteen (15) calendar manths immediately preceding the issuance. sale ar dispositian
af such stock, is ai'least equal to. twice the annual, di~idend requirements)m all outstanding
shares of ,the Seniar Securitiesand'~II'a(fler classes af stoc~ ,ranking priar to., ar an a parity
wlm. the Senior Securities as to. dividends ar distributians. including me shares proposed to. be
issued',- computed. in the case af any such s~ an which the dividend rate is subject to.
adjustment. at the dividend rate then in effeCt .or, if such shares are the shares ,praposed to be
issued, at the dividend rate initially established far such shares, and unless the gross Jincome af
the Campany far such ptriod', ~etermined in accardance with geperally accepted accounting
- ,
practices (but in any event after deducting the amaunt far said period c~rged by the Campany
on ire: htvIL:~ !~ ':!~~:':'"-:::::==
:~~ ...-~ ;.:;
","c;:i~ i.u Uc avaiiaoie rar me payment ofinteres~,
shall have been at least ane'and~)Oe-ha1f times the sum af (i) the annual interest charges on all
interest bearing indebtedness af the Company and (ii) the annual dividend requirements an all
outStanding shares of the Senior Securities and all other classes of. stock. ranking prior. to, ar
a parity with. the Seniar Securities as to dividendS ar distributians, including shares proposed
LtOl-5125J.1 "'H-OaJ5
:i-;';-~t,
~".'~:'-:~"~~,~:;:~)-:~~~!,
~;\i ~4'k~,
~~j,~~~~~
:,a,f.::~~~"A:~ r:,
,.., , "...:, ': ~, ,
"-'' -~,""
" h
-;-, ,.- -
iO be .issued~ computed, in the case of any such indebtedness o~ shares on ~hich the inre~-5t or
dividend rate is subject to adjusanent, at the interest or dividend then in effect or, if such
shares ate th!= shares propOsed to be Issued, at the divi~~ndrate miiliillyestablished for such
shareS; provided, that there shall be excluded from the foregoing co~pUtation hderest cbarges
on all indebtedness and dividends 'on al1 sha~ of ~tock w!1jcl!
~ .
!c ~
::"~
in \:OiWa.uuii
, -
with the issue of such additional shares of Senior Securities or other class of ~k ranking prior
to, or on a parity with, the Senior Securities as to dividends or dlstributio~; and pro.vided
further, .that in any where such additional shares of Senior Securities or otheJ: class of stock
ranking prior to, or on a'P!rity with, the Senior Securities as ,to dividends ord~butions, are
to be issued in connection with the acquisition of new property, the net earnings of the propert)'
to be so acquired may be included on a pro forma basis in the foregoing computation. computed
on the same basis as the net earnings of the Company;
(d)issue, self or otherwise dispose of any shares ~of. the Senior Securities~ or
of any other ,class of stock ranking prior to, or en a p~I;ty with, the Senior Securities as to
dividends or distributions. unless the aggregate of the capital of the Company' applicable to the
C~mmon Stock and the surplus of the C~mpany shall be not. less than the aggregate amount
payable on the involuntary dissolution, liquidation or winding up of the Company~ in ~t
all shares of the Senior Securities and all shares of stock, if any" ranking prior thereto, or
a parity therewith. as to dividends or distributions, which will be outstaridiog after the issue
the shares proposed to be issued; provided, that if, for the purposes. meeting the requirements
of this SJ,lbparagraph (d), it becomes necessary to take into consideration any earned surplus
. '
the Company, the Company shall not thereafter pay any dividends on shares of the Common
Stock which would result in reducing the Company s Common Stock equity to an amount less
Lr.D1~SU6J.~..a6-""26
~jfii;~~~#~c
" .- .. :":~'~;~':;;..~,": '. .
; t()S1-11.~t'
than the aggregate amount payable. on dissolution, winding lip Qf i!!'!t'!~'Y Hq-.rl=ncn cf Qc
Company, on all shares of the Senior Securities and of any stock ranking prior to, or on' a parity
with, Senior ~.:.~:;~ as to divid~nds or other distributions, at the. time outstanding.
(19)The Company from time to time may, subject to the limitations or requirements
provided above in this Articl~ . p'J!!:~ ~y cf:t:: =k cu::;:ar.dffig it 5UI,;i! price as may be
fIXed by its of Directors or Executive Committee am accepted by the holders of the stock
purchased, and may resell any stock so purchased at such" price as may be' fIXed by its Board of
Directors or Executive Commin~, but in the case the stock so purchased is subject to
redemption, the price paLd therefor shall not exceed the price at which it is redeemable.
(20)The Company froin time to time may, subject to the limitations or requiremems
provided above in this Article m, issue and sell Common Stock or Preferred Stock of any class
then authorized but unissued. bonds, notes or other evidences of indebtedness convertible or not
into Common' Stock ~r stock of any other class then authorized but unissUed.
(21)No ho!d;:! of any stuck or ou'-.er securiues of the Co~pany now or hereafter
authorized shall have any preemptive or other right to subscribe for, purchase or receive any
unissued shares. treasuIy shares, or 'other shares of any class. whether now or hereafter
authorized, or any notes. -bonds.:..~el;lentures. or oth~r securities convertible iIito, or canying
options or warrants to purchase, s~res of any class. The Company may "issue dispose of
any of its authorized shares for such consideration as may be fIXed by, the Board. of Directors
subject to the laws then applicable.
UDl,sun.s..oe-GO:'
p~,'~,(":;:"
ARTICLE IV
Meetings of shareholders of the Company may be held at such place. either within
or outsid~ the State of Oregon,as ~hall be designated from time to time by the Board of
Directors.
ARTICLE V
(1)The number of d~rs of the Company shall be not less nine (9) nor more
, than twenty-one (21), and within Such limits the exact number shall be fL'ted and increased or
decreased from time to time by resolution of the Board of Directors. The directors shall be
divided into three classes... 3.3 nearly equal in nulJ.1ber as possible. with the tenD of office of the
first class rClass I") to -expire at the 1991 annual meetiQg pC shareholders. the term of office
, of the second class ("Class II") to'expire at the 1989 annual meeting of shareholders and the
term of office of the third class ("Class In,'J, to expire at the 1990 annual meeting of
shareholders. At each anIlUal meeting of shareholders following such initial classificalion and
election. directors elected to succeed those directors whose tenns expil'C? shail be elected to serve
th!ee- year terms and until their successors are elected and qualified, so that the tenD of one class
f directors will expire ~ach year. Whe~ the number of directors is changed within the limits
provided herein,' any newly creat:d ,directorships. or any decrease in din:CIorships, shall be so
apportioned among the classes as to make all classes as nearly equal as possible. provided that
no decrease in the number of directors constitUting Board of Directors. shall shonen the- tenD
of any incumbent director.
(2)Allor any number of the directors of the Company may be removed without cause
only at a meeting of shareholders, called expressly for that purpose, by the vote of 80 percent
of the \totes then entitled to be cast for the election of directors. The shareholders may remove
UAl-ilUJ,l '180f-Oo.f
, ." ..""". ,."'", ........... - ~-
:: .,: ";' ,: ', .
hereinafter dermed) of the Company shall be requ~red for the approval or authorization of any
~usincss Transaction" (as hereinafter defi~ with any "Relarcd Penon" (as
defined) or any, Business Transaction in which a Related Person has an intcn:st (exccpc
J, .
prOpo!lionately as 8 shareholder of the ComJm;DY); -provided, however, that the 80 pc~ voting
requirement shall n?t be applica~le if either:
(a)The "Continuing Directors" (as hen:inafter defined) of the ComPanY by
at least a tWo--thirds VOle (i) have expressly approved in advance the acquishiOD ot the
outsrandiilg shares of Voting Stock. that caused such Related PersOn to become a Related Person,
or (ii) have expressly approved such Business Tm_tion: or
(b)TIre cash or fair market value;. (as deicnnined by at least a majority of the
Continuing Dircctois) of the PIq)C11y, securities or other consideration 10 be received per share
by holders of Voting Stock at the Company (other than the Related Person) in the Bus~
Transaction is not less than the "Highe~t Purchase Price" or the .Highest Equivalent Price" (as
those tenns ' arc hereinafter defined) paid by the \Rclated Person involved in the B~incss
, ,
Transaction in acquiring any of its" holdings of I1ic Company s Voting Siock.
-(2)For purPoscs of this Anicle' VIi:
':.. -
(4):' The term' "Business Transaction shall
include, withou~ limitation, (i) any merger. coRS9lidalion or plan
of exchange of the Company. or any endlY controlled bJ or u~~r
common control with the Company. with or into any Related
Person. or any entity conrroUed by or under common control with
such Related Person, (ii) aily merger. consolidation or plan of
~Y:'='~ ~! ~ P..:!:::::! !'woN... u;" ;,,;"ij ':uLi'l '-UiluuiicU Oy or under
UOl.sn'J,saICK-GoIf
, ~, .
. - . .. ". .. .,. . ". '. ," .-:
common coottol with such Re1ated Person, with or into the
Company ~r ~ entity . controlled. by or under comn1on control
with the Coinpany. (ui) anY sale, lease, excliange, transfer or other
disposition (in ~ction or series of uansactions)
includirig without limitation a mortgage or any other security
device; of all or any .Substantial Pait. (as hereinafter defined) of
the propertY and assets of the Company, or any entity controlled
by , or under common control with the Company, to a Related
person. or any entity controlled by or under conunon control with
such. Related Person~ (iv) any purchase, lease, exchange, transfer
or other acquisition (in one transaction or a series of transactions),
including without liniitation a mortgage or ailyother security
, device, of an or aOy Subslanlial P~;of the propeny and assets of
!I Vpl..tptt D""",ft ".. ft_.
-:... -----"...
L..- --
, -
.. _n_"'_- - u--- --
--:" """"",
......uu"".,;u VI U& uuU... \;UIIUIIUII
contr91 with such Related Person, by the .Company or any entity
controlled by or under common control wirh the Com~any, (v) any
recapilalization of-1he Company that would have: the effect"
increasing the voting power of a Related Person, (vi) the ~suance,
sale, exchange or other disposition of any securities of the
Company, or of any entity controlled by or under coOUI\on control
wirh the Company, by the Company or by any entity controUed by
or under common control with the Company, (vii) any liquidation,
spin-off, split-off, split-up or dissolution of the Company, and
LLOI-5UQ-l. 58801-002' .
options, or otherwise, shaD be deemed to be Beneficially Owned
by such Related Penon and to be outstanding for' purpoSes
subsection (b) above.
Cd)For the purposes of subs~tion (b) of
Section 1 of Ankle VU, the tenD .other consid~~tion to be
received. shaD include, withoUt limitation. Common Stock or' other
capital stock of the Company retained by its existing shareholders,
other than ~ny Related Person or other Person who is a party to
such Busi~ss TransaCtion. in the event of a Business Transaction
in which the Company, is the surviyor.
(e)The tenD .Voting Stock. shall mean all of
the outstamUng shares of capital stock of the Company entitled to
vote generally in the election of directors, considered as one class,
and each reference to a proponion of shares of Voting Stock shalt
refer to such proponion of the yotes entitled to be cast by such
shares.
(fT.:: The tenD .Contimiing Director. shall mean
a direc~rof the Company who became a director on the effectiveI '
date of the merger of PacifiCorp,' a Maine corporatio~, and Ucah
Pow~r '& Liglu Company, a Utah corporation. into the Company.
provid~d that anv person hecomin! ~ tfin-rtnr ~'..!t-!~.!~~ !~ :-.::~
date whose election. or nomination for election, by the Company
lLOi-SU6J,S"G'-GG~'
;~: ': ,
~~~~i~k~~A'"~;5,~~C;,
*,~";::.;".,;;...;:":'; ':"':". ." " " '
i~"
- ~~
;f.:;/ J"*:~~~
:;:
7.: ;:bi!~~:~~~;~~""1'
:~
.//f.;
);~,.. . ., . '.. " ,'" .. ./ ... '-----""'!------
sh8~hold~rs. was approved by a vote of at least a majority of the
Continuing Directors shall be considered a Continuing Director.
(g)
A Related ,Person' shall be deemed to have
~cqui~ a share of the Voting StOck of the Company at the time
when such Related Person became the Beneficial' Owner thereof.
With respect to the shares owned by Affiliates, Associates or other.
Persons whose ownership is attributed to a Related Person under
the foregoing definition of Related Person, if the price paid by
,. .
such Rela~ Person for such ' shares is not detenninable by a
majority ot' the Continuing Directors, the price so paid shall'
deemed to be the higher of (i) the price paid upon the acquisition
thereof by the Affiliate, Associate , ~r other Person or (ii) the
market price of the ' sbarc,s in question at the time when such
Related Person becan1e the ~neficia1 Owner thereof.
(h),The terms -Hi~estPtm:hase Price- and
.......
Highest Equivalent Price ' as, used; in this AniCfc VU shall mean '-
the fonewing: If there 'is only o class of Capital stocK of the
Company issued and ou~ing, the Highcst Purcha!:e Price shall
mean the highest price that can be detennined to have been paid
at any time by the Related ~erson involved jn the Business
Transaction for any share o~ shares of that class of capital stocle.
If there is more than one class of capital stocle of the Company
issued and outstanding, the Highest Equivalent Price shall ~ean,
UDl-SU'J.SII"-GOI'
" ,". .
::~~;f..;:~~~t,:;:~~~;,~#J~~:;;;':;r;
:;;~~,j~:, " .,:,(!;
-to.
i"-
. .~;.
, .
such specified Person or who is a director or officer of the
Company or any of itS subsidiaries, aDd (iv) any Person who is a
director or offacer of such spec~fied Person or any of itS parenes or
subsidiaries (od1er d1an the Company or an entity controlled by or
under conunon control with the Compzny).
(I)The term "Subsidiary," when used to indicate
a relationship with a specified Person, shall mean an Affiliate
controlled by such Person directly, or indirectly through one or
more inlc'1J1ediaties.
(3)For dJe purposes ,of this Article ViI. Ii majority of d1e Continuing Directors
shalt have the power to make a good faith detennination. on d1e basis of infonnation ~wn
them. of: (a) the number of s~ of Voting Srock that any Person Beneficially Owns,
(b) whether a Person is an Affiliate or Assoc;i~te-of another. (c) whether a Person has an
agreement~ contract. arrangement or 'understmding with another as 10 the matters-referred to in
subsection (2)(a)(viii) or (2Xc) f!':ren-f. (d) w~ :he 5'"ut.ject tv auy Business Transaction
nstinltc a Substantial Pan, (e) whether' any Business'Transaction is one' in which a Related
Person ,has ~n interest (except proportionately as a ~hareholder of the Company), and (0 such
other matters with respect 10 which Ii ~etennination is required under th~ Articl
f yn.
(4)The provisions set forth'in this Article VU may, not, be amended,' altered, changed
or repealed in any respect unless such actiofL is approved by the affirmative vote of the holders
, .
of nm Jess man 80 percent of d1e OUfStlnding shares of Voling Stock: of the Company.
1.!.O1-'12U.""'-IOU
, , , '
h' , '
" ", - - -:'-, "' '' '., :':"
.1j;,j
, ", ,
" lJ!Juu'..J.:Jt., ff
.. ;. ',!,,~:_;~~'
f~"
""~~:'::'
k-'\-
' ;' " " """ /,... '
ARTICLE
The Company shall indenuiirY to the fullest extent not prohibited by law any
person who is made. or threatened lO,he made, a pa.'1y to aii action, suit or proceeding, whether
civil. criminal; admi~strative, investigative. or otherwise (including an action, suit or
proceeding by or in the,right of the Company) by rea.U1n of 'hi-- f!~t t!'.:t t!:: pc-...vn i5 VI WiIS
a director. bfficer. employee or agent of the Company or a fiduciary ~ithin the meaning of the
Employee Retiremem Income Security Act of 1974 with respect 10 any employee benefit plan
of the Company, or servesor served'at the request of the Company as a director," officer.
employee or agem. or as ~ fiduciiiyot: an employee benefit plan. of another corporation.
partnership. joint venbJre. trust or omu enterprise. The Company shall pay for or reimburse
- dIe reasonable- expens.es incurred ~y any such person in any such proceeding in advance of the
fmal disposition of the pr~ing to the fullest, extent not prohibited by law. This Article shall
, not be deemed exclusive of any other provisions for ~fication or advancement of expenses
of directors. officers. employees. agentS :and fiduciaric~ thJt may be includc:d in any statute,
f:'
bylaw. agreement. general or specific ac~ion 'of the Board of Directors. vote of shareholders or
otherwise.
- -
ARTICLE IX
No dfreclor of the. Companf shall be personally liable to the Company or its
shareholders for monetary damages for conduct as a director; provided that this 'Artieh: IX shall
. ".
not el iminate the liability of a director for any act or omission for which such elimination of
liability is nm penniued under the Oregon Business Corporation ACL No amendment to the
u.ol-5UO.SlM'.OOU
r, .
" '
Oregon Business Corporation Act that funher limits the aces or omissions for which elimination
. ...'-..
(~').11
~(,
of liability is pcnniued shall affect the liabilitY of a dUector (or any act or omission which
occurs prior 10 Ihe effective darc of such amendment.
" -
LLO&,tuU,& "-.on.
ARTICLES OF l\1ERGER
FI LED
NOV 2 9 1999
. OREGON seCRETARY OF STATE
Scottish Power Acquisition Co.
- "'
with and into
. PacifiCorp
The following Articles of Merger are filed pursuant to Sections 60.481 and 60.494
of the Oregon Business Corporation Act by PacifiCorp, an Oregon corporation
Pac.ifiCorp~), the surviving corporation in the merger of Scottish Power Acquisition Co., (14119 :an Oregon corpo~~on ("Merger Sub"), with and into PacifiCorp, with PacifiCorp as the
sUrviving ~orporaQ~n (the "Merger
, 1. .of Mer er. The Amended and Restated Agreement and Plan of Mergerdated as of December 6, ~998, as amended as oflanuary29, 1999 and Feb~ 9, 1999 \aridamended and restated as dfFebruary 23 1999, and as further amended on or-prior to the date
hereof, by and amo~g Scottish Power pIc (fonnerly N~w Scottish Power pIc), a public ~ted' company incorporated under the laws of Scotland, Scottish Power D.K. pIc (fonnerly ScottishPower pic), a public limited company i~corporated under the lawS of Scotland, NA General
Partnership, a Nevada general partners~p, and PacifiCorp (the "Plan ) relating to the Mergeris attached hereto as Exhibit A-;- and is incorporatet(herein by this reference as if fully set
. , .
forth. The Plan has been duly adopted and approved by the Bo~d of Directors of each ofPacifiCorp and Merger Sub.
. Shareholder A rovals.
(a) The Plan was approved by the sole shareholder of Merger Sub as
follows, such approval being the only shareholder approval of the
. Plan required on the pan of Merger Sub:
297 341,004 shares of common stock of Merger Sub were
outstanding, .and 'each sqch share was entitled to cast one v~te on the
Plan;
. 297 341 004 shares of common stock of Merger Sub were voted in
favor of the PIari; and
0 shares of common stock of Merger. Sub were voted against the Plan.
PonIadZ-'2I44I0.3 0I11SO94IIM4
(b)The Plan was approved by the following voting groups of
shareholders of PacifiCorp, such approvals being the only shareholder
approvals of the Plan required on the part of PacifiCorp:
297 331 855 shares of common stock of PacifiCorp were outstanding
and entitled to vote as a single class, and each such share was entitled
to cast one vote on the Plan;
207 506 780 shares of common stock of PacifiCorp \!.ere voted in
favor of the Plan; and
051,938 shares of common stock of PacifiCorp were voted against
. the Plan;
159,370 shares of preferred stock of PacifiCorp were outstanding
and entitled to vote together as a single class on the Plan, and these
shares were entitled to cast an aggregate of 2 413,541.5 votes;
197 613 votes ofpref~rred stock ofPacifiCorp. were cast in favor of
the Plan; and
403 votes of preferred stock of PacifiCorp were cast.against the
Plan.
3. Effective Date. These Articles of Merger shall be effective upon the date and
time on which these Articles of Merger are duly f1le4 with the Corporation Divi1;ion of theSecretary of State for the State of Oregon.
1'IInIIIdZ-4214410.J aol~
Dated:NrnrF'mh::or ,q . 1999.
PACIFICORP
an Oregon corporation
BY:r:0lt--L
Name: . RichaJ:d T. O'Brien
Title: Executive Vice President and
arlef Operating Officer
Panlnd2~i"lG.2 001'75l19-OOO44
- AMa-i"DED A.' 1) RESTATED
AG~'dENT AND PL~" OF MERGER
dated as of Dec::nbe: 6. 1998,
as amended as of January 29~ 1999 and Febnwy 9. 1999
and amended and restated:!S of February 23. 1999.
by and among
NEW SCOmSH PO\\'"ER FtC.
SCOTTISH POWER FtC;
NA GENERAL P.-\RD.cRSHIP
and
P ACIFICORP
, -
NYI:,J%OJ2:7\o
TABLE OF CO~TINrS
This Table ofConteIltS is not pan of the Agreement to
which it is attaChed but is insenediOr convenience only.
Page
No.
ARTICLE I 11iE GER.. .....
................ ........ ... ... ......... ........... ........ ........... .............
........-- 21.01
1.02
1.03
1.04
LOS
1.06
1.07
ARTICLE II C0NVERSI6~ OF SH..r\.R.ES ................................
....":.............................._.........
01 Conversion of Capital Stock ......................................................................
~..
~........ 402 Procedure for Election ....
~...~....
:.................................................................-...-... 603 Exchange of Certificates. ".'.'..".".".".""'....".."..
~"."..."."."..........""
~...._........- 72. 04 ,!\Tt~o lding ~ ghts. ...... ..... ..
. :.... ................~........... ....
..................................-.... 1
ARTICLE ill REPRESENTATIONS AND \V AR.R.~~llES OF THE COMPANY................. 1001 OrgaIuzation and Qualification ..................................................................~......... 10
'-
3 .02' Capital Stock.... .....
.. ............ ~...:..... .......... ....... ....... ... ... .............. .......
..................... 1203 Authority Relative to this Agreemcnt............-...............-..........-..........--... 1304 Non-Contravention; Approvals and ConsentS .............._
~......_......._.........._
~.. 1395 SEC R~ortS. FinanCial StatementS and Utility ReportS...................................... 1506 Absence 0 Certain Changes 0 r E ventS ..._...........
,.......................................
~....... 1507 Absenc: of Undisclosed Liabi lities ...............................................................-.. 1608 Legal Proceedings ......... "".."."'.'.""'."'."
.'. .......... .
~............................................. 1609 Infonnation Supplied ..............................................................~............................ 1710 PermitS; Compliance' with Laws and Orders ....................................................... 1711 Cdmpliance \vith AgreementS .............................................................................. 1812 Taxes .........................~_....................................................................................... 1813 Employ~, Bex:tefit Plans; ERlSA ......................................................................... 1914 tabor Matters ..
~... .... ... .......... ....... ................ ........ ~.~........
............ .......................... 2215' Environmental Matters.. ...... .....
................................. ...............~.......
.................... 2216 Intellectual Property Rights .........................................................._...............~..- 2S17 Regulation as ,a Utility "".""...""'.'.""'.""".'."".".""...."..".".
'.""...'
'................. 2S
3 .18 lilsurance ......
~~.................... ......................... ..
~...................................................... 2S
3.20
3.21
The Merger...... ....... ....... ....... ...... .........
...... .............. ... ............ .....
...""... .............-. 2Clo~g '
.... .... .........~................ ...... ............. ........ ......... ........~..... .... --.....-.-..
:.-.. 3E~ v e Time
.................... .......... .... .... ...... .... ..~........ ... ...... ....
............--.....-... 3Govemin g Insmnncnt .......... ... .....
......... ...... .... ........ ....... ...... ....
.............. ................ 3
DirCC~ors and Officers of the Surviving Corporation .......~.........................._....- 3
ff~tS of the Merger .................................................................."......""."..-""- 3
F uribeI' Assuranc~..... .... ..
~.. .... ......... ..... .'.". ...... .... ......... ............ .............. ...... .......
~ 3
Vote Required ....._......................................._....._._.....
~~.__..._--
2S '
(Intenti onal1y Omi ttedJ ...
...................-........... .... ..~...: ..........
~._._.._..._.. 26Own~hip ofHoldCo or ScottishPower Stock ................................................... 26
... -
ARTICLE IV REPRESENTATIONS AND W ARR.~
'\
lIES OF HOLDCO,.scornsmoWER and the pattnership ......................................................-............ 2601 Q~on and, Qua1ific~tion. '."
"..."'" ..~.........................
~......_....................... 274. 02 GaP~~ ' S tock .
..............................~.....~........... ...............
........................................ 2803 Atitho"iity Rclati,.c to this Agreement .................................................................. 3004 1':'lon~oI1travention; Approvais and ConsentS ..................................................... 30
4~05 SEC Repons and" Financial StatementS................................................................ 32
' '' ,
4~06 AbSie;ice of Cenain Changes or EvcntS................................................_............ 3207 ~sc:z;ce "0 f Undisclosed Liabilities .........................................................-........ 3308 Lc,gal, Proceedin2S .....
.......... ............... .... ".'." ....
................................................... 33
4~ 09 Irif6~arion S UD~ iied .......... ......
:~............ ....- .............................. .....
~.................... 334: 1 0 ~~~JtS; Compti;"~ce with Laws and Q.rciers "
........
,............................................. 34Co~liance \vim .-'\greementS ..............L...................................~........................... 354. ~ 2 r ~~
~.............................................................. .....
....................................-......... 3513 ScottishPower E:nployee Benetit Plms............................................................... 3614 Labor -Matters ..
~.......................................~......~.........................................
:.......... 384: 1 5 Environmental ~ faners.........
~............... ......... ...................................................
~.. 316 intellectUal PropertY Rights .........
~.....
~................................................................. 4017 Vote Required .......
~...............~..........:..................................................................
18 (Intentionally Omitted..
~......................_..........................~........
............................. 4119 Ownership of Company Common S tack ..
~....................~.......
~.................._...... 4120 Insurance.. .............. .....................
~. ................. ....
.................................................. 414.21 Year 2000'
......................~~..........
....u............- ... ...................................................... 4122 J oint Venture R=?fI:Sentations ..................u.....................~................................... 42
ARTICLE V C 0 M -tS ............. .....
..... ......... ............. .:. ..... ..... ........ ..........~............
.............. 42
0 I' CovenantS of thc Company .............................~.................................................... 4202 Covenan~ of HoidCo an~ ScottishPower ............................................................ 4703 Joint E.'tecutive Committee.
...............................................................................
09 '
3.12
3.23
3.24
3.25
' '
A.rtiCle vn ofthc Companys-Anic1es of incorporation and Sections
: 60.825-60.845 of the BCA Not Appiic~ie ..................~..................................... 26
C ert3in C ontraCtS ..
~................................. ................ ..... ......~................................. "
Year 2000 .......~...........................................................--...........................- 26JoUtt Ve:uur-e' R....-;Jresentations
...........................................................-............
Tax Maners ... .....
~.....................~........... ............. ..........................
~......... .............. 52Discharge 0 f liabili ti es ......
~.. ...... ,"....""."" .... ........ .....
................... .......... ........... 52ContractS ...... ...................... ......... .
.....~..
.......... ................... ................................... 53No So lici lations ................. ............
~...... ............. .... ............ ............ .......................
Conduct of Business of Merszer Sub ..........oo........................................................ 54
Third PartY Standstill A2I'C:~entS ..... ................... .~...........................................- 54
Contra 1 0 f Other Party's" B usiness .........................................-...............-.-.... 54
ARTICLE VI ADDmONAL AG~S.........
:........................_....._............__.-
O 1 .~ccess to Infonnation. ........
~....... .........................................................................
02 Preparation of Registration Statement and Proxy Statement............................... 55
~ '
Approval 0 f Shareho Iders. ......................................--......-........-..-...-..... 56
C omp any Affiliates
.... .... ..... ....... ....... ........ ..... .... ..... ......
....................................... 57
A udit()rs' Letters ...................... .............. ."'....
:......""."."...."'."
~........................... 5 8
Stock Exchange Listing; Deposit Agre===t .......................-..-...-.......-........ 58
Rcstn1c:tU1ing 0 f Merger ..........
............
~............................................-......-..... 58
Regulatory and' Other Approvals .....................................................--.............. 59
Emp 10 "lee B cncnt Plans ........ ........
............... .... .'" ............ ....-......-.-...........
omp~y Stock Plan ..................
..-...... .... ..... ......-......-. ...-...........-.......-.....
pir~~rsl and'Officers' hldenmiiication and Insurance ..................................-. 61
H~14~0 Governance; Addi~na1 Matters. ......................................._.................
-- .
1;;."Cp ~es ..
..... .................... .......... .......... .. .... ........ ............... .................. ....... - ... ...
B r:c.kers 0 r ~inders....... .... .....
................... ... .......... .... ... .... .:.....
........-...... ....-...... 62
t a1c~C?vcr Statutes .................................... ....................-...................................... 63 "
Conveyance T a."tcs .........................
:.........................;......................................
~ 63;"
R#,~ Maners..
~.... ....~......... ...... ... ....... ........
.................... ........ ...................... .......... 63
~: ~aners ....
~....................... ....................
.",...". .... ...................... ...................... 63
.: I?-~d:nds ""'"
............ ........... ..... ........
~.................... ......... ........................ ............ 65
ARTICLE vn CO NDm 0 NS
..................... ........".... ...............
................................................... 6501 Conditions to Each panys Obligation to Effect the Merger....................~........... 6502 Conditions to Obligation of HoldCo. ScottishPower and Merger Sub
Effect the M~er ........
~...:...........~.........~.............................................
:..........- 67
Conditions to Obligation of the Company to Effect the Merger ......................... 69
ARTICLE vm TERMINATION, AME-.TIMENT .~""D \V AlVER ......................................... 70
01 T eIminatio n ..... ..... ........ ...
~... ... ....... .......... ..... ... ..................... ............... ........-...-
02 Effect 0 f T ennination................
.:~~_.....................................-.........-.-........--
03 Am endm ent .
:...... ....-............. ..:~... .-......... .. .. ....... .. . .... ...... ..
...-......-.......... .......... 7304 Waiver. ..... ..................... .......... ............... .......... ....... ....... .............. ........................ 73
ARTICLE IX GE~TERAI, PROVISIONS
-................................................................................
73,
01 Non-Survhlal ofRepresent&ltions. \\"an-ar.ties. CovenantS and AgreementS ....... 73
02 N oticcs ..
~.................................................... .... ........ ...................................
............ 74
03. Entire Agreemen~ Incorporation of ExhibitS ...................................................... 7504 (Intentionally Omitted.
) ...................................................................................-.
7S
05-Public AnnouncementS ....................................
~....:......................._....................
7S
06 No Third PartY Beneficiarv .................................................................................. 76
0l... No Assignme;~ Binding EfTect........................
:.................
~................................ 7608 Headings ....
~.................. ....:.... ................... ..... ....... ..... ............ ....... ................
~..... 76
09- Invalid Provisions ..
............ ....................:....... ..'.. ........ ..... ..............................
:~.. 7610 Governing La\v ...................................... ......... ..................................................... 7611 Submission to lurisdiction; W aivers~......................................................._........ 76
Enforcement of Agrc;:mcnt.......-.....-........-....-.........-.-........---
C c:rtain Definitions
-.... _.....~._..._................._......
~........_.__......_-- 77
Co unterp an! ........... ................ ...... ............... .
... .... ... .......... ...... .... .... ..... ..... ...... ......
WAIVER OF J'tJRy TRIAL...............................................................-.............. 79
111
ConvCItcd Shares"
DOE"
Effective Time
Election Date"
Environmental Claims"
Enviromnental Laws
Environmental PermitS
ERISA"
ERISA Affiliate
Exchange Ac~
Exchange Agent
Exc~ge Fund"
FER.C"
FSA"
FT A ..
FTC"
Governmental or Regulatory Authority
-group
"Hazardous Materials!!
HoldCo ADRs"
HoidCo ADSs
HcSidCo Employee B'enefit Plans
HoidCo Group
HoIdCe Ordinary Shares"
Hold Co Share Schemes
HoidCo Special Share"
HSR Act
Intellectual Property
\'Joint Executive Coinmittec
Joint VentUre
knQwledge
laws
Licn~i
Listing Paniculars
LSE" .
material adverse effect"
Merger"
Merger Consideration
Merger Ordinary Shares
Merger Sub"
Merger Sub Common Stock"
tt ldM C"
"N co.i.F acili ties
"NY5E"
" 0 FI:ER "
OFT"..
. .. .
Section 2.01 (c)(i)
Section 3.0S(b)
Section 1.03
Section 2.02(a)
Section 3.IS(g)(i)
Section 3.1S(g)(ii)
Section 1S(b)
Section 3. I 3 (b)(i)
SeCtion 3. 13(b)(iii)
Section 3.04(b)
Section 2.03(a)
Section 2.03(a)
Section 3.0S(b)
Section 3.09(b)
Section 7.01(k)
Section 6.
Section 3.04(a)
SeCtion 9.12(f)
Section 3.1S(g)(iii)
Preamble
Preamble
Section 4.13(b)
Section 5.02(k)
Preamble
ection 4.02(a)
Schedule n
Section 3.P4(b)
Section 3.16.
Section S.03(a)
Section 301 (b)(i)
S~tion 9.13(d)
Section 3.04(a)
Section 3.02(b)
. ~ection 3.09(b)
S~tion 2.03(e)
, Section 9. 2(e)
Preamble
Section~2.01(c)(i)
Pre~ble
Preamble
Section 2.
Section 7.01(k)
$ection 9.13(1)
Section 2.03(e)
Section 7.01(1)
Section 7.01(k)
, .
OFW AT"
Options
orders
Ordinary Share Consideration"
Ordinary Share Election
Ordinary Share Election Form
Original Agrc:ment"
"Parmc:mip
Partnership A~eCment
Partnership Lo~ Note
persOn"' .
Plan"
Policies
Power Act"
Proxy S taternent
qualified stock options
Ref"
Registration Statement
"Relcase
"Repr:sentativ~
Rcvic~ Material"
, "
Sales Price
Schcm~ of Arrangement
Scheme ConsentS
Scheme Date"
Scheme Document"
SconishPower", ,
SconishPower !A.DRs"
ScottishPower ADSs
" .
ScottishPower Bud2et
ScottisnPower Disciosure Documents
SConlshPower Disclosure Lener
Sco~hPower Employ~e-Benefit Plans
ScoWshPower Financial State,.-nentS
ScottishPower loint V cnwre
ScottishPower Ordinary ShareS"
ScottishPower PennitS
ScomshPower SEC Repons
ScottishPower Share Schemes
ScottisbPower Shareho Idersf Approval"
ScottishPower Shareholders' ~1eeting
ScottishPower Special Share"
SEe'- .
S~ of State"
Securities Act"
SharC .Transfer
. '
Vl1
Section 1.01(1)
Section 3.02(a)
Section 3.O4(a)
Section 2.01(c)(i)
Section 2.02
Section 2.02-
Preamble
Preamble
Section 4.01 (a)
Section 2.01(c)
Section 9.13(g)
Section 3. 12(b)(ii)
. - Section 4.14(b)
Section 3.05(b)
Section 3.09(a)
Section 6.10(a)
Section 9.13(h)
Section 4.
Section 3.1S(g)(iv)
Section 9.13(i)
Section 6.
S~tion 2~03(e)
Preamble
~eciiQ~ 9.P(k)
Section 2.0 t (c)
Section 9~13(1)
Preamble
Preamble
PrC3IIlb Ie
S~tion 5.02(e)
-Section 3.09(b)
. Section 4.01(a)
S~tion 4.
Section 4.
Section 3.01 (b)(iii)
Pieamble
Section 4.10
Section 4.
SCcri~n 4.02(a)
Section 6.03(a) ,
S~on 6.03(a) ,
Section 4.02(a)
Section 3.04(b)
Section 1.
s.ec~on 3.04(b)
Preamble
This AMENDED k'ID REST A rcl) AGREE\1ENT AND PLAN OF MERGER.
dated as ofDeccmeer 6 1998 and amended as of January 29,: 1999 and February 9. 1999, and
amended and rcswcd as of February 23, 1999 (this "A!ZI'e=c:nt J, is made and entered into by
and among NEW SCOTIISH POWER PtC, a pueiic limited company incorporated under th~
laws of Scotland ("HoldCo ), SCOTTISH POWER PLC, a public limited company incorporated
under the laws of Scotland ("SconishPoWer"), NA GE~"ER.AL PARTNERSHIP, a Nevada
general partnership indirectly ~holly owncdby SconishPower (the "Parmershin ), and .
PACIFICORP.an Oregon corporation (thc "Comuanv ), an~ with respect to Section 2;01 her:of
only, ScottislfPo~er NA 1 Limited, a limited liabiiicy comp~y incorporated ~dcr thc laws of
Scotland ("UKSiib 1 ") and Scottish Power NA 2 LimJted. a limited li~ility company
incorporated ~d~ the laws of Scotland ("UKSubl"
)'
WHE~I\S, ScotushPower, the Pannership. UKSubl, UKSub2 and thc Company
entered into an Agre~l11ent and Plan of Merger dated as of December 6, 1998 and amended as of
January 29, 19~9 and February 9, 1999 (the "Ori2inal Asrn:~ment
~.
HoidCo. SconishPower. the P:lrtI1ership, UKSubl, UKSub2 and the
Company wish ~o ~end and restate the Originai Agreemem in itS entirety. effective as of thc
date set foM in'SeCtion 9.03(c);
~,
the Board of Directors of ScottishPower intends to recommend to its
shareholders a proppsal to_introduce HoldCo' as a new holding companyJor the ScottishPower
group pursuant to a scheme of~gcinent sanctioned by the Coun of Session. Edinburgh (the
Scheme of Arn1neement ), substaIuially in thc fonn of thc draft Scheme of Arnmgement
attached hc..9'Cto as Exhibit A subject to such amendmentS as ScottishPower may reasonabJy dcem
necessary or desir:able; rovided. that if such amendm~ntS \\"ould have a material adverse effect
on the benefits ofthc Merger for the holders oTCompany Common Stock. such amcndm~ts
may only be effected with the prior writtcn ,consent of the c; 9mpany;
WHEREAS. pursu~t to the Scheme of .-\rrangemcnt. ,(A) aU ordipaiy sharestOf
0 pence each ofScettishPower C'ScottishPower Ordin:lr; Shares ) will be cancelled and the
holders thcrcofwill receive in piace oithe ~cotitshPower Ordinary Shares then held by thcm an
identical number of ordinary shares of 50 pence e:lch of HoldCo ("HoldCo Ordinary Shares
and (B) all Scon~shPow~r Ordinary Shares represented by Aincridm Depositary Shares of
ScottishPower ("SconishPower ADSs ), e:lch representing four (4) SconishPower Ordinary
Shares and' evidenced by American Depositary Rec:iptS f'SconishPower ADRs"), will be
cancelled and thc holders thereofwill recei\'C"'in place of the ScottishPower ADSs then' held by
them an idcntical number of American Depositary Shares ofHoldCo ("HoldCo ADSs ), each
rcpresci1tmg four (4) HoldCo Ordinary Shares and evidenced by Af!!erican Depositary Reccipts
HoldCo ADRs"
);.
\YHERFAS, after the Scheme Datc (as defined in Section 2.01) and prior to the
Closing Date (as defined in Section 1.ScottishPower shall transfer to Hol4Co all of the
outstanding shares ofUKSub I and UKSub 2 ("Share Tr3I1Sfer");
"'.
WHERE.I\S, the Boards of Directors of Hold Co, ScottishPower and the Company
and thc parmers of the Partncrship. have e:lch dctennincd that it is advisablc and in'the best
NYI :lJ20J227~'
intereStS of their respective stockholders and p2..'"mC:S~ :;,s me. case may be, to coI1SUll1m:ue, and
have approved,. the business ce:=bination transaction p:o:vided for herein in which Merger Sub
(as defined below) would merg: with and into the Coc:;:any and the Company vioul~ become an
indirect, wholly-owned subsidiary of Hold Co (the 1f~1e~:!") pursuant to the temu of this
Agreement, whereby each issued and outStanding share cf common Stock of the C~mpany (~he
ComDanv Common Stock"), other than shares owned c::ctly or i;1direcdy by HoldCo.
ScottishPower, the Parmership. ~erger Sub or the CoI::pany, Will be convened into the right to
receive either (i) HoldCo ADSs evidenced by HoidCo ..;DRs or (ii) HoldCo Ordinary Shares (the
Men!:CI" Ordinarv Shares"
);
~REAS, iIr.mediaiely prior to the C!csing D~te (as defined in Section 1.02),
an Oregon corporati~n wholly-owned by the Pannc:ship (Mer2er Sub") will be formed for the
purpose of effe~~ng the Merger;
WH;REAS. the respective Boards ofDir::c:ors ofHo14Co, SconishPower and the
Company, and ~e 'parmers of the Partnership. have cie:::-::tined that the Merger is in funhcrance
of and consistent with their re~cctive lonsz.terrn business strate2ies and is fair to and in the best
' ',. : -, .
interestS'oftheii- r~spective snz:::holders and stockhoJc::s. e:lch' ofHo~dCo and ScottishPowcr
\1as approved this Agreement Zo'ld the Merger. L'XSub i ~~d UKSub l.in their capacity as general
parmers of the Parmership and as parties to Section Z.have approved this Agreement and the
Merger, and the Partnership has agreed that. immediat:~y following the formation of Merger
Sub, it will approve this Agx:-:::lent and the Merger as the so le stockholder of Merger Sub;
WHEREAS. for federal inceme ta.x purposes. it is intended that the Merger shall
qualify as a reorganization within the meaning ofSccticn '36~(a) of the Internal Revenue Code of
1986, as amended (the "Code ); and
WHEREAS. HoldCo. Scotti~hPo~ver. the Partnership and the Company desire to
make c:nain representations. wammties and agr~=::=:s in conn~tion with the Merger ~d also
. to prescribe various conditions to the Merger,
NOW. THERE:ORE. in consider:uiou of~he mutual covenantS and agreementS
set forth in this Agreement.. ~d for other good and \":lbablc consideration. the receipt and
sufficiency of which are hereby acknowledged. the pmies hereto agree as follows:
ARTICLE
THE MERGER
1.01 The !\'lcnzer- Upon the terms ilI1d subject to the conditions of this .
Agreement, at the Effective Time (as defined in Section 1.03). Merger Sub shall be merged with
and into the Company in accordance with the Business Corporation Act of the State of Oregon
(the "BCA"). At the Effective Time, the separate existence of Merger Sub shall cease and the
mpany shall continue as the survjving coIporation in the Merger (the "SurVivin
Col'Dotarlon"). Merger Sub and the Company arc sometimes referred to herein as the
Const'inu:nt Co orations
. :
\5 a rc:sult of the Merge:, the outStanding shares of capital stock of
~;
the ConstitUent Corporations shall he convened :u:d car..c:iled in the manner provided. in
Article II.
02 Closin2. Unless this Agre=::u shall have hem tc:rmin~ted and.
the transactions herem COntemplated shall have bc:n abandoned P~t to Section 8.0 1 ~ andsubject to the; satisfaction or wcrlver (where applicable) of the conditions set fom in Arncle VII.
the consummation of the. Merger (the "C1osine ) \\;11 take place at the offic~ of Mil bank,Tweed, Hadley &McCloy, 1 CJ1ase Manhattan PI2Z3.. ~ew Yo~ New York .10005, at 10:00
am., local time. on the fifth bi1sinessday folloWing satisfaction or waiver (where applicable) of
the conditions s~~ f9~ in Miele VII. unless another da!e~ .time or pl~c ~ agreed to in writing.by the parries hereto ~~e "Closin2 Date"). ~t the Closing there shall be delivered to HoldCo.
ScottishPower~. ~e Parm~hip. Merger Su~ and the Company the certific~tes and other
, documents and instruments required to be deliver:d under Article vll.
1.03 Effective Time. At the C1osing~ the panies shall cause to be duly
prepared and e~CC'.lted by the Company as the SUI'\;,;ng Corporation and Merger Sub articles .!'fm~er (the "Artic.les ofMeI"2er ) for filing on, or as soon as practical?le after, the Closing Date
with theSecre~;QfState of the State of Oregon Ithe "S;:cret:lrV ofSta1e ). as provided in
Section 60.494 :o~~e BCA. ~e Merger shall become effective at,~e time of the filirig of theArticles of Merger:\vith the Secretary of State (such date and time being referred to herein as theEffective Time
1.04 Governine Instnuitent. At the Effecti,'e Time. (i) the Anicles of
Incorporation of the Company as in effect immediately prior to the Effective Time shall be theArticles of Incorporation of the Surviving Corporation until thereafter amended as provided bylaw.and such Articles of Incorporation, and (ii) the Bylaws of the Company as in effect
immediately prior to the Effective Time shallbe the B:Jtaws of the Surviving Corporation until
thercaft~ amended as provided by law. the Articles ofIncorporation of the Surviving
Corporation and such Bylaws.
1.05' Directors and Officers of the Sur...i...in!:!: Corooration. Theindividuals listed on Schedule I shall. from and aiter the Efiective Time. be the directOrs andexecutive officers respectively, of the Company as the S w:\"i\"ing C;o dration -until theirsuccessors shall have been duly elected or appointed and qualified or until their earlier death,resignation or removal in accordance with the Survi\;ng Corporation s Anicles ofIncorpo~tionand Bylaws.
1.06 EffectS of the MeI"2er. Subject to the foregoing, the effects of theMerger shall be as provided in the applicable provisions of the SCA.
07 Funher AssuranccS; Each pany hereto will, either prior to or after
the Eff~cti".e Tune. execute such funher documentS. instruments, deeds, bills of sale:
assi~entS and asSurances and take such further actions as may reasonably be requested by one
or mo~ of the other parties hereto to COI1SUI11II1atC: the Merger, to vest the Surviving Gorporationwithlup title to all assets, properties, privileg~. rights, approvals. immunities and franchises of
either ~JtheConstituent Corporations or to effect the other purp?ses or this Agreement'
ARTICLE II
CONVERSION OF SHA.1tES
01 ' Conversion ofCauital Stock. At the Effective Time, by vinuc of
"the Merger and, with respect to clauses (a)-(c), (f) and (g) hercoi without any action on the partof the holder thereof:
, eta) Canital Stock of Menzer Sub.' Each issued and outstaDding share of the
common stock ofMcrger Sub ("Menzer Sub Common Stock") outStanding immediately prior to
the Effective 14rie ~~l be cancelled and the SW'\i\ing COIporario~ sb~ issue to tllc; Partnership
at the Effective Tinic such number 'of s~ of common Stock as is equal to the number of shares
otMerger sub Common Stock, with the same rigntS:"'pow~ and privileges as the Merger Sub
C9JDmon Stock, ~d ~~l consUolte the only outStanding shares of common stock of the
Surviving COIp~rilt~pn ("Survh'iniz Cornoration Common Stock"
).
(b) Cancellation ofTrcasurv Stock and Stock Owned bv HoldCo.
ScottishPower and Subsidiaries. All shares of Comuanv Common Stock that are owned bv the
Company as
~~
stock and any shares of-Company CoII1I1lon Stock owned by HoldCo~
ScottishPowcr,:1he Partnership. :Vlergcr Sub or any other wholly-owned Subsidiary (as defined in
Section 9.12) of Hold Co or SconishPower. 'shall be cmceh:d and retired and ~hall cease to existand no stock of Hold Co or other consideration shall be deli~'ere'd i~ exchange therefor.
(c) . Conversion ofComoanv Common Stock. (i) Each issued and outstandingshare oCCompany Common Stock (other than shares to be cancelled in accordance with Section
01(b)), shall be converted into the right to receive (A).58 HoldCo ADSs (the ADSConsideration), or (B) if a properly completeq. Ordinary Share Election Fo~ (defined inSection 2.shall have been submitted to the Exchange Agent (as defined in Section 2.on atimely basis with respect to such ,share of Company Common Stock, 2.32 fully paid andnonassessable Merger Ordinary Shares (the "Ordin:u\" Share Consideration ; the Ordinary ShareConsideratio~ and the ADS Consideration are each sometimes referred to her=in as the "MenzerConsideration). All shares of Company Common Stock to be converted into shares oCH61dCo ,~ ADSs' or Merger Ordinary .shares pursuant to this Sc:ctiort 1.(c) are hereinafter referred to asConvened Shares. " '
, ,
1";. (ii) If, (A) prior to the time at wh'ich th~ Scheme ofJ\mmgement becomes
effective (the "Scheme Date ), ScottishPower shall pay a dividend in, subdivi4e. consolidate orexcept pursuant to the' Scheme of Arrangement. issue by capitalization of its reserves, any
ScottishPower Ordinary Shares or (B) following the Scheme Date and prior to..ttte EffectiveTime~ HoldCo shall pay a dividend in, subdi\'ide.J:onsolidate or issue by capitalization of itsreserves, any HoldCo Ordi~ary Shares. as applicable. the Merger Consideration shall be
multiplied by a fraction, the' numeratQr of which shall be the number of ScottishPower OrdinaryShares~~ HoldCo Ordinary Shar~ as applicable, outStanding immediately after, and thedenominator of which shall be the number of such sh3rcs outstanding imm~ly before, theo~e of such event, and the resulting 'product shall from and after the date of such event be
the Mciger Consideration subject to further adjustment in accordance with thi$ sentence.
(ill) All shares of Company Common Stock converted in accordance with
paragraph (i) of this Section 1.OUc) shall no ionge: be outStanding and shalL as part of the
consideration for the allotment and issue by HoidCo rc:::::rcd to in Section 1.01 (c) belowaUtOmaticalIy be canceled and retifed and shall cease to :xist, and each holder ofa certificate
rePfesent4tg any such shares shall Ce3Se to have any rig.~tS with respect thereto, except the right
to receive the Merger Consideration and any cash in lie:l of fracnonal HoldCo ADSs or Merg~Ordinarv Shares (detcnnined in accord3nce with S~ticn 2.03(e)), upon the surrender ofsucll
cenific in accordance with Sectiob. 2~Q3. without int::cst..
(9) UKSub I shall cont4tue to be th: owner ora 90% general parmc:rshipinterest in the PaIm~hip, and ,UKSub 2 shali continue to be the owner of a 10% general
parmcrship interest in. the Parmcrship.
- (e) As consideration for the acquisition by the Partnership of the S~vingCoIporatio!1 (:ommon Stock in accordance \vith Section 2.0Ua): (i) the Partnership agrees to
issue a loan note to HoldCo in the form and in an amount to be mutUally agre:d upon by HoldCo
and the Parmc:rs~p (the npannc:rshio! Loan Note ~ (ii) "KSub 1 agrc~s to allot and issue to
~oIdCo fully p~q..or~nary shareS of il each and (Hi) l"KSub 2 agr~~ to allot and issue to
HoidCo fully paid ordinary shares of il each.. In consid:raJion of the ,other steps rcfc:rcd to inthis Section 2.0t (including, to the extent s~t,but in column A of Exhibit B attached hereto, theissUe of the Par;mership Loan Note by the Partnership), HoldCo sh~1 ~Iot and issue (i) the
number ofHoldCo Ordinary Sh3!es represented by HoldCo ADSs to be issued in the.Merger toHaldCos United States Depositary (the "ADR DeDositar....) on behalf of the holders of Company
Common Sto~k entitled ther-..to for the purposes of ghing effect to the conversion and exchangereferred ~ in this Amcle IT, and (ii) the number 0 f ~terg:r Ordinary Shares to be issued in thc
Merger. In consideration of the other steps referred to in this Section 2~01 (including, to thcextent set out in column B of Exhibit B. the issues of ordinary shares by UKSub I and UKSue 2
referred tq ~ove), HoldCo shall allot and issue (i) the number of HoldCo Ordinary Shares
repre$en~ed by HoldC? ADSs to be issued in the !\1ergc::- to the ADR Depositary on behalf of the
holders of Company Common Stock entitl'ed thereto for the purposes of giving effect to the
. conversion and exchange referred to in this Article: II. :L,d (ii) the number of Merger Ordinary
shareS to bc issued in the Merger.
(tl Subject to the tcnns and conditions of the Company's Stock Incentive Plan(thc "ComDanv Ontion Plan ) and the stock option' agr::mentS executed pursuant thereto, each
option to purchase Company Common Stock granted th:reunder that is outStanding at thc
Effective Time (a "ComcanvOotion ) shall be conven:d intO an.option to acquire, on the same
tenns ahd coilCiitions as wete applicable .under thc C,?mpany Option Plan at the Effective Time, a
' numb.:r of (i) H~ldCo ADSs.equal to the ADS Considcr:1tion. or (ii) Merger Ofdinary Shares
eqUal to the Ordinary Share Consideration. in each case multiplied by the number ofsha:Ccs ofCompany Common StOck subject to such option immediately pn,OrlO the Effe~ve TIme, .on thebasis d~cribed in. Section 6.10. The Company as the Suryiving .corporation and HoldCoshall
take all action necessary to ensure that HoldCo has contrOl of the opcranon of the Company
Option Plan and the Company Restricted Sto~k Plans.
5- '
. ,, "
NY1:1J20J-227,'1
(g)
Subject to Section 5.01 (c)(iv)(Ct the Company Prcfcrcd Stock (as
defined below) shall not be aff:~::d by the Merger:mci sh2.i1 continue to have the same rights and
preferences as were in eucct prior tl? consummation of the ~erger.
02 Procedur: for Election. At such time as shall be sufficient to
permit the holders of Comp~y Common Stock to ex::-Clse their right to make an election
pUmwu to this Section 2.02. HoldCo will ~ake available to all hold:.; of Company Common
Stock of record a le~ of trarisminal and election form and other appropriate materials
(collectively, the "Ordinarv Share Election Form ) pro\iciing for such holder to elect to receive
thej)rdinary
~~~
Ggnsic;ieration with respect to all or ariy portion ~f such holder's shares
Company ~ommon Stock ("OrdinarvSharc"Eleetion t As of the Election Date (as hereinafter
defined), 'any share of Company Common Stock \\;th respect to which th~ shall not have b==n
effected such election by subr;rission to the J;xchange Agent (as defined in Section 2.of an
effective, pI;Operly completed Ordinary Share Election Form shall be convened in the Merger
into the right to receive the ADS Considcrat;i.on.
(~) .
A.ity ele:::ion to receive the Ordin:l.1' Share Consideration shall have,be:n
validly made oniy if the Excha::ge Agent shall have r:c::-,'cd by 5:00 p~m.; New York City time.
on or prior' to th~ "Election Datc:. :m Ordinary Share Election Form properly completed and
executed (with ~e signarurc or signatures thereon guarante:d if required by the Ordinary Share::
Election Fonn) by such holder ofsharcs of Company Common Stodc. As used herein. "Election
, Date" mc:3J1S a date announced bv HoldCo, in a news reie:lSc delivered to the Dow Jones News
Service, as the last day on which an Ordinary Share Electio~ F onn Will be accepted: rovided.
however. that $uch date shall bc a business day no e3I'iier than five (5) business days prior to the
date on Which the Effective Time occurs and shall bc at least five (5), and not more than 20
business days following the dat: of such news release: Drovided funher. that, subsequent to such
~ounc=ment, HoldCo, shall have the right to change stich Elcc~on Date to a later date so long
as ~ch later date is (i) at least five (5) business days following the date of notice of such change
and (ii) ~ot later than the date on wh~ch the Effective Time occurs. HoldCo shan have the right"
to make reasonable det:rrnjnations and to establish re:lSonable procedures (not inconsistent with
the te~s" of this Agreement) in guiding the Exchange Ag:ni in i~s de::nnination as to the
validity of O~dinary Share Ele:::ion Forms and of any revision. revocation or withdrawal thereof.
; ,
(b) Two or m~re holders ofsharcs ~fComp~y Comm~n Stock who arc::
determined to constructively own such shares owned by e:lch other by vinue of Section 318(a) of
the Code and who so c~nify to HoldCo s reasonable satisfaction. and any single holder of shares
of Company Common Stock who holds such shares in two or more different names and who so
cenifies to HoldCo s reasonable satisfaction. may submit :ljoint Ord~narY Share Election Form
covering the aggregate shares of Company Common Stock owned by all such holders or by such
single h91der.as the case may be. For all purposes of this Agre:ment, each such group of
holders w~ich, and each such single holdei--
\\'
bo. submits a joint O~ary Share Election Form
, shall be treated as a single holder of shares of Company Common Stock.
(c) R.c1::ord holders ofsharc::s of Company Common Stock who are nominees.'
only may sub~it a separate Ordinary Share Election Form for each heneficial owner for whom
Such rel1ord holder is a nomin::; :ovid~ however. 'that. at the request of Hold Co; such record
holder shzll certify to the reasonable satisfaction ofHolc.Co tha.t such rcr.orq holder holds such
. shares as nominee for the bene:icial owner theret)I: Fc:' ?UIpo~es of this Agrce:ncnt. each
beneficial oWner for which an Ordinary Share: Election:: OrIn is submitted will be tteted as a
separate holder of shares of Company Common Stock s:::,ject.. however, to Section 2.02(b).
(d) Any hoidc:r of shares of Company Common Stock may at aI\Y time pr!or to
5:00 p.m. New York City time. on the: Election Date: r:o;oke ~uch holder's el~ction by written
notice to the/Exchange Age:u r:c::ved at any time prior.o 5:00 p.m., New York City time, on
the Election. Date.
2.03 Exchanszc ofCenfficates. (a) Ex::~an2e A2ent. Prompdy
following the Efi'ective Time, ti) HoldCo shall issue to aIld deposit with the ADR Depositary, for
the beneiit of the hQ~ders of shar-..s of Company Commo:1 Stock convcnc4 into the ADS
Consideration 41 ac~ordance \\;th Section 2.01(c), HoldCo 'Ordinary Shares in an amount
sufficient to pc~~1.t the ADR Depositary to issue HoldCo ADRs representing the number of
HoldCo ADSs ~ssUable PUrstWlt to Section 2.01(c) and 1 ii) HoldCo shall, for the benefit of the
holders of the sh~s 'of Company Common Stock con\':~ed. into Merger Ordinary Shares in the
Merger, m~e ~y~!able to the Surviving Cor;poration fa: d:eposit with a bank or trust company
deSignated befC?r~, the Closing Date by Hold~o and re:!.Son~ly accc:pt~le to the Company (the
Exchan2e Aszent'~), (A) cenific~es representing the: m':::1oer of duly authorized ~vhole Merger
Ordinary Shares issuable in accordance with Section 2_0 I (c). and (B) an amount of ash equal to
the aggre,gate .aInouni payable in lieu of tractional HoldCo ADSs arid Merger Ordinary Sh~.in
accordance ,Vith Section 2.03(e) (such cash. ce:ni~cates :::presc:nt~ng Merger Ordinary Shares
and ~oldCo ADRs representing HoldCo ADSs, togeth::' with any dividends or diStributions with
respect thereto being herc:ina.~er r:femd to as the "Exch:!I12e Fund"), to be.held for the benefit
and distributed to the holders of Convened Shares in accordance with this Section. The
ExchaI:1ge ~gent shall agre:: to 'hold such Merger Ordinary Shares and funds for delivery as
contemplated by this Section and upon such additional t:::ms as may be agreed upon by the
Exchange Agent, the Compan)' and HoldCe. HoidCo sn:111 cause the ADR Depositary to issue
tbrOughand upon. the insuuctions of the E~change Ager::- for the benefit Ofthe-1101ders ofsharcs
oCthe ,C!;)mpany Common Stock converted into the ADS Consideration in accordmce with
Section 2.01(c). HoldCo AbRs reprcsenting,the numbe:- ofHold~o ADSs issuable pursuant to
Seetion2.01(c). Neither HoldCo, ScouishPower. their respcctive affiliatcs nor holders of
Conv~ed Shares shall be reSponsible for any stamp duty reser~"e tax payable in connection with
the ADS Consideration. The ,Exchange Agent shall invest any cash included in the Exchange
FUnd.as directed by.the Survh;ng Corporation on a daily basis. Any interest and other income
resulting from such inveStmentS shall promptly be paid to the Survivjng Corpqration.I .
(b) Exchan!Zc Procedures.. As soon :is reason:1bly practicable after the
Effectiye Time~ the Surviving.Corporation shall cause th: E:"(change Agent to mail to each holder
of rcco~ of a certificate or cc:nficates which immediately prior to the Effective Time
rcpres~ted outstanding shares of Company Common Stock (the "Cenificatcs ) whose shares are
conv~ed pumwn to this Article n into the right to reed,"e HQldCo ADSs or Merger OrdinarY
;(i) a letter of transmittal (which shall specify that deliveIy shall be effected, and risk of
loss and title to the Ce:"tificates ~ha11 pass, ~)nly upon delivery of the Certificates to the E.-cchange
Agent'and shall be in such forin and have such otherproyisions as the Surviving Corporation or
HoldCo may rcasonably specify) and (ii) instructions ier use in effecting the' su.."TCdc: of the
Ccrtiiicat=s in exchange for certificates rcpresentiIig HoidCo ADRs which represent HeIdCe
ADSs. 29-d Merger Ordinary Shares and c:ash in lieu oi fractional HoldCo ADSs or ~erger
Ordinary Shares. UponsUITend~ of a Certificate ior cancellation to the Exchange Agent,
together with such letter of ttansminal.duly executed and compietcd in accordance with its temIS.
the holdc;' of such Certificate shall be entitled te 'ree:i,'e 'in exchange therefor (i) one or more.
HoldCo ADRs .representing, in the aggrega.t~. that. wht?le number of Hold Co ADS5 and/or a
certificate or cCnmcates representing that whole numc~ of Merger ordinarY Shares eleCted to
be r=eived in accordance with Section 2.02. (ii). the amount of dividends or other distribUtions,
if my, with a f!:~oi'd on or after the E~ective Time which therc~fore became payable with
respect to such ~()1d~p ADSs and ~erger 9rdinary Shares. and (iii) the cash amount payable in
lie-.! of fractional HoldCo ADSs and Merger Ordinary Shares in accordance \vith Section 2.03(et
in each case wtijch such holder has the nght to' receive pursuant to the provisions of this Arnele
and the - Ce~f?ca:t~ so surrcnder:d sbatl fonhwith be canceled. In no event shall the holder of
any Certificate ~e ~titled to receive interest on any funds to be rcr.eived in the Merger. In the
event ora tranSf~r ~fownership ofCompariy Common Stoc~ which is not registered in the
transfer r:eord(qfthe Company. one or more HoldCo ADRs representing, in the aggrcga~e. that
, whole number of HoldCo ADSs ~d/or a certificate or certificates representing that whole
number of :vter,ger Ordinary Shares elected to -~~ reeeh'ed in acco~ce with Section 2.02. pIt;S
the cash amount payable in lieu of fractional HoidCo ADSs and Merger Ordinary S~
accordance wj~ Section 2.03(e). may be issued to a tr:lIlSic:re~ if the Cenificate representing
such Company Common Stock is presentedlo the Exchange Agent accompanied by all
40cumentS required to evidence and effect such tr:msfer and by evidence that any applicable
stock transfer taxes have been paid. Until surrendc;red as contemplated-by this Section 2.03(b),
- each Ce~ficate shall be deemed at any time after tfi:e E~ecti\'e Time for all-corporate purposes
ofHoldCo~except as limited by Section 2.03(c) belo\'" and sUbject to applicable taw, to represent
. owncrsmp of the whole ,number of HoldCo ADSs and/or Merger Ordinary Shares into which the
number:ofshares of Company Common Stockshown ther:on have been convened as
contemplated by this Aniele II. NotWithstanding the foregoing, Certificates rePresenting
Company Comrnon Stock sUlTendered for excha.~ge by
~y
person constitUting an "affiliate" of
the Company for purposes of Section 6,O~ sh::1l1 not be exchanged until HoldCo has received:1."1
Affiliate Agreement (as defined in Sectlon 6.0~) as provided in Section 6.04. i. (c) Distributions with Rescect to.Vnexch::m2ed Shares. No dividends oromer
distributions declared. made or paid after the Effective Time with respect to HoldCo Ordinary
, ;Sbares with a ~ecofd date on or after the Effective Time shall be paid to the holder of any
unsum:ndered Cenificate with respect to the HoldCo ADSs and Merger Ordinary Shares
rcpres~ntcd thereby and no cash payment in lieu of tractional HoidCoADSs and Merger
Ordinary Shares shall be paid to any such holder pursuant to Section 2.03(e) until the holder of
record of such Cenificate shall sUtTender such Certificate in accordance with 'this Section.
Subject. to the effeCt of applicable laws. following surrender of any such Certificatc therc shall
be paid to the record hold~ of the. certificates repreSenting the HoldCo ADRswhich represent
HoldG9 ADSs and Merger Ordinary Shares issued in exchange thc:rc:for, withoUt in~ (i) at
the time of such surrender, the- amount of dividends or other distributions, if any, with a record
date oq or after the Effective TIme which theretofore b:came payable. but w~ich were not paid
by reaSon of the immediately preceding sentence, with respect to such HoldCo ADSs and Merger
. ; ; ,
OrQ.i:i1ary Shares and (ii) at the ~propriate payment date. the amount of dividends or other
distributions with a record date on or me:' the Effet!ivc Time but prior to surrender and a
payment date subsequent to surr:nder payable with r:sp=t to such HoldCo ADSs and Merger
Oidinary Shares.
r'-(d) No Furth:: Ownershiu RiehtS in Comuanv Common Stock. All HoldCo
ADSs and Merger Ordinary Shares issucC -:on the su."'!'::l~~ for exchange of Certificates in
accordance with the tc::ms her:oi (including any. cash .paid pursuant to Section 2.03( e)) shall be
deemed to have been issued at the Effective'Time in full satisfaction of aU rightS pcnaining to
the Convencq ~~~. r:presentcd thereby, subJeCt. however, to the Suriivip.g Corporation
obligation to pay.any dividends which may hav~ been declared by the C9~pany on the s~:
Company Commo~ Stock in accordance wi$ the t;.l~of this Agreemc:m and which remained
unpaid at the Eff~tive Tune. From and after the Effective Time. the stock transfer books of the
ompany shall be ~losed and ther: shall be no furthc;r regisuarion oCtransfers thereon oCthe
shares ofConip~y ~ommon Stock which were outStanding immediately prior to the Effective
Time. If. after the Effective Time, Certificates are pt""'-sented to the Sur\'ivi~g Corporation for
any reason. ttiey '~qaIl be canceled and exchang~d as provided in this ~~tion.
(e) ,No Fractional Shares. ~o ce:'dIicate or scrip representing fractional
HoldCo ADSs or Merger Ordinary Shares will be issued iri the Merger upon the surrender for
exchange of ~enificates. and such fractional HoldCo ADS or Merger Ordinary Share int~tS
will not entitle ~e owner thereof to vote or to any rightS of a holder of Hold Co ADSs or Merger
Ordinary Shares. In lieu of any such.fractiomil HoldCo ADS ~r Merger Ordinary Share. each
holder ofCenificatcs who would otherwise have be~n entitled10 a fraction ofHoldCo ADS or
Mcrger Ordinary Share in exchange for such Cenific:nes pursuant to this Sectiqn shall receive
from the E.~change Agent. as applicable, (i) a cash payment in lieu of such fractional HoldCo
ADS det:III1inl~,flby multiplying (A) the Sales Price tas de~~ed below) ora HoldCo ADS on the
last Trading Day (as defined below) immediately pr=:ding the Closing Date by (B) the
fractional HoldCo ADS intereSt to which such holder would otherwise be entitled, and/or (ii) a
cash payment in lieu ofsuch mctional Merger Ordin0!4-:' Share determi~ed by multiplYIng
(A) the,Sales Pric: ora HoldCo ADS Ordinary Share on the last Trading Day immediately
preceding the Closing Date by (8) the fractional ~lerger Ordinary Share inter-cstto which such
holder ",ould otherwise be entitled. The term "Sales Price" sh~l mean. on any Trading Day,
with respect to HoldCo ADSs. the closing sales pri~e qiHoldCo ADSs reponed on the New
York Stock Exchange, Inc. ("~rySE")'Composite Tape on such day and. with respect to Merger
Ordinary Shares, th~ closing middle market quotation of a, HoldCo Ordinary Share as reponed in
the Daily Official List of the London Stock Exchange ("LSE") for such date. ,The tcan "Tradin2
Q!y"s~all mean any day on which securities are traded. with respect to HoldCo ADSs. on the
NYSE, and with respect to HoidCo Ordinary Shares. on.the LSE.
. '
. (1) Tennination of Exchamze Fund. Any portion of the Exchange Fund which
remains undisnibuted to the stockholders of the Company for one (I) year after the Effective
Tune shall be delivered, to HoldCo, upon demand, and any holders of CertifiCatc5 who have not
thcrctofore complied with this Article fi.shaU thcr-..aft:r look only to HoldCo' (subject to
abandoned property, escheat and other similar laws) as gen::al crcdiJOrs forpaymcnt of their
claim' .for HoldCo ADSs. Merger Ordinary Shares. any cash in lieu of fractioqa1 HoldCo ADSs
and Merger Ordinary Shares ;cd any dividcndsor d.i~=utions with respeCt to HoldCo ADSs
and Merger Ordinary Shares. Xeither HoldCo. Scotrish?ower nor the Surviving Corporation
shaiI be liable to any holder ox my Certificate for HoldC.;) ADSs or Merger Ordinary Shares (or
dividends or distributions with respeCt to either), or cast. payable in respect of fractional HoldCo
ADSs or Merger OrdIm.ry Shar-..s, delivered to a public official pursuant t~ any applicable
abandoned propc:ny, escheat or similar law. "
(g)
Lost CerrificMes. If any Ce:tiiicateshall have be=tlost, stolen or
dCstt'oyed., !lpon the making of an affidavit of that fuct by the person claiming such Certificate to
be lost. stolen 9r d~~yed and. if required by HoldCo. :he 'posting by ~~h person of a bond in .
such reasonable am~unt as ~~ldCo may direct as indc:r.:rity agairiSi any ~laim that may be made
against it with respect to such Certificate, the Exchange Agent will deliver in exchange for such
lost, stolen or destroyed Certificate the appllcable ~'Ierg::' Consideration with respect to the
shares of Company Common Stock fonnerly representee thereby, any cash in lieu of fractional
HoldCo ADSs or Merger Ordinary Shares. and unpaid Cividends and distributions in respect
or on HaldCo ADSs or Merger Ordinary Shares deli....e~le in respect tber:of pursuant to this
A~e:nent.
, .
. 2.04 Withholdinli Ri2htS. Each oithe Surviving Corporation and
HoIdCo shaU be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to, any holder of shares ofCo~pany Common Stock such amountS as
it is required to deduct and withhold with respect to the ~aking of such payment under the Code,
or any provision of State, local or foreign ta.~ law. including the tax laws of the United Kingdom.
To the extent thafarnountS are so withheld by the SUI\;\;ng Corporation or HoldCo, as the case
- may be, such withheld amountS shall be treated for all purposes. of~ Agreement as having
be:n paid to the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by the Surviving Corporation or HoldCo, as the case mayb~
ARTICLE III
! REPRESE!N"TATIONS Al'-.TI WA.R.R.-\.'-:TIES OF THE COMPAl'lY
The Company rei'resentS and warrantS to HoldCo. SconishPower~ the Partnership
and Merger Sub, as ofDecemoer 6, 1998 (except for the representations and warranties
contained in Sections 3.03 arid 3,. which are made as of the date hereof), as follows:
01 Onzanization and Qualification. (a) Each of the Company and its
Subsidia...ies is duly organized. validly existing and in good standing (with respect to jurisdictions
which recognize th~ concept of good standing). under the laws of itS jurisdiction of organi~on '
and h~ ~1l corporate or partnership, as the case may be. power and'authority to conduct itS
busine~s-is and to the exte~t now conducted and to own. use and lease itS assetS and propcnies
cxcep~Jor such failures to be so organiz~ existing and in good standing (with resp.
jurisdictions which recognize the concept of good standing) or to have such power aIid authority
which. individually or in the aggregate, arc not having and would 'not reasonably be expected to
have ~ ~aterial adverse effect (as defined in. Section 9.1:) on the Company and its Subsidiaries
taken as a whole. Each of the Company and itS SubsiCia...;es is duly qua1ifi~ licensed or.
admitted to do business and is in good Standing (\\ith :-:spea to jurisdictions which recognize the
concept of good standing) in each jurisdiction in whic~ :.ic ownership, use or leasing of itS assetS .
and properri~ or the conduct. or natUre of itS business. Ulakes such qualificarion. licensi:ng
admission necessary, except for such failures to ,be so q~,a1iiie~ licensed or admitted arid in good
standing (with respect to jurisdictions that rccogniz:::.: conc:pt of good standing) which.
individually or in the aggreg~c:.m not having and would no~ rcasonably b!= e~p~ted to have a
material advCrsc effect.on the Company and its Subsidiaries taken as a whole. Section 3.01
the letter d3.tcd December 6, 1998 and delivered to ScomshPower, the Partnership and Merger
Sub by the; Camp~y on such date (the "ComDanv Disc1oSW'c Letter") ~e~ fOM (i) the name and
jurisdiction of ~T1i7ation of each Subsi4i~ of the Company and (x) with respect to
Subsidiaries that arc corporarions, (a) such Subsidiary s authorized C3pital stock. (b) the number
ofissucd and OU~3nc#ng sharcs of such Subsidiary s capital stock and (c) the record owners
such Subsidiaijs shares an~
(y)
with resPeCt to Subsidiaries that are partnerships, the names and
ownership intei-..stS of the .partncrs thereof:' The Company has previously delivered to
SconishPower. cocrect and complete copies of the c:::ificate or ankles of incorporation and
bylaws (or other ~omparable chancr documentS) oim: Company and itS Subsidiaries.
(b) Section 3.01 orme Company Disclosure Letter sets fonh a description as
of Dec:mber 6, 1998, of all Company Joint VentUI'eS. including (i) ~e name of each such entity
and the Company's interest therein. and (ii) a brief d:scription of the principal line OI: lines
business conducted by each such c:ntity. For purposes of this Agr~cmCnt:
(i) "Joint VentUrc" of a person or entity shall mean any corporation: or other
entity (including parmerships and other business associations) that is not a Subsidiary'
such person or entity~ i.!l which such person or on~ or mare of itS Subsidiaries owns
directly or indirectly an equity interest, other than equity interestS which are less than 5%
of each class of the outS"wnding voting see-mttes or equity inter-...stS of my such entity;
(ii) "Comuanv Joint Venture" shall m::m any Joint VentUre of the Company
or any of its S ubsidiari:s: and
(iii) "~ttish Power Joint Venture" shall mean any Joint Venture of
SCOtllshPower, HoidCe. or any of their respet:tive Subsidiaries.
(c) Except for interestS in the Subsidiaries of the Company, the Company
Joint VentUres and as disclosed in the Company SEC ReportS (as defined in Section 3.05) filed
prior t~ Deccmber 6, 1998 or Section 3.01 of the Company Disclosure Letter, the Company does
not directly or indirectly ciwn any equity or similar interest in, or any interest convertible into or
exch3;1geable or exerc~sable for any equity or simiiar interest iIi, any material corporation,..
partnership, limited liability company, joint venture or other business associ~tion or entity (other
than non-co~trol!ing investmentS in the. ordinary course ofbusiness and corporate parmering,
development, cooperative marketing and similar undena.icings and arrangcm~tS entered into in
the ordinary course of business).
Cauital Stock. (a) The author~ed capital stock of the Company
consistS of:
(i) 750 million shares of Company Common Stock. of which 29i.335,056 shares
were issued and outStanding as ofNovemb~ 30. 1998, and
(ii) 126,533 shares of5% preferr:d stock. of which 126~33 were issued and
outSWlding as ofNovemoer 30, 1998-, 3.5 million shares of serial prefe:red stoc~ of
which 288,499 were issued and outStanding as of~ovembCr 30, 1998 and of which 2,065
shares w~ ~~~gnated the 4.52% Series, 18.060 shares were ~esignated ~e 7.00ra
Series, 5,932 shares were designated the 6.00% Series. 42,000 were designated the 5.00%
Series, 65,960 were designated the 5.40% Se:ies. 69,890 were designated $e 4.72%
Series, ~Il(f 84~92 were designated the 4.56% Series. respectively; and 16 million shares
of no par ~e~a1 preferr:d stocle, of which 1..438 were issued and outStanding as of
Novemb~ 30, 1998 and of which 381,220:sharcs were designated the $1-.28 SerieS.
420,11~ shares were designated the Sl.ltfSeries. 193.102 shares were designated the
51.16 Series,OOO.OOO shares were desilID~:ec! the S7.70 Series, and 750,000 shares were
- ~,'--'
designated the S7.~8 Series. respectively (cpiiecth'ely. the "C::?m~~v Preferred Stock"
As of November 30, 1998~ 28,8Ii.9:1 shares of Company Common Stock were
reserved or held fox: issuance under the PacifiCorp Stock 'Incentive PI~ the PacifiCorp Long
Term Inc~tive Plan. the PacifiCorp K-Plus Employee Savings and ~tock Ownrnbip Plan and
the PacifiCorp Dividend Reinvesanent and Stock Purchase Plan. All of the issued and
outsW1ding shares of Company Common Stock ar:. and all shares reserved for issuance will be,
upo~. issuance in accordance with the tenns specified in the instrumentS or agreements pursuant
to which they are issuable. duly authorized. valiqly issued.. fully paid and nonassessable. Except
pursuant to this Agreement and except as described in Section 3.02 of the Company Disclosure
Letter, as of December 6;1998 there were no outstanding subscriptions, options, warrants, rights
(including stock appreciation rights). preemptive rights or other contractS, comminnents,
understandings or arrangementS, including any Ii ght of conversion or exchange under any
outSta.mling security, instrument or agreement (together. "Octions ), obligating the Company or
any of itS ~ubsidiaries to issue or sell any shares 'of capit:li stock of the Company or to grant,
extend-, or enter i~to
~y
Option with rcspe~t thereto.
- "
(9) Except as disclosed in the Company SEC Repons filed prior to December
1998 or Section 3.02 of the Company Disclosure Lett:r. all of the outStanding shares of capital
stock of each Subsidiary of the Company arc duly authorized. validly issued., fully paid and
nonassessable and are owned. ccneficially and of record. by the Company or a Subsidiary wholly
owned. directly or indirectly, by the Co-mpany, free and clear of any liens. claims, mongages,
encumbranceS. pledges, security interests. equities an4 charges of any kind (each a "Lien ), Qther
than Liens or failures- to so own which arc immaterial. Each outStanding share of Company
Prefc.."T:dStock. other than shares of the S 1.28 Series, S1.18 Series and 51.16 Series of no par
serial preferred stock:. is entitled to one vote per share, voting together with the holders of
Company Common Stock as a single class, on all matters generally submitted. to the stockholders
of the ~ompanyfor a vote. Except as disclosed in the Company SEC Reports filed prior
Deccn:;,~er 6. 1998 or Section 3.02 of me Company Disclosure Letter, there aie no (i) outstanding
Options obligating the Company or any of itS S ubsidiarics to' iSsue or sell any shares of capital
stock 0 f any Subsidiary 0 f the Company or to grant. extend or enter into any such Option or (ii)
voting trUSts. proxies or other commianems. understandings, reStriCtions or ammgcmclts in
favor of any person other than the Company or a Subsidiary wholly owned. directly or indirccdy,
by the Company with respect to the voting of or the: ri~t to participate: in dividends or other
earnings on any capital stock of any Subsidiary of the CoIPpany.
(c) None of the Subsidiaries of~e Company or the Company Joint Ventures
is a "ublic utilitY comtJanv," a "boldine comuanv." a "subsidiarY comnanv" or an "affiliatell of
any public utility ~Oq1p.~y within the meaning of Section 2(a)(S). M!!ill, 2(a)(8) or 2(a-)(11). of
the Public Utility Hol#Ig Company Act of 19~5. asamendcd (the "1935 Act"), respectively.
(d) Except as disclosed in th,e Company SEC Repo~ tiled prior to December
, 1998 or Section 3.02 of the Company DisClosure Lener. there arc no outStanding contractual
obligations of $e.~ompany or any Subsidiary of the Company to' repurchaSe, redeem
otherwise a~q~ any shares of Company Common Stock or any material capital stock of any
Subsidiary of~e Cq~pany or to provide any material amount of~ds to, or make any material
invcsnnent"(in ~e fqnn ora loan. capital contribution or otherwise) in, any Subsidiary of the
Company"or any o~er person.
03 AuthoritY Relative to this A!ZI'eemcnt. The Company has full
corporate pow~ and authority. to enter into this AgI1::ment. an~ suJJject to obtaining the
Company Stockholders' Approval (as defined in Section 6_03 ). to perfonn itS obligations
, hcrcunderand to consummate the transactions contemplated hereby. The execution. d~livcry
\and penonnance of this Agreement by the Company and the consummation by the Company of
the transactions contc:r;1plated hereby have be:en Idul:: and validly approved by the Board of
Directors of the ComPany, the Board.ofDirectors of the Company has recommended approval of
this Agrcc::nentby the: stockholde:s of the Companymd directed that this Agreement be
submitted ~o the: stockholders of the Company Tor their consideration. and no o~er corporate
proceedings on the: part of the Company or its stockholde:s arc necessary to authorize the
execution. 'delivery and pe~ormance 0 f this Agreement by the Company and the consummation
by the Company of the transactions comempiated hereby~ other than obtaining the Company
Stockholders' Approval. This Agreement has been d~ly ,md validly executed and delivered by
the Company and constitutes a legal,valid and binding obligation of the Company enforceable
against the Company in accordance with itS terms. except ,as enforceability may be limited by
bankruptcy, insolvency. reorganization. moratorium or other similariaws affecting the
enforcement of creditors' rights generally.and by gener:iI equitable principles (regardless of
whether such enforceability is considered in OJ. proc~c?ing'in equity or at law). ~
, 3.04 Non-Contravention: ADcfovals and Consents. (a) The ~xecution
and delivery of this Agre-..ment by the Company do not. and the performance by the C;ompany 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 noti~ or lapse of time
or both.) a default under, result in or give to any person any right of payment or reimbursement,t~on, cancellation, modification or acceleration of. or result in the crcation or imposition
ofany"'-ien upon any of the assets .01' propenies of the Company or any of itS Subsidiaries or any
~ ,
of the Co~pany Joint V entur-~ under. any 0 f the te:ms. ;:onditionS or provisio~, of (i) the
certificateS or anicles of incorporation or bylaws ,"or oe::r comparable charter documentS) of the
Company or any ofits Subsidiaries, or,(ii)subjec.t to tI-.: obtaining of the Company Stockholders
Approval arid the taking of the actions deScribed in Se::ion 3.0~), '(x) any StatUte, law, rule,re~tion or ordinance (togeth::r, "laws ), o~ any judg::nt. decree, order, writ, pcnnit or license
. (together, "orders ), of any COtl.."t, tribunal, ~itrator. a:;mority, agency, commission, official or
other instrumentality of the United States, any foreign country or any dom~c or foreign state,
countY, city or other political subdivision (a "Governrr.::ual or Re211latorv AuthoritY") appliCable
to the Comp3IJ.y or any ofits Subsidiaries or any oithe Company Joint VentureS or any ofthcir
respective ass~!S 9,. p~pcrtics. or (y) any note. bond. I:".origage. s~ty ~grccment, indcn~""e,
license. franchise, pe:mit, conc:ssion, conuact, lease or other instnmient, obligation or
agrccm~t ofany ~d (together, "Contracts ) to which the Company or any of its Subsidiaries
any of the, Compapy Joint VentUres is a
p~
or by which .the Company or any ofits Subsidiaries
or any of the Cqmpany Joint Ventures or any of their r-..spective assets or properties is bound,
excluding from the foregoing clauses (x) and (y) confiic:s. violations, breaches, defaultS, rights
of payment and reimburscmc:".t. tenninations. modific:l::ons. acc::lerations and cre:1tions and
impositions ofLi~ns which. individuallyotin the agg:-:g:ate. would no~ reasonably be expected
, to have a material ~verse e,f::::t on the Company and i:s Subsidiaries ~enas a whole or on theability of~e Company to consummate the ~3.ctions contemplated' by this Agrc:=mcnt.
(b) Exc:pt (i) for the filing of le:.erger notification r:pon by the Companyunder the Han-Scott-Rodino A~tittust Impro\.'~mentS Act of 1976, as amended. and the rules and
regulations thereunder (the "HSR Act"), (ii) for the filing of the Proxy Statement (as defined in
Section 3.and the Registration Statement (as defined in Section 4.09) with the Securities and
Exchange Commission (the "SEe") pursuaiu to the S:::urities Exchange Act of 1934, as
amcndeti, and the rules and regulations thereu.~der (th: "Exchanee Act"), and the Securities Act
of 1933~ as amended, and the rules and regulations th::-:under (the "Securities Act"). the
declarati~n of the effectiveness of the Registration Stat::ment by the SEC and filings with various
state securities authorities that are required in connec::on with the transactions contemplated by
this Agt:eCInenc. (iii) for the fliing of an application ur.c:r Section 203 and any directly related
Sectiori of~ or regulation under. the Power Act (as de::=:.ed in Section 3.0SfbH for the sale or
;..
disposition ofjurisdictiortal facilities of the Comp~y: ti\") for the filing Q;fthe Anicles ofMei'ger
and other appropriate merger documents required b)' th~ SCA with the SecreWy of State and
appropriate do~umentS with the relevant authorities of other states in which the Constituent
Corporations arc qualified-to do business; and (\-) as disclosed in Section 3.04 of the CompanyDisclos~ Letter, no consent. approval. or action of. filing with or notice to any Governmental or
Regulatory Authority or other public or private third pan)' is necessary or required under any
the .terms. conditions o~ pro\ isions a f any law or order 0 f any Governmental or Regulatory
Authority or any Contract to which the Company or any of itS Subsidiarie~ or' any of the
Company loint V enmres is a party Qr by which the Company or any of115 Subsidiaries or any of
the Company Joint Ventures or any,oftheir respective assetS or propenies is bound for the
execu~on and delivery of this Agreement by the Company, the performance by the Company of
its obligations hereunder or the consummation ofthc:,tr3nSactions contemplated hereby, other
than sijch 'consents, approvals, actions., filings and notice~ whiCh the failure to make or obtain, as
the c~e may be. individually or in ~e aggregate. would not reasonably be expected to h~ve a
material adverse effect on the Company arid itS Subsidiaries taken as a whole or on the ability of
the Company to consummate' ~e transactions cont:mpiate~ by this Agreement.
. 3.05 SEC ReuoTtS. Financial Statcme:'1tS and UtilitY ReDortS. (a) The
Company has delivered to SconishPowcr a n:ue and compie:e copy of each form. report,
schedule, regiStration statem=;t. r:gisttation exc:nption. if applicable. definitive proxy Statement
and other d~cument (togethcr,withall amendmentS th::::of~d supplementS thereto) filed by the
Comp~y or any ofi~ Subsidiaries with the SEC since D~:~bcr 31, 19~5 (as such documents
have since the.time ofthcir filing been amcndedor suppiemcnted, the "Comnanv SEC Renorts
). '
which are ~I th~ documents (other than preliminary rrtatcriais) that the Comp~y and its
Subsidiaries wet: rcq~ed to file with the SEC since such date.As of their reSpe..'"tiye dates, the
Company SEC Rcpo~ (i) complied as to form in all material resPects ~th the requirements of
the Securities Act or the Exchange Act, if applicable. as the .case may be. and (ii) did not contain
any untrUe 'stat~cnt of a matFIal 'fact or omit to sute a material fact required to be sated
therein or necCs~ in order to make the StatementS therci:i. in light oftbc circumSt3Ilc:s under
Y'bich t.~ey w~e made, not misleading. The audited consolidated finanCial statements and
unaudited ~t~ c~i1solidat:d financial statementS (induding, in eac;h. case, the notes, if any,
theretO) iriCluded jii the CompanY:5EC ReportS (the "ComDanv Financial StatementS ) complied
as to form in aU IIJ~tcrial respectS With the published'~ies and ra:gul~~i~ns of the SECwith
respect thcrcto,werc prepared in accordaIice \vith C.S. generally accqJ~ed accounting principles
aPplied on a consistent basis during the periods involved (except as may be indicated therein or
ul the notes therc~~.~d excl:pt with rrsPect to unaudited, s~t=men~~ p~ned by.Fo~ 10-Q
of the SEq and fairly present (subject, in the case afthe unaudited interim financial Statements,
to nonnal, recurring year-end audit adjusnnentS (which ar: not expected to be. individually or in
the aggregate, materially advcie to the Company and itS Subsidiaries taken as a whole)) the
consolidated financial position ofttie Company and its consolidated subsidiaries as at the
respective dates thereof and the consolidatC;d res~tS,oftheir op~tions and cash flpws for the
tespectiye periods then ended. Exc:pt as set fonh in Section 3.05 of the Company Disclosure
Letter. each Subsidiary of the C~mpany is ~reated as a consolidated subsidiary of the Company in
. the'Company Financial Stat:mentS, for all p~riods covered thereby.
' ,
. (b) All material filings required to be m:lde by the Company or any o(its
Subsidiaries since December 31, 1995; under the Feder:1i Power Act.(the "Power Act") and
applicable state laws and regulations, have been filed with 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, Montana. Oregon, Utah. Washington and Wyoming), as the case may be
including all material 'written forms, statements. reportS. :lgrecrnents and all ma~erial documents.
exhibits. amendmentS and supplementS appenainmg ,thereto, including but not ,limited to all -
materi~ rites, tariffs.,franchises, service agreementS and related docUmentS. complied. as of their
respective dates. in all m~crial respectS with all applicable requirementS of the appropriate
statUte ~d the rulesand regulations th~under.
. 3.06 Absence ofCert3in Chan2cs or Eyents. Except as disc.osed in the
Comp3!1y SEC Reports" filed prior to December 6. 1998 or Section 3.06 of the Company
Disclo~e Letter, (a)'be~een December 3 I, 1997 and D::cember 6~ 1998, thcrc has not been any
change, event or development having. or that would rc:lSonably be expected to have, individually
or in the aggregate. a material 'advCI'Se effect on the Camp~y and its Subsidiaries taken as
whole (other than those chax;ges. events or developme:us occurring as a result of general
economic or financial conditions or which are not unique to' the Company and its Subsidiaries
bui"-also affect other entities who participate or arc engaged in the lines ofbusincss in which the
' Company and its Subsidiaries arc engaged), and (b) between Dec~ber 31. 1997 and December
6. 1998 (i) the Company, its Subsidiaries and the Company Joint VentUreS have condUCted their
respective businesses only in the ordinary course substantially consistent with past pnctice and
(ii) neither the ~omp~y nor any of its Subsidiarics nor any of the Company Joint Ventures has
(x) acquired or agi-eed,to acquire (by merging or consoiidating with. or by purchasing a
submntial equity interest in or a substantial ponion of the assets Q~ or by my other manner) any
business or my corporation. pal'm:rship, ass9ciation or other business organization or divisi9n
thereof for a pUrch~e price (including the amount of any indebtedness assumed in connection
therewith) of S~~ nullion or more in anyone transaction or (y) sold. leased or otherwise disposed
of any of its assetS or properties (or agreed to do so) other than dispositio~ in the ordinary
course ofbusiri~~~ ~onsistent with past practice or having a net boo~ v~lue .of 525 million or less
in anyonetraI1.$a!=t1on.
../
07. Absencc of Undisclosed Liabilities. Except for matters reflected or
reserved agai~t in the ba.lanc~ sheet for the period ended De~ember 31. 997 included in the
Company F:inanc~al Statements or as disclosed in the Company SEC Rc;pons filed prior to
December 6. 1998 or in Section 3.07 of the Compan): Disclosurc-Lerier, neither the Company
nor any ants Subsidiaries had at such da~e. 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 lj.S~ generally accepted accounting
principles to be reflected on a. consolidated ba1an,ce sheet of the Company and its consolidated
subsidianes "(including the notcsthereto), except liabilities or .ob ligations (i) which were incum:d
in the ordinary course of business co~istent with past practice or (ii) which are not having. and
would not reasonably be expected to ha,'. individually or in the aggregate. a tpaterial adverse
effect on the Company and its Subsidiaries taken as a whole. -
O!f Le23,1 Proce:din2S. Except as disclosed in the Company SEC
ReportS filed prior to Decemb~r 6, 1998 or in Section 3.08 of the Company D~sclasure Letter and
except for enviro~ental matters which arc governed by Section 3.15. (i) there arc no actions.
suits. arbitrations o~ procee~~ngs pending or, to the knowledge of the Company, threatened
against. nor to the knowledge of the Company are there omy Governmental or RegulatoryAuthority investigations oCaudits pending or thr~atened against. the Company or any ofits
Subsidiaries or any of the Company Joint Ventures or any or'their respective assets and
propcni~s which, individually or in the aggregate. would re:lSonably. be expected to have a
materi~ adverse effect on the Company and its Subsidiaries taken as a whole.or on the ability of
the Co!npany to consummate me tr:lI1sactions.conte:r.plated by this Agreement, and (ii) neither
the Company nor any of itS Subsidiaries is subject to a1.1Y order of any GoverDmental or~ry Authority which, individually or in the aggregate, is having or w~uld reasonably be
expec~d to have a material adverse ,eff.ect on the Company and its SubsidiaIi~ taken as a. whole
or on die ability of the Company to' consummate the ~sactions contemplated by thisAgreement
09 Information Suoolicd. (a) Tne proxy Statement relating to the
Company Stockholders' Me:ting (as defined in Secnon 6.03(b), as amended or supplemented
from time to time (as so amended and supplemented. the "p:-oxv Statement ), and any other
doc11II1entS to be. filed by the Company with the SEC (including. without limitation. under the
1935 Act) u1 connection with the Merger and the other tranSactionS contemplatea. hereby will (in
the case of the Proxy Statement and any such other documentS tiled with the SEC under the
Exchange Act or the Securities Act), comply as to form in ail material respectS with the
requirementS of the Exchange Act and thc.securities Act. respectively, and will no~ on the date
of its filing or, in thc case of the Proxy Stat~ent. at thc date it is mailed to stockholders of the
Company ~4 ~ ~e ~e of~e Company Stockholders' ~1eeting, cQn~ ~y unttue State~cnt
of a material fact or amino state anv materia! fact reQuired to be stated therein or necessary in
, " . ..
order to m3ke the StatementS therein. in light of the circumstanc::s under which they are made,
not misle~g, except that no rcpr:sentation is made by the Company with respect to
infonnation supplied in writing by or on behalf of Hold Co. ScottishPower, the Parmership or
M~er Sub expressly for inclusion therein and information incorporated by reference therein
from documen~ filed by HoldCo, ScottishPower or any of their respective Subsidiaries with theSEC.
. (b)' Tne information supplied or to be supplied by the Company for inclusion
in any filing by HoldCo or ScottishPower with th~ LSE in respect of the Mergcr (including.
without limita~on. the Class 1 circular to be issued to shareholders of ScomshPowcr (the
Circular"), and the listing particulars under Pan IV of the Financial Services Act 1986 of the
United Kingdom (the "FSA ") relating to HoldCo Ordinary Shares (the "Listine Paniculars ) and
the. Scheme Document (to gether with any amendmentS or supp lemenes thereto. the
ScottishPower Disclosure DocumentS ) wiil. at allrelc\"ant times. inclu~ all information
relating to the Company, and information which is \\;thin the knowledge. of each of the directors
of the Company (or which it would be reasonable for thc:;n to obtain by making inquiries),
which, in cachcasc.'is required to enable the ScomshPower Disclosure: DocumentS and thc
anies ~creto to comply in all material respectS \",;th all t:'nited Kingdom staWtory and other
legal and regulatory provisions (including, without lirniution. the Companies Act (as defined in
SectiQn 4.02(at the FSA and the rules and rc!!ulations m:lde thereunder. :md the rules and
requirementS of the LSE) ~d all such inform;tion conQiried in such documents will be
, substantially in accordance with the factS and will notomit anything material likely to affect the
import of such infonnatioh~ .
, '
(cr' .NotWithsWiding the foregoing provisions of this Section 3.09. no
representation or warranty is made by the Company with respect to statementS made or
incorporated by reference in the Registration Statement. the Proxy Statement or the
ScottishPower Disclosure DocumentS based on infonnation supplied by HoldCo. ScottishPower
or the ~artDership expressly for inclusion or incorporation by reference therein Of based on .
info~tion which is not incorporated by reference in such documents but should have been
disclos~ pursuant to Section 4.09.
10 PennitS: Conmliance With Laws and Orders., The Company, its
Subsidjaries and the Company Joint V cnwrc:s hold all pc:rmi~ licenses, franchises, variances,
exemp~ons, orders ~d approvals of all Governmental and Regulatory Authopties (other than
environmental pennits which a...~ govc:med by Section 3. :5) nec=ssary for the lawful conduct of
their respective businesses (the "ComCaIlV PennitS t :x::pt for failures to hold such Company
PermitS whic~ individually or-in the aggregate. :!re not ::~\ing and would not reasonably be
expected to have a mate:iala4verse effect on the Comp~y and its Subsidiaries taken as a whole.
The Company, its SUbsidiaries ~d the Company Joint V:nnires are in compliance with the terms
of the Company Permits, except failures so to comply whic~ individually or in the ag~c, are
not having arid would not reasonably be expected to ha\': a materi31 adverse ~ffect on
Company arid its Subsidiaries taken as a whole. Exc:pt a,s discloscd in the Company SEC
ReportS filed priorto Dec:mber 6, 1998 or Section j.10 o(me Company Disclosure Letter, the
Company, itS Su,bsidiaries and the Company Joint Venru::s are nol,in vio~~on of or default
underaiiy law- o~ oIde:;- of ~y Govemmcntaf or Regulatory Atlthority, except for such violations
or defaults .which, individually or in thcaggregat~ are nct having and would not reasonably be
expected to have a :material adverse effect ~~ the Comp,"~y and itS Subsidiaries taken as a whole.
.11 Comciianc: with A!n'ecmentS, Ex:ept as disclosed in the
Company SEC ReportS filed prior to December 6. 1998 or Section 3.11 of the Company
. Disclosure Lett-~jleithcr theCon;pany nor any of itS Subsidiaries nor any of the Company Joint
Ventures nor.- t\?- tlle knowledge of the Company. any ot:::: party thereto is in breach or violation
of. or in default".in the periotm2:".c: or observancc of any term or proyision of. and no event has
occurred which, with notice or iapse of time or both. would reasonably be expected to result ~ a
default under, (i) the certificates or ankles of incor:por:ltion or bylaws (or other comparable
chaner documents) of the Company or any of ils'Subsidi:!.ries or (H) .any Contract to which.the
Company ~r any of its Subsidia..;es or any of the Comp:my Joint Ventures is a pany or by which
the Company or any of its Subsidiaries. or any ~fthe Company Joint VenturC$or any of their
respective assets or properties is bound, except in the C:lSe of clause (ii) for breaches. violations
and defaults which, individually ar in the aggregate. :1I'C :l0~ having and would not reasonably be
expected to have a material adverse effeCt on the ~ompany;and its Subsidiaries taken.as a whole.
12 Taxes. Except as disclosed in the Company SEC Reports filed
prior to December 6'998 or S~~tion 3.12 of the Comp:l."1Y Disclosure Letter: '
, (a) , Each/ot" the Company and its Subsidiaries ~as filed all matenal tax retUrnS '
and reports required to be filed by it, or requests for exte:1sions to-file such returnS or reports
have been timely filed or ~ted and have ~ot expired. :l."1d all ta.'"t retUrnS and repons are
complete and accurate in all respectS. except to the e.'"tten: 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, would not reasonabl1' be expected to have. individually or, in the aggregate, a material
adverse effect on the Company and its Subsidiaries taken as a whol~ The Co~pany and each of
its Subsidiaries. has paid (or the Company has paid on itS behalO all taxes shown as due on such
tax ~tums and reportS. The most recent financial swerr.entS contained in the Company SEC
ReportS reflect an adequate r:s:Ivefor all u.xes payable by the Company and its Subsidiaries for
all tax3:hle periods and ponior.s thereof accrued ,through the date of such financial statements,
and no .deficiencieS for any taxes have been proposed. asserted or assessed agUnst the Company
or any of its Subsidiaries thaI are not adequately resCI\'ed for, except for inadequately reserved
taxes ~d inadequately rese~..cd deficiencies that would not reasonably be exPected to,
individ~y or in the aggregate. have a material adverse effect on the Comp~y and its
Subsidiaries taken as a whole. No requestS for waivers of the time to assess any taxes against the
Company or any of itS Subsidiaries have been granted or ar: pending, except for requestS with
respect to such taxes that have be=t adequately reserved for in the most recent
financial
statementS contained in the Company SEC ReportS. or. to the extent not adequately rescrv~ the
assessment of which would not reasonably be expected to ha.v~ individually or in the aggregate.
a material adverse effect on the Company an~ itS Subsidimes taken as a whole.
. (b) Neither the Company nor any of itS Subsidiaries has ~cn any action or
has any knowledge of any fact or circumstance that is reasonably likely to prevent the Merger
from q~fyingas a tax-free reo~T'lj7~ti on within the n-.e:ming of Code Section 368(30).
(c) . Neither the Company nor any of itS Subsidiaries has filed a consent under
Code Section 341(t) concerning collapsible corporations. neither the Company nor any of itS
Subsidiaries has made any paymentS. is obligated to make any payment. or is a party to any
~grccment that .under certain Circumsw1CCS could obligate it to make any paymentS that will not
be deductible under Code Section 2800.
(d) Each of the c:ompany and its Subsidiarics has disclosed on itS federal
income tax retUrils all positions taken therein that could give rise to a substantial undcrswcment
of United States fede~l income tax within the meaning oiCode Section 6662.
(e) ,Neither the Company nor any .tS Subsidiaries is a party to any tax
allocation or sharing agreement. Neithcr the Company nor any ofits Subsidiaries (i) has been a
member of an affiliated group filing a consolidated feder:11 income tax rctUII1 (other than a group
the common parent of which was the Cornp~y) or (iilhas any material liability for-the w;cs of
any person (other than any of the Company and i~-Subsidiaries) under United States Tre:isury
Regulation Section lS02:-() (or any similar provision or state, local. ~r foreign law). as a
trmSfcrcc or successor, by contract, orothC1'Wise. '
(t)
\.
'-As used in this Section 3.1::! and in Section 4. i2. "ta.'tcs shall include all
federal. state. local and foreign income. franchise. gross r:ceiptS, propeny, sales. use. e.'tcise.
altemativc:.~inimum. estimated and other ta:'(cs and duti:s of any jurisdiction. including
obligations for withholding taXes from paymentS due or madc to any other person and any
interest, penalties or additions to taX.
~ '--'
13 ,. Emnlovc:e Benefit Plans: ERlSA.ta) E.'tcept as disclosed in the
Company SEC Repons filed prion~ Deccmber 6. 1998 or Section 3.13 of~e Company
Disclosuretetter or as would not reasonably be expected to have a material adverse effect on the
Company and itS Subsidiaries taken as a whole. (i) aU Company Employee Benefit Plans (as
, defined below) are in compliance..with all applicable requirementS oflaw, including without
limitation ERISA (as defined below) and the Codc. and (ii) neither the Company nor any of itS
Subsi~3ries has any liabilities or obligations with respect to any such Comp~y Employee
Bcnefii Plans. whether accrued. contingent or othe:wise, nor to the knowledge of the Company
arc any:such liabilities or obligations expected to be iI;cmrcd. Except as specifically set forth in
Section 3.13 of the Company Disclosure Letter, the ex~on of, and perfonnmce ofthe
trans~~ons contemplated in. this Agreement will not (either alone or upon the occurrence of any
.19
additional or subsequent events) constitUte an ever.: under any Company Empioye: Benefit Plan
that will or would reasonably be expected to result i."1 any payment (whether oi severance payor
otherwise), acceleration, forgiveness of indebtedness. vesting. distribution, increase in benefitS or .
obligation to fUnd, bene~ts with respect to any emp ioy~e. The only severance agre::nents or
-----
severance policies applicable to the Company;or an!o( its Subsidiaries are the agrc:ments and
policies specifically referred to in Section 3.t.3 ofth: Company Disclosure Letter.
(b)As used herein:
(i) "Comuanv Emulovee Benefit Plan" means any P~an (other than any
multiempioycr plan." as that term is defincdin Section -WOl of ERIsA) entercdinto,
established. maintained. sponsored, connibuted .to or required to be conttib~ted to by the
. '
Company or any ofits Subsidiaries for the b~efit oCthe c~t or former employees or
directors of the Company or any orits Subsidi~es and existing on December 6, 1998 or at any
time subsequent thircto and on or prior to the Effer.:ive Time an~ in the case of a Plan which is
subj,ect to Part J ofT~tle I of the-Employee Rctire:::::1t Income Security Act of 1974, as
amended. and $e ~les and regulations thereunder (ERISA"). Section, 412 of the Code or Tide
IV of ERISA. at
~y
time during the five-year p~ricci i~eciiately preceding Dec:mber 6, 1998;
and
(n) Plan means any employm:~t. bonus. incentive compc1Sation,defern:d
compensation. long tem1 incentive, pension. profit sharing, retirement. stock purchase, stock
option. stock ownership, stock appreciation rightS. phantom,~toc~ leave of absence, layoff,
vacation, day or dependent care, legal services, cafet:ria. lire~ heal~ medical. accident,
disability, severance, separauon. termination, ,c~ge of control or other benefit plan, agre:me:1t,
practice.. policy, program, scheme or. arrangemc:rit.. whether written or 0ra4 and whether
applicable to only one individual or. a group of indh;duals- including, bufnot limitCd to any
emulove: benefit ulan" within the meanin~. ofSec:ion 3(3) ofERlSA.
(Hi) "ERISA Affiliate" means any person., who on or before the Effective
Time. is under co~on control with the Company within tije meaning of Section 414 of the
(c) Complete and COITect copies ofth~ following documentS have be:n made
available to ScottishPower, as ofCecember 6, \ 998:~ \i) all materii1l Company Employe: Benefit
- Plans and any related trust agreementS or relat~ insurance contraCts and pro forma option
agrccmentS~ (ii) thc:-moStcurrcnt summary plan descriptions of each Company Employe: Benefit
Plan subject to the requirement to, give a summary plan' description under ERlSA. (iii) the most
recenf~orm ssgo- and Schedules- thereto for each Company Employee Benefit Plan subject
such reponing, (iv) the most recent determination of the Intcrnal Revenue Service with respect to
qualified status of each Company Employee Benefit Plan that is intended to qualify under
Sectio~ 401 (a) of the Code, (v) the most recent 'accountings with respect to eaCh Company
Employee Benefit Plan funded through a trust, (vi) the most recent actUarial report afthe
qUalified actUary of each Company Employee Benefit Plan with respect to which actu3rial
va1uati,~ns are conducted.
(d) Except as disclosed in the Compcy SEC ReportS filed prior to Dec:mber
6, 1998 or Section 3.13 of the Company Disclosurc Le:::-., neither the Company nor any
Subsidiary maintains or is obligated to provide ben~I1tS under any lif~ mCdical or health Plan
(other, than as an incidental benc~t under a Plan quaiifie'd under Section 40 1 (a) of the Code)
which pro'ides benefitS to rerirc:s or other termiriated e:nployees other than benefit
continuations rights under the Consolidated Or;mibus Budget ,Reconciliation Act of 1985. as
amended.
le) Except as set fo*- in'Section 3.13 of the Company Disclosure Letter. each
Company Emp!QY~; I?enefit Plan covers only employe:s who are cmp~oyed by the Company or
a Subsidiary (or former cmployc:s or benefic,iaries \\ith respect to sCrvic:: ~th ~e Company or a
Subsidiary), so that the trahs3ctions' contemplated by this Agreement will require no spin-off
assetS and liabili~Cs o~ other division or tranSfer of rightS with respect to any such plan.
(1) Except as disclosed in the Company SEC ReportS filed prior to December
6, 1998 or Section 3.13 of the Company Disclosure Lener. neither the Company, any Subsidiary,
any E~A ~~at~ nor
~y
other corporation or organization conuolled by or under common
conuol With ~y,ofthe foregoing within the meaning ox Section 4O01of~A has at any time
during the five (5) yeM period preceding Decem~ 6. 1998 contrib~ted to any "multiemployer
pl~, as that te."II1 is defined in Section 4001 of ERISA. With respeCt to each "multiemployer
plan". as define4 ~ove, in which the Company. any Subsidiary or any ERISA Affiliate
... participates 'or haS p~cipated. (i) neither the Company. any Subsitijary nor any ERISA Affiliate
has incurred.
~y
material withdrawal liability, (ii) neither the Company, any Subsidi~ 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 materia11iability, (B) increased
contribu~ons of a material ~ount may be ~rcquired 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) to the knowledge of the Company, there: arc no PBGC (as defined below),
proceedings against any such plan.
(g)
, Except as disclosed in the Compa.'1Y SEC ReportS filed prior to December
6, 1998 or Section 3.13 of the Company Disclosure Lcm:r. no ,~\'ent has oc~UI1"ed. and ther::
existS:o condition or set of circumstances in connection wit11,any Company Employee Benefit
Plan. Under ~hich the Company or any Subsidiary, di~tly or indirectly (through any
indemnification agreement or otherwise). could ,reasonably be expected to be subject to any risk
ofmatcrialliability under Section 409 ofERlSA. Section S02(i)ofERISA. Title IV of ERISA or
Section, 4975 oCthe Code.
(h) No transaction contemplated by this Agreement will result in liability to
the Pension Benefit Guaranty Corpo~tion ("paGC") under Section 302(c)(11), 4062. 4063,
4064 or 4069 of ERISA, or otherwise, with respect to the Company, any Subsidiary, HoldCo,
Scottis~ower or any corporation or organi7anon controlled by or under common control with
any of the foregoing within the meaning of Seen on 4001 of ERISA, and, to the knowledge ofthc
C~)jnpaj1y, no event or condition exists or has existed which would reasonably be expected. to '
result iD any matcrialliability to the paGC with respect to HoldCo, ScottishPower, the
Comp~y.. any Subsidiary or any such corporation or organization. Except as set forth in Section
.' '
13 of the Company Disclosure 5chedul~ no "reportable :vcm" within the meming of Section
4043 of ERISA has ocCUITed with respect to any Compzny Employee Benefit Plan that is a
defined benefit plan under Section 3(35) of ERISA othe: than "reponable eventS" as to which the
rcquiremen~ of notice tO ~e PBGe wi~.thirty days has been waived.-
(i) Except :as set forth in Section 3.13 oCthe Company Disclosure Schedule,
no employer securities. employer real propc:ny or other :::1pioyer property is Included in the
assc6 of any Company Employee Benefit Plan.
. -(j)
No stock appreciation' rights arc outstanding under the Company Stock
Incentive Plan' or any other plan or a.."!3I1gemcnt ~ainW:led by the Company or any affiliate ofthe Company.
~4 Labor Mattm. (Ii) Except as set forth in Section 3.14 of the
Company DisclosUre Letter, neither the Company nor ~"1y ofits Subsidiaries is a party to any
collective bargaining agreement or other labor agre::m::lt with any union or labor org~n;'7ui on.
Except as disclos~d in the Company SEC Repons filed prior to December 6, 1998 or in Section
14 afthe Comp3I.1Y Disclosure Letter. there are nodisput:s pending or, to the knowledge of the
Company, threatened betWeen the Company or any oiitS Subsidi~Cs or any of the Company
Joint VentureS and any trade union or other rePresentatives of itS employees, except as would
- not, individually or in the aggregate, reasonably be :xpeded to have a material adverse effect'
the Company and its Subsidiaries taken as a whole. and. to the know\~ge of the Company,
except as set fonh in Section 3.14 oCthe.Company Disclosure Letter, there arc nomatCIjal
organizational effons presently being made invoh;ng any of the now unorganized employees of
the Company or any 0 fitS Subsidiaries or any of the Company Joint VentureS. Since December
31, 1995, there has been no work stoppage, ~r strike by employees of the Company or any of its
Subsidiaries or any of the Company Joint Ventures except as would not, individually orin the
aggrcPte. reasonably be expec::d to have a material adverse eff:ct on the Company and itsSubsidiaries taken as a whole. /'
(b)' To the lCIlowiedge of the Compu.y. neither the Company nor any of itS
Subsidiaries. nor any of the Company Joint Ventures is in material violauon of my labor laws in .
any countrY (or politicatsubdivision thereoO in which t.f1e:y transact business except for such
violations as would not, individually or in the aggregate. reasonably be expected to have a~rial adverse effect on the Company and its Subsidi:uies taken as a whole.
15 Environmen~l Matters. E~~cpt as disclosed in the Company SEC
Repons filed prior to December O. 1998 or in Section 3.15 of the Company D~sc1osurc Letter and
except as would not. individually or in the aggregate. re:lSonably be expected to have a material .
adverSe effect on the Company and its Subsidiaries taken :lS a whole:
..,/
(a) (i) Each oCthe Company, its Subsidiaries and the Company Joint
VentUI'CS is in compliance with all applicable Environmental La~s (~ hereinafter
, defined); and
(ii) Neither ~e Coqipany nor any of its Subsidiaries nor any ofth\: Company
Joint V enwres has received any written communication from any pc;rson or
.,.,
Governmental or Reguiamry Authority. that ziieg:s that the Company or any of itS
Subsidiaries or any of the Company Joint Ve:-.n:::s is not in such compliance with
applicable Environmental La~s.
(b) - Each of the Company~ itsSub~idiz..;es and th~ Company Joint Ventures
has obtained all enviro~cnw. c::1lth and safety pe:::utS and governmental authorizations
(collectivciy, the "Environmental PcrmitS ) necessary Io:' the consnuction onts facilities and the
condUCt ~f i~ operations, as ,applicable, and all such En..-ironmCI:1tal PcnnitS are in good standing
or, where appli able, arcncwal application has be::n timelY filed and is pending agency approval,
and the Comp~y, itS ~ubsidiaries and the ~~JI1pan~.. Joint V entUrCS are in compliance with all
tcm1S and conditions of the Environmental PermitS.
(c)
(i)
Joint Venror-~;
, .
There is ;to Environmental Cl:rlm (as hereinafter defined) pending
against the Company or any of itS Subsidiaries or any of the Company
(ii) to the knowiedgc of the Company. against any person or entity whose
liability for any such Environme::tal Claim the Compa."1Y or any ofits Subsidiaries or any of the
Company Joint Ventures has or may have retained 0:' as3Ul11c~ eIther contraCtually or
operation oflaw; or
(iii) against any real or' personal prope::y or opc:raUons which the Company or
any of its Subsidiaries or any of the Company Joint Ve:lturcs owns, leases or manages, in whole
or in pan.
(d) To the knowledge of the Company, there have not be:n any Releases (as
hereinafter defined) 0 C any Hazatdous M~terial (as her::nafter defined) that would be -n:asonably
likclyto~form the basis of any material Environmenul Cairn against the Company or any of its
Subsidiaries or any of the Company Joint V emures. or against any person or entity whose
liability for any Environmental Claim the Company or :my of itS S upsidiaries:or any of the
Company Joint Ventures ha;s O(:-:1ay have been re~nec or assumed eithercoIltracrually or byoperation oflaw. ' '
(e) To the knowledge oCthe Company. with respect to any predecessor of the
Company or any of i~ Sl,1bsidiaries,Jh.ere is no En\;ronmenul Claim pending pr threatened in
writing, and there has been no Release of Hazardous ~-1ateiia1s that would be reasonably likely to
fonn the basis of any Environmental Claim.
(t) There are no material factS specific to the Company that have not been
disclosed to ScottishPower which the Company rezsonably believes arc likely to Conn the basis
ofa Environmental Claim against the Company or any ofitS Subsidiaries or any oCthe Company
Joint Vemurcs arising from (x) current environmctal r:mcdiation or mining ~lamation costs of
the Company, its Subsidiaries and the Company Joint VentUres or such remediation or
reclam~on costs known to be required in the futUre. or (y) any other environmental matter
affcCti~g the Company or its Subsidiaries or"any of the Company Joint Ventufcs.
.. "
(g)
, As used in this Section 3.15:
(i)- "Environmental Claims" mcms any and all adm;nistrative, regulatory or
jucficial actions, sui~ demands. demand letterS, dir:cti\"e~ claims, liens, investigations,
proce:dings or written notic~ofnoncompliance.liability or violation by any person or entity
Cmcluding any Govemmcncif or RegUlatory Authority) alleging potential liability (inCluding,
without limitation. potential responsibility or liability for enforcement. invCSrlgatory costS,
cl~up COStS, governmental ~cspoi1se cOsts, removal coStS, r::nedial costs, IiatUI3l resources
daInages, property damages, pe:sonal injuries or penalties) arising out of. based on or resulting&om
(A)the presenc:, or Release or mrcar:ened Release into-the environment. of
any HaZardous Mat=rials at any location. whether or not owned. operated,
leased or managed by the Company or any ofits Subsidiaries or any of the
Company Joint V en~
circumstances forming the o:!Sis of any violation, or alleged violation, of
any Enyironmental Law; or
any and all claims by any third party se~king damagcs, connibution.
indemnification, cost recovery, compensation or injunctive relief resulting
from the presence or Rel~eaf any HazardoUs Materials;
(~l
(ii) "Environmental Laws" mems all Federal. s~e and local laws, rules and
regulations relating to pollution, the environment (including, without limitation. ambient air, .
surface watc:, groundwater, land surface or subsurfac:: strata) or protection of human health as it
reIates to the environment including. without limitation. laws and regulations reIaiing to Releases
or thrCatcncd Rcleases.:ofHazardous Materi$. or ather.';se relating to, the manufacture.
processing, distribution, use~ treatment. storage, disposal. transport or handling of HazardousMateri:ils;
':"-
(iii) "Hazardous Materials" me:ms (a) JJ1Y p~troleum or petrOl~um products~
radioactive matcnals, asbestos in any iorm that is or c~uld become fti~le, urea fonnaldehyde '
. ,
foam insulation. and tranSformers or other-equipment that contain dielecnic fluid containing
polychlorinated biphenyls; and (b) any che~icals. materials or substances which are now defmed
as or included in the defInition of "hazardous subStanccs
. "
hazardous wastes
. "
hazardous
materials " exttcmelv hazardous wastes
. "
restricted hazardous wastes"
. "
toxic substances
toxic Dollutantsl'. or words of similar import, under:my Enviromnenul lawi'and (c) any other
chemical, material. substance or waste, exposure to which is now prohibited. limited or regulated ,
- under any Environmental Law in a juriscfiction in which the Company or any ofies Subsidiaries
or any of the Company Joint Ventures operates Or any jurisdiction which has received such
ch~~al. materiaL substaI1ce or waste ~mthe Company or itS Subsidiaries; and
(iv) "Release" means any release, spill, emission. le~r;ng,injection, deposit,
dispos~ discharge, dispersal leaching or migration into the atmosphere, soil, surface water,
groun~wate:' or property.
16 . Intellectu3.i PrcueItv RilZhtS. Th: Company and its Subsidiaries
have all right, title and interest in. .or a valid and,binciing license to use, all InteUectual Propeny
(as defined below) individu:illy or in the aggregate ::l:!terial to the conduCt of the businesses
. the Company and its Subsidiaries taken as a whole. !\either the Company nor any Subsidiary of
, the Company is in default (or With the giving of notic: or lapse of time or bo~ would be in
default) under any lic:nse to use such Intel1e-:.~ Property and. to the knowldige of the,
Company, such Intellectual property is not being mmnged by any third party, and neither the
Company nor any Subsidiary of the Compan.Y is 4'1fringing .any intellectUal Propeny of-any third .
patty, except for su~h defaults andinfriIigemcntS which. individually or in the aggregate, are not
having and would ~Q! reasonably be expected tq have a matCrlal ady~e ~ffect on the Company
and iuSubsidiaries taken as a whole. For purposes afmis Agreement. ~lntellectual Prooc:nY'
me3I1S patents and patCI1t rights, trademarks and trademark rights, ~cs and trade name
rights, .seMce 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.
~~17 Re2Ulation as a UtilitY. i:a) Tne Company is not regulated as a
public utility by any state oth~ man the States of California. Id~o, Montana.. Oregon. Utah,
W~gton anctWyoming. Se~rion 3.17 of the Company Disclosure Letter listS each ~ubsidiary
of the Company which is a public utility or is other.,,'ise engaged in the regulated supply
(including generation, transmission or distribution) of ele---tricity, natural gas and/or
telecommunicatiq!iS. Except as set forth in Sectidn 3.17 of the Company Disclosure Letter,
neither the Company nor any "subsidiarv.coinoan..'" or "affiliate" of the Company is subject to
regulation as a public utility o~ public service company tor similar designation) by any ~tate 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 Section3--~17. the terms "subsidiarY comnanv" and
affiliate" shall have the respective meanings ascribed. to them in the 1935 Act.
, 3.18 Insuranc::. Except as set forJ1 in Section 3.18 of the Company
. '
. Disclosure Letter, each of the Company and itS Subsi~iaries is. and has been continuously since
. January I, 1994, insured withfmancially ~esponsible insurers in suchamountS ~d against such
risks and losses as arc customary in all material respectS for companies conducting the business
conducted by the.Company and its Subsidiaries during such time period. E..'tcept as set forth in
Section 3.18 of the Company Disclosure L~tter. neimerthe Company nor any of itS Subsidiaries
has received any notice of cancellation or termination ,,;th respect to any material insurance
policy of the Company or any of itS Subsidiaries. Tne material insurance policies of the
Company and each of its Subsidiaries arc valid and enforceable policies.
3~19 Vote ReQuired. AssUming the accuracy of the representation and
wananty contained in Section 4.19. the affirmative vote of the holders of record ofat.least (i) a
majo~ty of voting power of the outStanding shares of Company Common Stock and Company
~fcI;rcd Stock voting together and (ill a majority of the voting power of th~ Company Preferred
Stoc~.voting separately from the Company Common-Stock as a single class with r~ect to the .
appf9valofthis Agreem~nt aI'e.mc only votes of the holders of any class or series ofth: capital
stock of the Company or its Subsidiaries required to approve this Agreement and approve the
Merger aDd the other transactions contemplated her:by.
3.20 (Intentionally Omitted)
3.21 Owncrshin of Hold Co or ScottishPower Stock. -Neither the
Company nor any ofits Subsidiaries beneiicially 0\\'T1S any ScottishPower Ordinary Shares,
Sco~ower ADSs, HoldCo Ordinary Shares or HoidCo ADSs.
3~ Article \-11 of the ComDanv's .~cies ofInco~oration and
Sections 60.825:-60.845 oCthe SCA Not ADDlicable. T:-.: Company bas t3k~ all
necessary actions'~o tbat neither the provisions of Articl: vn of the Company's Anicles
Incorporation nor the provisions of Sections 60.82S-60.S~S of the SCA (i.e.. affiliated
tranSactions and ~~ price provisions) will. before the :=nination of this Agre::ncnt. apply to
this Agreement 'Qt ~e Merger or the other mmsactions contemplated hereby.
. ~.~,
Cehain ContractS. Except as se: :onh in Section 3.23 of the
, ' . '
Company Disc!Q~rire Lener. ....:ither the Company nor a..'y of itS Subs~diaries or Joint Ventures is
a PartY to, or bo~4 by..any ContraCt containing any provision or covenant prohibiting or
nWerlally limi~g the ability oIthe Company or any CiJmpany S~bsidiary to engage in any
business activity or compete with any person.
3.24 Year 2000. The Co~pany a;i~ntsSubsidiaries have put into effect
practices and programs which the Company reasonably believes will enable all material
software. hardware and equipment (including microprocessors) that is owned or utilized by the
Comp~y or any ofits Subsidiaries in the operations of itS or their respective business to be
capable. by December 31. 1999 of accounting,Jor aU calculations using a century and date
sensitive algorithm for the year 2000 and the fact that th: year 2000 is a leap year and to
othCIWise continue to function without any material im::roption caused by the OCCurmlce of the
year 2QOO.
. \. -
25 Join V:nture Re:m:sent:ltions. =:~::h representation or '\yarranty
made by the Company in this Artic~e III relatiI:Ig to a Company Joint Venture that is neither
operated nor managed by the Company or a SubsidiaI)" of the Company ~hall be deemed to be
made oiUy. to the Company s knova.rledge.
~T1CLE IV
REPRESENTATtONS M"D WARRANTIES OF HQLDCO. SCOrnSHPOWER AND THE
PARTNERSHIP
ScottishPower and HoldCe (each on behalf of itself and on behalf of Merger Sub)
and the Parmcrship represent and wamnt to the Company as follows (which representations and
wamuitics (i) in respect of ScottishPower and its Subsidiaries arc made as ofpecember 6, 1998
(except for the representations 'and wammties contained in Sections 4.03 and 4.04.. which are
made as of the date hereot).(ii) in respect of HoldCo and its Subsidiaries are made as of the date
ofthis!Agrcement and (Hi) ofScottishPower and HoldCo'behalfofMcrger Sub shallonly.
. '
26 '
. trUe and coII'CCt as of~e Closing Date). it being a :d that HoldCo and ScottisbPower shall.not
be in breach or deemed to be in br::ach of any reprcs::iution or Wamnty contained in this Anicle
IV by vinue of the fact that any Schcri1e Consent (as c::lned in S~tion 9.13(k)) has not bc::n
obtained by the ~te of this Agreement: j
01 OrIl:lTl;~tion and Qualification. (a) Each ofHoldCo
ScottishPower and their respeCtive Subsidiari~ (om::: than the Panncrsbip) is a corporatIon duly
incorporated. yalidly existing and in good standing ~ With respect to jurisdictions which recognize
thc concept of good ~ding) 'under the laws of itS jurisdiction of incorporation and has fiill
corporatc powcr. ~d ~thority to conduct itS business as and to the ~~Cn~ ~ow conducted and to
OWD,'usc and leasc;i~ assetS ~d properties. excqJt for such failures to be so incorporated.
cxiSting and in good standing (with respect to jUrisdiCtions which recognize thc concept of good
standing) or to haye s~ch power and authority which. individually or ~ the aggre~ are not
. having and'woul~ no~ reasonably be expected to have a material adverse effCCt,on HoldCo.
ScottishP~wer and their respecnve Subsidiaries taken as a wholc. ~e,~Pannership is a general
partnership validly existing under the laws of the State of Nevada. Each of the Partnership and
Merger Sub was,fo~ed solely for the purpose of e:1gaging in the ~~ons contemplated by
this Agre::mcni (Qther than-with respect to the Par..:-.:rship. in connection with ~e inveStmctlt of
the initialparmciShip capital pursuant to or in acco:-aanc: with the Parmership Agreemcnt, dated
Dec:mber-3, 1998, by,andbetWe:n UKSub I and L"KSub:! (the "Parmershin A!ZI'Cmlent )), has
engaged in no o$.er bUsiness activities and ~as conducted itS opera~~ons only as contempl~
hereby (or. with respect to the PartnerShip, as conte:npl:lted by the P~e:ship Agre::;lcnt).
HoldCo was formed solely for the purposc contempiated by the Scheme of Arrangement and this
Agrc:ment and has conducted itS operations only as contemplated by thc Scheme of)
Arrangement and this Agr:cment. Except as disclosed in Section 4.01 of the ScottishPowcr
Disclo~:Lettcr (as defined bclow), each ofUKSub r and UKSub 2 was fonned solely for thc
pUIpo~e otengaging in the tranSactions contempl~tcd bXi!Us Agreement, hasengagcd in no other
business activities and has conducted itS operations only as contemplated hex;eby. E~h of .
ScottishPower, HendCo and their respective Subsidiaries is duly qualified. licensed
oJ:" admitted
to do business and is in good standing (with respe~t to jurisdi~tionS which recognize the concept
of good standing) in cachjurisdiction in which tEe owne:'Ship. use or leasing of-itS assetS and
praperties~ or thc conduct or natUre ontS husiness. ffia.\:es such qualification.lic::nsing,
admission or good standing n~cssary, except for such failurcs to be.'so quaIified.liccnsed or
admitted and 4t good standing (with respect to jurisc:iictions which recognizc thc concept of good
standing) which. indi~d1:1ally or in the aggregkte. are not having and would not reasonably bc
expeCted to havc a material ad,'ersco effect on HoldCe. SconishPow~r and their respective
Subsi(ijaries taken as a whole. Section 4~Ol of the' letter dated December 6, 1998 and delivered
, by ScottishPower and, Merger Sub to the Company on such date (the "ScottishPower Disclosure~t setS fonh (i) thc name and jurisdiCtion 0 f incorporation 0 f each S ubs~diary of
Scottis~ower, (ii) its authorized capital stock. (iii) the number ofissued and outSt3I1ding shares
ofits C;a,pital stock and (iv) the record owners of such shares. ScottishPowcr has previously
dclivefcd to the Company correct and complete copics of the memorandum and articles of
association and bylaws (or other coI:IlParable charter documents) of Sco~owcr and C2Ch of its
Subsidiaries, and thc Partncrship Agreement. As of the Scheme Date., thc articles of association
t- and byl~ws (or othcr comparable chanerdocumentS) of Hold Co shall substantially reflect th~
principles set out in Schcdulc IT, subjcct to arDcndmentS required to comply,with applicable law
, 2... .
~' .,~
NY1 :13203221\'1
or the rules of ~e LSE and subject to such other amendm::ntS as ScottishPower may reasonably
dc:m net~aiY or desirable. rovided. that to the e.'t:::nt such other amendmentS dc:::ned
necessary or desirable by ScottishPower would mite:iaily adversely affect the benefits of the
Merger for the holdc..~ of Company Common S lock. ScattishPo~er shall have 'received the prior
written consent of the Company.
(b) Section 4.01 of the ScottishPower Disclosure Letter sets fom a
description as of Deccmber 6~ 1998, of all ScottishPower Jo~t Ven~ including (i) the name
of each such pany and ScottishPower's interest thc-...in. and (ii) a brief description of the
principal).ine or lines ofb~ess conduct~ ~y each such entity.
(c) . Exc::pt for interestS in the Subsidiaries of ScottishPower and HoldCo and
as disclosed in Section 01 ofthe SconishPower Disclosure Letter, neither HoldCo nor
ScotrishPowcr ~tly or indire~y owns any equity or similar interest jn, or any intC:rest
convertible into or exchangeable or cxe:cisable for any equity or similadntcrcst ~ (i) any
material corpora~on, partnership, joint ventUre or other business associan.on or entity (other than
non-contrO lling41vesnnentS in the ordinary course 0 f business and corporate parmcring,
development.. coqperative m~keting and s~miiar 1lI."1dcrtakings and arnmgementS entered into in
the ordinary course ofbtciiness)- or (ii) any. other business association or entity the effect of
which. is having ~r could reasonably be expected to ha\"~ a materi~ adverse effect on HoldCo,
ScottishPow~ ~d their respective Supsidiarics taken as a whole.
02 Cariital Stock. (a) The authorized share capital ofScotrishPower
consistS solely of (i) 1,700.000.000 SconishPower.Ordinary Shares. of which 1,198.629,102
shares were issued as of November 30, 1998. and (ii) one Special RightS Non-Voting
Redeemable Preference Share of f:l (the "Scecial Share ) which was issued as of such-date. The
authoriz:d.sharc capital of Hold Co consistS solely oi(i) 50.000 HoldCo ordinary-shares off!
each (to b~ subdivided into HoldCo Ordinary Shares of 50p each prior to the,Sc:heme Date), of
which 2 were issued as oftJ1e date of this Agr~ement. and (ii) 49,998 non-voting redeemable
ordinary shares of f:l each. all-afwhich \,-"ere issued as of the date of this Agr,c:mcnt. are held by
SconishPower and shall be redeemed by HoidCo prior to the Effective Time. Since November
30, 1998, exc:pt as disclo'scd in the ScottishPower SEC Repons filed prior to December 6. 1998,
Section 4.'02 ofth~ ScottishPower Disclosure Letter or pursuant to the Scheme of Arrangement.
there has been no change in the number of issued ScottishPower Ordinary Shares other than the
issuance of ScottishPower Ordinary Shares pursuant to options or ~ghts outStanding as of such
date to subscribe or purchase ScottishPower Ordinary Shares, which options or rightS are
described in Section 02 of the ScottishPower Disclosure Letter. All of the issued
SconishP~wer Ordinary Shares and HoldCo Ordinary Shares are. and aU Merger Ordinary
Shares and all HoldCo Ordinary Shares to be issued to the ADR Depositary pursuant to Section
01 yiill be~ upon issuance. duly authorized. validly issued and fully paid and voting, and no
cla$s' of shares is entitled to pre-..mptive rightS. except as provided in Section 89 of the
Companies Act of 1985 of the United Kingdom (the "Comuanies Act"). EXcept pursuant to this
Agre:ment. the ScottishPower employee' share schemes listed in Section 4.02 of the
ScottishPower Disclosure Letter (the "ScottisbPower Share Schemes ), thc.HoldCo employee
share. schemes established in connection with the Scheme of Arrmgement to replace the
Sco~shPower.Sbare Schemes and which are in all material respectS six.ml~ to the ScottishPower
Share Schemes (the "HoldCo Share Schemes ), and exc:pt as diSclosed'in the S~ottishPower
SEC ReportS filc4 prior ~o December 6, 199~ or S~on .t02 oCthe ScottishPower Disclosure
Letter. as of December 6, 1998' there were ri~ outStanding Options obligating HoldCo.
ScottishPower or any of the:: respective Subsidiaries to issue or sell any capital or other shares of
ScottishPower or HoldCo or to grant. eXtend or enter mto any Option with respect theretO.
(b) Except as disclosed iIi the ScomshPower SEC Repo~ filed prior to
December 67 1998 or Section 4.02 of the SconisbPower Disclosure Lcttcf, all' of the OUtSWlding
shares of each Subsidiary of HoldCo and SconishPower are duly authorized. validly issu~. fully
paid and no~se~~1e and are owncd.,beneficially and of record. by HoldCo.or ScottishPowcr
or a SubSidiary wh~Qy owned. directly or in~rectly. by,HoldC9 or ScottishPower, and clear
of any Liens. Immediately following the Scheme Date. all of the outStanQing shares of
SconishPower will ~~ duly authorized, validly issued. fully paid and nonassessable and owned..
beneficially an4 ~f record. by HoldCo or itSnomine=s. Eicept as disclosed in the ScottishPower
~EC Reports ~1~ prior to December 6, 1998 or Section 4.02 of the SconishPower DiscloSure
Letter, and e~cCpt for the Share Transfer. there are no (i) outStanding Options obligating HoldCo,
ScottishPowei9r ~y of their respective Subsidia...ies to issue or se~l
~y
shares of any Subsidiary
of Hold Co or ~~qttishPower or to grant. e~tend or ente:- into any suCh Option or (ii) voting trUStS.
proxi~~ or ~thei coinmitmcnt.S. understindings. restrictions or arrangi:mentS in favor of any
person other HoldCo or Scoiqsh:Power or a Subsidiary wholly owne~ dirCctly or indirectly,
by HoldCo or ScotiishPower with respect-to the voting' oi or the right to panicipate in dividends
or other earnings iri:tespect.ofany .~hares of any Subsidi3I)' ofHoidCo or ~co~hPower.
- -'
(c) Other than (i) as ,disclosed in the ScottishPower SEC ReportS filed prior to
December 6, 1998 or Section 4.02 of the ScottishP~werDisclosure Lener, (ii) the right of
Holdco to redeem the 49,998 non-voting redeemable shares held by ScottishPower and refmcd
to in Section 4.02(30), (Hi) the right oCthe holder of the ScottishPowerSpecial Share to require
Scottis~ower to fed=m the ScottishPower Special Share pursuant to the Articles of Association
of SconishPower or, following the Scheme .Date. .the right of the holder of the HoldCo Special
: Sh3re (as defined in Schedule II) to require HoidCo to redeem the HoldCo Special Share
pursu~t to the Anicles of Association of HoldCo. and ti\") pursuando the Scheme
Arrangement or pursuant to a proposed aniendme~t to ScottishPower's Anicles of Association
which will provide for shares in ScottishPower to be issued: to an op~onholder under the
ScottishPower Share Schemes to be transfetTed to HoldCoin consideration for HoldCo issuing to
the optionholder the same number of HoldCo Ordinary Shares as the number ofScottishPower
shares so issued under !he ScottishPower Schemes. ther: arc no outstanding contr3Cwal '
oblig~ons of Hold Co or ScottishPower .or any Subsidiary of Hold Co or ScottishPower to
repurchaSe, redeem or otherwise acquire ~y Hold~o Ordinary Shares or ScottishPower
qrdinary ~hares or any shares of any Subsidiary of HoldCo or ScottishPower or to provide funds
to, or make any investment (in the form of a loan, capital contribution or otherWise) i~ any
Subsi~~ary of Hold Co or ScottishPower or ~y other person.
, .
(d) As of December 6, 1998, no bonds, debemur~, notes or other
indebtedness of Hold Co or ScottishPower having the right to vote on any matters on which
shareholders may vote are issued or outstanding.
NY1 :'32032%1"11
....."""
03 AuthoritY Relative to this AEr::=:nt. Each of Hold Co,
ScottisbPower, the Parmcrship and Merger SuI? (and. w.th respect to Section 2.01 only, UKSub "
and UKSub 2) has full power and authority to enter ir.::J this Agreement, and, subject (in the case
of this Agreemc:nt)\to obtaining the Scdr;rishPower S~:holders' Approval (as defined in Section
03(a and the Scheme ConSentS, to pert:9IIn itS obijgrions hereunder, and to consummate the
traI1SaCtions contemplated ~er:by. The execution. dcHv:ry and performance of this Agreement
by each ofHoldCo. SconishPower, the Parm.e~hip ami ~~crger Sub (and, with respect -to/Secnon
2.01 only, UKSub I and UKSub 2) and the coi1sum.m2rion by each ofHoldCo,ScottishPower,
the rartn~hip and Merger Sub (and, with respect to S=-:.tion 2.01 only, UKSub I and UKSub 2)
of the transac~oI1$~Qntemplatcd hereby have been d~iy 3:I1d validly approved by the Board-
Directors ofHoldCo~ ScottishPower and ~erger Sub (~d, with resp'ectto Section 2.01 only,
UKSUb,l and UKSub2) and thc genci-a1 parme:-s ofth: Parmership, and by the Parmcrship in itS
capacity as-sole sioc;kholde~oiMcrger Sub. Tne Boa."Ci of Directors-of S cottishP ower has passed
a resolution declaring the achisability of the Merger and resolving that the M:rger be submitted
for considera,ti~n-by the shareholders ofScomshPowe:-. The Bo~ of Directors of Hold Co has
passed a resoJurion approving the Merger. No othe:- ::::I:porate proceedings on the part
'HoldCo~ Sco~~hPower or Merger Sub or theirsharehoi~ers. or the ~armcrship or itS general
partners arc net;-c;ssary to auth.oriz: _the execution. d:!i\"c=:' and perfonnance o~ this Agreement by
HoldCo, -Sccim~hPower, the'Parmership or Merger Sub (and, wit:h respect to Section 2.01 C?nly,
UKSub 1 and UKSub 2) ~d ~c consummation by HoldCo. Sco~shPower, the ParmerShip and
Merger Sub (and, with respect to Section 2.01 only. LXSub I anq UKSub 2) of the ~actions
contemplated hei-eby, othe:- than obtaining the ScomshPower Shareholders' Apprcivat~d the
Scheme ConsentS. and to the Scheme of ArTangement becoming effective. This Agreement has
been duly and validly executed and delivered by e:lCh of Hold Co. ScotrishPower, the Partnership
and Merger Sub (and, with respect to Section 2.01 only. l;'KSub 1 and UKSub 2) and constitutes
a legal. valid and binding obligation of each of HoldCo. SconishPower. the Partnership and
Merger Sub (and, with respect to Section 2.01 only, l"KSub I and UKSub 2) enforceable against
each cirHoldCo, Scottis~owcr, the PartnerShip and ~ergcr Sub (and, wi~ respect to Section
01 only, UKSub I and UKSub 2) in accordance wiu~ its terms, except a:s-enforce:1bility may be
limited by banlauptcy, insol\"ency. reorganization. ~oratorium or other similar laws affecting the
enforcement of creditors' rights gene:-ally: and by ge~:~~ ~quitable principles (regardless
whether such enforceability is considere~Un a procc~::iin~ in equity or at law).
04 Non-Contravention: ADDro\"als and ConsentS. (a) Subject to the
requirement to obtain the Scheme Col1;ScntS, the e.",ec~tion and delivery of this Agreement by
each of Hold Co. ScottishPower. the Pannership and ~terger Sub (and, with respect to Section
01 only, UKSub I and UKSub 2) do not. and the perfonnance by each of Hold Co.
ScottiShPower, the PartnCI'Srup and Merger Sub (and. with respect to Section 2.01 only, UKSub I
and UKSub 2) of itS obli!Zations hereunder and the consummation oCthe transactions
contemplated hereby will not, conflict with. result in a- \;olation or breach of. constitUte (with or
with~ut notice or lapse of time or both) a default under. resuJt in or give to any person any right
of payment or reimbursement, termination, cancellation. modification or ac~eleration of: or result
in th~ creation or imposition of any Lien upon any of the assetS or properties of HoldCo, i
ScottishPower or any oC'their respective Sul?sidiaries or any of the ScottishPower Joint Veritures
under, any of the tenus. conditions or provisions of (i) the memorandum or articles of association
or bylaws (or other comparable charter documentS) of Hold Co, ScottishPowcr or any of their
r~ective Subsidiaries or any oithe Sco~ower Joint Ver.rurcs. (ii) the PartneIsbip
Agreement. or (Hi) subject to the obtain;ng of the Sc:mishPower Shareholders' Approval and the
taking oithe actions described in paragraph (b) of this Scction.--rx) any laws or orde.oos of any
Govemmcmal or Regulatory Authority applicable to noldCo. ScottishPower or any of their
, respective Subsidiaries or' any oithe SconishPower joint Venr.Jtes or any of their respective
asSetS or' propeniCSy or (y) any ContraCts to ~hich HaldCo, ScottishPower or any ofth~
reSpective Subsidiaries or any or the ScottishPower joint Venrures is a pany pr by which
HoldCo, ~cottishPower or any oitheir respective Subsidiaries or any of the ScottishPower Joint
VentUrCS :or any ~f ~eir respec~ve assets or properries is boUnd. excluding from the foregoing
clauses (x) and (y) co~cts, violations. bre~hes, defaults. rights of P;!~~t or reimbursement,
t~ations~ ~odi~c~ons~ acc;eieI4!Uons and cre2.tions and impositions of LienS which,
individually or in the aggregate, would not reasonably be expected to have a material adverse
effect on HoldCo, ScomshPower and their resPective Subsidiaries-takcn as a whole or on the
ability of Hold Co, $cottishPower, the Parmcrship'and ~lerge:- Sub to consummate the
transactions con~~lated by this Agre:ment.
(b.) Except (i) for the filing of a pr:me:g:r :'lotification rcpon by
ScottishPower un4er the HSR Act. (ii) for the filing ot th: Registration Statement with the SEC
pursuant to the S~~urities Act. the declaration of the :ffe::~i\"ene~ of the, Registration Statement
by the SEC and filings with various state secUrities authorities thit arc required i~ connection
with the trmSactio~ contemplated by this Agrc::r.:::t. (iii) for the filing of the Articles of
Merger and othcrappropriate merger documents required by the SCA with the Secrer.ary of State
and appropriate docwncntS with the r:levant authorities or other states in which the ConsUwent
Corporati~ns arc qualified to do business. (iv) for the filings \....ith, notices to, and approvals ot:
the LSE and NY~E, (v) the filing ora notice pursuant to Section 721 orthe Defense ~~duction
Act of 1950, or any successor thereto ("Exon-F1orio ), (\"i) the approval of the FERC pursuant to
the power Act, (vii) the approval or any jurisdictional state regulating agcncies~ (viii) the giving
ofuulications by the OFT, SOS~;OFFER and OFWAT as described in Sections 7.01(k) and ill,
(ix) as disclosed in Section 4.04 of the ScottishPower Disclosure Letter and (x) for the Scheme
ConsentS, no consent, approvai or action of. filing with or notic: to any Governmental or
Regulatory AuthoritY" or other ptiblic or private third p:my "is necessary or required under any of
the telins, conditions or provisions of any law or order at any Governmental or Regulatory
Authority or any Contract to which HoldCo, ScottishPowc:r or any of their respective"
Subsidiaries or any of the ScattishPower Joint Ventures is a pany or by \vhich HoidCo,
ScottishPower or any ofthcir respective Subsidiaries or any ofthc ScottishPowcr Joint VentUres
or any of their respective assets or propenies is bound for the e~ccution and delivery of this
Agreement by. each of HoidCo. ScottishPower, the P:lrtI1ershipand Merger Sub. the pcrfonnance
bY,C3ch of Hold Co, ScottishPower. the PannerShip an~ ~lerger Sub of its obligations hereunder
or the cC?~~ation of the transactions contempl:ttcd hereby other than such"consentS,
approvals! actions. filings and notices which the failure:: 10 make or obtain, as me case maybe
individUally or in ~e aggregate, would not reasonably be expected to have a material adverse
effect o~ HoldCo, ScottishPower and their respective Subsidiaries taken as a whole or on the
ability'~iHoldCo, ScottishPowcr, the Partnership and Merger Sub to consummate the
transactions contemplated, by this' Agrc:ment.
' "
05 SEC Reoons and Financial StatementS. (a) ScottishPower has
delivered to the Company a trUe and complete copy of ~:lCh form. report, schedu1~ registration
Statement. d:finitive p~xy statement and .o~er document (together with all amendmentS thereof
and suppiemcn~ thereto) filed by HoldCo. SconishPower or any of their respective Subsidiaries
With the SEC siIice December 31. 1995 (as sUch documentS have sinc: the time ofthcir filing
been amended or supplemeiited.the "ScottishPower SEC-ReuonS"), which are all the documentS
(other thm pre1iminary materials) that HoldCo, ScottishPo\~er and their rcspectiye Subsidiaries
were reqUIred ~o tile with the SEC since suCh date. As of their respective dates. the
ScottishPower SEC Repons (i) complied as ,to ronn in all material respectS with the requirements
of-the Se~mitic:S Act 9r the Exchange Act, ~~the case:may be. and (ii) ~d ~otcontain any untrUe
statement of-a ~teria1 fact or omit to state: a material fact required to be Stated therein or
necessary in order: to .make the :statc:mc:nts therein. in light of the circumstances under which they
were made. not misieaAing. The audited consolidat:d financial statements and unaudited interim
consolidat:d tinanCiai StatementS (including, in,-each case. the notes. if any, th~tO) included
the ScottishPower SEC Repons (the "SconishPower Financial Statements ) ~omplied as to form
in all material respects with the published rules and regulations of the SEC with respect theretO,
were prepared in accordance with generally-accepted accounting pd~~ples in the United
Kingdom applied on a consistent baSis during the periods involved (e~cCpt as may be indicated
therein or in the notes thereto and except with respect to unaudited statementS) and fairly present
(subject. in the case of the Unaudited interim financial statementS,. to normal. recurring year-cnd
~udit adjustmen~ (which arc not e~pecte4 to be, indhidua1ly or in ~!= aggregate. materially
advC'Se to HoldCo~ ScottishPower and their respecth"e Subsidiaries t3ken -as a whole)) the
consolidated financial position ofSconishPower:m1L in respect ofpcrlods ending after the.
Scheme Date, HoldCo and their respective consolidated subsidiaries as at the r::spective dates
thereof and the consolidated resultS of th~ir operations and cash flows for the respective periods
then ended. E."tcept as set foM in Section 4.05 of me SconishPower Disclosure Letter, each
- -
. SubsidiarY of SconishPower and, after the Scheme Date, of Hold co is treated as a consolidated
- .....
subsidiary of ScottishPower or HoldCo. as the case may be. in the SconishPower Financial
Stat.em:ntS for all periods covered thereby.
(b) All material filin2:s reauir:d to be made by ScottishPower or any of itS
Subsidiaries since December 31. 1995 i; the 'United Kingdom under the Electricity Act 1989, the
Water Industry Act 1991. the Water Resources Act 1991 and the Telecommunications Act 1984
havebe:n filed, with OFFER. OFW AT and the Offic: 0 f T elecommunicatiol1$ Services or any
other appropriate Governmental or Regulatory Authority. as the case may be, including all
material fonns, statements. reports. agreementS and all material documentS. exhibitS.
amenamentS and supplementS appertaining thereto. including but not limited to all material rates.
tariffs, franchises. semceagreementS and related documents, complied, as of their respective
dates. in all materiaLrespects with all applicable requirementS of the statute and the rules and
regulations thc:rcwider.
06 Absence of Cenain Chan2CS, or EventS. Except as. disclosed in the
ScottishPower SEC Reports filed prior to December 6, 1"9.98 or Section 4.06 C)f the
ScottishPower Disclosure Letter, (a) since March 31, .1998 there has not been my chmge, event
or de~clopment'having, br that would reasonably be expected to have, individually or in the
. aggre~!te, a material adverse effect on HoidCo, SconishPower and their resPective Subsidiaries
taken as a whole- (other than those changes, eventS. or d=,'e!opmenrs occurring as a result of
general economic or financial conditions or which are not unique to HoldCo, ScottishPower and
their respecth~e Subsidiaries bUt also affect other entities \vho participate or arc engaged in the:
lines oibusiness in which HoldCo, ~conishPower and their respecti~e Subsidiaries are engaged),
and (b) be~een MarCh 31~ 1998 and December 6, 1998 ScottishPower, its Subsidiaries, and the:
.. .
ScottishPower Joint Venrures h~ve conducted their respe:rive businesses only in the ordinary
,/ course substantially -consiStent with past practice.
07 Absence of Undisclosed Liabilities. E:(cept for matterS reflected
reserved again$t in th~ balance sheet for the period ended ~arch 31, 1998 included in the
ScottishPower FinanCial StatementS or as disclosed in Section 4.07 of me ScottishPower
Disclosure Letter, neither HoldCo, ScomshPowc:r nor any of their respective Subsidiaries had at
such date, or has incurred sine: that date, any liabilities or obligations (whether abscilu~
accrued, continge~t, fixed or otherwise, or whether due or to become due) of any natUre that
would be required by generally acc::pted accounting principles in the United Kingdom to be
reflected on a consolidated balance sheet of ScottishPower and. in respect ofperiods ending after
tp.e Scheme Date, "fioldCo and their respectiy~ consolidated subsidiaries (including the notes
thereto), except liabilities or obligations (i) \".hich were inc;:urrc:d'in: the ordinary course of
business consiSt~twith past practice or (ii) \,,'hich have not be:n, and would not reasonably be
expected to be, mdividua1ly or in the aggregate. mate:1ally adverse to HoldCo, SconishPower
and their respective Subsidiaries.taken as a whole.
08 Lesza! Proceedinszs. Except as disclosed inthe ScottishPower SEC
Repons filed prior to December 6, 1998 or in Section 4.08 of the SconishPower Disclosure
Letter and except .for environmental matters ~vhich are governed by Section 15, (i) mere are no
, actions, suitS, arbitrations or proceedingS pending or, to the knowledge of HoldCo or
Scotti~hPower, threatc:".ed against, n~r to the knowledge of Hold Co or ScottishP.ower arc there
any Govemmen~ or Regulatory Authority investi~ons or audits pending or tl1rcatened
" -
./ against. HoldCo, SconishPower or anyofth!=ir respective Subsidiaries or any of the
ScottishPowerIoint Ventures or any of their respecth'e :lSsetS and 'properties which, individually
orin th~aggregate. "'ould reasonably be expected to ;ha\"e 'a material adverse effect on HoldCo,
SconishPower and their respective Subsidiaries taken as a whole or on the ability of HoldCo,
ScottishPower, the Parmership and Merger Sub to consummate 'the transactions contemplated by
this Agreement, and (ii) neither HoIdCe. ScottishPower nor any of their respective Subsidiaries
nor any of the ScottishPower Joint Ventures 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 Hold~o. ScottishPower and their.'respective
Subsidiaries taken as a whole or on the ability of Hold Co. ScottishPower, the Partnership and
. Merger ~ub to consummate the transactions contemplated by this Agreement.
09 Information SuDclied. (a) The registration statement on Fonn F-4
to be filed with the SEC by HoldCo in connection .with the issuance of Hold Co ADSs in the .
Mergcr~ as amended or supplemented from time to time (as so amended and supplemented, the
"Reszistration StatcmentM), and any other doCumentS to be filed by HoldCo or ScottishPower with
the SEq or any other Governmental or Regulatory Authority in cormc:cti~n with the Merger and
the oth~ tranSactions contemplated hereby will (in the case of me Registration Statement and
:.,
any such other documc:ltS filed v,ith the SEC under en: S:cu..~ties Act or the Exchange Act)
comply as to form in all material respects with the r:qui:=::us of the Exchange Act and the
Securities Ac~ respectively, and will not. oX? the date oxitS tHing or, in the case of the
Registration Statement. at thetimc: it becomes effective ~r the Securities A~ or at the 4ate
the Proxy Statement is mailed to stockholders of the Company and at the time of the Company
Stocldiolders' Meeting, contain any untrUe statement of a material fact or omit to state any
material faCt required to be swcd therein or neccss3Ij' in order to make the ~cmcntS thcrci~ in
light of ~e ,CirCumstanCes under which they are made. not misleading, except that no
representation. is made by HoldCo, ScottishPowcr, the PUtnership or Merger Sub With .respcct to
infonnation supplied in writing by or on behalf oCthe Company exp~ly for inclusion therein ,
and information 'incorporated by refer:nce therein from documentS filed bythe Company or any
ofits Subsidi3rles wi4t the SEC.
. :
(b) The ScottishPower Disclosure DocumentS will, at all relevant times,
include all info~aon relating to ScottishPower and HoldCo anq. theirrcspcctive Subsidiaries,
and information which is within the knowled2e of each of the directors ofScottishPower and
HoldCo (or whi~~ 'It would be :':~onable fo ~~em to octain by making inquiries), whic~' in e3Ch
'case, is require4.~o.enable the ScottishPower Disclosure DocumentS and the parties hereto to
comply in all matcri~ respectS \\;th all United Kingdom Statutory and other legal and regulatory
,provisions (inclu~g. without limitation. the Companies .-\c~ the FSA and the roles and
regulations mad~. thcr~under, and the roles and requirem:ntS of the ~S~ and all such
infonnation crjntained in such documentS ",;11 be substantially in accordance with the factS
win not omit anything matenal likely to .affect the import of stich infom1ation.
(c) , Notwithstanding th~ foregoing pro\;SiOi1S of this Section 4.09, no
representation or Wclrranty is made by ScoitishPower or HoldCo with resp~ to Statemcnts made
or iricorpoI3ted by reference in the R;gistration StatemenL'the Proxy Statement, the Listing
Particulars. the'Circular or the' Scheme Document bas-ed on information supplied by the
Company expressly for incluSion or incorporation by rei::-:nce therein or based on infonnaaon
w~ch is not made in or incorporated by n:ie::encc in such'documentS but which should have
been disclosed pursuant to Section 3.09.
. .
. i
10 PermitS: Comnliance with Laws and O~ers. HoldCo,
ScottishPower, their respective Subsidiaries and the Sco~ishPower 19int VentUres hold all
pcnni~ licenses, franchises vaPanccs, exemptions. orders and approvals of all Governmental
and Regulatory Authorities (other than environmentai pennitS which arc governed by Section
4.15) necessary for the lawful conduct of their rcspective businesses (the "ScottishPower
Permi ), except for failures to hold sUch ScottishPower PermitS which, individu31ly or in the
aggregate, are not having and would not reasonably be c."Cpected to have a material adverse effect
on HoidCo, ScottishPower and their respective Subsidiaries taken as a whole. HoldCo,
ScottishPower, their respective Subsidiaries and the SconishPowcr Joint Venturcs are in
compliance with the terms of the ScottishPower PermitS~ except failures so to comPly which.
indiVid~y or in the aggregate, arc not having and would not reasonably be expected to have a
. material adverse effect on HolaCo, ScottishPowcr and their respective Subsidiaries taken as a
whole. ':Except as Ciisclosed in the ScottishPowcr SEC Rcpons filed, prior to D~ccmbcr 6, 1998,
none of~oldCo, ScottishPower, their respective Subsidi~es or the ScottishPower Joint
. '
VcntUreS arc in violation of or default under any law or ordC- of any Governmental or Rcmlatorv
Authority, except for such violations or defaults wrJcn.:'"1wvidually or in the aggr:gat~ ~ not
haying and would not reasonably be expected to have 2. ::tatcriai adverse effect on HoldCo,
ScQ.aishPower and their. respectivc Subsidiaries tak:n 2.S a whole.
11 ComDliance with Al!reemctS. Exc:pt as disclosed in the
ScottishPower SEC ReportS fi.1ed prior to December o. ! 998 or Section 4.11. of the,
ScottishPower Disclosure Lener. none of Hold Co. ScotrishPower or any of their ~ective
Subsidiaries or, to the knowledge of Hold Co or SconishPower. any otherpany ~eretO is in
bI'C3Ch or violation of, or in default in the perfonnanc: or observance of any tetm or p~vision of.
and no event has occurred which, with notice or laDs: of time or both. would reasonablv be
. ,. .
expected to result ~ a default under, (i) the mem~r:mc;um or amcl~ of association (or other
comparable chaner docu.-nentS) ofHoldCo;SconishPower or any oftheirmatcrial Subsidiaries
or (ii) my Con~t to which HoldCo, ScottishPower or any of their respective Subsidiaries is a
party or by whiCh ~oldCo, ScottishPower.any of their respective Subsidiaries or any'oftheir
respective assets, or propenies is bound. except in the case of clause (ii) for breach~ violations
and defaults w~~~ individually or in the ag~gate. ~: :lot having ~d would not reasonably be
expected to have a material adverse effer..t on HoldCo. ScottishP-ower and their respective
Subsidiaries t3lCcn as a whole. '
Taxes.(a) Each of Hold Co. SconishPower and ,their respecrive
Subsidiaries has filed all material tax re~ and rl:?6r~ required to be filed by it, or requests for
extensions to file such returns or reportS have be~ timely filed or granted and have not expired
and all tax retUrnS and reportS are complete and accurate in all material respectS. HQ.ldCo (if
applicable). ScottishPower a.~d each of their respecth': Subsidiaries has paid (or HoldCo or
Scottis~ower has paid on itS behalf) all taxes ShO\\l1 as due on such tax returns and reports. The
most recent fiI13I1ciai statementS contained in the ScomshPowCt SEC ReportS reflect an adequate
rcseryc for all taxes payable by ScottishPower and itS Subsidiaries for all taxable periods and
portions thereof" accrued through the date of such fmmcial statementS and no deficiencies (or.
any taXes have be:I:1 proposed. assened or assessed 2.gainst HoldCo,ScottishPower or any of
their respective Subsidiaries that are-not adequately :-:s::r\"ed-for. ext:::pt for inadequately
reserved ta."tes and inadeqJaeeiy reserved deficiencies that would not. i~dividU311y or in the
aggregate, have. a material adverse effect on HoldCo. ScottishPowc;r' and'their respective
Subsidiaries tak~ as a whole. No requestS for waiV:r5 of the time to assess any ta."tCS against
HoldCo, ScottishP~\Ver or any of their respective Subsidiaries have been granted or are pending,
except for requcstS;with respect to such ta."tes that have been adequately'reserved for in the most
recent financial statementS contain~jn the ScottishPower SEC ReportS. or, to the c:."ttent not
adequately reserved, the assessment ofwhich would not. individually or in the aggrega~ have a
material adverse effect on HoldCo, .ScottishPower and their respective Subsidiaries taken as a
~~
(b) Neithex: HoldCo, SconishPowcr nor any of their respective Subsidiaries
bas ta)cen any action or has any knowledge of any 12.Ct or circumstance that ~ reasonably likely
to prcV,ent thc Merger from qualifying as a tax-fre: r:organ17ation within the; mf!an;n!orCode
Section 368(a).
(c)UKSub I and UKSub 2 are ::01 public limited companies.
(d) From the date hcr-..of through the Share T ransfcr. ScottishPower will
directly ov;n the whole of the issued shar~ capit3l of UK Sub I and UKSub 2. Following the
Share Transfer and'1hrough!the Closing Date, HoldCo will directly own the whole of the issued
share capital ofUKSub 1 and UKSub 2.
(e)UKsub I and ~i1b 2 dfcctiy own all of the cquif;y interestS in the
Partnership.
(f) Prior to the Cosing Date. SconishPower or HoldCo will make (i) the
elections necessary pursuant to Section 301.7701-3 of the U.S. Treasury regulations promulgated
under the Cod~ to treat UKSub I and UKSub 2 as entities disregmieq as separate from
ScotrishPower and HoldCoand (ii) aneleciion under Section 301.7701-3 of the U.S. Treasury
gulations to treat the parm,ership as an association ta.'table as a corporition. Neither
ScottishPower, HoldCo. nor any ofther respecti,.e Subsidiaries has taken 'any action that (or has
failed to take any action ifsuc~ failure) would re~onably be likely to cause UKSub I or UKSub
2 to be characte~zed as an aSsoci~on taXable as a ;:orporation for U.S. federal income tax
purposes.
(g)
Following the Scheme Date. HoldCo will satisfy either directly or
indirectly, through the activities of one or mo~ "qualified subsidiaries~, the active trade or
business teSt specified in Section 1.367(a)-3(c)(3) oithe U.S. Treasury regulations for a
minimum period oJ thrc:: years prior to the Closing Date.
(h) None of Hold Co, SconishPower, L"KSub I, UKSub 2, the Partnership, nor
any other affiliate of HoldCo or ScottishPower has~y int:ntion to-red~ acqui~ or to cause"
..-/
the Company or any affiliate of the Company to acquire, or to 3II2I1ge tor another person to
acquire"any of the AD~ Consideration or the Ordinary Share ConsideratioIl:
(i) N~ither HoldCo. SeottishPower nor any affiliate thereof. directly or
indirectly, has paid any expense incurred by the Compan)'any Company affiliate or any
Compan~stockholder iq :.o~C'".tion with the tranSaction~ contemplated by this Agreement.
G), Neither HoldCo, ScottishPo\ver nor any affiliate thereof. directly or
indirectly, has loaned any funds to any escrow account. trUSt or other fund established to pay any
expenses incurred by the Company, any Company affiliate or any Company Stockholder in
connection with the transactions contemplated by this Agreement.
(k) Neither HoldCo. ScottishPower nor any affiliate thereof, directly or
indirectly, owns any stock issued by the Company unless acquired directly ~m the Company.
13 ScottishPower Emclove= Benefit PlanS. (a) ScottishPower has
made available to the Company complete and corre!=t copies. as of December 6, 1998, of: (i) the
CUI1'C1t trUSt deeds and ruleS,ofeach of the material employee benefit,pbns to which .
ScottishPowcr and its Subsidiaries make or could become liable to make payinents for providing
retirement, death, disability or life ass~ce benefitS lthe "SconishPower Emolovee Benefit
Plans"), (including any draft amendments); (ii) the moSt reccndy prepared explanatory booklets
and announcemclts relating to each of the ScomshPower Employee Benefit Plans~ (iii) a copy
the 3CtUaIY'S repon on the latest actuarial valuation of the ScoaishPower Employe~ Benefit
Plans, ii applicable; and (iv) the roles of theScottishPower~hare Schemes.
(b) The SconishPowcrEmpioyce Benefit Plans are the-only material schemes
to which HoldCo. ScottishPowcr and their respective Subsidiaries make or could become
liable to make payments for providing retirement. death. disability or life insuraD.ce
benefits except for any schemes for pro\;ding retircmen~.dcath or disability or life
insurance benc~~ ("HoldCo EmtJlovee Benefit Plans )whic~ HQldGo establishes in
connection with the Scheme. of Ariangement which are in all material respectS similar to
the ScottlshPower Employe: Benefit Plans.
(c)" To the extent such exemption is intended by SconishPowcr, the
SconishPower Employe= Benefit Plans are exempt approved schemes within the meaning
ofChapicr 1 Part XIV of the Jncome and Corporation Taxes Ae,t.i988. Except as
specifically set fonh in Section 4.13 of the ScottishPowcrDisclosure Lencr.'mcmbers of
the Sc~m~~ower Empioye= Benelit Plans are contracted-out afthe State Earnings
Related 'Pension Scheme.
(d) , To the knowledge of Hold Co or ScottishPower. there is no amount which
is treated by Section 144 of the Pension Schemes Act 1993 or Section 75 of thcPcnsions
Act 1995 as a debt due to the trustees orme ScottishPower Employee Benefit Plans or
from SconishPower or any of its Subsidiaries to the truStCcs of any other benefit plan
except for such debts which would not reasonabl~. be expected to have a material adverse
effect on HoldCo. SconishPower and their respective Subsidiaries taken as a whole. The
SconishPower Employee Benefit Plans have not ceased to admit new members..
(e), Except as set forth in Section 4.13 or the ScotrishPowcr DisclosUre Letter
and "except for disputes which would not reasonably be expected to have a material
adverse effect on HoldCo. ScottishPower and their respective Subsidiaries taken as a
whole. there is no pispute about the benefitS payable under the SconishPO\y~ Employee
Benefit Plans and,-to the knowledge of HoldCo or ScottishPowe!:- there are no
circumstances which might give rise to any such dispute.
(f) TQ the" knowledge of HoldCo" or ScottishPower, the actuary's report on the
latest actuarial valuation accurately describes 'the financial position of each ScotrishPower
Employee Benefit Plan for ~hich an actuarial valuation is required by law at its effective
date and in aCcordance with the assumptions employed for that valuation. Except as' set
forth in Section 4.13 of the ScouishPower Disclosure Letter, nothing h~ happened s41ce
mat date which would. to a material extent. affect the level of funding of any
ScottisbPower Employe= Benefit Plan and. since that date, contributions have been paid
to each ScomshPowcr Employee Benefit Plan at the rate rccommendC(i by the actu.ary.
Except as set forth in Section 4.13 of the ScottishPowc;r Disclosure Letter, no assets have
~ecn withdrawn ~y HoldCo, ScottishPowcr or any of their respective Subsidiaries from
ScottishPower Employee Benefit Plan (except to pay benefits or by way of
reimbursement of expenses) since the eff:cti\"e cizte of the latest acmarial valuation 9C
that plan.
(g)
Except as set forth in Section 4.13 of the ScottishPowcr Disclosure Lener
or as would ~ot reasonably be expected to have a material adverse effec~ on HoldCo.
. .' -
ScottishPower and their respective Subsidiaries ukcn as a whole, the ScottishPower
Employee Benefit P-tans comply with and have be--. adminiStered in a~cordance with all
applicable laws. regularions and
rcq~entS. All amountS due to the ScottishPower
Employee Benefit Plans at any tU;le prior to the month in which this Agreement is signed
. have be:n paicl-
14 Labor Maners. (a) Except as set rOM in Section 4.14 aCthe
ScottishPower Discl~~ LettCr', neither HoldCo. Scottis~owcr nor any of their rcspectiv~
Subsidiaries is~a p to any collective bargaining agre=:nt. recognition agreement. European
Wom Council or o~cr labor agr::ncnt with any union. labor rgatti'7~ri on or other responsible
body. E.'tcept as disc;losed in th: ScottishPower SEC Rcpons filed prior to December 6. 1998 or
in Section 4.14 of m~ ScottishPower Disclosure L:tte:-. :.:.:::c,.are no disputes pending or. to the
kno~ledge of Ho!d~o or ScottishPoY'er~ threatened betw::n. HoldCo. ScottishPowet...or any of
their respective Sub~idiaries or any of the SconishPower joint VentUreS and any trade Union or
other icprcsen~ves of its cmpioye:s. exc=pt as would not. individually or in the aggregate,
reasonably be e~pec~ed to have a Inaterial adverse effcc! on HoldCo. ScottishPowcr and their
- respective Subsidiaries taken as. a whole, and. to the knowledge ~rHoldCo or ScottishPowcr.
there are no material organization effortS presently being made invo~ving any of the now
unorg311ized employees' ofHoldCo,.ScottishPower or any oftheir respective Subsidiaries or any
oCthe SconishPower Joint ~enmres~Sincc December 31. 1995, there has'becn no work
stoppage, strike or other concen:d action by employe::s of Hold Co. ScottishPower or any oCtheiI'
respective SubsIdiaries except as would not., individually or in the aggregate. reasonably
expected to have a.material adverse: effect on HoldCo. ScottishPowcr and their respective
Subsidiaries taken as a whole.
(b) , To the knowledec of HoldCo or ScottishPower. neither HoldCo.
ScottishPowc~nor any of their respective Subsidiaries nor:my of the ScomshPower Joint
Venwr-..s is in violation of any labor laws in any country tor political subdivision tl\ereof) in
which they tranSact business. except for such violatipns as would not. individually or in the
aggregate. reasonably be expca:d to ha\'e a material adv::'Se effect on HoldCo. ScottishPower
and thei~ ~spcctivc Subsidiaries taken as a whole.
15 Environmental Matters. . E.'tcept as disclosed in the ScottishPower
SEC ReportS filed prior to December 6. 1998 or in Section
15 of the ScottishPowcr Disclosure
Lener and except as would not, individually or in the aggregate, reasonably be expcctc4 to h~ve
a material adverse c::ffect on HoldCo, ScottishPowcr a:1c their respective Subsidiaries taken as whole: '
, (a)' (i) Each oCHoldCo. ScottishPower and their respective Subsidiaries
and the ScottishPower Joint ~~tUrCS is in compliance \\;m 'all applicable Environmental Laws(as hereinafter defined); and
(ii) Neither HoldCo. ScottiSbPo~'er :or any of their respeCtive Subsidiaries
nor any of the ScottishPower Joint VentureS has received anY written communication
from any person or Govemmental or R.eguiatOry Authority that alleges that HoldCo.
ScottishPo;.ver or any of their respective Subsidi2..~es' or Joint VentureS is not in such
compliance -with applicable En~nmental La\\.s.
- (b) Each of Hold Co. ScottishPower. ~i: respective Subsidiaries and the
. ScottishPower Joint has obtained all environmental. ~ea1ih and safety permitS and
gov~C1tal a~tho~ons (cc?llectively, the "En,ironm~tal P~tS ) necessary for the
constrUCtion of its facilities and the conduct of itS operations. -as applic;aPl~, and all such
Environmental PermitS- are in full force and effect or. where applicable. a renewal application bas
been timely tiled and ~ pending agency approvaL and HoidCo. SeottiShPower, their respective
Subsidiaries and the ScotrlShPower Joint Venture 3%': in compliance with all terms and conditions
of the Envirc~~tal ~ermitS.
(el There is no Environmental Claim (as hereinafter defined) pending
(i)against HoIdCe. ScottishPower;or any of their respective
bsidiaries arany of the: SeottishPower Joint VentUres:
(ii) to the knowledge ofHoldCo or ScottishPower, against any person
or entity whose liability for any Environmental Oaim HoldCo,ScottishPower or any ofthcir
respective Subsidiaries or any of the ScottishPower Joint VentUres has or may have retained or
assmned either contraCtually or by op~tion oflaw:~r
(ill) against .any re3Ior personal propeny or operations ~hich HoldCo,
ScottishPowcr or any of their rcspect;ve SuDSidiari~.E.r any of the ScottishPower Joint VentureS
owns, leases or manages in whole or in pan.-
(d) - To HoldCo s or ScottishPoweis knowledge, there flavc, not been any
Releas~ (as hereinafter defined) of any Hazardous ~tateriai (as hereinafter defined) that would
be reasonably likely to form the basis of any En\"ircr.m~:1ul Claim against HoldCo,
SconishPowcr or any of their respective: Subsidiaries or any of the ScottishPower Joint VentureS,
or against any pe:rsonor entity whose liability for any Environmental Claim HoldCo,
ScottishPower or
~y
of their respective Subsidiaries or any of the SconishPower Joint Ventures
has or may have retained or assumed ~ither contraCmally or by operation oC1aw.
(e)As used in this Section 4.15:
(i) "Environmental Claims"me~ any.and all administrativ~, regulatory
judicial actions, suitS, demands, demand leners. directh.es. claims; liens, investigations.
proceedings or notices of noncompliai1ce~ liability or violation (written oronl) by any person
entity (including any Governmental or Regulatory Authority) alleging potential liability
(includiDg. without limitation, potential responsibility o~ liability for enforcement, investigatory .
costs, .cleanup costs, government2l response costs. rcno,.al costs, rcmedial costs. natu:ral
resourCes damages, property damages, pcrso~ injuries or penalties) arismg out of: based on orresultiIig from
. ,
(A)the presence, 'or RclC3Se or threatened Release intO the
environment, of any Haia.~us Materials at any location. whether
or not Qwned.op~ted. Ic:!Sed or managed by HoidCo,
Scot:rishPowcr or any of-their respective Subsidiaries or any of the
ScoitishPower Joint Venmrcs; or
(B)circumstances forming the basis of any violation, or alleged
violation. o(any ;nvironmcntal LaW; or
any and all claims by any third party seeking damages,
conttibution, indemnification, cost recovery, compensation or
injunc~ve reliefresulting from the presenc:: or Release of any
Hazardous Materials;
(C)
(ii) "Environmental laws" means all .European Union, natio~ regional or
local laws, rules and regulations relating to pollution. thc environment (including, ,vithout
\imitation. ambient , air. surface water, groundwater. land surface or S11bsurface strata) or
ri,tection of human health as itS relates to' the' environmental incllimng, without limitation. laws
and regulations relating to" Releases o~ threatened Releases of Hazarqous Materials." or otherwise
rel$....g to the manuIacwr:, proccssmg, distribution. use. treatment, storage, disposal, transpon
h~nnHng of Hazardous Materials includIng, without limitation, ~.an n and p~graphs 161 and
162 ,of Schedule 22 of the EnvirOnment'Act -1995 and the Department of the Environment
TraDspon and the Regions Co$ltation Draft Guidance on Cc;mtaminated land dated Oc~bcr
1998 but not to the extent that any modification thereoiintroduced in the final fonn of this "
guidanc: imposes mat~~ly more onerous or stringent requirementS in respect of contaminated
land or. pollution.
" .
(iii) "Hazardous Materials" me3I1S (a)
~y
petroleUm or petroleum products,
radioactive materials., asbestos in any Conn that is or could become friable, urea fonnaldehyde
foam insulation. and tranSformers or other eClUipment that contain dielectric fluid containing
polychlorinatcd'~iph~nyls; and (b) any chemicals. materials or substances which are now defined,
as or included in 'the defmition 0 f "hazardous subStanccS
. "
hazardoUs wastes
. "
hazardous .
materials"
. "
extremelv hazardous wastes
. "
restricted hazardous wasteS
. "
toxic subStances
toxic collutaIlts . or words of similar, import. under any Environmental law, and (c) any other
chemical, material, substance or waste. exposure to which is now prohibited, limited or regulated
tinder any Environmental law in a juriSdiction in which HotdCo, ScottishPower or any of their
respective Subsidiaries or any of the SconishPowcr Joint Ventures op~teS or any jurisdiction
which has received such chemical, material. substance or waste from aoldC~, ScottishPower or
their respective Subsidiaries; and
(iv) "Release means any release, spill. emission, leaking, inj~tion, depOsit,
disposal, discharge, dispersal, le~hing or migration into the atmosphere, soil, surface water,
groundwater orpropcny.
16 Intellectual Pronenv Rimts. HoldCo, ScottishPower and their
respective Subsidianes have aU right, title and interest in, or a valid and binding license to use,
all Intellec:ua1. Property individually or in the aggregzt~:naterial ~ the conduct ofthe businesses
of HoldCo. ScottishPower a.'1d their respective Subsidia..~cs takc:n as a whole. Neither HoldCo.
ScottishPower nor any of their r:spectivc; Subsidiades is in default (or with the giving of nonce
or lapse of time or both. would be in default) under any license to use such Intellccma1 Propc:ny,
to the k:nowl~ge of Hold Co or ScottishPower. such Int:llectUal Property is not being infringed
by any third party, and neither HoldCo. SconishPower nor any ofthcir rcspc:ctive Sub~diaries is
infringing any ~tel1ectual Property of
~y
party, exc:pt for such defaults and infringementS .
which. indi~dua1ly. or in the aggregate. arc not ha\ing and would not reasonably be expected to
have a materi~ adverse effeCt on HoldCo, SconishPower and their respective Subsidiaries takenas a whole. .
17 Vote Reouircd. The only votcs of the holders ofanyc1ass of
shares ofScotti~ower or, after the Scheme Date. Holdcorequired to approve the Merger and
the other tr3.DSacqons contcmpiated hereby (other than those set foM in paragraphs 1 through 3
of Schedule II and any vote which may be required in order to give effect to the conversion of
the Company Stock Options in acco~dance with SeCtion 6.10 or to give 'effect to the amendmentS
to HoldCo s Anf~lcs of Association in accordance \,;th Section 6.03(c)) arc the affirmative vote
ofa majority ofs~ch ordinary shareholderS ofScottishPower as (being entitled to do so) are
present an~ vot~ (or, in the case of a vote taken on apoU. the aITumative vote by shareholders or
their proxies r::presenting a majority oCthe ScottishPower Ordinary Shares in respect of which
votes were validly exercised) aJ the ScottishPower Shar=holders M~ting in relation to the
approval of the Merger and the Scheme o(Ar,range~ent.
(Intentionally Omitted)
19 Ownershiu ofComuanv Common Stock. 'Neith~r HoldCo,
, ScottishPower nor any of their resp~crive Subsidiaries or other affi1i~es beneficially ov.ms any
shares 0 C ompanyCommo~Stock.
Insurance. Except as set forth in Section' 4.20 oCthe ScottiSbPower
Disclosure Letter. each of ~cottishPower and itS ~,ubsidi:1ries is. and has been continuously since
January I, 1994!(and at all times following the Scheme Date. HoldCo and itS Subsidiaries will
be), insured'with "fInancially responsible insurers in such amountS and against such risks and
losses as 3IC'customary in aU material ~espectS for companiFs conducting the buSiness conducted
b-y HoldCo. ScottishPower and !heir respective Subsidiaries during such time period. Except as
set forth in'Scction 4.20 ofthc ScottishPower DisclosurcLetter. neither HoldCo. ScottishPowcr
nor any of their r::spective Subsidiaries has reCeived any notice a cancellation or tennination
with respect to any material inSurance policy of Hold Co. ScottishPower or any of their respective
Subsidiaries. The insurance policies of Hold co, ScottishPo ver and each of their respective
Subsi4ianes are valid an~ enforceabie policies.
' 4.21 Year 2000. ScottishPower and its Subsidiaries have (and at all.
times following the Scheme Date, to the extent (if at all) then necessary, HoldCo win have) put
into effect practices and programs which $cottishPower(C?r HoldCo) reasonably believes will
enable. all material software. hardware and,equipment (including microproceSsors) that are
owne4 or utilized by SconishPower (or HoldCo) or any of their respective Subsidiaries in the
.' operations of itS or thcr;rcspecrivc business to bc capabic. by Dcc::nbcr 3-1, 1999 of accounting
-for all calcul~ons using a~ennUy and date s~irive aigorithm for the year 2000, and thc fact
that thc year 2000 is a leaP ycar an~ to otherwise continu~ ~O function withoUt material
intc:rnmrion caused bv thc occurr:nc:of the ear 2000.
. ,
4.22 Joint Venrure ReDfescntaUons. Ez:h representation arid wamnty
made by H01dCo or ScottishPower in this Article rv rclating to a Scottisht'ow~loint Ventur=
that is neither operated nor managed by HoldCo or ScottishPower or a SubsidiarY thereof shall
be deemed to be made (;mly to HoldCo s and ScottisbPowers knowledge.
ARTICLE V
COVENA1'\ ,.S
, 5.01 CovenantS of the ComDanv. At all times from and after December
6, 1998 until the Effectivc Timc. the-Company co\'enantS 2..'1d agrees as to itSclf and itS
Subsidiaries that (except as expr:ssly contemplated or p:=tined by this Agreement. or to the
extent that HoldCo or ScottishPowershall otherwise prc\"~ously consent in writing, which
consent shall not be unreasonably withheld or dclay~d):
(a) -Ordinarv Course. The Company a:1d cach of-itS Subsidiaries shall conduct
their.businesses only in. and the Company and each of itS Subsidiaries ~hall not take any action
except the ordinary coursc subStantially consistent wit~ past business practice. Without
limiting the generality of the foregoing, the Company and ~tS ~~bsidi3ries shall use all
commercially reasonable effons to preserve intact in all material respectS their present business
rgmiz3tions, to maintain in effect all existing materiai p:nnitS. to keep available the services of
their key officers and. employces. to"maintain their assetS and properties in good working order
and condition. ordinary wear and tear exc:cpted. to maintain insurance on their t3ngible-assCtS
businesses"in substantially the same amountS and against substantially the same risks and losses
as are cmrendy in effect. to pr:serve their relationships w1th customers and suppliers and others
having ~ignificant buSiness de:J.iings with them and ~o cc~ply in aU material respectS with all
laws and ordcrS of all Govetr.rn:ntal or Regulatory Authcrities applicable to #tern.
, -
(b) . Chaner DocumentS. The Company shall not.,:nor shall it permit any ofitS
. Subsidiaries to, amend or propose to amend its certificat~ or anicles ofincorporation or bylaws
or i~memorandum an~ anicles of-association (or other comparablc corporate charter,documents).
(c) Dividends. The Company shall not nor shall it pcnnit any 0 fitS
Subsidiaries to, (i) dc-:.lare. set aside or pay any dividends on or make other distributions in
respect of any .of itS capital stock or share capital.excep~: -'
(A)that tbe Company,may continuc the declaration and payment of
regular cash dividends (including increases consistCnt with past
practice) on Company Common Stock and the Company Prcferi'ed
Stock, with \;Sual record a..,d payment dates fOf such dividcn9s in
accordance \\;m
p~
dh-idend practice; provided. that no. such
. dividend on the Comp2.nY Common Stock shall exceed the amount
budgeted therefor in the Cc:npany Budget (as hCreinaftcr defined),
and
. '
for the declaration and payment of dividends by.,(x) a wholly-
owned Subsidiary soiciy to its parent corporatio~(y) Bridger Coal.
~ompany in accordanc: \\;th past practice and (z) Subsidiaries of
regular cash dividends with usual record and paYment dates
(including increases consistent with past practice) in accordance
with
p~
dividend practice. and
(ii) split, combine, reclassify or take similar action ~\'ithrespect to any ofi~ ~italstock or .
share capital or isSue or authorize or propose the issUance of any other securides in ~cct of, in
lieu of or in sub~tinition for shares of its capital stock or comp~sed in its s~ capital. (Hil
except as disclos~ in Section 5.0Hc) of the Company Disclosure Letter, adopt a plan of
complete or p~alliqtiidation or resolutions providing for or authorizing such ~iquidation or a
dissolution. merger~ .consolidation. restrUctUring, r:'::lpiuiization or other reorganization or (iv)
..,..0
except as disclosed in Section 5.0Hcl of the Comp2I".Y Disclosure Lener. directly or indirectly
. - redeem. repurchase or otherwise acquire any shares of its capital stack or comprised in i~ share
capital or any Option with respect thereto except:'
---'
(B)
(A)in connection with inte:comp:my purchases of capital stock orshare capital.
(B)for the purpose of funding employee stock ownership or dividend
remves~t. stock purchase plans and other incentive plans
disclosed in Section 5.0Hd) of the Company Disclosure LettCrin
accordance with past prac~ice. and
Prior to: the Closing Date. the Company shall redeem all
outstanding shares or its S L:S Series, S 1.18 Series and S 1.16
Series orne par se~:li pre:~:Ted stock.
(C)
(d) Share'Issuances. The Company shall not. nor shall it penuit any of its
Subsidiaries to, issue, deliver or sell. or authorize or propose the issuanc~. delivery or sale ot:
any shares of its capital stock or comprised in itS share c:lpital or any Option with respect thereto
(other than (i) the issuance of Company. Common Stock upon the exercise ofOpt~ons issued
pursuant to the Co~pany s Stock Incentive Plan outStandi~g on December 6, 1998 and in
accordmce with tl1eir present tenns. (ii) except as specifically set fonh under the heading "Long-
Term In~en1;ive Awards" on the Schedu~e ofOngomg Compensation Obligations attaChed to
Section 5.0Hd) of the Company Di~closure Letter. the issuance of options or awards pursuanno
the Co~pany,s Stock Incentive Plan in accordance \\;th itS present tenDs and only in connection,
with the. hiring.of new employees, and the issuance of shares of Company Common Stock upon
exercise of such options or awards" (iii) the.issuance by a whoUy-owncd SubsidWy of its capital
stock to itS parent corporatio~ or modify or amend any right of any holder of 9Utstanding shares
NYI:JJ20,2!1vl '
.... -
ofcapiui stock or Options with r:spect thereto and.(iv) shares of Company Prefe:redStock with
a Stated vaiue of up to an aggregate of 52 50 milliont '
(e) Acauisitions. Except as set forth in Section 5.01(c) of the Company
Disclosur: Letter and other than as provided in the 1,999 operating budget of the Company, a
copy of which has been disClosed to and discussed \\ith Scot:tishPower. or any other budgc:tof
the Company thereafter approved by HoldCo or SconishPower. wtrich appro.val shall not be
tmre3SoI1ably withheld (collectively. the "ComDanv Bud!Zct ), the Company sh311 not, nor shall it
PCmut any afits Subsidiaries to, acquire (by merging or consolidating with, or by purchasing Ii
substantial equity in!~ in or a substantial ponion of the assetS of: or by any other manner) .any
business or any ,corPc?~o~ parmership. association or other business organization or division
thereof or .oth~vise acquire or agrc: to acquire any assctS in excess of S25 million in any one
transactio~ rovided. that this Section 5.0He) shall not prohibit any capital expenditUreS made
in accordance wj~ Section 5.0H1).
. '
(f) Discosirions. Other than as set fC'nh in Section 5.0HO of the Company
Disclosure Le~
~~.
*c Company shall not. nor shall it pe:mit any of ~tS Subsidiaries to. selL lease
grant any securio/ iiiterest in or otherwise dispose of or :ncumber ~y of its assetS or propenies.
other than disp,?sitions in ~e ordinary course of its business consistent with past practice or
having an ag~gate ~~.t book value of525 millio~or less in any one transaction.
(g)
Indebtcdncss. Other than as expressly provided in the Company Budget,
the Company shall not. nor shall it pennit any of its Subsidiaries to. incur or guarantee any
indebt:dness (including any debt borrowed or guar:ante:d or othe1Wis~ assumed. including.
without limitatio~ the issuance of debt securities of warrantS or rights-to acquire debt) or enter
into any "keep well" or other agreement to maintain any financial condition of anoth~ person or
enter into any ammgement haVing the econom~c c;ffect a f any of the foregoing omer than (i)
shon.term indebtedness in the ordinary course ofbusiness consistent with past practice (such as
the issuance of commercial-paper or the use of existing credit facilities) in an aggregate amount
riot exceeding 5500 million; (ii) long-tenn indebtedness not aggregating more than S200 million
. and On) indebtedneSs entered into in connection with tho: refinancing of indebteaness outstanding
on De~:rnber 6, 1998 or incUlTed in compliance willi this Section 5.01(2).
(hl EmDlove: Benefits. Except as set Jonh on SectionS.OHlt) of the
Company Disclosure Letter, the Company shall not. nor shall it pennit any of itS Subsidiaries to
enter into. adopt. amend (except as may be required by ~pplicable law) or terminate
Company Employee Benefit Plan, or increase in any mann2r the compensation or ftitige benefits
of any director or executive officer, or, except for normal increases in the ordinary course of
business consistent with past practice that. in the aggregate. do not result in a mater:!al increase in
benefitS or compensation expense to the Company and it~ Subsidiaries takenas ;- whole. increase
in any in~er the compensation or fringe benefitS of any employee. or pay any benefit not
requirc~ by; any plan or arrangement in effect as. ofDC'"..cmber 6, 1998 and, in no event shall the
Compa;ny or its Subsidiaries be pcnnitted to grant to any employee any rights that are not in
effect on Dec~ber 6, 1998 to any payment (whether of severance payor otherwise).
acceleration. forgiveness of indebtedness, vesting, diStribution, increase in benefitS or increase ,
obligations to fund benefitS with respect to that cmpioye: resulting from a change in comrcl or
change in ownership oithe Company or any of itS Subsidiaries..
(i) . Affiliate ContractS. Except as ciisC;losed in Section 5.0Hi) of the Company
Disclosure Letter, the Company shall not, nor shall it pc:mit any of itS Subsidiaries or, within the
exercise of its reasonable commercial effortS, itS Joint Venmres to, exc:=pt otherwise expressly
provided for in this Agrccmc:lt. enter into any ContraCt or amend or modify- any exiSting
Contract, or engage in any" new tranSaction outSide the ordinary course ofbusincss consistent
with past practice or not on an aim's length ~asis, \\ith any .affiliate of such party or anyontS
S ubsidiarics. .
(j) ,
Canital E..~nenditures. The Company, shall not, nor shall it permit any of
its 5 ubsidiari~ to, make any capital expenditUres or comminncntS other than (i) as required by
applicable law,
(~~)
capital expenditures incUIrCd in connection with the repair or replacement of
facilities destroyed' or damaged due to casualty or accid:nt (whether or not covered by
insUI3I1ce). an~ (iiD other capital expenditUreS in ex-cess 0(110% of the aggregate amount
provided for s~c~ purposes in the Company Budget.
(Ie) 1935 Act. The Company shall not. nor shall itpe:mit any of its
Subsidiaries to, ~ngage in any activities which would cause a change in itS status, or that of itS
Subsidiaries, under the 1935 Act, including any action or inaction that would cause the prior
approval of the SEC under ~e 1935 Ac~ to ,be required ior the consummation of the tranSactions
contemplated hereby.
(1) Resrolatorv Status. The Company shall not, nor ~!WI it permit any ofits
Subsidiaries to, agree or consent to any m~lterial agree::-.cntS or modifications o(material existing
agreementS with any Government orRegulatory Authority in rcspectofthe operations of their
businesses except where follqwing discussion with the relevant authority such agreementS or
modifi~ations arc imposed upon the Company.
(m)' Transmission. Generation. Except as required pursuant to tariffs on file
with the FERC as of December 6, 1998, or as set forth in Section 5.02(m) of the Company -
Disclosure Letter, the Company shall no~ nor shall it pc:rmit itS Subsidiaries to:
(i) commence construction oi any additional generating, tr:mSmission
or delivery capacity in e."(ccss of 500 megawattS. or
(ii) obligate itSelf to purchase or otherwise acquire. or to sell or
otherwise dispose of. or to share, any additionil" generating, tranSmission or delivery
. ,
plantS or facilities, in an amoUnt in excess of 515 million in anyone transaction, except as
set forth in the Company Budget. Any regulatory order potentially imposing any such
obligation shall be immediately forwarded to HoldCo or ScottishPower.
(n) Accountin~ The Company sha.1l not, ~or shall it permit any ofits
Subsidiarics to, make any material changes in their accounting methods, except as required by
law, ~le, regulation or applicabie generally accepte(i'ac:counting principles. '
. -
(0) Tax Maners. The Company shall not take any action which (or fail to take
any action if such failure) wouid cause the Merge: ~o fail to qualify as a reorg~u~i7ation described
in Code Section 368(a). u
(P) . No Bre3Cn. The Company s~l not. nor shall it permit any ofits
Subsidiaries t9 willfully take or fail to t3ke any aCtion that would or is reasonably likely to result
(i) in a material breach of any provision of this Agr:::n::nt., or (ii) in any of its representations
and warranties set fonh in this Agre:me;1t being untrUe on and as of the Cosing Date.
(q).
No Liti!!ation. The Comp3;I1Y shall not, nor s~l ~t pcnnitS any 0 fits
SubSi4iaries to, initiate any material actions~suits: arbitrations or proce:dings.
(r) Tax-E."(emnt Status. J"he Company shall not, nor shall it permit any 0 fitS
SubsidiarieS to, except as otherwise expressly pro\;ded for in this Agre:ment, take any action
that would be reasonably likely to jeop~:: the qualification of any material amount of
outstanding revenue bonds which qualify on December 6. 1998 under Section 142(a) of the Code
as "exempt faci~o/ bonds" or as tax-exempt industriai de\~elopment bon4s under Section
lO3(b)(4) of the internal Re\":~ue Code of.19S4.JII1ended. prior to the enactment' of the Tax
Reform Act of 1986.
(s) Advic: of Chanecs. The Company shall confer \vi*- HoldCo.
ScotrishPower on a regular and frequent basis with respect to the C~mpanY's business and
operations and other matters relevant to the Merger. and shall promptly advise HoldCo or
SconishPower, 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 ma). be contemplated) or the institution..Q( threat of
material litigation; provided that the Company shall'not be required to make any disclosure: to the
extent ~u~ disclosure would constitute: a violation of any applicable law or regulation: .
(t) " Notic: ~"1d Cure. The Companr \\"i~l notify HoldCo or,ScottishPower in
writing of, and will use all commercially re:lSonabl:'Cfforts..to cure before the Closing, any event.
tranSactioI( or circumstance. :!S soon as prilctical after it becomes known to the Company, th~ .
causes or will cause any covenant or agreement of the Company under this Agreement to be
breached or tJ1at renders or ,..;11 render untrUe in any material respect any representation or
warranty of the Company contained in this Agreement. The Company also win notify HoldCo
or ScottishPower in \yritingof. andwill use " aU commercially reasonable effortS to cure, before
the Closing, any violation or breach., as so~:m as practical after it becomes known to the
Company, of any representation. warran~y, co\'en~t or agree~ent made by ~e Company. No
notice given pursuant:to this paragraph shall ha\"e any effect on the representations, warranti~
covenantS or agreementS contained in this Agreement for purposes of detennining satisfaction of
any cc;mdition contained herein.
(u) Fulfillment of Conditions. Subject to the terms and conditionS of this
AgrC~cnt, the C~mpany will take or cause to be taken all commercially rc:3:Sonable steps
necessary or desirable and i,ll proceed diligently and in good faith to satisfY each condition to
its obligations contained in this A2I'Cement and to consummate and make effective the
., . ,
transaCtions contemplated by this Agreemen~ and th:: C:::rnpany will not, nor will it permit any
of its Subsidiaries to, take or fail to Jake any action thz: would reasonably be expected to result in
the nonfulfillmcm of any such condition.
02 Covena.?1tS of Hold Co and ScottishPower. Each of Hold Co, at all
times from arid after the date h:rcof until the Effecuve Tim~ and ScottishPower, at all times
from December 6, 1998 until the Effectiye Time. co\"e:".zn~ and agre:s as to itself and itS
Subsidiaries that (except for the transactions contemp ia:=d or pcnnined by this Agreement or to
the extent the CQmpany shall othCIWise previousiy consent in writing, which consent shall
not be unreasonably withheld or delayed):
(a) . Ordinarv Course. ExcCpt pursU2l1t to. the Scheme of Arrangement and the
eStablishment C?fHoldCo Share Schemes and l:IoldCo E..~ployee Benefit Plans, HoldCo,
ScoaishPower a;td each of their respe-:.tive SuDsi4iaries shall conduct their businesses only in,
and HoldCo, ScottishPower and each of their respecti...c Subsidiaries shall not take any action
except in, the o~inary course consistent with past praCtice.; Without limiting the generality of
the foregoing, rtoidCo, ScomshPower and their respec::\"c S.ubsidiari~ shall use all
, commercially ~t:asonable effo~ to preserve intaCt ::. ~H :muerialrespectS their present business
organizations and reputation. to maintain hi effect all cxis~ng penmtS;,-to keep available the
sCrvic:s of their 'key officers and employees. to maintain their aSsets and propcrrles in good
working ordc;r
~ ,
condition. ordinary wear and tear e:'tccpted. to maintain insurance on their
tangible assetS and businesses in such amountS and against-such risks and losses as are currently
in effect, to preserve their relationships with customers and suppliers and others haVing
significant business dealings \\;m them and to comply i~ all material respectS with all1aws and
orders of all Governmental or Regulatory Authoritiesapplicable.to them.
~,
(b) Chaner Documentsl;Other than as contemplated by Section 6.03(c) and
except.to the extent required to comply with applicable law or the rules of the LS~ HoldCo
(~cr the Scheme Date) and ScomshPo\ver shall not. nor shall they pennit any of their respective.
Subsidiaries to, amend or propose to amend their r:spe::ti\"e cenificates.or articles of
incorporation or bylaws or their respective memoranc:!. ~d anicles of associ:ition (01; other
" comparable corporate chane:- documentS).
- '
(c) Dividends. Other than as 5et foM in the ScottishPower Budget (as
defined in.Section 5.02(e)). HoldCo and. prior to the Scheme Date~ ScottishPower shall not, nor
shall they pennit any o.ftheir respective-Subsidiaries to.
(i) dcclaic~ set aside: or.pay any dividends on or make other diStributions in respect of any
ants capital stock or share capital. except:
(A)that. ScottishPower may, (1) as regards record dates for the
payment of dividends occurring' prior to the Scheme Date, continue
the declaration and payt;1ent of regular cash dividends (including
inCreases consistent with past practice) on ScottiShPower Ordinary
Sb3res~ 'Yith usual record and payment dates for such. dividends in ;
accord~ce with past dh;dend practice; provi4ed. that no such
(B)
, dividend shall exce::i by more than 12% the dividend payable
during the prior fiscal ye:!I' in reSpect of the comparable time
period and (II) before. on or after the Scheme Date, effect 'the
Share Transfer, and
that, as regards record dates for the payment of dividends
occurring after the Schc:::1e Date, HoldCo may' declare and pay
regular cash dividends (inciuding increases consistent with
ScottishPower's pastpnctic:) ,on HoldCo Ordinary Shares, with
usual record and payment dat~ for su~ dividends in accordance
with ScottishPower's past dividend practice; provided.. that no such
dividendsha1~ wbcn taken together with any dividend paid
, pursuant to clause (:\)(0 of this paragraph (c). exc::d more than
. '
12% of the dividend pa)'able by ScottishPower during the prior
fiscal year in respect oCthe comp~le time period, and
for the declaration and pa~111ent of divid~nds by a wholly-owned
Subsidiary solely to itS parent corporation (including for the
avoidance ofdoubt diyidends by ScottishPower to HoldCo
following the Schem: Date 1. and
Oi) other man pm:suartt to the Scheme of Arrangement or in connection with the
restrUcturing of the tr3I1SacnonS contemplated hcr::by pursuant to Section 6.07, split,
combine, reclassify or take similar action '\\ithrespect to any ofitS capital stock or share
capital or issue or authorize or propose the issuance of any other securities in respect of:
in lieu of or insubsiitution for shares ofits capital stock or comprised in itS share capital
(except that HoldCe may subdivide itS ordinary shares as referred to in Section 4.02(a)).
, (iii) other than pursuant to' the Scheme of Arrangement, adopt a plan of complete or
p~alliquidation or resolutions providing for or :ruthorizing such liquid:nion or a
dissolution. merger, consolidation. restrUct'.mng. r:::apitalization or other reorganization
or (iv) other than pursuant ~o the .Scheme 0 f .1.rr'..ngement or as described in Section
02(c) of the ScottishPower Disclosure Lc~ter. directly or indirectly rede:m~ rep~hase
or otherwise acqUire any shares of itS capital stock or compr:iscd in its share capital or any
Option with respect thereto except:
(C)
(A)in connection with intercompany purchases of capital stock or
share capital.
(B)for the purpose of funding employee share ownership, dividend
reinvesuncnt. stock purchase and other incentive plans disclosed in :
Section 5.02 (c) of the ScottishPower Disclosure Letter in
accordance with pastpracnce.
(C)the redemption of the SconishPower Special Share or the HoIdCo
Speci~ Share in acc()~ance with its tenns or
the r:dcmption-ofthe 49,998 HoldCo non-voting rede:mable
shares rcf~!I=d to in Se~tion 4.02.
(d) Share Issuances. Other than pursuant to the Scheme of Arrangement. (i)
ScottishPower not, nor shall it pc:mit any of itS Subsidi"aries to, issue, deliver or se14 or
authorize or propose the issuanc:. deliv~ or sale of. any shar:s ofitS capital stock or comprised
in its share capital or any Option with respect thereto (otherthm (A) up to 125 million shares of
ScottishPower Ordinal)' Shares for general corporate pu..1;oses, (B) the issuance
ScottishPowcr Shares or Stock app~ciation, share; awards or simi~ar rights, as the casc
may be, pursuant to the ScottisbPowcr S~ Schemes. in each case ou~ding on Dc:c:mber 6.
1998 and in ac!=o~e with their. present t~. subjec: to any amendmen~ made m. the
ordinary course consistent with past practice or pUI'SU3Ilt to; any share scheme of ScottishPower
to be adopted in t4c ordinary course consistent with past practice, (C) the issuance of options or
awards p~t.
~ .
ScottishPower Share Schemes in accordance with their present tcnns, s~bject
to ~Y amendm~ts made in the ordinary course cifbusincss consiStenfwith past practice or as
reasonably nec~s~~ to reflect the Scheme of Arrangement and. except as set forth in Section
O2(d) oftl1e ~c~nishPower Disclosure Letter. only in connection With the hiring of new
employees ar;~ the issuance of shares of ScottishPower Ordinary Shar~ upo~ exercise ofsuch
options oraw3rds~ and (D.)~e issuance by a whoUy-o"'l1ed Subsidiary of its capital stock to itS
parent corponitio~. or modify or amend any right of any holder of outstanding shares of capital
stock or Optio~ wi~ respect thereto).
(ii) HoldCo ~hall not, nor shall ~t pennit an~ ~f itS Subsidiaries to, issue,
deliver or sell, or authorize or propose the issuance. delivery or sale of, any shares of its
capital stock other than in the amounts and for the purposes set forth in clause (i) of this
paragraph (d) and other than pursuant to the HoldCo Share Schemes or pursuant to the
arnmgemcnt referred to in Section 4.02(c)(i\") or pursU3I1~ to the ScottishPower Share
Schemes as amended as reasonably nec=s53r)' to reflect the Scheme of Arrangement.
. (e) AcQuisitions., Other than as provided in the 1999 operating budget of
ScottishPower, a copy of which. has been disclosed to :md discussed with the Company, or any
subsequentiy.adoptedbudgct oiScottishPower disclosed to the Company (collectively, the
. "
ScomshPo\ver Budllet ) or pursuant to the Scheme of Arrangement, neither HoldCo nor
ScottishPower shall. nor shall they permit any of their respective Subsidiaries to. acquire (by
merging or consolidating with...iJr by purchasing-a substantial equity intereSt in or a substantial .
portion oIthe assets of,.or by any other manner) any business or any corporation. partnership,
association or other business organization 'or division thereof (i) iILexcess of (750 million or (ii)
if such acquisition would have a material adverse affect on HoldCo, ScottishPower and their
respective Subsidiaries taken as a whole, without the prior written consent of the Company.
(f) DiStJositions. Other than as provided in the SconishPower Budget, and
other than the transfer of all of the outstanding shares or~~b I and UKSub 2 from
Sco~owcr to HoldCo. neither HoldCo nor ScottishPowcr shall, nor shall they permit any of
~dr respective 5 ubsidiaries to, sell, lease; grant any security intereSt in or otb,crwise dispose
. or cn~ber any of its assets or properties. other than dispositions in the ordinary course of its.
business consistent with past practice and having an aggregate value ofless than f.750 million.
(g)
. Indebtedness. Neither HoldCo nor ScottishPower shall nor shall they
permit any ~ftbeir respective Subsidiaries to, incur or gtmantee any indebtedness (including any
debt borrowed or guaranteed or otherwise assumed. including. without limitatio~ the issuance of
debt securities or warrants or rights to acquire debt) or entcrintO any "keep well" or other
agreement to maintain any financial condition of another Person or enter into any arrmgcmcnt
having the economic effect of any of the foregoing. other tha1i indebtedness in an aggregate
amount not exceeding 110% of the amount of indebtedness provided for in the ScottishPowcr .
Budget. For purposes of this paragraph (g), any. indebtedness up to fSOO million incurred in
connection with the plapned buyback of ScottishPower.ordinary Shares and/or HoldCo Ordinary
SharCs shall ~e dlsrcgwed.
(h) Affiliate ContraCtS. Neither HoldCe nor ScottishPowcr shall. nor shall
they permit any of their respective Subsidiaries or, v.ithin the exercise of its reasonable
commercial effortS. .the ScottiShPower Joint V enwrcstO. enter into anY,Contract or amend or
modify any existiIig ContraCt;or engage in any new mmsaction (other than pursuant to the
Scheme of ~g~ent) outside the ordinary course of business consistelu with past practice or
not on an arm ~ l~ngth basis. ~vith any affiliate: of such party or any of i~ Subsidiaries. .
(i) CaDital Ex:)endiwrcs. Except for any paynients by HoldCo to
SconishPower in connection with, the acquisition by HoldCo ofUKSub 1 and UKSub 2 or any
invCSJIIlent-by ~oldCo in UKSub 1 and UKSub 2. neither HqldCo nor ScottishPower shalL nor
shall they permit' any of their re~ective Subsidiaries to. ma1te any capital exp~nditurcs or
commi~entS (except as requirCd by law ori-egulation) in excess of 110% of the aggregate
amount pt'Qyided fo!: such purposes in the ScottishPower BudgeI,;
G) 1935 Act. Except for the acquisition ofSconishPower by HoldCo and the
filing ~(Forms U-57 by ScotrishPower and HoldCo s other utility subsidlmes after the
acquisition of SconishPower by HoldCo, neither HoldCo nor ScottishPower shall, nor shan they
permit any of their respective Subsidiaries to. engage in any activities which would cause a
cbang~ in its status.,or that of itS Subsidiarics. under the 19~5 Act. including any action or
inaction that would cause the prior approval of the SEC under the 1935 Act to he'required for the
consummation of the transactions contemplated hereby.
~., (k) UK Licer.simz Re2irrie. Except p~t to the Scheme of Arrangement,
neither Ho1dCo nor ScottishPowe~ shall, nor shall they pennit any 0 f their respective
Subsidiaries to, engage in any activities. or omit to do any~thing which would entitl~any
Governmental or Regulatory A~thority to revoke in whole or in material part any material
license, authorization or appoirian~nt or which would otherwise materially change the statuS ~f
H01dCo, ScottishPower or any of their respective SubsidiarieslHo1dCo, ScottishPower and their
respective Subsidiaries being r:f:rred to as the "HoldCo Group ) thereunder.
(1) Tra,nsmission. Generation. Except as set rOM in Section 5.02(1) of the
Scottisppower Disclosure Letter, neither HoldCo. nor SconishPowcr s~nor shall they permit
any o~thcir respective Subsidiaries to: '
. '
(P) Advice ofChanszcs. HoldCo and ScottiShPower shall confer with the
Company o~ a regul~ and frequent basis with respect to HoldCo s and ScottishPowers business
and operations and other matters relevant to the Merger, and shall promptly advise the Company,
, .
orally in writing. of any material change or event. includin~ without limitation. any
complaint.investigation or hearing by any Governmen~ or Regulatory Authority (or
commumcation in~cating the same may be contempiated) or the institUtion or threat of
litigation. having,. or ..yhich. insofar as ~an be reasonabiy foreseen. could have, a material advers~ \'
" effect on HaldCo. Scotti~hPower and their respective Subsidiaries taken as a whole or Q!1 the
ability of HoldCo and ScottishPower to consummate the tranSactions contemplated hereby;
provided that HaldCo and ScottisbPower shall not be r:quired to make any disclosure to the
extent such disclosure would constitute a violation of any applicable law or regulation.
(q)
tice and Cure. HoldCo or SconishPower will notify the Company in
writing of, and will use all commercially reasonable cffons to cure before the Closing, any event,
ttans~tion or circumstmcc, 3:S soon as practical after it beComes known to HoldCo or
ScottiShPower~ that causes or will cause any covenant or agreement of Hold Co or ScottishPower
undet:.this Agreement to be breaChed or that renders or will render unttUe any representation or
warrantY of Hold Co or ScottishPower contained in this Agreement. HoldCo or ScottishPower
will also ~otify the Company in writing ~r. and will us~ all commerciallY. reasonable efforts to
cure~ before the ,Closing, my violation or breach. as soon as practical after it, becomes known to
HoldCo or ScottisbPower, of any rep~~tation, wmanty, covenant or agreCment made by
HoldC;o or ScottishPower. !';fo notice given pursuant to this paragraph shall.jtave any effect on
- .
the representations. warranties, covenantS or agreementS contained in this Agreement for
pmposCs of detennining ~e satisfaction ox any condition contained herein.
(r) Fulfillment of Conditions. Subject to the tc:mlS and conditions of this
Agreement. HoldCo. and Sco~ower will take or cause to be taken all commercially
reasonable steps necessary or desirable and proceed diligentiy and in good faith to satisfy each
condition to the Companys obligations contained in this A~::nent and to consummate and
make effective the tranSaCtio~ contemplated by this Agrc~cnt. and neither HoldCo nor
ScottishPower: wj.ll, ~or will they pennit any of their respective Subsidiaries to, take or fail to
take 3!J.y action that would reasonably be expc;cted to result ~ the no~~ent of any such
condition. :
, 5.03 Joint Executive Committee. As soon as practicable after the date
hereof: ScottishPp~er and the Company shall establish a joint ex~ve committee (the "
Executive Committee ) which; shall be comprised ofthrc: nomineeS ofScottisbPower (one of
whom. in the instance. shall b~ Ian Robinson) and three nominees of the ComPany (one
whoIlL in the ~ ~ce. shallbe Keith McKennon J. The Joint Ex~ve Committee shall be
, jointly chaired 'y Ian Robinson and Keith McKennon and shall have the' objective of facilitating
and achieving the Merger contemplated in this Agree:nent.. integratior;t plannin~ Strategic
development, developing recommendations concerning the futUre strUcture and
the general
operation of~~ Co~pany after the Effective'Time subjectta applicable law. The Joint
Executive Conuiiincc shall meet monthly in the United States or upon such other date or dates, ,
and in such other places. as ScottishPower and the Company may agree from time to time and
may be convened by telephone, video conference or similar means.
04 Tax Matters., Except as set fOrt:h in their respective Disclosure
Letters, neither HoldCo,ScottishPower nor the Company shal~ nor shall any party pe:mit its
St,tbsidiaries to, make or rescind any material express or de=ned election relating to taXes, or
change any of its methodS of reponing income'or deductions for tax PUIJ'oses from those
employc;d in ~c preparation orits tax retUIIl(s) for the prior ta."(able year, except as may be
required by applicable law as agreed to by the other
p~.
or. subject to Section 6.18. to the
extent reasonably neceSsary to comply with or imp1emcri.t ~c Scheme of Arrangement. The
, COmpany shall. inform ScottishPower regarding the progress of any material claim. action, suit,
litigation, proceeding. arbittation, investigation, audit or controversy relating to taxes and shall
consult with ScottishPowerbeforc entering into any settlementS ~r compromises with regard tosuch matters.
05 Dischane of Liabilities. Neither HoldCo, ScottishPower nor the
Company shall nor shall any pany permidts Subsidiaries to, pay, discharge or satisfy any
material claims. liabiliti~ or obligations (absolute accrued. asserted or unassertcd. contingent or
otherWise), other than the c::ntry into ofthc; New Facilities in place of, and/or amending, the RCF.
or oth~ than 2S con~CIriplated by paragraph 11 of Schedule I or other than the payment.
discharge or ~atisfaction, in the ordinary courSe of business consistent with
p~
practice (which
includes the payment of final and unappealable judgmentS) or in accordance with their tem1S, of
liabili~es reflected or resexved against in, or contemplated by, the most recent consolidated
financ~al statements (or the notes thereto) of such P arty included in such partfs reportS filed with
. ,
the -S~C. or the Registrar of Companies in Edinburgh. or incurred in the orffinary course of
business consistent with past practice.
06 ContractS. Neither HoldCo. SconisbPower nor the Company shal4
nor shall any party pemrit its Subsidiaries Of, within the :."(crcise of its reasonable business
efforts, itS Ioint VentureS to, except the entrY intO of the ~ew F acilitics in place of:' and/or
amending, the RCF, or omer than as contemplated by paragraph 11 of Schedule I or as
contemplated by this Agreement or in the ordiIWy course ofbusiness consmcm with past
practice, mo~, ~~d. terminate. renew or fail to use reasonable business effortS to ~cw any,
material contraCt or' agreement to whi~h such party or any Subsidiary of such party is a pany or:
waive, release or assign any material lights-or claims.
- ,"
- 5.07 No Solicitations. (a) E."(ccpt as disclosed in Section 5.07-ofthe
Company Disc~osUre Lener, prior to the Effective Time, the Company agrees (i) that neither it
nor any of itS ~ubsidiarics or other affiliateS shall and it shall use its best efforts to cause their
respcctiveiRepres~ntatives (as defined in Section 9.12) not to, initiate., solicit or encourag~
directly o in~#Y, any inquiries or the ~aking or impiementation ot any proposal or offer
(including, \~~otit limitatioIl.: any proposal or offer ~o itS stOckholders) With respect to a merger,
consolidation or other busineSs-combination including the Company or any ofits Subsidiaries or
any acquisition or sjmilar tranSaction (including, \\ithout limitation. a tender or exchange offer)
involving the p.m:cliase of (A) all or any significant portion of the assets of the Company and its
Subsidiaries taken as a whold. (B) 5% or more of~e OUtSt3Ilding shares of Company Common
Stock or CC) 5% of the out.st3l1diIig shares ofthe tapital stock of any Su~sidiary oft11e Company
(any such proposal or 0 ffer being hereinafter ,referred to as an n Alternative Procosalft), or engage
in-any negotiations concerning, or provide ariy confidential information or data to, ?r have any
discussions wi-th. any person or grOuP relating to an Alternative Proposal (excluding-the
tranSactions contemplated by this Agreement), or othC1'\\;se facilitate any effort or attempt to
Inake or implement an Alternative Proposal; (ii) that it \\;11 immediately cease and cause to be
terminated any-existing acti'iities, discussions or negotiations with any p,arties with respect to any
of the foregoing, and'it will-take the necessary steps to iniorm such parties of.its obligauons
under this S~tion; and (Hi) that it will notify SconishPo\,..er o~ HoldCo promptly if any such
inquiriC:S, propos~ or offers arc received by. any such information is requested fro~ or any
such negotiations 'or discussions are sought to b~ initiated or continued with. it or any of such
personS; provided. however, that nothing contained in this Section 5.07(shall prohibit the
Board of DirectOrs of the Company from (i)' furnishing infonnation to (but only pursuant to a
confi~enti~ty agreement in customary fonn and haying terms and conditions no less favorable
to the Company than the Confidentiality Agreement (~ defined in Section 6.01)) or entering into
discus~ions or negotiations with 'any perso'n or group that makes an ~olicitcd fu!:
Alternative Proposal. if, and only to the extent that. prior to receipt of the Company
Stockholders' Approval. (A) the Board ofDircctors of the Company~ based upon the advice of
outside counsel, determines in good faith that a failure to perform such action could rcaso~ably
be expected to-result in a breach ofits fiduciary dUtk:s to stockholders impo~ed by _law, (B) the
Boar4 of Directors has reasonably concluded iJl good faith (after consultation with its financial
~visqrs) that the person or group making such Alternative Proposal will have adequate sourceS
ol~cing to consummate such Alternative Proposal. (C) the Board of Directors has reasonably
concluded in g09d faith that such A1t~ve Proposal is more favorable to the Companys.0
. ,
stockholders than the Merger. (D) prior to furnishing such information to. or entering into
discussions or negotiations with. such person or group. ti:: Company provides wrinen notice to
ScotUShPower or HoldCoto the effect that it is furnishing information to. or entering into
discussions or negotiations with. such person or group. which noticc shall identify such person or
group in reasonable detail and (E) the Company ke:ps SconishPower or HoldCo appropriately
informed of the swus of any such discussions or nc20tiations: and (ii) to the extent required.
complying With Rule 14e-2 promulgate"d under the "E."tchange Act with regard to an Alternative
Proposal Nothing in this Section 5.07 shall.(x) permit th: Company to term;nate this Agreement
(except as specifically provided in Article vnD. (y) p~t .the Company ~o enter into any
agreement with tCsp~ to an Alternative Proposal for so long as this A~ent remains in
effect (it being agreed that for so long as this :Agrecment remains in effect, ttle Company shall
not enter into arii agr~~ent with any person' or group that provides for. or in any way facilitates,
an Alternative Proposal (other than a.confidentiality agre::nent under the circumstances
descrlbed above)),"or (z) nt:ea any other obligation ofth: Company under this Agreement.
(bJ Each oiHoldCo and SconishPow=r agrees that (i) neither it nor any orits
Subsidiaries or o~c;r affiliates ~hall and it shall use itS o=st effortS to c~e their respective
Representatives ,( as defined in Section 9.12) riot to. initjat:.- solicit or encourage. directly or
indirectly, any inquiries or the making of any proposal or offer(inc1u4in~ without limitati9I1;
any proposal or offer to itS shareholders) With respect to any tranSaction that would Cqnstitutc a
Change ofCo~~1 (as defined i:Il Section 8.01(e)). (ii) it \vili notify the Company promptly if any
such inquiries. proposals or offers are received by HoldCo or ScottishPowcr and (iii) will keep
the Company appropriately ~?formcd ofthe statUS of any such inquiries. proposals of offers.
08 Conduct of Business ofMer2er Sub. (a) Merger Sub shall not be
fonned until immediately prior to the Closing Date.
(b) Prior to the Effective Time. HaldCo .shallcause Merger SUb to (i) perform
its obligatio~ under this Agrecment in accordance with i~ terms. (ii) not incur dircc~ly or
indirectly any liabilities. or obligations other than those incurred in connection with the Merger.
(Hi) nc;n engage directly or indircctlyin any business or:lctivities of any type or kind and not
enter into any agreementS or arrangementS \vith any person~ o~,be subject to-9rbound-by.any
obligation or undenaking, which is notcontemplat~d b:' this Agre!:ment and (iv) not create. grant
or suffer to exist any Lien upon its propcnies or assetS which would attach to any proPc:rries or
assets of the Surviving Corporation after the Effective Time.
' -, -
09 Third Pam Standstill AiZI'CementS. During the period from
December 6. 1998 through the Effective Time. neither the Company nor any of its Subsidiaries
shall terminate. ame:1Ci. modify or waive.any provision of any confidentiality or Standstill
agreement to which it is a party. During such period. the Company shall c:nforce, to the fullest
extent pennitted under applicable law. the provisions of.any such agreement. including, but not
limited'to, by o~taining injunctions to prevent any brc2Ches 0 f suCh agreemcn~ and to enfcxce
specifi~ally the terms and provisions thereof ~ any court having jurisdiction.
tO Control of Other Partv's Business. Nothing contained in this
Agreement shall give the Company, direct~y or indiiCctly. the right to co~trol or direct HoldCo
or SconishPowcr's operations prior to thc Effective Tim::. ~othing contained in this Agreement
shall give HoidCe or ScottishPowcr, directly or indir:::ly. th: right to control or direct the
Comp~y's operations prior to ~e Effective Time. ?:-ior to the Effective Tim~ each of the
Company, HoldCo and ScottishPowcr shali exercise. :onsistcnt with tJlc terms' and conditions of
this Agrc;ment. complete co~tIOl and sup~slon over its resPective operations.
AR Tl CLE VI
ADDmONAL AGRED~lS
. 6.01 Access to Information. Each of the Company, HoldCo and
Sco~;Powcr shall. and shall cause each ,of itS Subsidiari~ and, so' long as consistent with its
confidentiality obligations under its Joint Venture agr-..:oentS. shall use commercially reasonable
efforts to cause i~ loint VentUrCS to, throughout the period from the date herco~ to the Effective
TlII1~ (i) proVide; the other parties and their respective Repr:sentatives with full acc~ upon
reasonable prior .~ot1ce and during noimal business hours. to all officers, employees, agents and
accountantS of~e 'Company, HoldCo an'd SconishPower. as the case may be, and their
respective' Subsidiaries and loint Yenmres anc:i- their r--spc--..uve assets, propenie~ bookS and
records, but onlY to the extent that such access does not unreasonably intCrferc with the business
and opccitions of the Company, HoldCo and'ScottishPowc:-, as the case may be, and its
Subsidiaries ~d loint Venmr:s. and (ii) furnish promptly to-.such persons (x) a copy of each
report, statemen~ scnedule and other document filed
o~ received by the Company, Hol~Co and
ScottisbPower, as the case may be, or any of their respecti".~ Subsidiaries and Joint
VentureS
pursuant to the requirements of federal or State secunnes laws and each material report,
statement, schedule and other document filed with any other Governmental or Regulatory
AuthoritY, and (y), all other info~ation and data (incJuding, "yi~out limitation, copies of
Contrac~, Company Employee Benefit Plans, and other books and records) concerning the
business' and operations of the Company, -HoldCo and ScottishPower,as the case may be, and its
Stibsidi~es and Joint VentUres as a;1y~uch party or any of such o~~persons reasonably may
requeSt. No investigationpurstimt to this paragraph or otherwise shall affect any
representation
or w~ty contained in thjs Agrccmen~ or'any condition to the obligations of the parties hereto. ,
Any such information or material obtainc;d pursuant to this Section 6.01 that conStitUtes "Review
Material" (as such term is defined in the le~er agreement dated as ofOctoDer 12, 1998 betWeen
the Company and ScottiShPower (the nConfidentia1itV.A~:mentn)) shall be governed by the
tem1S' of the Confidentiality AgrecmenL
02 . Precaration ofReszistration Statement and Proxv StatemcnL
soon as practicable after the date of this Agreement. the Company shall, in'cooperation with
HoldCo and ScottishPower, prepare ~e Proxy Statement and~oldCo and ScottishPower shall, in
cooperation with the Company, prepare the Registration Statement. in
which the Proxy
Stat~ennyil1 be incl~ded as the prospectUS. The Company shall, in coope~on with
Scotti$Power, tile.the Proxy Statement with the SEC as its preliminary Proxy Statement and
HoldCo shall, in cooperation with the Company, prepare :md file with the SEC the Registration
statement in which the Proxy Statement Will be included as the prospectUS. HoldCo. and the
ComP~y,shall use commerci3:lly reasonable efforts to have the Registration Statement dec~ed
effectiy~ by the SEC as prom~ily as practicaQle after such filing. HoldCo and the Company shall
also take any action (other than qualifying as a foreign corporation or taking any action which
would subject it to service of process in any jurisdiction where ScottishPowcr is not now so
qualified or subject) req~d to be taken under appucabie state blue sky or securities laws in
conneaion with the issuance of Hold Co ADRs or Merger Ordinary Shares in connection with the
Merger. If at any time prior to -the Effective Time any e\'::1t shall occur that should be set forth
' an amendment 0 f or a supp lemerit to the Regimation 5 tatemcnt, HoldCo shall p~are and file
with the SEG such amendment or supplement as soon the:-::mc:r as is reasonably practicable.
HoldCo, Sco~ower and the Company shall cooperate \Vith the other parti~ in the
preparation 0 f tJte R~gj~tration Statement and the Proxy S wemCI1t and any amendment or
supph:ment thereto, and each shall notify the"other parties of the rec~pt Qf~y Comments of the
SEC witli respeCt to the RegiStration Statement or the Proxy 'Statement and of any requestS by the
SEC for any am~dm~nt or supplement there~ or for additional information, and sh~ provide to
the other parties -promptly copies of all correspondence bet've~ HoldCo, ScottishPower or the
Company, as the case may be, or any of their respective Representatives with respect to the
Registration'S~~cment or the Proxy Statement. HoldCo. ScottishPower and the-Company shall
give the other
p~~
and their respective -coWlSel the oppormnity to review the Registrati~n
Statement and ~~- Proxy S tatemCIit and all ~~sponses to requests for ad,ditional information by
and replies to cqmmentS of the SEC before their being filed with. or sent to, the: SEC. Each of
the Company an~ HoldCo agrees to use commercially reasonable ~fft?i1s, after consultation with
each other, to respond promptly to all such commentS 0 f and requests by the SEC and to cause
(x) the RegiStta:iion StatCJIlent to be declared effective by the SEC at ~e earliest practicable time
and to be kept effective as long as is necessary to consummate the Merger, and (y) the Proxy
Statement to be mailed to the holders of Company Cammon Stock and Company,Preferred Stock
entitled to vote at the meeting of the stockholders of the Company at'the earlies~ practicable
, time.
03 AC1)rovalofShareholders. (a) SconisbPowershall, through its
~oard ~DirectO~ duly ca1~ give notice of/convene and hold a general meeting of its
shareholders (the "ScottishPowcr Shareholders' Me:tin2 )~ for the purpose of voting on the,
Merger In accordance with this Agrc:ment (the "SconishPower Shareholders' AccIOval"
Unless the Board 0 f Directors 0 f ScottishPawer ~ based upon; the advice of outside counsel,
detenniD.es in good faith,that making sudi recommendation. or failing to amend. modify or
withdraw any previously made recommendation. could reasonably. biCxpected to result in a
breach ofits fiduciary duties to shareholders i~posed by law~ ScotrlshPower shall, through its
Board ofDirecto~ include in- the Circular the recommendation oCthe Bow of Directors of
ScottisbPower that the shareholders of ScottishPower approve such matters, and shall ~~ its
reasonable best efforts to obtain such approval. In coIU1ection with the ScottishPower
. .
Shareholders' Meeting, subject to applicable law, (i) SconishPower shall, as soon as practicable
~ertl\e date of this Agreement and in accordance with the listing rules ofth~ LSE, prepare and
submi(to the LSE for approval the C~ular and the Listing Particulars, and shall use all
reasonable effons to ,have such documentS Connally approved by the LSE and shall thereafter
publish the Circular and ~e Listing Particulars and dispatch the ,Ci.tcu1ar to i~, sharChol~ in
compqance with all legal requirementS applicable to the ScottishPower S~holdersf Meeting
the listing roles of the LSE and (ii) if necessary, after the Circular has be:n so dispatched,
promPt,ly publish or circulate amended, supplemental or supplemented matenals and, if required
in co~ection therewith, resolicit votes. In the event that the ScottishPower Shareholders'
Approval is not obtained without the vote having be::i taken on the date on which the
Scottis~ower Shareholders' Meeting is initially convened. the Board ofDirectOIS of
ScottisbPower agre:s to use itS reasonable best enons to adjourn such ScottishPower
Shareholders' Meeting for the purpose of obtaining the ScottishPower Shareholders' Approval
and to use cQmmcrcially reasonable effonsduring any such adjournments to obtain the
ScottishPov.er Shareholders' Approval. ,
(b) '111e Company shall, throughiu Board ofDircCtOr5, duly call, give notice
of, convene and hold a mee~g. ofitS stockholderS (the "ComDaDV StockholderS Meetin2 ) for
- the purpose of voting on the approvai' of this Agreement (the "
CoIDDanv Stockholders'
Approval") as soon as -reasonably practicable after the date hereof. U~~ ~e Board of
DirectOrs of the Co~any, based on the advice of outSide counse~ de~~es ~ good faith that
making such. recommendation. or failing to 'amend. modify -or withdra~ any previously made
rccommendado~ ~~uld reasonably be expected to result in a breach of its 'fiduciary duties to
stockholders ~posc4 by law, the Company shalL through itS Board ofD~OIS, include in the
Proxy Statement ~~rc:commendation afme Board ofDirectoIS of~~ Co~any,that the
stockholders of ~# -Company approve this Agreement. and shall ~e its i~onable best effons to
obtain such approv~: The Company shall cons~t and discuss in go04 faith with ScottisbPower
rcgarding the alternatives available for obWning the Company Stockholders' ApprOval. In the
c,vent that the ~.9mpany Stockho~ders' Approval ~s not obtained without th~ vote having been
taken on the ~' on which the _Company Stockholders' ~leeting is irii~ally convened, the Board
ofDircctors of the Company Will use its reasonable best effons to adjourn such Company
Stockholders'Mecting fortl1c purpose of o~taining the Company Stockholders' Approval and to
use co~c=cially reasonable effons during any such adjournmentS to obtain the Company .
, Stockholders' Approval. -
(c) HoldCo shall, through i~ Board ofDircctors, aqhe Annual General
Meeting of Hold Co next following the Scheme Date (or ewer, ifagreCd), inclu~ for
conside~o~ by itS shareholders and, subject to itS fiduciary duties, recommend the approval of
a resolution to approve amendmentS to the HoldCo Articles of Association in o(dcr to provide. to
the extent reasonably possible. for the holders of HoldCo ADRs substantially the same rightS as
holders qf~oldCo O~ Shares to receive notice of. mend, speak and vote at general
mecting~ of holders of Hold Co Ordinary Shares (the " ADR Holder Prouosal"). In the event the
ADR Hol~er Proposal is not adopted by Ho(dCo s shareholders at such Annual General Meeting,
HoldCo shaiLthrough itS Board ofDirccteIS, include-f~r consideration by its shareholders and,
subject to itS fiduciary duties, recommend approval aCthe ADR Holder P1't)posal at HoldCa;s
next Annual General Meeting. \Vith effect from and/or following the Scheme Date,
Scottis~ower's Articles of Association shall be amended to reflect its status as a subsidiary,
rovided. however. that if the effect of such amendmentS would have a material adverse effect
on the Q~nefitS of the Merger for the holders of Company Common Stock, such amendmentS
may onfy be effected with the prior written consent oCthe Company.
., - .
.- 6.04 ComDanv'Affiliatcs. At least thirty (30) days prior to the Cosing
Date the Company shall deliver a letter to HoldCo identifying all persons who, at the time of the
Comp~y Stoc~olders' Meeting, may, in the Companys reasonable judgment, be deemed to be
affiliates" (as such term is used in Rule 145 under the Securities Act) of the Company
Comnanv Affiliates ). The Company shall use itS best eifons to cause cacho Comcany Affiliate
to deliver to HoidCo on or prior to the Closing Date a \\Tirteiiagreemcnt substantiaily in the form
and to the effect Q.fE:dlibit C he.~to (an "Affiliate A!ZI'e=ent
).
HoldCo shall be entitled to
p~
legends as specified in such Affiliate AgreementS on the ccn:ificates evidencing any .
HoldCo ADSs to be received by such Company Affiliates pursuant to the terms oftQjs
Agreement, and to issue appropriate stop tranSfer instrUc:ions to the transfer agent for the
HoidCo ADS$, consistent with:~e tcm1S of ~c::h Affiliate AgreementS.
05 . Auditors! Letters. Each of the Company, HoldCo and
. ScottishPower Shall use a11rcasonable effortS to cause to be delivered to the; other parties and
sUch other p~es~Boards ofDir:ctOIs- a l~ner of its independent auditors, dated the date.
which the Regi~on Statement shall become effective. and addressed to the other parties and
such otherpartic;s"Boards of Directors, in fo~ and. substance cUSU?~ for "comfort" letters
delivered by in4c;P~dent public aCcoun~ts jn connection with registration statements on fonnF4andFormS-4:'
0(i Stock Exchanee Listin!Z: DetJosit-..1.2'I'C:ment. (a) HoldCo shall
use' itScommcr:eiatty reasonable effons, arid the Compan)' shallcoopeme in respect thereto, to
cause (a) the HaldCo ADSs to be issued in the Merger ~d under ~e Company Stock Plans after
the Merger in ~cordancc with this Agreement to be approved for l~g on the NYSE, subject to
official notice C!f i~ce, prior to the Closing Date: :md (b) each of CD the HoldCo Ordinary.,
Shares to be rcprcscnted(by the HoldCo ADSs to be. issued in the Merger to be admitted to the
Official List ~fthe London Stock Exchange and (ii) the ~terger Shares to be issued in
the Merger-to be admin~ to the Official List of the LondonStock Exchange.
(b) Following thlexCcutio~ of this Ag:rc:ment, HoldCo shall promptly
. PrePare and' shall use itS commercially reasonable effons to havc~:'"exccUted a deposit agrccm~
all on terms and conditions reasonably satisfactOry to the Company, that will provide holders
HoidCo ADRs with the right to (0 pamcipa~e.in rightS offerings, (ii) attend HoldCo shareholder
meetings; (Hi) speak. at HoldCd shareholder meetings, (iv) call' for a poll at H9ldCo shareholder
meeti~g~, (v) e?,-aminc.doc~entS made available at HoldCo shareholder meetings, (vi) insuuct
the Depository to vote itS HoldCo ADSs in a particuiar f~hion. (vii) generally be counted
individually as present and/or. voting with respect to resolutions adopted at HoldCo shareholder
meetings, and (viii) decide at HoldCo shareholder m::tings how to vote on panicular
resolutions, in each case on the same basis as the holders of Hold Co Ordinary Shares.
. ".....
07 RestructUrinli! of Menter. The parties expressly acknowledge and
agree that, although it is their current intention to effect a business combination among
themselves in the fotm contemplated by this Agreement. it may be preferable to effectuate such a
busineSs combination by means of an alternative strUCtUI'C in light of the conditions $et forth in
Sections 7.Oten, 7.02(d) and i.03(dt, Accordingly, if the only conditions to the partics'
obligations to consummate th~ Merger which are not satisfied or waived are receipt of anyone or
more of those set.forth in SeCtions 7.ill~'7.02(d) and 7.03(d), and the adoptiOn of an alternative
structure (that otherwise substantially preserves for the partieS the economic and other material
bcnefitS"ofthe Merger) would result in suct1 conditions being satisfied or.waiycd. thcli the parties
, shall ~e 'their respecrlvct reasonable best efforts to effect a business combination among
' ,
thcms~lves by means of a mumaily agreed upon W':CtUl"C other than the Merger that so preserves
such benefitS; roVided that.prior to closing any such r~StIUcmrcd trmSaCtion, all material
pany and Governmental ,and RegulatOry Aut?ority d:cl~~tions. filings. ,registrations. notices.
authorizatioD$y consentS or approvals necessary, ~o effect such altemative business,combination
shall hav.e' been obtained and all other conditionS to the tlartiesl oblhzanons to consmrimate the
' -
Merger, as applied to such alternative business combination, shall have been satisfied or waived.
08 Resrulatorv and Other Atltlrovals. Subject to the terms and
conditions of~ ~~~cmcnt without limiting the prov:isions o~Sections 6.02. and 069
eaCh of the Company, HoldCo and ScottishPower shall joindy develop a~guIatory approval
pl~ arid p~ceed cooperatively and in good faith to. as promptly as practicable. (i) obtain
consentS. appro,vals or actions ot: make allfiIings with and'giveall notic~ to Governmental or
Regulatory ~uthoiities or any other public or private third parties rcquii-ca of Hold Co.
ScottishPower,~the Company or any ofthcitSubsidiaries or Joint VentureS to conSutnmate the
Merger and th~ c;)ther matters contcmplated:hereby (including withoUt ~tation those set forth
on Section 3.-04 qfthe Company Disclosure Letter and Section 4.04 9fthe ScottishPower
Disclosure ~erierj~ and (ii) provide such other infonnation and co~imlcations to such
Govcrnmcntal.;or Regulatory Authorities or other public' or privaie third panics as the other
parties or su~ 'Governmental or Regulatory Authorities or other public or private thii1i panies
may reasonably request in connection therewith. In addition to and not in limitation of the
foregoing, eai:~ of$e parties will (w) take promptly all actions nec~sary to make the filings
reqUired of Hold Co, ScottishPo~er and the Company or their affiliates Under the HSR Act ahd to
comply \Vith filing and approval requirementS of the FERC ~d each state Governmental or
Regulatory Authority, (x) comply at the earliest practicable Ciate with any request for additional'
information received by any such party or itS affiliatcs I!om the Federal Trade Commission (the
FTC")-or the Antitrust Division of the Departme~t of JUStice (~e " Antitrust Division ) pursuant ' C
to the HSR Act,
(y)
cooperate with the Qther parries in connection with any such panys filings
under the HSR Act and in connection YJitli resolving any investigation or other inquiry
conccming the Merger or the other maners contemplated by this Agreement commenced by
, either the FTC or d;1e AntitrUSt Division or state attorneys general or by the FERC or any State
Governmental or Regulatory Authority having jurisdiction with respect to the Merger or another
transaCtion contemplated by thiS Agrc:ment. and (z) provide to the otherpanies promptly copies
of all correspondence betWeen any such pany and the applicable Govemmen~ or Regulatory
AuthoritY ~th respect to any filings referred to in this Section 6.08. and shall give the other
parties' the opponunity to review such filings and, all responses ~o rcqu~ for additional
information by such Governmental or Regulatory Authority prior to theii being filed therewith.
09 Emtllovee Benefit Plans. HaldCo shall use itS reasonable best
effortS to cause the Company Employee Benefit Plans in cffect"at December 6, 1998 that
been disclosed to SconishPower prior to such date to remain, in effect until th~ second
anniversary o(the EffeCtive Time or, to tb!= extent such Company Employee Benefit PI~ are
not co~~uecL HoldCo will maintain Until such date benefit plans which are no less favorabl~ in
the agsrcgate. to the employees coverCdby suc~ Company Employee Benefit Plans rovidccL
howeVer. that nothing contained herein shall be constrUed as requiring HoldC;o or the Surviving
Corpq~tion to continue any specific plan or as preventing HoldCo or theSuiviving Corporation
from :~) establishing and. if necessary, seeking sharcho IdeI' approval to establish. any other
ben~iit plans in respect of all or any of the employees cover:d by such Company Employee
Benefit-Plans or any other employ=. or (b) amending such Company Employee Benefit Plans
(or any reP~acement benefit plans therefor) where required by applicable law
or where such
amendment is with the consent of the affected employees. From and after the Effective Time,
HoldCo shall honor, and shall cause its Subsi9iaries to honor. in accordance with its eXpress
terms, each existing employment. change of control. severmce and termination a~cment
betWeen the Company or anyofitS Subsidiaries. and any officer. director or employe: of such
company, including )Vithout limitation alllegaI.and comrac~ obligario~ pursuanuo
OUtst3I1ding restoration plans, severance planS; bonus deferriil plans, vested and accrued benefits
and similar employment and benefit arnmgemcnts, poiiciesand ag:t1?~cnts that had been
disclosed to ScoriisbPowerprior to December 6, 1998 and other obligatio~ entered into in
accordance with Sections S.OHd) and 00.
10 Comuanv Stock Plari. (a) At the EffeCtive Tunc, each outstanding
option to purc~e shares of Company Common Stock (a.Conmanv Stock Ontion ) under the
Company Option Plan, whether vested or unvested, shall be conve~ed into an option to acquire,
on ~e same ter:tI1S: and condItions as were applicable under such Co~panyStock Option, except
, as amendea by this Section 6.10. a number of HoldCe ADSs equal to the product (rounded down
to the n~ whole number) of (i) the number of shares of Company Common Stock subject
the option immediately prior to ~e Effective Time and (ii) the ADS Consideration and the option
exercise pric;e p~ HoldCo ADS at. which such option is exercisable s~ be the amount (rounded
up to the nearest whole cent) obtained by di\jding (iii) the option exercise price per s~
Company Common Stock at which such option is exercisable immediately prior to the Effective
Time by (iv) the ADS Consideration;,rovided. howeyCt'. that, in the case of any Company Stock
Option to w~ch Section 421 of the' Code applies by reason .of its qualification under any of
SectionS'422-424 of the Code ("aualified stock aotions ), the aptian exercisepricc.; the number
Qf shares which may. be acquired pursuant to ~ch option and the terms and conditions of
exercise'ofsuch option shall be detennined in oroerto comply with Section 424(a) of the Code;
rovided. further. that, under no circumstances shall the option exercise price per HoldCo ADS
be less thari the -aggregate par value of the HoldCo Ordinary Shares represented by a HoldCoADS. ' '
(b) As A as practicable after the Eff:ctive Time, HoldCo shall deliver to
the panicipants in the Company Option Plan appropriate notices setting forth such participants
rights pursUant thereto and the grants pursuant to the Company Option Plan shall continue in
effect on the same terms and conditions (subject to the adjustments required by this Section after
giving ~ffect to the Merger).
(c) . HoldCo shall take all corporate action necessary to have a sufficient
number of shares of HoldCQ ADSs available for delivery under the Company Option Plan as'
adjusted in accorc;1ance with this Section. As soon as practicable after the Effective Time,
HoldCQ shall file a registration statement on Form F-S promulgated by the SEC under the
secUrities Act (or any successor or other appropriate form) with respect to the HoldCoADSs
subjeci,to such options and shall use its reasonable best efforts to ainta;n the effectiveness of
such registration statement or registration statements (and maintain the~t statUS of the
prosp~~ or prospectUSes contained therein) for so long as such options re~ outstanding.
(d) For purposes of Section 2.0Hct Company Common Stock shall include
shares of restriCted Company Common Stock issued una::- the Companys N~n-Employee
DirectOr's Stock Compensation Plan. Stock Incentive Plan and Long Tcnn Incentive Plan
(collectively,. the "CoIIl1Janv Restricted Stock PlanS!!). The Company shall take all corporate
action necessary and obtain all relevant consentS to ensur: that the consideration received ~der
such Section 2.01(c) upon the conversion of e3ch.outSt3I1~g share of restriCted Company
Common Stack wiil continue to be subject to the same r:strictions that such shares were subject
to under the Company. Restricted Stock Plans and the appi~cable award agreements thereunder,
including, without limitatio~ any forfeiture reStriCtions. 'su~ject to ~endment or modification of
such plans or award a~entS to reflect action 'oCthe Board, orD~rs ~(the ComPany taken
prior to Dec:mber6, 1?98 arid discl9sed to Sc~ttishPower prior to such datC.
11 Directots' and Officers ' Indemnification and Insurance. (a) Except
to the extent required by law, until the sixth anniversary of:the Eff~ve Time, HoldCo will not
take any action ~~ as tc? amend. modify or repeal the provisions for ind~T1ification of directors
or officers contained in the certificate or anicles of incorporation or bylaws'(or other comparable
charter doc~entSl of the Surviying CorPoration and its Subsidiaries (whicnafter the Effective
Time shall be substantially identical to those of the Company in eff~ on December 6. 1998)
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 ontS Subsidiaries prior to the Effective Tune to be
indemni~ed by ~u~h corporations in respect of their serving in such capacities prior to the
Effective Time. '
. .
(b) HaldCo and the Surviving Corpo,ration shall. until the sixth anniversary of
the Effective Time, cause to be maintaine~ in effect. to,the extent available. the policies of
direCtors' and officers' liability insurance maintained by t~e Company and its Subsidi~es as of
December 6, 1998 (or policies of at least the same coverage and amountS containing terms that
. are no less advantagcous to the insured parnes) with respect to Claims arising from facts or
. "- events that occurred on or pri9r to ~e E~~ctive'TIme: rovided in no event sh3l1 HoldCo or
the Surviving Corporation be obligated to expend in order to maintain or procure insurance
coverage PU!SU3:D:t to this p~graph any amount per annum in excess of tWo h~dred percent
(20()%) of the aggregate premiums payable by the Company and its SubsidiarieS in 1998 (on an
ami~:d basis) for such purpose.
-'.
12 . HoldCo Governance: Additional Matters. (a) Subject to the
exercise of fiduciary d~ties and to the extent permitted by applicable la , HoldCo s Board of
Directors shall take action to cause the full-Board of DircctOrs of Hold Co at the Effective Time
to inc1ude Keith McKennon, as Deputy Chairman of HoldCo, and tWo additional non-exeCutive
members of the Company's current Board of Directors to be deSigitated by tht: Company at least
thirty (3~) days prior to the Effective Time.
(b) HoldCo shall. promptly following ~e Effective Time, cause certain oftbe
non-executive members of the Company's Board of Directors immediately prior to the Effective
Tune who do riot become directOrs of Hold Co pursuant to Section 6. 12(al hereof, and who are
willing,to so serve, to be elected or appointed as members of an advisory board (the " AdvisolV
Board~~ established by the Company, the (unction of which shall be to mcCt no less frequently
than semi-annually in order to advise the Companis Board ofDireCtOIS with respeCt to general
business as well as oppommities and activities in th: Companys market area and to maintain and
develop customer relationships. The Advisory Board shall be chaired by Ian Robinso~ and shall
also include Duncan Whyte, Richard O'Brien.. and such other rcpres~ves from the
co~unitics served by the Company (including but not limited to non-executive members of the
Company's Board ofDirectoIS immediately prior to the Effective Time) as shall be mumally
agreed by Ian Robinson and K~ith McKennon. The members of the Advisory Board who are
willing to so serve initially s~ be elected or appointed i~.r a term of tWo years. HoldCo agrees
to cause the C(Jmpany to re-elect or re-appoint e~h of the initial members of the Mvisory Board
to onesucceSslve on~~year.~enn following the initial term: Drovided. h6wev~- that HoldCo shall
have no obl~gation to cause the ~ompany. to elect or appo~t. or re-elect or re-appoint, and may
cause the Company to remove,; any member if HoldCo reasonably detennines that such member
a conflict o( interest that compromises such member's ability to serve effectively as a
member 'oI.the Advisory Board or any cause existS that othCIWise would allow for removal of
such person as' ~dircctorofthe Company if such person were a mcniberofthe Company's Board
ofDircctors.
(c)Immediatciy following the Effective Time:, the Company's United States
head4uart~ ~hall continue to be in Portlan~ Oregon. In recognition of Hold Co s and
ScottiSbPow~s commitment to the communitieS scr:~d by the Company, following the
Effective Time HoldCo or ScottishPower \vill contribute to The PacifiCorp Foundation the sum
of SS million.
13 ExDenses. Except as set forth in Section 8.02. whether or not the
Merger is consummated. all costS and 'x~es incurr=d in connection \,Vith this Agreement and
. the ~actions contemplated hcr:by ~hall be paid by the pany incmringsuch.cost or expense.
The Company shall not be obligated for any feeS or expenses relating to HoldCo s obligation to
demo~ the existence of adequate working capital in connection with the filing of the Listing
Particul~.. NotWithstanding any provision of this Agre::nent, in no event ,shall HoldCo,
SconishPower or any affiliate of HoldCo or SconishPower pay any expenses of the Company,
any Company affiliate or any Company stockholder in connection wi~ the tranSactions
contemp~ated by this Agre=mc:nt.
14 Brokers or Finders. Each of HoldCo, ScottisbPower and the
Company representS. as to itself and its affiliates. that. except as set forth on Section 6.14 of the
Company Disclosure Letter and except for any reasonable fees and eXpenses that may be paid by
HoldCo or ScottishPower to Morgan Stanley Dean Witter Discover, Inc. in connection with the
Sc:heme of Arrangement, no agent, broker, inyesnnent banker. financial advisor or other firm or
person is or will be entitled to--any brokers or .finders fee or any other commission or similar fee
i~ connection with any of the 1;r3I1Sactions contemplated by this Agreement e~ccpt Salomon.
Smith Barney, whose fees and expenses will be paid by the Company in acco~e with the
Comp!Ily's agreement with such firm (a tIUe and complete copy ofwhich has: been delivered by
the Coinpany to ScottishPower prior to December 6, 1998), and Morgan Stanley Dean Witter
Discoycr Inc. whose fees 'and expenses win be paid by ScottishPower in accQrdance with
Scottis~ower's agreement with such firm (a tIUe and complete copy of which has been delivered
by Sc~ttishfower to the Company prior ~o December 6. 1998), and each of Hold Co and
ScotrishPower, on the one hand. and the Company. on :=: other, shall mdemniiY and hold the
other hannless from and against any and all claims. mbmti~s or obligations with respect to any
other such fee or commission or expenses related ther::: assened by any person on the basis
any act or Statement alleged to 'have beo made by such party or its affmatl!
15 Takeover Statutes. Ifany "fairt):ice~. "moratorium
, "
control
share acauisition'.!..or other fonn of antitakeover statUte cr regu)ation shall become applicable to
the transactions contemplated hcr:by, the Company and the members of the Board of DireCtors
of the Compan)'s~ grant such approvals and ~e such actions as ate reasonably necessary so
that the tranSacnoIis' contemplated hereby may be consummated as prompt1y as practicable on
thetcrms cont~lat~d--hereby and thereby and 'otheI'\\;s~ act to ctim;"ate or m;n;m1~e the effects
of such Statut~' ~r regulation on .the transactions con empiaied hereby thereby.
i6.\6 Convevance Taxes. The Company, HoldCo and ScottishPower
shall cooperat~'in'~e preparation. execution ana tiling of all retUmS, queSrlonnaiIes, applications
or other docum~~ regarding any real property transfer or gains. sales, Use, transfer, value
added. stOck ~fer and stamp taxes and duties. any ~..nsfer. recorcijng~,regimation and other
fees, and any s~lar taxes \vhich become p~yable in connection with the transactions
contemplated,by ttrls Agre:ment that are requir~ or P,~~tted to be ~led on or before the
Effective Tun~~ Th~ Company shall pay, without deduction or withholding (except where such
dec4tction or, Witb11olding is requir::d by applicable la~...) from any ~ount payable to the holders
aCCompany Common Stock. any such taxes which become payable'in connection with the
ttmsfer of Company Common Stock in exchange for the Ordinary Share Consideration and the
ADS Consideration. The Company shall also pay any sump duty _or stamp duty reserve tax
arising ~ connection with the issue of the HoldCo ADSs and HoldCo ADRs.
, 6.17 Rate Matters. During the period commencing on December 6,
1998 and ~nding,on the EffeCtive Date, the mpany shall. and shalfeause its Subsidiaries to,
obtain HoldCo s' and SconishPower's appro.val. not to be ~asonably withheld or delayed, prior
to initiating any general rate c:!Se and shall consult \\;m HoldCo and ScottishPower prior tp
making any material changes in itS or itS Subsidiaries: :-ates or ,charges, standar~ of service or
accounting from those in effect on Oeccmper 6. 1998 and shall funher consult With HoldCo and
ScottishPOWel' prior to making any filing (or any amendment thereto l~ or effecting any
agreement. commitment, arrangement or consent, whether written or oral, formal or informal,
with respect thereto. .
18~ Tax Matters. Each orHold~o and ScottishPower agrees that:
(a) Prior to the Closing Date. ScottishPower and HoldCo (i) will make the
electi~ns necesSary pursuant to Section 301.7701-3 oithe U.S. Treasury regulations promulgated
, under the Code to treat UKSub 1 and UKSub 2 as entities disregarded as separate from
SCOtt1~hPo~i:r and HoidCo ane; '(ii) will not change such election during the period b~ginning on
the date such election is effective for U.S. federal income taX purposes and ending on the date
that is'three years after the Closing Date.
. .. .
(b) Throughout the period begiDnin~ on the date the election described in
Section 6.l8(a) of this Agre=ment is effective for U.S/federai income tax purposes and ending
on the date that isthrce ye:1I'S after the Closing Date: Ii) ScottishPower and HoldCo win not
make an election under Section 301.7701-3 of the U.S. Treasury regulations to treat UKSub 1 or
UKSub 2 as an association taxabl~ as a corporation; (ii) ScottishPower, before the Share
Transfer, will directly own the whole of the share capital oft.:"'KSub 1 and UKSub 2. and
HoldCo. after the Share Transfer, will directly own the whole of the share capital ofUKSub
and UKSub 2; and (ill) ScottishPower and HoidCo will cauSe UKSub 1 and UKSub 2 to directly
own all of the eq~ty:~~1tereStS in the Partnership. Prior to the Closing Date, ScottishPower and
HoldCo shall caUSe me Share Transfer to oc~.
. ., .. . ,
(c) Throughout the period beginning at the -Effective Time and ending on the
date that is thrc~,ycars after the Closing Date, the ParmerShip will directly own all of~.
Common Stoc~ of the Surviving Corporation. except for contribution to ~ controlled subsidiary
deScribed in Code Section 368(a)(2)(C) and the regulations promulgated thereunder. .
(4) Throughout the pc:nod beginning at the Effective.Time and ending on the
date that is tbrC~:years after the Closing Date. none,o~HoldCo. ScotUshPower, UKSub 1, UKSub
2, the Parmers~p, nor any othcraffilime of Hold Co or ScottishPower will redeem. acquire,
convert, exc~ge, or cause tlfe Company or any affiliate afthe Company to acquire, convert or
exchange or ~ge for another person to acquire, convcn or exchange any, of the ADS
Conside:ation .or the Ordinary Share Consideratio~ unless HoldCo has received a written
opinion ofcoUDSel that such action will not'cause those p,ersons who were stockholders of the
-Company at the time of the Merger to recognize gain ~r loss for US federal income tax purposes
either with respect to the Merger or with respect to a sUbsequent e~change or conversion;
(e) .. Neither HoidCo, ScottishPower nor any affiliate of Hold Co or
ScottishPower will, directly or indirectly, pay any expense incurred by (i) the Company, "(ii) any
affiliate,ofthe Company or (iii) any Company stockholder. in each case, in connection with the
tranSactio~ contemplated by this Agreement.
. .' .
. (f) For a period of three years following the Closing Date. without the receipt
ofa ~tten opinion of counsel that such action wjll not affect the tax-free statUS of the
trmSactions contemplated by this Agreement. neither HoldCo nor any affiliate of Hold Co, will,
directly or indirectly, (i) make; contributions (whether or not in exchange for shares) or loan
additional fun~ to (x) the Company, (y) any affiliate of the Company or (z) any escrow account,
tIUSt or other fwld established to pay any expenses incurred by th~ Company, any affiliate of the
Co~pany or any Company stockholder in connection \\;t!1 the transactions contemplated by this ,
AgrC~ent or (ii) permit the Company or any Company affiliate to incur additional indebtedness
guaran.teed by HoldCo or any HoldCo affiliate;
(g)
Neither HoldCo nor any affiliate of HoldCo will. directly or indirectly
reimburse (or otherwise pay) any amounts paid to the holders of$I.28 Series, 51.l! Senes or,
Sl.l6.Senes no par serial preferred stqck of the Co~pany in connection with the redemption of
their preferred stock prior to the Closing Date.
. . (b) Neither HoldCo. ScottishPower nor any affiliate of H9ldCo or
ScottishPower will. directly or indirectly, acquire any Company stock excePt for the Company
stock acquired solely in exchange for the ADS Consideration or the Ordinary Share
Consideration unless acquired directly from die Company.
19' Dividends. HoldCo hereby ack:1owl~dges its intention, following
the Effective Tim~ to adopt a practice of payUig. \\;th respect to HoldCo Shares and
HoldCo ADS~ quancrly dividends on regular quancrly dividend dates UJ.,roughly equal amounts.
After the date hereof, each of Hold Co.. ScottishPowcr and the Company shall coordinate with the
other with respect ~o ~~ declaration of divid~ds in respect of Hold Co Ordinary Shares and
Company Common Stock and the record dates .and payment dates wi~ respect thereto prior to
the Effective Tunc, \~th the intention that the holdCIS of Company Common Stock receive
dividends in respeCt oCtile Company COII11IlO:t;1 Stock for all periods prior to the Effective Time
- but do not receive dividends on the ADS Considcration and the Ordinary Share Consideration
after the Effcctive Time in respect of periods prior to the Effective Time.
ARTICLE \ill
CONDmoxs
01 Conditions to Each Panv's Obliszatlon to Effect the MeI'2cr. The
respective obligation of each party to cffec~ the Merger is subject to ~e f!1lfillmcnt, at or prior to
the Closing, of each of the following conditions:
(a) Stockholder ADt)rova1~ This Agreement shall have been approv~ by tfle
requisite vote of the stockholders of the Compax:tY under the BCA and theshareholdeIs of
scotttshPower shall have approved the Merger. "\
. .
(b) Re2imarion Statement: State Securities Laws. The Registration Statement
shall have become effective in accordance with the proyisions of the Securities Act, and no Stop
order suspending such effectiveness shall have bee.." issued and remain in effect and no
proceed~g seeking such an/order shall be pending or tbre:ltencd. HoldCo shall have receive~tall
s~e securities or "Blue Sky" permits and other authorizations necessary to issue ,the HoldCo
ADSs puisuant to this Agreement and under the Company Stock Plans after th~ Merger.
(c) Exchan!Zc Listinsz. ~e LSE shall have agrecd:to.admit to the Official-List
(subject.to allotment) the new HoldCo Ordinary Shares to be issued: in connection with the
Merger and such agreement shall not have been Withdrawn and the HoldCo. ADSs issuable to the
Company stockholders in the Merger and under the Company Stock Plans, after the -Merger in
accordance with this Agreement shall have been authorized for listing on the NYSE. upon
official notice of issuance.
(d) HSR Act. Any waiting period (and any extcnsio!1 thereof) applicable to
the co~ation of the Merger under the HSR Act shall have expired or b~ rm;n~ted
(e) Injunctions or Restraints. N~ coun of competent jurisdiction or other
compe~ent Governmental or Regulatory Auth?rity shall have c:nactetL iSsued; promulgated.
enforced or entered any law or order (whethcrtc:mporary~ pr:iiminary ~ pc:mancnt) which is
then in effect and has the effect of making illegal or 'otherwise restricting, preventing or
prohibiting consummation of the Merger or the other tranSactions contemplated by this
Agreement.
(f) Exon-Florio. The review and investiganon under Exon-Florio shall have.
been temrinatcd and ~~ Presid~t shall have taken no action authorized thereunder.
(g)
power Act: Atomic Enem Act. The final approval of (i) the FERC and
(ii) the Nuclear Regul~t~ry Coinmission under the Atomic Energy Act.. with respect to the
Merger and the transaCtions contempJated by $is Agreement shall have been obtained.
(h)" H.M. Treasury Consent. HoldCo or ScottishPower (as required) shall
have received consent ftcm H.M- Treasury purst13Iit to Section i65 of the U.K. Income and
Corporation -r:aJ!;'?5 Act 1988 in respect of the Merger and any othermanercontemp1ated hereby,
or conmmanon nmt no co~ent is required.
(i) Governmental and Resmlator.' ConsentS and ADDrovals. Other than the
filings provided for by Section 1.03 and any iiiing required in connection with the registration or
exemption of HoldCo under the 1935 Act, all consentS. approvals and actions of: filings with and
notices to any Govemment3:l or Regulatory Authority (inciuding under the HSR Act and &on-
Florio Act and. the approvals by FERC pursuant to the Power Act) reqUired of HoldCo9
5cottishPower. the Company' or any of mcir Subsidiaries to consumnlate the Merger and the
other matters contemplated hereby shall have been made or obtained (as the case may be) and
become Final Orders (as defined in this Section below). and such Final Orders shall not,
individually or in the aggregate, contain terms: or conditions that would have, or would
reasonably be expected to have, a material adverse" effect on the Surviving Corporation and its
5ubsidiarie~ ~en as a whole. A "Final Order" means an action by the relevant Governmental
or Regulatory Authority that has not been r=~'ersed. ~tayed. enjoined. set aside, annulled or
suspended. \vith 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 consununation of such transactions prescribed by applicable law, regulation or
order have be:n satisfied.
CD Other ConsentS and ADDrovals. The .consent or approval of each person
(other th3n a Governmental or Regulatory Authority) whose cqnsent or approval is required of
HoldCo, SconishPower, the Company or any, of their Subsidiaries tindCr any ContraCt in order to
consummate the Merger and the other ttansactions contemplated hereby shall have been
obtained. except for those consents and approvals which. if not obtained, would not have, or .
would I;1ot .reasonably be expect~d to have. a material ad\"erse effect on the Company and its
Subsidiaries taken as a who~e or on the ability of Hold Co. ScottisbPower or the eompany to co~e the transactions contemp lated hereby.
(k)UK Fair Tradin2 Act. .A.nyof:
(i) the Office of Fair Trading (the "OFT") shall have indicated in
writing that the Secretary of State fur Trade and Industty (the "50S") in the
exercise of his powers undcr the F~ l~..ding Act 1973 (the FTA")does not
intend to refer the Merger or 'any mat:: ~lating thereto to the Monopolies and
Mergers Coqunission ("MM:C ); or
(ii) in the event,ofan ~1C f:rence~ the M;MC shall have concluded
that .the Merger does not or may not be expected to operate against the public
mtc:rc:St; or
(ful if on a reference the ~1C shall have concluded that the Merger
does or may be expected to operate :.gainst the public interest, the 50S shall have
indicated in writing that it is intc:ltion to approve the Merger~
rovided that.-if
~y
indication by the 50S referred to in (i) or (iii) above is subject to
undertakings,. as~urances or.any other terms or conditions. such un~gs, assuranccs. terms
or conditions would not have. or would reasonably be expected not to hav~ individually orin the
aggregate.~ material adverse effect on the HoldCo Gra~ taken as a whole.
(1) UK Re2uiators. Each of the Offic:oiElectricity Regulation ("OFFER"
and the Office of Water Services ("OFWAT') shaH have indicated:
(i) tharit is not its intention to seek any modifications to any
conditions 0 f the licenses or appointments held by ~y member of the HoldCo
Group under any applicable statUfc:. law. regUlatio~ order or determination which
wo~d have, orw~Uld reasonably be expected to have, individually or in the .
aggrc:gatCy a material adverse effect on the HoldCo Group taken as a whole; and
(ii) that it will give such consentS and/or directions (if any) as are
necessary or appropriate witJl respect to such licenses or appointments
connection with the Merger on te~s which. would not have, or would reasonably
be expected not to have,individually or in the aggregate; a material adverse effect
on the HoldCo Group taken as a whole.
;-
(m) UK. UndenakinesiAssuranc:s.Seither OFFER nor OFW AT shall have
sought .undenakings or assurances from any member of the HoldCo Group which would have~ or ,
would reasonably be expected to have~ individu~ly or in the aggregate, a material adverse effect
on the HoldCo Gro9P taken as a whole.
02 Conditions to Oblie:ation of Hold Co. ScottishPower and MeNer
. Sub to Effect the Mereer. The obligation of Hold Co. ScottishPower and Merger Sub to
effect the Merger is further subj~t to the fulfillme:1t. at or prior to the Oosing, of each of the
following additional conditions (all or any ofwhicn may be waived in whole:Or in part by
HoldC~, ScottishPower and Merger S~b in their sole discretion):
i...
(a) RCDresentanons and Wa.rnmtic:s. The representations and warranties made
by the Company in this Agre::nc:nt shall be tIUC znc1 COIICct, in all material respec~ taken as a
whole;a.s of the Closing Date as though made on and as of the Closing Date 9r, in the case of
repres~ntations and warnmties made as ora specified date earlier than the Closing Date on and as
of such earlier date (provided,. ,however. thatJor purposes of this paragraph (a), no effect shall be
givcntO the reference to the da~e December 6. 1998 in the first paragraph, of Article Ill). except
as affected by. the tranSactions contemplated by this Agrc:~meD.t. ,and the Company shall have
delivered to HoldCo a certificate. dated the Closing Date and execUted in the name and on behalf
of the Company by its Chairman of the Board, President or any Executive or Senior Vice
Prcsiden~ to Such effect.
(b). Perfonnmce of Obli2atioils. Th~ Company shall have periormed and
complied with. in all material respectS, the agrccmcn~ covenantS and obligatio~ taken as a
whole, which
~ ~.
9Y this Agrecm~t to be so performed or~omp~cd with by the
Company ;it or priori~ ~e elosing, and the 'company shall have delivered to HoldCo a
certificate. d3ted the Closing Date and executed in the name and on behalf of the Company by its
Chainnan of the Board, Presi4ent or any Executive or Senior Vice President, to such effect.
(c) Material Adverse Effect. Since December 6. 1998, no material adverse
eff~t shall haye occutrcd with respect to the Company and its Subsidiaries taken as a whole and
there shall exist. no facts ~r circumstances arising after December 6, 1 ~?~. which in the aggregate
woU;ld, or insof~ ~ reasonably can be foreseen.could. when taken together with any breaches or
violations of anY representations. warranties. covenantS an~ agreements of the Company
contained heri:in. have a material adverSe effect on, the Cotnpany and h~, SUbsidiaries taken as a
whole. For purposes 9ftbis Section 7.02(c). (i) any (3."( benefitS relating directly to the strUCture
of the tcinsactions con~!:1Ilplated by this Agreement as of the d~te hereofwhich arc nouea1ized'
by HoldCoor SconishPower, and (ii) any adverse effects on the Company and its Subsidiaries
'resulting from general economic or financial conditions4 shall nQt be taken into account in
. ,
determining whether a material adverse effect has occo.m-edunder this Section 7.02(c).
(d) Tax Oeinion. HoldCo, ScottishPower and the Partnership shall have
received the opinion. based on appropriate represcncitions of the Company, HoldCo and\'
. ScottishPower. of Mil bank. Tweed, Hadley & McCloy LLP. specia! counsel to HoldCo and
ScottishPower. dated on or about the date on which the Registration'S tatement'( or the last
amendIpent thereto) 'shall have beco~e effective. which opinion shall have be:n confirmed in
. writing 'on and as. of the Closing Date, to the eff~ct that the Merger will constitUte a
reorganization" within the meaning of Code Section 36S(a) and that no gain or loss will be
recognized for US 'federal income tax purposes by the Stockholders oftne Company who
exchange Company Common Stqck for HoldCo ADSs or Merger Ordinary Shares pursuant to
the Merger (except .With x:cspcCt to cash received in lieu of fractionat-HoldCo ADSs or Merger
Ordinary Shares).
- (e) Procecdin2s. All proceedings to be taken on the p~ of the Company in
connection with the transactions contemplated by this ,Agreement and all documents incident
thereto shall be reasonably satisfactory in forin and subst3nc: to HoldCo, and HoldCo shall have
recc:iv~ copies of all such documents and other evidences as HolciCo may re~onably request in
order to establish the consummation of sUch transactions and the taking of all proce:dings in
conn~on therewith.
. ,
03 Conditions to ObliEation oithe ComDanv to Effect the Met'2er.
The obligation of the Company to ct;fect the Merger is iurth~ subject to the fulfillment, at or
prior to the Closing, of each of the fQl1owing additional conditions (all or any of which may be
waived in whole or in part by the Company in its sole discretion):
(a) Renresentations and Warranties. The re:m:sentations and wammtics.made
by HoldCo, ScottishPower and the Pamiership in this Agrcem~t shall be" tr1:te and co~ in all
material respects, taken as a whole, as of the' Closing Date as though made on and as of the
Cosing Date 9r, in the case of representations and warrarities aUide as of a specified date earlier
than the Closing p~~, on and as of such cariier date (provid~ hoWC;:y,?, for purposes of this
paragraph (a), ~o eff~t ~be given to the refe;::nc: to ~e" date D~eniber 6 19~8 ~d the date
oftbis Agrc::m~t ~ the first paragraph of Article IV hcreof), except as affected by the
transactions' cqnt~pla.ted by thiS Agreement, and HoldCo----SconishPower' and Merger Sub shall
each have deliver~ :to the Company a ccrtificate, dated the Closing Date and executed in the
name and on behalf of HoldCo by itS Chairman of the Board., President or any Executive or
Senior Yice Pri!si~~t or any Executive Dir~tor. in the name and on behalfofScottishPowerby
its Chairman Qft1?-~ Bo~ President or any Executive or Senior Vice PreSident and in the name
and on behaif of Merger Sub by itS Chairman of the Boar~ Presid!m~ or any Vice President, to
such effect.
(b) Perfonnance ofOblieations. HoldCo, ScottishPower and Merger Sub
shall have performed and complied with. in all material respectS, each agreement. covenant and
oblig~on required by this Agreement to be ,so performed or complied with by HoldCo,
ScottishPower or Merger Sub at or prior to the Closing, and HoldCo, ScottishPower and Merger
Sub shall each have delivered "to the Company a certificate, dated the Closing Date and executed
in the name and on behalf of-HoIdCo by its Chainnan of the "Board, President o(any Executive
or Semor Vice President or any ExecunveDirectOr, in the name and on behalf ofScottishPower
by its c::hairman of the Board, President or any Executive or Senior Vice President and in the
name and on behalf of Merger Sub by itS Chairman of the Board, President or any Vice
Presidcn~ to such e~ect.
(c) Material Adverse-Effect. Since Dec:mber 6, 1998~ no mate:ial adverse
effect shall have occurred with t:spect to HoldCo. SconishPower and th~ir respective
Subsidiaries taken as a whole and there shall exist no factS or circumstahces arising after
December 6, 1998 which.in t!1.e aggregate would. or insofar as reasonably can be foreseen, could.
When taken together with any breaches or violations of any representations, warnnties,
covenants and agreementS of Hold Co and ScottishPower contained herein, have a material
adverse effect on HoldCo, ScottishP~wer and the~ respective Subsidiaries taken as a whole. For
purposes of~s Section 7.03(c), any adv~e effects on HoldCo, ScottishPower and their
respective Subsidiaries resulting from general economic or financial conditions shall not be .taken
into account in detcrmiD.ing whether a. material adve~e effect has occurred under Section
. (d) Tax Ocinion. The Company shall have received the opinion. based on
appropriate representations of the Company, HotdCo and ScottishPower, ofStoel Rives LLP,
couns~~ to the Company, and LeBoeuf. Lamb, Greene & MacRae, LLP;Spccial c~unsel to the
Company, dated on or about the date 0!1 which the Registration Statement (or the last amendment
thereto) shall have beCome effective, which opinion s~ have been confirmed. in writing on and
as of the Closing Date to the effect that the Merger \\iil constitUte a IIreorgmizaiion" within the
meaning of Code Scctio~ 368(a) and that no gain or loss \\;11 be recognized for US federal
income taX purposes by the StOckholders of the Company who exchange Company Common
Stock for HoldCo ADSs or Merger Ordinary Shares pursuant to the Merger (except with respect
to cash received, in lieu of fractional HoldCo ADSs or Merger Ordinary Shares).
(e) Proceedin2S. All proceedings to be taken on the part of Hold Co,
ScottishPower and Merger Sub in colU1ection with the trulSactions c;g~temp,lated by this
Agreement and all documents incident. there~o (other than documentation relating to the Scheme
of Arrangement) shall pe reasonably satisfactory in Conn and substance to the Company, and the
Company shall ~ve received copies of all such documentS and the docUmentation relating to the
Scheme of Arrang~ent and other evidences as the Company may reasonably request in ordcrto
establish the co~ation of such transactions and the taking of procCedings in connection
therewith.
./' '
ARTICLE VITI~ATION, AMENDME'\"T AND W AlVER
01 T emiinauon. This Agr=ment may be tenninate~' and the
transactions contemplated hereby may be abandoned. at any time prior to ~.e Effective Time,
whether prior to or after the Company Stockholders' Approval or the ScottishPower
Shareholders Approval:
:' .
(a) By mumal written agreement of the parties hereto duly authorized by
acUontakcn by or on bebalfofthcirrespcctive"Boards ofDirecrors;
(b) By'either the Company or HaldCo upon notification to the non-
terminating party by' the terminating party: -
~ ,
(i), at any time after the date which is nine (9) months following
December 6, 1998 if the Merger shall not have been consummated on or prior to such
date and ~uch failure to consummate thc-'Merger is not caused. by a breach of this
Agreement by the terminating pany; rovided. however, ~.if on such date HoldCo,
ScottishPower and the Company and their respective S'ubsidiaries have not received all of
the app~vals requirCd in order to satisfy the conditions set forth in Section 7.01(i) but all
other conditions to effect the Merger shall be fulfilled or shall be capable of being
fulfine~ then. at the option of either HoldCo or the Company (which shall be exerCised
by written notice), the term of this Agreement shall be extended until the expiration of
such date which' is eightee."1 (18) months afte:' December 6, 1998;
(ul if the Company Stockholders' Approval or the ScottishPower
Shareholders; Approval shall not be obtained by reason of the failure to obtain the
requisite vote upon a vote actUally held at a meeting of such stockholders or shareholders,
9f any adj()umment the~or, called therefor,
(iii) . if there has been a material br-~h of any representation, warranty,
covenant or agre:ment 01:1 the pan of the non-terrn;n~riT'l g pany set forth in this
Ae:reement (detennined in all cases as if the :c::n.s .'material" or "materially" were not
in~luded hi any such representation or warranty), "':m.ch breach is not curable or,
curablt:y has not been cUred within thirty (30) days following receipt by the non-
C'tJ1;n~tin g pany of notice of such breach from the te~;nati"'g party which breach, when
taken together with any other breaches of re;Jrcsenwions, warranties, covenantS and
agreementS of the non-term;naring party contained in this Agreement, has or would
reasonably b~ expected to hav~ a material adverse effect on the Company and its
Subs~di3ries taken as a whole; or
. .
(iv) if any court of compet:nt jurisdiction or other competent.
Governmental.or RegulatOry Authority shall have issued an ~rder making illegal or
otherwise prc;venting or prohibiting the Merger and such order shail have beCome finaland nonappealable;
(c) By the Company upon five (5) days' prior notice to ~oidCo if (i) the
Board ofDirectci~ of the Company determines in good faith. that a failure to temrinate this
Agreement coul~ re;lSo~ly be expected to result in a breach of itS fiduciary~uties to
stockholders impqsed by law by reason of an unsolicited bona fide Alternative Proposal meeting
the rCquir-..m~ of clauses ml and of Section 5.07 having been made; rovided that
. '-.:' -. ,
(A) The Bo~ of Directors of the Company shall have bem advised by
outSide counsel. that notWithstanding a binding co~nnent to consummate an
agreement of the natUre of this Agreement entered intom the proper exercise orits
'- applicable fiduciary duties, and notwithstan~g all conces,sions which may be offered by
HoldCo in negotiations ente:-ed into pursuant to c:l~use (B) below, a failure to reconsider
such commitment as a result of such Alternative Proposal could reasonably be expected
to result in a breach of itS fiduciary duties to stoc~'olders imposed by law , and
, (B)' prior to any such termination. the Company shall and shall cause its
respectivefmancial and legal advisors to, negotiate \'\;th HoldCo to make such
adjusnnents in the tenns and conditions bf this Agre:ment as would enable the Company
to proceed with the transactions contemplated hc:r:in on such adjusted tem1S;
and rovided further that the Company's ability to terminate this Agrce;nent pursuant to this
clause (i) is conditioned upon the prior payment by the Company to HoldCo of any amounts
owed by it l'ursuant to Section 8.02Cb
or (ii) th~ Board ~fDirectors of Hold Co (or any committee thereot) shall have withdrawn or
modified. in a manner materially adverse to the Company iis approval or reeoI;1II1endation of this
Agreem~~t or the Merger, or
(d) By HoldCo if the Board of Directors of the Company (or my committee
thereof)' (i) shall have withdrawn or modified in a manne:- materially adverse: to HoldCo its
approval or recommendation of this Agreement or the Merger, (ii) shall fail to reaffinn such
approv~~ or recommendation upon HoldCo s request, (iii) shall have approve~ recommended or
... -
taken no position with ~ect to an Alternative Proposai to the stockholders of the Company or
(iv) shall resolve to takb any oime foregoing actions: or
(e) By the Company iftherc has ce:n a Change of Control a.fterthe Scheme
Date and prior to the Effective Time. A "Change oi Control" shall occur if any of the ,following
applies: (A) Any "Person , as such teml is~ed 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 Ex~hange Act), dirCctly
or indirealy, of securities o~HoldCo repr:scnting 30 percent or more of the combined voting
power of Hold Co s outStanding capital ~ock; (B) the shareholders of Hold Co approve a merger
or other.,consQij4~*)I~ of Hold Co with any other company~" other ~ t;1erger or consolidation
effected to implement a recapitalization-ofHoldCo (or Similar t:ranSaction) in which no Person
acquires more than 30 percent of the combmed voting po\ver ofHoldCo ~ then oUtstanding
securities;' (C) a'tender or exchange offer is made fo~ the ordinary shares ofHoldCo (or securities
convertible into ordinary shaics of HoldCo)and such offetresults in a portion of those securities
being purchasc::~ and the of!"eror after the consw:mnarion of the offer ~ the beneficial owner (as
detcnnined p~t to Section 13(d) oithe Exchange Act), directly or indirectly, oCsecmi~es
representing a~ least 30 percent of the voting power of outStanding secU#ties of Hold Co; or (D)
HoldCo seIls ~O p"erc:nt or more of its shares of ScottishPciwer to a buyer that is not a member
HoldCo conttOlled group of corporations.
02 Effect ofTennination. (a) If this Agre:ment is validly te:minl'ltt-d
by either the Company or HoldCa--pursuant to SeCtion 8.01. this ~grcement will fonhwith
become null and void and th~ will be no liability or obligation on the part of either' the
Company, HoldCo or ScottishPower (or any of their respective Representatives or affiliates),
except (i)" thanhe provisions of Sections 6.13. and, 16.this Section 8.02. and Sections" 9.
.and will continue to apply "following any such te:mination. (ii) that nothing contained herein
shall relieve any party hereto from liability for willful breach of ~ts representations, warranties,
covenants or agre:,men~ contained in this Agre:meIlt and (iii) as provided in paragraphs (b) and(c) below.
(b) , In the e':::nt that any pcI?on or group sha1~ have made an Alternative
Proposal and thereafter (i) this Agreement' is terminated (x) by the Company pursuant to Section
01(c)(i), (y) by HoldCo pursuant to Section 8.0Hb)(iii) or Section 8.01(d) or (z) by eitherpany
pursuant to Section 8.01 (b)(ii) as, a result oCthe Company Stockholders' Approval not being
obtained or (ii) this Agreement is tenninated for any other reason (other than by reason 0 f the
brcach-ofthis Agreement by HoldCo or pursuant to Section 8.Q!1illl as a resu1~ of the
ScortisbPower ~hareholders' Approval not ~eing o~tained or Section 8.01(c)(ii))'or 8.01(e)~and,
in the case of this clause (ii) only, a definitive agre:ment with respect to such Alternative
PrOposal is e'!:ccuted within one year after such termination.. then Ute Company shall pay to
HoldC6 bY-wire ~fer of same day funds, either on the date contemplated in Section 8.01(clif
applicable, or otherwise, within tWo (2) business days after such ~~t becomes due, at~on fe: of $250 000,000.
(c) In the event that this Agreement is tCITf1h1~ted by the Company following a
Change of Control, then HoldCo shall pay to the Company, by wire transfer of same day funds,
withiti ~o (2) business days following such termination. a termination fee of $250,000,000.
NYt:J320j221vl
.... -
( d) the: event that this AgrCCInot is terminated by e:ither PartY pursuant to
Section 8.01 Cb)(ii) in circumstances in which the: te:rmination fee: se:t forth in clause (b) above is
not payable:. (i) in the: case ofth~.Company Stockholders' Approval not being obtained and the
ScottishPowcr Shareholders' APproval having been obtained. the Company shall pay to fioldCo
(ii) in the case of~e ScottishPower Shareholders' Approval not being obtained and the Company
Stockholde:'Approval,havingbeen obtaine~ HoldCo, shall pay to the Company, in each case an
amount equal to S 1 0,006,000.
(e) If the Company fails promptly to pay the amount due: pursuant to the
preceding para~hs, ~d in order to obtain such payment, HoldCo or ~crg~ Sub coIrimences a
suit which resuJ.ts in a j~dgmc:nt against the 'Company for the fee set forth in such paragrap~ the
Company shall pay to aoldCo or Merger sub, as the case may be, its cost and expenses
(including reasonable attorneys f~ and experises) in connection with such sUit. together with
interest on the aI;Ilount 'ofthe fee at the prime rate of The Chase Manhattan Bank in effect on the
date such paym~ w~ required to be made.
8~q3 Amendment. This Agreement may be amen4ed. supplemented or
modified by ac~on taken by or ~n behalf of the respective Boards of Directors of the parties
heretQ at any ~e prior to the :Effective Time, whether prior to or after the Company
Stockholders' Approval or the ScottishPower Shareholders ' Approval '~hall have been ob~
but after such adQption and approval only to the extent pemiined by applicable law. No such
amendment, supplement or modification shall be effectiveunlcss set forth in a written instrument
duly executed by or on behalf of each pany hereto.
04 Waiver. At any time pripr to the Effective Time any party hereto,
by. action taken by or on behalf of its Board ofDirecto~ may to the'c:x.tent permitted by
applicable law (i) extend tije Emc for the perfonnance of any of the ~bligations or oth~ acts of
. the other parties hereto, (ii) waive any inaccuracies in the representations and warranties of the
other parties heretO contain~ herein or in any,document delivered p~t hereto or (iii) waive
compliance with any of the covenants. agre=:nic:ntS or conditions of the otherpani~ h~rdO'
contained herein. No such extension or waiver shall be effeCtive \mleSs set forth in a Written
insttumCnt duly executed by or on behalf of the pany extend~ng the time of performance or .
waiving any such inaccUracy or non-comp Hance. No waiver 'by any party of any tcnn or
condition of this Agreement, in anyone or more instances. shall be deemed to be or COnstIUed as
a waiver of the same or any other term or condition of this Agreement on any future occasion.
ARTICLE IX
GENERAL PROVISIONS
01 Non-Survival ofRetJfesentations. \VarTailties. Covenants and
!Zl"CementS . The repre~entations, warranties, covenantS and agreements co~tained in
this A~ent or in any instrument delivered pursuant to this Agreement shall not survive the
Merger 9ut shall terminate at the Effective Time, exccp~ for the agreements contained in Article I
and ArtiCle IT. in Sections 5.01(0), 5.02(k). 09. 6.10. 6.11.12,14,6.16 and 6.18, this.
.. ,
Atm: Dexter E. ~Iartin
and to:
LeBoeuf: lamb.. Greene & MaCRae. LLP
125 West 55th Street
New Yodc, NY 10019
Facsimile No.: [phone]
Attn: William S. Lamb
All notices, requestS and. other communications will (i) if delivered
personally to the address as provided in this Section. be de~med given upon delivery, (ill if
delivered by facsimile tr:tnm'l1s sion to the facsimile numbeias providc;d in this SectiOtly be
deemed gIven upon receipt, and (ilil if delivered by mail in the manner d~cribed above to the
address as pI'C?vi~ in this S~tion. be deemed given upon receipt (in each case regardleSs of
whether such n~tic:., request or other communication isre-:.eived by any other person to whom a
copy of sudi no~c;!;~ request or other communication is to be delivered pursuant to this Section).
Any.party fro~ ti~e to time may change its address~ facsimile ,numb~ or other infonnation for
the purpose 0 f no~ces to thou party by giving notice spedi)ing such change to the .other particshereto.
. 9.03 Entire ASITeement: Incornoration oiE:dribits. (a) Subject to
paragraph (c) below, this Agre:ment 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 ofthi~ Agrecmen~ in accordanc~ with its terms,
\ and contains. together with the Confidentiality Agreement. the sole and entire agreement among
/ the panies hereto with respect to the subject matter hereOf:
(b) The CoIIlpany Disclosure Lener. t.~e Scottis~ower Disclosure Letter and
. .
any Exhibit or SclJedule attached to this A~:ment and referred to herein are hereby
incoIpC?rated herein 'and 9de a part hereof for aU purposes as if fully set f~Ith herein.
(c) NotWithstanding the ex~ution oithis Agreement by the panies hereto on
the date hereof: this Agreement (other th3n,this Section 9.03(c) which.sball have immediate
effect) shall not take effect until the Scheme Date; rovided.. however, that upon the Scheme of
AIrangement becoming effeCtive, this Agreement shallbe deemed to have been in full force and
effect since the date hereof. Prior to the Scheme Date. the Original Agreement shall continue in
full forCe and effect. IfScoffishPower gives wntten notice to PacifiCotp that the Scheme of
AIrangement will not become effective, ~e minsactions contemplated by theOrigUial
Agreement will proceed as if no notice wider Schedule n of the Original Agreement had been
received and this Agreement had not been entered into.
(Intentionally Omined.)
0~ Public Announcements. Except as otherwise required by law or
. the rul~ of any applicable s~urities exchange or national market system or
~y
other Regulatory
Authority (including the U.K.T~eover Panel) ,so long as ~is Agreement is in effect, HoldCo,
.~ "....-.,~ -
. ScottishPower and the ~pmp~y will not, and will not permit any of their respective Subsidiaries
or Repr.esentatives to, issue or cause the publication of any press release or make any other
public 2r.Ilouncemcnt with respect. to the transactions conte:npiated by this Agreement Without
the consent of the other party, which consent shall not be unreasonably withheld. HoldCo.
ScottishPowC:r and the Company will cooperate ~th each other in the development and
distribution of all press releases and other public announc:mentS with resp.ect to this Agreement
and the tranSactions contemp~ated her:cy,and ~ll furnish, the other with drafts of any such
releases and announcementS as far ~ advance as practiCable.
06- No Third Party Benefici~~ The terms anq p~vi~jons ofmis
Agreement arc inten~ed solely for the benefit of each party tlereto ~d their respective successors
or permitted assigns, and except as provid~d iIi Sections 6.09. 10. 6.and (which are
intended to be for the benefit of the persons .entitled to ~ercin. . and
~y
be cniOtCed by any of
such persons), it ~~ not the intention of the panics to confer third-paro/ beneficiary rights upon
any other person.
Q7 No Assi2I1I11em: Bindimz Eff::t. ~either this Agreement nor any
right, interest or obligation hereunder lIlay be assigned by any party heretO withou!,the prior
written consent of the other panies hereto and any attempt to do so wi~1 ~e void, e."Cc=p~ that
HoidCe may cause Merger Sub to assign any or all of its rightS, interests and obligations
h~Undcr to ~other direct or indirect wholly-owned Subsidiary of Hold Co, rovided that any
such Subsidiary agrees in writing to be bound by all of the terms, 'conditions and provisions
containedherciIL This Agreement is binding upon. inures tQ,the benefit of and is enfotCeablc by
the parties hereto and their respective successors and assigzis.
......
08 Hcadin2S. The headlngs ~ed in this 'Agreement have been ,
insetted for convenience ofrcfercnce only and do not define. modify or limit the pI:Oyisionshereof. ' '
.., 9.09 """'Invalid Provisions., If any provision of this Agreement is held to
be ill~gai. invalid or uneniorccable under any present or future i~w or order. and ifthe ~ghts or
obligations, of any party hereto under this Agreement wjll not be materially and adversely
affected thereby, (i) such provision will be fully severable. (ii) this Agreement ,will be construed
and enfotCcd as if such illegal, invalid or unenfotCeable 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 severancehc:refrom. '
10 Governin2 Law. Except to the extent that the BCA is ~datorily
applicable to the Merger and the rights afthe stockholders of the Constituent Corporations. this
Agre~ent shall be governed by and constrUed in accordance with the laws afthe ~tatc of New
York applicable to a contraCt executed and perfonned in such State, without giving' effect to the
conflicts oflaws principles thereof.
11 Submission to JurisdiCtion: Waivers. Each ofScottishPower,
Hold~o (on behalfofi~c:lfand Merger ~ub), the Partnership, UKSub 1 ~ub 2 and the
Company mevocably agree that anx l~gal action or proc:::ding with respect to this Agreement or
for recognition and enforcemer.t of any judgment in resp::ct hereof brought by another pany
hereto or its successors or assigr.s may be brought and d:temrined in the Supreme Com of the
State of New, York in New York County or in the United S~cs District Coun for the SoUthern
Distri~ of New York, and each of ScottishPower, HoldCo (on behalf of itself and Merger Sub),
the pannership,3nd the Company hereby trrevocably submits with regmi to any sUch 'action or
proceeding fur itself and in respect to its propertY, gencmly and uncoilCiitionally, to the
noneXclusive jurisdiction of the aforesaid courtS~ N;1y service of process to be made in such
action or prOce::ding xp.ay be made by delivery of process in accordance with the notice
provisions conwned in Section 9.02. Each of ScottishPower"HoldCg, the Partnership, Merger
:Sub, and th~ Company ~ereby irrevocably waivc:~ and agreeS, not to 3ss~by way of motion. as
a defens~, coun~rc_'or otherwise, in any action, or proceeding with ~ect to this Agre:ment,
, (a) the defense ~tsoyereignimmUnity, (b) any claim that it is not personaijy subject to the
jurisdiCtion of th~ 'above-named couns for any reason other than the ~l~ ~ serve process in
accorci3nce'with Uii~ Section 9.10. (c) that it or-its property is exempt or iInmune from
jurisdiction of~ysui:h coon or from any le2al process commcncedin suc;i?,couns (whether
through servic~Ci~ 9otice, attachment pn~rt~ judgment. attaChment in aid of execution of
judgment. exeC1iii~~ ofjudgm:nt or othmVise), and (d) to the fullest~tcnt permitted by
applicable law't1ia,t (i) the suiL action ox: proce'eding'in any s~h coon i~ brought in an
inconvenient forum, (ii) the venue of such suit. actio~, or proce=ding is improp~ and, (Hi) this
Agre=ment, or ~~ ~~ject maner hereof: may not blenforced in or by such c~urts.
12 Enforcement of A~mcnt. The panies hereto agree that
irTeparable damage would occur in the cven~ that an~.. of the provisions of~ A~cment was
not perform~ in accordance \\;m its specified terms or was otherwise breached. It is
accorcfuigly agreed that the parri~hall be entitl~d to an injunction, or injunctions to prevent
breaches ofmis Agreement and to enforce specifically the terms and provisions hcrcofin any
court o(competent jurisdictio~. this being in addition to any other remedy to which they are
, entitled at law or in equity.
I 9.13 Cenain Definitions. As used in this Aereement:
(a) except as used in Secti~~ 2.03(bt 3.02(c), 3.17 and 04,the term
affiliate." as applied to any person, shall mean any othc;r person directly or indirectly
controlling, controlled by, or under common control \,,;~ that person; for purposes of this
definition, "control" (including, with correlative meanings, the termS "controllinsz.
" "
controlled
and "under common control with"), as'.'ipplicd.to any person, means the p~ssession. directly
or indirectly, aCthe power to direct or cause the directi~n oCthe management ~d policies of that
person. 'whether through the ownership of voting securities, by contract or otherwise;
, (b) a person will be deemed to nben~Iicial1v" own securitieS if such person
would Qe the bCD:eficial owner of such securities under Rule 13d-3 under the Exchange, Act,
including seCurities which such person has the right to acquire (whether such.~ght is ex~le
imm~itely or only after the passage of time);
(c) . th~term business davIt me3I1S a day other than Saturday, Sunday or any
day on which banks located in the State of Oregon or Londo~ England are authorized or
j obligated to close;
(d) thc term "lmowlede:e" or any similar formulation of"knowlede:c" shall
mcan. with respeCt to ScottishPower or the Company, the acmal knowledge after due inquiry of
the executive ofiicm ofScottishPower or thc ComDanv and theirSubsidiarics. set forth in
Section 9.12(of the Sco~owcrDisclosure LcttC'or Section '9. 12(d) o~the Company
Disclosure Letter and. with respect to HoldC,?, the actUal knowledge after due inquiry ofthc
Executivc Directors of Hold Co immediately prior to the ~~ective
( c) any reference to any event, changc or effect having a "material adverse
effcct"on or with respect to an,entity (or ~up of entities taken as a 'Yhole) means such event,
change or effect ~ materially advme to the- business. propCrrlcs. assets. liabilities, financial
condition or rcs1ilts of operations of such entity (or of such group of ~tities taken as a' whole);
(f) the term "New Facilities" means new revolving credit facilities and/or
amendmentS to eXiSting revolving credit facilities of not more than ~.6 billion in the aggregate
on terms which 3re not simiiicantlv less favorablc taken as a wholc' than the RCF;
- '(g)
thc ter;n "erson" shall includc indiviquals, corporatio~, parmcrships.
tIustS. other entities and groups (which tenn shall include a "
~"
as such term is defined in
Section 13(d)(3) ofthc Exchange Act);
(h) the term.RCF" mcanS the Revolving Credit Facility dated June 24. 1996
, betWec~ inter alia.ScottishPowc:r, the Royal BanWhf Scotland pIc and Union Bank
Switzerland (thc "RCr~
;' ,
(i) . the "Retm:sentatives
" ,
of any entity means such entity's directors; officers.
employees. Iega4 invesnpcnt banking and financial advisors. accountants and any other agents,
and representatives; .
. . (j)
except as used in Sections 3.02(d) and 3.17, the tcnn "Subsidiarv" means.
with respect to any pany, any corporation or other organizati~hether incorporated or
unjncorporatcd, of which more than fifty percent (50%) of either the equity interests in, or thc
voting conttOl of, such corporation or other organization is. directly or indirectly through
Subsidiaries or otherwise, beneficially owned by such party.
(Ie)
to in Schedule I;
Scheme Consents" means the conscnts, clearances and approvals referred
(1) "Scheme Document" mcans the document. including an explanatory
statement, to be sent to the,shareholders of ScottishPower in connection with P1e Scheme of
AIrangcment.
. (m) any refcre:;ce to "transactions contemplated hereby,
" "
transactions
contetppl~d hereunder,
" "
~actions contemplated by this Agrcement." "~actions
contemplated under this Agre=entll or any similar for=uiation shaIl include the traiisaction
contemplated by the Scheme o(Arnmgemcnt: ro\ide:i. ~o\Vever. that the reference to such
phrase appearing in the parcnth::ical clause in the ir.:rocuctory paragraph of Section 5.02 shall
not include the tranSaCtion contemplated by the Sch== of ArnmgemcnL
14 Counte:"'J3ItS. This Agrecner.t I:l:!Y be executecj in any number of
- counterpans, each of which \viii be deemed an original. ~ut all of which togetherwiU constitUte
..
one and the same instrument.
15 WAIVER OF JURy TRIAL EACHPARTYHER,ETOHEREBY
W AIYES, TO THE FULLEST EXTENT PERMITTED BY APPU~LE LAW, ANY RIGHT /
IT MAY HA ~TO A TRlAL BY JURY IN ANY LEGAL PROCEEDiNG DIRECTLY OR
INDIRECTL Y ARIsING OU1 OF OR ~TING TO THIS A~ OR THE
TRANSACTION CONTEMPL~TED' HEREBY (\VHETHER. BASED ON CONTRACT, -
TORT OR ANY OrHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESaq AJ1VE, AGENT OR A TIORNEY OF .Xy OTHER. P ARTY HAS
REPRES~~ EXPRESSL Y OR OTHERWISE. T..~~ T SUCH OTHER PARTY WOULD
NOT, INTHE:EVENT OF LInGATION,SEEK. TO E~rORCE THE FOREGOING WAIVER
AND (B) A~OWLEDGES- THAT IT AND THE OTHER P AR11Es HERETO HAVE
BEEN INDUc;m TO ENTER INTO THIS AGRrF~'~"l BY~ AMONG OTHER THINGS,
MUTUAL WAlVERS A..'\1J CERTIFICATIO~S ~THlS SECTION.
5 CHED UI.E 1
" SCHE.."IE CONSENTS
The approvai of the Scheme or ~t by a majority in number~~n~cr.:ec:-fo-.mhs in v-Ju: af the ScocCshPowcr "S1weholdm
p~
aM voCDg (ei~er in penon or by prexy) at the me=rconvened by the 1:oait. .
-z:he zpprcml of me Scheme or ~t and me reduction in cbe
Capial ofScocrishPowe:~ the in share =Pia1. ~e pif!:l1;tuioanew Scoa:ishPowCr Shares 2nd me gcncng of authcmty to me direcam
~fSccc:isbPcwer to allot such Shares, in each asc chc: purposes af che
$chemc of Az::ngcmenc by a specW ~olmion of~a:ishP~.
The co~c:m: in writing of che Scoc:ishPowcr Spc:ci21 Shm:holder to' the:
Scheme of Arrmgcmcnt and chc proposed ~nu."~
ScatCsnPowc:Articles of AssocWion. and " the appraval or mc4
amendmentS .by a spc:ci2l r:solmian of ScottisbPoW;c:r.
The sznc:icn by the"CoUR of the Scheme of Amngcmcnt (with, or
withOUt n-.odifiction) md the c:onm;mtion Dr the eoun" or the:
miucCon in apial by the anceDmon 6f Scocr:ishPowcr Shares rcq~
as pm of the Scheme or Amngcmcnc.
The app:aval in writing of-thc, tni1naion co be ettCC"'.c:d by the Schemeof Amngemem: by the Sccrcarr of San: for Scodmd 2nd by each UK.
JlecuWcr whose consent is or considered' by ScoaisbPowu to
be necessary, under che: a::ms or ach licence. appoincncnc or other
aumoris2.tion held by my member of the ScoaishPower Croup.
).:1 indi~con on S4~.cry te..~ by the Secn:wy or Swc:' for Trade
2nd Ind'usay a..-ui by cac~ 1.J1C. RegWacor. as appropriate. that it,is not his
incmcon co seek, as at1;sult of t.~e cmsaction to- be c&aed by the
Scheme of ~gcmem, any revocmon of or modifiacion to my
1icence. appOincment or ocher au'chorisation hc:1ci by any member ofche
Scoa:ishPower Group. cxc:pt on atis&ctaty terms.
Neither the Sccreary ofSarefcr Scotbnd nor my Reguhtcr havinC~
sought. ~a result or , the Scheme of Arrmcemm...r. undemkings or
u.sur2nces fram any member of che Scoc:ishPower Group;' except on
wis&c:tOty cerms.
the qrc of the L.SE to admit the crdinary s1wa ofHolciCo issued
aDd to be: issued pumwu co che Scheme of An-mgcmcnc cc che Otnml
Lise of the I.SE (subjeCt only to alloanent) and such ~c nOt being
witbdnwn prior to the Scheme: Due.
'I/99IMt4U~tJ
Th~ r:mpt. in e2Ch cae an sar:is6aory tmnS., by HaldCo
ro dcmnca ttom me InIanei Revenuc unduseaioa 138 of
TmCali oiOwpab1e Gaias Act 1992 and UDder scc:iioa 707 oC
d1~ "rnca~ and Carpomion Taxa An 1988 in respect of the
Scheme of Amqcmcnc; wi
The accuaon of me RpW:cment depasic agreement ill respect oC du:
HoldCo ADas punumt to Secticm 6.06('0).
J 4. A. ~GI11t;1tem=t" co be Ateci under me SecuriUes Exchange Acf," 0(-
' "
1934 Wl1 have DeeD fiJed bY'HoldCo and declaRd Ci"etave by; me SEe.
IS. ThC"ipPF'21 o(HoJdCo'. ordinary Wreholdczs (wbCft: re~ by &
spccDl rcaIudon) (i) co me adopticm or amen~ .oE'HoldCa'Ani~ or AsSocUDou izI'accotdmce wich Seccicn ..O1(a) (md to the paa,.cidwlaa to HoIdCo'1 Aftic1a. oC AssacWicn ~~..4 to ill Secrion 6.03(c)
if dJc WIle am 10 b~ d&..
~~~
Oft prior CD me Scheme Dale). (Ill toincrease me mcAoriiai aPical ofHoJdCo, mci to sift me cJireccon
of HoJcICGwChadtT CD s!wa we: aaon 80 0(1I1c Coinpmics
AD. t 9as. in ot che cmIizuq , ahara or HaldCo co' be
punumt to the Scheme ~ Amqcmcm: ane! d1c Mqu md ad1erwile(or c=ml f:pGICI (jii) co .disappJy mmml1 PR-cmpaOA zighu (Iv) toambadse HoIdCo co rqn:dwe itS awn Wm tv) CO chance HoJdCo'IWDt cODdiaom1 UpO.I me Scheme oE' Amngcmcnc becommg c&aift
mcI (\i) to ippoint dD:,..coa.
, " - '
Such ocher &Ppranls. prior co the Scheme Dace. of the SharehOldm of
HolciCo, the baud: ofHaJdCo mdchc baud afScac:isbPower ~
(Ii) CO~,at IQ chI appJicacion oC JecDQJ1 136 of che T azaaonof CJwpab1e GaW 'Ace 1992 in rcpee: of ~ Sch=cAampmcm.
- ./ .
10.The caDS~ UDder the llCF o( the Majority .B2Db (as cie6Ded themD)
to the Scheme of Aam an4J at me rcplae:mcnt of me Ref (UIwhole or in pm) with the New Faci1icics under which DO such COftSCDC is
(~ cansmc bu ~e= siv=).
. '
ConDrmaOQJ1 .ram me E=apcm I~ B~ .Wt it wi11 DOC
the: pre~c of 10m co Scca:isbPower ~ i~,bsi..l;-""
a R:IUlc of rile chmp" at comral of Scac:isbPower which the Scheme of:Arrm~ wiD, n=lc in. 1D che ahleace of (t'lft~, SccaimPawer mq decide ~ p=pay my sUch 10m. ,
11.
12. The: Ho1dCo ADRs co he issued pumiam: fa me Scheme of &r2npmem:
IIWl haft audtorised for listing on:~ upon oScial AO~ofiss1uncc.
13.
I. WM4G4.L~"'2
17;
require~ to implement and give c=== to the Scheme
of Amngc:nenc andthe team of this Agreement.
The 6ling af orden. re:u.~ ether docu:n:na with me R.egiscr of
Compmics in ScodWi or with the Court in onier to obaia the san:acn
of me: C;aurr iOr, md ta give e:i:c: ta, the Scheme: of Amngcm.em.
18.$ach fiIingi and conscna as SCCtCsnPower rmy r=san2hly considern~cessuy or dcsiabIe . in com1ec=n ~ch the Scheme of Amngcmcmmdlor the Mqer .with stock cxd:w1gcs or other Govcmmca1 or~ry Authoriues in AusaW.. ~~"~d'! ,Ir:hnd.japm and any otherapp1i=blc jur.sdiaien (omer than t.~c US and the: UK).
D cBuidcnu
In this Schc:duJe I, the foRewing dCnitians apply:
OJ~rc mens the COuI:, of SCssie~. Edinburgh;
Sc.oUishPtItftr Shua means ordinary smr:s of lO.sOp in me capial ofScoa:ishPOWet; and
PIC lUl"14tor tnems each of the Direc:ar Gcn~ of E!ec::icity Supply. theDiRaor Gene:2l of Wau:: Services, t!:e , Direc:at Ccncr:al of Gas Supply,
chc Direccr Gcnc:a1 ofT elecommuniecoas..
.".
..tUf4CtDr7 temu mC2DS on terms which are ucisCc:ary ta Holdco and which
would not, or would noe te2SOi&ab1y be expec::d ,to. have. individ=Dy or in theaggrc:ptC~ .a In:te:'.2l adve:se c:$:ct on ehe Holdco Group =ken as a whole.
L.".,.146O 1!I~/13
,... .J
CHED tJLE II
TIm ARTICLES OF ASSOCIATION OF HOLD
HoIdCo's Articles of Association will m\'c, tb: princip2l difiCrenc~ &om thecurrent Articles of Assoamon of Scaa:ishPowcr r~..ta below. TherewiBalso be some of a minor or c::!u:ic:1 z:=mc' which, have DOC been~~d ~~low. ' HOIdco s Artides' of Associaaoa will alsC? ~du4c; my chmges
requCstc4 by the ~coaishPowcr SpccW S1u::h61dc:r or by the LSE and agreed to~ Sco~ower. '
ThC?' nUmb=- idcmi..:ying each p~visiou of HoldCo's prupased Articles of~cWi~n ccm:sponds (except whe:e otherwise sated) tC the: numbering
d1c:cmIem Scac::ishPower Articles of lwoc:Wicm.
(a)'~rddc 6(EJ (I1ae RdcClrlllilc Sluua)-
There is no equivalene of this pruposcci a..-:icie in Sc~a:ishPower s c;o~
Amcles of Associatian. Ie will ,see oue the righa u:ac:bing to nou-wansrcdcc:ruble shues which it is intended c!w HoiciCc wiJl issue in order co havethe issued apial required, to obain ~ bc#ng cmifiacc underseetiarf n 1 of the Campmies Ace 1985.
(b)A"ciclc 1 HoLlCII Spcci4l Slur,,)
'"
'INs uncle. which will set OUt the righa ~~ng to the: one s1wc: of l1 in mecapial of HaldCc to be issued tt) the Sc:ct:ishPower SpecW S1ure~olde:
, puauanc co the Sc:he:ne of Amngcment (the "Holdco Spcc:W S1ure'
j,
wUl beamended from the' ccmpmble: Scoa:ishPcwcr midc so"chu == of thefonowing m:.c::n win also be deemed to be a vu".mcn prior consent
in writing ,f the hold~ of t.~e HoldCo Special $lure:
(i) the: giving by HoldCo of any cons~t (1,: ~:::nenc to any amendment
co, di:letion 'of or 3lccntion to che em:c: o~ article 7 of the Anides
Association oiScoa:ishPowcr (s~vc ,as rcl::..4 eo below):
' ,
Cnl the giving by HoldCo of my cement or ~cnc to the: antion or
issue: of any slura in the capial of Sc:otti1.iPowc:r other dun an issue of
shares upon', me issue of which HoIdCo win own thc tWI'lepl and
bcnc5c:i21 ince:est in.md contrOL shuc:s i:1 the apial of ScoaishPowcr
anying at 1== 8S per cent. of thc voCni righa cxerciDblcon, a poB at
genc:n1 mccings of Sco~ower;
, ,
(ii11 '" the disposal by HoldCo ~E any of the shares ' in Scoa:ishPowcr' or of my
rights or incc:resc therein. or the m~ intO by HoldCo of my
agreement or amngc:nent With respece =, such sluRs. or me exercise of
my wang or other righa acching to such shares. such ~c HoldCO
would cease to own the fWllep ~d bc:1cncW interest a.qd concral.
flV)
sh2r:s in L:':: cpial of Scoc:ishPower c:::ymg It '!em 85 per cent. of the
voting rigna exe:Csahle an a foil at gene::J meetings afSco=mpowc:r;
the giving by HaidCo of my consent ar ~cmem to ;ny"ibragation.varia:ion, waycr or madifiaCon or any ,f!'f me rigins ~r privileg=ac:!Ung to my siures in SeocishPower such 'c!m noJdCo would case
co own" the mIl lepl and bene:= ir~t m. and canac!. sham in the
~pia1 of Se~owc:r cmymg at lease 83 per CCDt.of VOting rigba?,e.."1:is:ble~on a pan ~ gencc1 meeenp orSc:cc:ishPqwcr. mci
(vJ U1Y ache: ac: or omission co ac:t by HoldCo or the Dir:c:aa of New
Sc:attishPower which r:sWa in HoldCo e~ co own' the fWllepl and
hcnefic:W ir.tcmt in. and "comral. sb2rcs in the
apia1 of ScoaishPower
cmying It le2St 85 per cem. of the voUng riglus exercisable on a poU at
geJeal m~ ofScoa:ishPowcr.
' ,
The existing we:: 7 o(Sco~OWCt s A.."Uclcs is co be d~d 2nd replacc:d by
a."1 micle which e:uurcs that the eventS set CUt in panga.phs (i), (ii) and (iv)above do not o~c:ur withOUt 'the prior \vrlttcn "-CO~t of.'; HaldCQ.ScottishPower s mccs of Assoamon will ~a includc my requested
by the Sc;ocishPower Special Shatchaldcr :.greed to by Sco~owcr.
(c)Anidc SO (DiJdtmlrc Gf Lneraa in SJa4ru)
This micle. which wiD relaee to the disclosu..-: of incer:srs L"1 shares, will beamended ttcm the cqmpaable
' "
ScoaishPow~:... wele co tm1Ove r:fC'C1cCS toccmin interim m--~ge:nentS included in ScaCcshPower s Articles in connec:tionwim the izUtial Boi:atiOn afScotCshPower.
(d)Arridc 11 (UmiuUoru Oil SMrcMUlngs)
This wele. which will Ie: ~ut restrictions on penons holding or conC'Ciling theright to =t 15 pe: cent. or more of the votes at gencal meetings, wiD. beamended from. me c:amp2nble ScottishPowcr a.~clc to remove refc:cu:es tocemm intc:im m--~ml::1a included in Scac:shPowcr s Anidcs of A1sociatio~
in connection with the inic21 Boa.tion of ScoeshPower.
(e) .AJ:cIde (N."Mcr "1 DlrcttG,. to ~rirc)
This mid=.- wbic.~ will reWc co the number of ditec:tcft to retir:: f:o~ oSee byroation. wiJl be amended &am the comparable Scoa:WtPower utic:le inaccord2nec with the new London Stock Ex:hangc rcquir::nenr that all directOD
sha1I retire by roaaon at lcm evert three yem.
ArUdc 12J (1Urrowi;'1 Powcn)
This article win, if considered necessary by Scoc:ishPower. be amended ttom the
c:ompwle ScocishPow az?cle to reflea the new UK Mnmaal' Rcp~rting
1. 'W9'JIM9Iln,
Sand.mi FRSI0. Any such 2.~mchr.e::: ::::y include provisions to the c&ath:. in alc:u1:ring me borrowing limit. ::0 gaodwi11, or inangiblc mea wiD bedcduc:ed a:c:pc me amount Cut Ius ce:n unarmed in ac:canbnce-Wid!AUla.
(g)
Artith 1J0 (lfltmm Dl"uaub)
This mice. which wiD rda= co the: a..biiity of the:: Direaaa ta pay interimdividends. mar, if considered nc:csu..",,! or desicble $~~a:ishPower, beamcn~ed ttcm me ccmpmble: Sc:ocCshPowc: mic:le to ckir, thu "the: Direc:oad~chr: md pay. any dividends. ir.6:Cing fin2l dmdcnds. and Dot jusc~~dividends. This reWa to the prcposed move to qUUteriy dividendpayme:m.
(h)Artick 110 (ADR DfI!,flritllria)
!unmc.:nccs wi1l be m2de in ac:cc::::~c: with Seaion 6.03(c) of this~p::n=c, 2lthough these am:ncimc:na ::-.:.y noe be made prier co che SchemeDUe.
W?M4w.J:l/~'.J
EXHIBIT A
Scheme of Arraftiemect
(under section 425 of te Companies Act 1985)
b,tw..n ScaUSSh Po..r pic and U\I Scheme Shar.holdl" III h.,.iN1tIr a'Med'
and Ul8 Specllt Shanholdlr (.1 ",rlinantr defined'
1. PrtllmtMI'j
(A) In =s S~ 91 Al:'mI=c:u. \Inial .ir.c::nsis~::~ wi':.': :."Ie S\:=iec or c:la:m. the !cUawinc
~sicms i.'i&11 bear the faUOWUIC mcani::p:
!nwlSest "Uy means my ciay 0= than a SIa:rd&y ar Su:u!ay an which" banks Looe lencra11y Opeft far
busmw ~ ~"'~Wala;.
Court means d1e OIu:t af Seuioa in Edi."1b1Ulh:
CClU" .\1 elCUlI mcUIJ the mcc=t af halden af Sc:ottishPowe: s~ c:onwne4 by iaterlacnor of the
C:n&rt pun~ to secioa 41$ o( the Co6~i:un Act 19as fer
. '
. 1999 to ccllSidcr 1Dd. if
moulD: I~ this Sc!\cmc:
CREST rr.e
~~ ~
~iCVU1t S"tCft'.:U ddncd i.."1 ~,:e CR!ST i\er.l:I=:llUl ~ ::sp,ect o!whia CUSTCo is
the o;:Jeram: i~ ~e4ned in to". CREST Rqul&:lo-..s);
CJU:STC'D me&:!s CUSTCo L.:.:~i~~
C1tEST 1t~lu14cioru means the Unc:r:mcateci Sc:u:'.ties Rcl'.!:luans 1995 (51 1995 :-la. 1%72) u from
. ,
time to time Imended:
. '- ,' ." ,
JaG,", includes any penon C:ttitied by asasmissian:
flcar ScOutshPotflu SIuua rr.mu new ardir.2."Y SM:es of SO r:::e each if". the capital of 5co:nshPower:
Ncv.ScauuhPotfl., means :-lew S'coaish Power iSle:
NrtlI ScoutshPo",c, Sp.aell Shll,e :neans the specal
:"~
nce..vati:lc redeemable j)refCfena share
n in :he capital of New. ScocishPower;
No, Shl/u~s means ordinary ,",arn or (50 pCftce) ead: in :r.e :s.j2ital oI :"few Sc:oCshPawer.
..-'
Ite~rtl 04t6 rr.eans the busir.~ day immediately j):~riir.t :.~e Scr.:mc Cate;.
Scheme D4" mei."1S to~e dlte an wnic ~h4 Scheme oc:=::-.:s e!!ec-M in acc:=rdance wi.m dawc 6 of- this Scheme; \
...... '" -
Scheme Record Delta means tJo.e business day irnmeC:a:ely ~re::::'"\1 ~~ diu of t.~e 1:earinI ~ the Cowt
at which L~e Scheme is slll1C:oncd:
S~M"'C Shelruoldlr meUIJ a holde: of 5c!,ce Shun u It 5.30 p.=. on the Record Dace:
Sa.".. SIll,," meaN:
, .
(I' all Sc:aais~r Sham in iuue " the data of c-.u Sc:."tc::e:
, (b) aU (if any, other ScC:ishPowCf S~..res in issue iI-..-::e::i&uly prior to the CQu:t ~=t1I: and
(:) an (if my) f'Jr..'~er S::ttshPcwer Shun wtUc:: ::sj be in iuue It S.JO pm. on ~"1e SQc.-ne~=M C~
ScocruhPaUlcr mans Scot".:u pic;
ScouuhJ'oruc, ShaNl me&CJ ontinazy sbatft of SO pence cae:. in :.."I.e capital of S;ottW1Powwr:
SeatcisJtPfJfllcr Spcr:i41 ShGl'f meant the lpe~al riChu nan.yodnl rcdcaub1e preference shaft of It in
c:ap~ of SccaishPower.
, .
S"ca.l ShG1CJao14c, ceuzs ~'t Sc~.ary of Stice for S::c&.-:::. holder of ScocCshPo..... SpecialS1we;
, .:
clsil Sc:bem,e meus this Sc.'t~.e of.Anca=crn ill ::1 ;:~s::-.t f:rnt ~r with &I1Y modification t.~e:eaf or
~ciciicon :.~ema or concii~on apprcved ar imj20scC by I.~e C::m: a.:d
. '
Uftcuritt=UG or 1ft Iluntllf=wl means rc~arCe: c:: ~c ' ~i:vazu r:r.sw u in unc:::'.ifica:ed
fo:m. beiq Jude! in u:ani1i~te~ ~Cr:ft in CR!ST and a~e ~~ :.I:e o=jec: of which by Yift.:ie of the Cit!ST
Retuluiaas may be uansfemC ~y me&:1S of CREST.
(B) 111e aut.horiseli'sh~ capital of SccuishPo~ as u the date of c..'".:s Sc:!1e:=e is! . divided into
Scoa:ishPowe: Shara, of which haw been issueti ace! an: fW1y paic! up (and the remaiDde:
arc wUsS1:8ci). a,n,ci Q~e ScoaishPower Special Shin whi:: ::u bec., issued ..,ci is
~y
paid up.
, "". , ,':-"
(C) New ScoCshP~ wu in'CazporafeG UI pW:1k.iiJC:ed co-...;:sny 011
. '
. 1999 wu!er the
gm& Sew ScoWhPoWu. The aumor.sed. maR capiW of Sew s~ower It me af this Scheme
is 1: 8 diYidc:d into' . New Sham, o! whiCh' 8 haw been ~ued. and ue:lwly paici up (1M
the l'C'.aincier L~ unissued) and U:c New ScomshPower Sj:c:iai Sr.a:: which has. Cat bee i.ssud.
. .' ./' . ' '
CD) The ~e of this Scheme is co pravicit fOr the caaaC.a.= af the Sc1leme ShIftS. and the
Scouisb:~ :Sp~ Share Lou! me iSsue 01 new S=CshP:wer StaRS wiUi an .~pte naminal v81u
ec;ual to t.~ o(~.e shues so a.nc:Uec!~ Sew Scocist:JIcwer So": :::1sic:te~u~~ af:t1e aUaacem by ="'CW
ScacishPowu'of New Shares 10 ee Scheme ShL~olCe:S I~d ::c wa=e.en by :-;ew Scca::shPowu of
t.'1e Ncw Scct#S~~r SpcCal Share co u-.e Specw Sha."'i:':!:!::.
. .
(E) ~C;; Sc:acis~.Po"er has aveect. &n;4 it is' propaicci tt.at :"\8 Spec:W Shareholder win qrce. 10 ai'Pe&r
by Counsel on ine heuinl of :he Peritiou fer du sanct:or. by tl'.e Coc.~' of ~'tis Sd1eme. to cement
theretO ancI 10 u:uicr.ake to be bounci thereby a.."d 10' uec-~t& or FO~ ~ De aecneci all such
ca=m1mlS. and ~. do or pf'OC".uc to be cioce an S1:Ch IC"'..s &:c! w..,p. u may be ~ec:ssary or desimhle
' be executed Cir daite by them ::spec:ively far ~"1c pu.;::se of aiviQ eiIect io lhii Scheme.
. .
z. The Scheme
ScattishPower Cmcellation
(a) The share capical cf SCQ:shPower shall be muc:d
;y
~c:llinl c..lte Scheme Shares and d1e
Scou:sh1'ower Special Share.
---- \
(b) Forthwith and ccntinlcndJ upon the said reducion of capital tUml e&ct
(i) the share capital of Scanis~er s~ be inc::ucci to ;~ !armer amount =r the c:::auan of
such number of new ScanishPowcr Shira U s~111 be of.., alZrcp\8 uaminal &C1Q\&ftt equal
co the aa&repte :1:::Unal amount at ~'te S~L"'n caReL:::! pu.-sumt co sub-clause (I) of this
clause 1:'I \
(ii) ScaaishPawer shaU apply the credit U:..smc L."\ iu books of ac=unt on :he reciuc:ian of
:apital j:Umlant to sub.cause (I) of c..'tiJ clauu 1 in s:ayiq up; ic C\:U u par. t.,e new
ScomshPawer Shun created . pursuant to sub~!a\lle (b)(1) o! this ,clause 1 a:uI shall aIla&
and wue the ~an".c. c.-:di:ed u fully paid. :a ~"' SCQCshPawer anciJor itS nomia.ee(s); lad
(Oi) SCQcish~r "Mia he:ome a whoUy owned s~bsidiuy of Sew Sc:oaishPower.New Sillies (1) In =ruide~aoa of t.~c az:c:UaUOft of the Sc:.~c::e Sh&m ..~d c..'1e SCQt:shhwe: Special Shan
and 'tbe issue of ac :\CW ScatUshPower ShIRl to :-Ie-.. Sccc:shPawer uleilor itS nomince(tl
p:muam to clause 1 = this Scheme. New Scccsr..Power shall (subje=. to :.'\e provisians of sub-
clause (e, of chis ciause 2):
(i) allot and issue (e::dited u fully pad) ~e'W Slwa to the Sc."I.cme Shueholclen on the
faUowiq basis:
For cadi Sc.'u..-:.e Share held at S.JO pm. 0:: :he bc::rd 0&18. CRe seW Shan
s~ Lit. lar any pe~on boldin, Sew Sr.ues U AI 5.30 p.m. on the' Record Caw his
eautie.:nent ta real'" New Shara pursuant Ie ~"is Ca~sc 2 shall be rcduceci'ay che numberof Sew Shun !:e holds'a: tt'.at.1iI:e: anci .
(il1 allot ane! issue (c-.:!itd u fully paie!) the Sew s~!-.Power SpeC2l Share to the Special
SlwcColcie:.
(b) Th= ~C'W 'Sh~ to be issue: p1:.~t to sub-c.1ause (aHi) of t1::s clawe 2 aha!l,pari pusu IS
I Iin8lc daD of shares intC' Ie me! shall :mk ift cd1 !or all ~vic!=ds or 1Z'.ac... paid
cr e!e~ Wr me Sceme Cace aa the ~re:.~.,. 1::&.' ~t'ira1 of New S~.
' /
(e) :rhe
p~
of sub-clAwe (a) af lhil cage 2 s~ ~e ,ubject .to
~ .
1I~bibiticm"or c:mdiciaa.
imp~e! by law. Wi~aut pr:;!.:dia ~ the leaenlicy of :he !=-=taUSI. iC. ~ ta"cct of an, Scheme
Sharihalde: who is I ci==. ::sidem or :,.auoaa! ~ any jurisd.ic:io: ou~ to". Uaiwi Kmldom~~u shareholde:"T. ~ew Sca::fJh.Powv is a:-;.sed Cat the allac:u:: lAd issuIof :-few
shareS 'i;1:..~1:aJU to U:is clawe 2 woUle! inf:i.::le == ~1W1 0: 1:IY
j~~
ouuide me Ucitd
KialCi~~(ocher Uw1 the USJ1 or would ~;u::e ~C'W Scc~QWa' ~ obi,e:ve laY lovum:sencaI
, ather' F=ascm or illY rq'Ist:'J.uan.
~~
or otl:e~ !::=S1UY ((oUte tr.~ the USn. thca New
Scomsti~er m.y dC".:=e no Sew 51'.ua siull ~e ailoced or jslued to such owrsaa
shlreholder :Jftcie: rr.:s c1a~e 1. but .hail U:ftUC ~e Lloc:eci to I' :.a~ee appoin= by New
scaciitiPower. IS I U'U1tn fQr such OVe:'Scas st\'I'L~oic1u. ~a terms that the Gominee shalL IS
sGOn as practicable !=ltowinc :he SchC1e Cite. sei! :.~e ~~ Sbw so' allotted &1 the best pr.ce
whiCh an ,m-onably be ooWned and shall &e..'"=W\: !or ~c net praCftdt of such sale (mu
deducion of all =::j:cases and cccmiss:ons, in~~~1 ~Iue a.dl!ec( iU: pay8bie th~.
smen. I c.'te~.1C or wurut ca such cve:scu s~.a:cEoide: in 8CCQ:Cacc: -ids me provisiocs of
. c!ause 3 below. :-lone of Sc:QhPowet.~:':few Sccc::.~. any nominee re!emci to:: L'Us sub.
clause (c) f)r any IIrcm or a!CIU ,of any,of che::t ,:-.ar, tl~ any !ishi:ityfcr any lau arisi::C Ii I
result of the cimm. or te:ms of my such sale.
Cet1L1aru and Dl)'ment
(1) Not later dwllive (5) business daY' alter ~e Sche:::: Dau:.
~"'
Sca~ shall scd by past
, tD the allottees of the New Shara and = eo,. a1lcttee of ~e New S=aUhPower Special Shm
allotted and iuucd ;:un~ :a clawe 2 a! this Sce.e :::-.Jicatn in respect of such sIwa.
, ,
that when: Sc.'te:ne Shara an: held in ~~c:r:.fcued !C:=1. New ,ScatCshPowu will ;m2care that~STC4 is ins1N~-= to c::::!it to !hi aP1'~p:-..~e ncc& IC:Cum in CREST o! L'1e Scheme
Sham1olde:- conc:med sue::. sharcit.ok!c:"s cn::!e:::e:u = ~ cw Shares.
OJI ~ot iater man Eve (5) bwineu dayi" foUowir:1 the we or any reicvant ~ew~Shara pu.~t clawe 2(:1. New Scoctis:Powv uuVor the :10=" shall'sacisfy the cash e=nsidencioA payable
by :c by dcspltCU.~ to the P::3OftS mp~ly e:~..d chc~ chequ~ mciJor by pOSt.
(c) AU cerWicates re;uim! to b. se:i by ScceshPower ;:un'~ to sub-c1IUsI (a) of ,"'Us dwse J 8Dd
all cheques' or WUTmU requi.ftd to he' sem by :"few ScaCshPower uuilar any :uJmiaee rdemd
to in c!.auae 2(e) at S~cme shall be seut thraulh c.~e j:osc ill 9ft1l- CftYtiOJlCS acldtenccI to
me perta:.s ::spea:i'veiy awed therco.a It ~eir ml'CC'YW acid:usa apparizl, in the rqiaccr of
members of ScoeishPower at. ~~e cline of bwirt.m on :.~e Rc=rcI Due (or. :n ~e cue ' of ;oint
holders, ~ the aC:""W at Cat ene at L':e ;ain: 'ho~cn whose name r..mds 5m in the ::JIS"Ar in
RSl'ect at the joim !:oidinc) or in scordlnCt wt.t." L."1)' special irmNCCftS r:JuCinc
cammun:caaan1 re:cived It ~~e rqisten:d ce!:e :f SC=~WU ilriar tC ~e IleCcrd Dat&.
(d) ~one of Scac,hPOWU'. ~ew Sc:mishPawv. In, n:=i:ee rde:ml tC ia clawe 2(C) or any .cent
of 1ft)' of them sha11 be ~spon11ale tar ~,. Iou or ~e:IY In t.-acu::Uslioc af c~cues. cheques or
....uNnCl ,ant in ac:cn!ance with this c!ause 3. .
(e) The l=rec:dir.1 sub~lAwa o! thi. clause J Ii'.d tIkI c!::: subject fa &:IJ,prahibitioa o:(oadi=aimposed by law.
C,t1iJ1atIs -teDrlsem:inr Scheme Slwes Jnd en. Scaa:snP="~ Soecz&l SlI...
.. Wich e!ect fram aM 'ir.clw=C the Sc~~ Cat&. a:1 :c::::aca ~pmcmi:lc ho1&CS of Scheme
S~ua 1m! the SCQais~ 5;:::i.aJ Share ihaJJ ClAse:=:1 vUd in respect o~ such"~al=p and the
baleln of such sr.ara Inan be :a=d at :h. ~c:uat at Sca;:sftPawer to deliver ,such a:=ca= fat~.don to ScacishPow'v or = any apPo&n~ec Sca::st.Pawer to :::eiYe '~e WIle.
,. ' ~,
. .....
lA.nates
.5. Eac.'s :nanduc in force at S.3Cp.m. en the JUc:oni C3.:C re:a:ir.. to ~e payment of diVidends on
Scheme Sh~arid each instr~cC=n then in !o:= IS ca:i::s &nO ocer commumcauoDJ fromS~ lbail. u:1lest aitd un:il 'llried-or ::vakeel. :: :::m:ci IS f:'om Cie Sche;ne Cateto be .
valid and c~ ~~ or asuuc:Uan to ~ew Scoest:Pcwcr ~:u.tiac to th~ ca~pondiD& New
Shares to bea#oued iad issued pu.-sumt to Cis Schece. '
Sdleme Oai
6. This Schema thaD became e~w U loon u aft =5= c:py of the ~~.oc&tar of the CQUft
sanc:ianiq Schem under scc:ion 425 of ce AI: W :cnft=ic.. under se~0i1131 , of the Act the
mtucaaa of ~pi~ proposed w:c!er this Sc.'sa::: shall ha", b~ daly delivered to the Rqisuu of
Campania ~ ~l:Uion and Ce bwtac::nor and r:~ rC:u:.e have been r~.swed by him.
7. UDlw this scheme shall haw Dccome e!ec:ive on or:e!M:1999 or such later dale. if
any, u the CoUn,'iria, aDow, it s1iaC lapse.
Mdcltion
8. Sc:onisCiowcr and New Sc~hPower may jouuly co~=c: ::: ochal! of all p~ons c:oaccmed CO 8ftJ
modi&catiCa of or addition .ta.:his Sc."e::e or to az:y cec:==r: wh~C.L~c Ca~ cay think lit to apprave
. or impose.
Dated the day of 1999
EXHIB IT B
i Column A Column B
PropottionofHoldCo Ordinary Shares
represented by H91dCo ADSs
Proportion ofMerg~ Ordinary shareS
not more ri1an 75%- not less' than 25%
not more than .75%not less than 25%
.... \
NY1 :t3203221vl
EXHIBIT C
(Form of Affiliate s Agre::nentJ
(Date )
(name)
(address)
Ladies and Gentlemen:
I have been advised that as :ofthe date hereof! may be deemed. to be an "affiliate
ofPacifiCorp, an aregon corporation (the "Comcanv ). as that term is de~ed for purposes
paragraphs (c) and (d) of Rule 145 of the ~les and regulations (the "RuleS and Remlations
the Securities and E."tchange Commisslon'(the "Commiss1on ) undcrthe Securities Act of 1933,
as amended (the Act"). Neither my entering into this agrecnient, nor anything contalned herein.
. shall be deemed an admission on my pan that I am such an It affiliate"
Pursuant to -the terms of the Amended and Restated Agreement and Plan
Merger dated as of December 6, 1998, as amended as of January 29, J 999 and F e9ruary 9, 1999 -
and amended. and restated as of January 23, 1999 (the "MCt'2er A2reCr11ent"), by and among New
Scottish Power pic, a.public limited,company incorporated under the laws of Scotland
HoldCo ), Scottish Power pic; a public.lim\ted,co~any incorporated under,the I~ws of
Scotland. NA General Parme~hip, a Nevada general parmership (the "Pannersmc ). and the
Company providing for ~e merger of a wholly-owned subsidiary of the Partnership, with and
into the Company (the'~\1Ct'2er"-), and as a result of the Merger, I may receive shares
HoldCa s American Depositary Shares, each representing four HoldCo Ordinary Shares (the
HoldCo Securities ), in exchange for the shares of common stock, mthout par value, of the
Company owned by me at the Effective Time (as defined in the Merger Agreement) of theMerger.
lrcpresent and warrant to HoldCo that in such event:
A. I shall not make any sale, transfer or other dispositi~n of the HoldCo
Securities in violation of the Act or the Ruies and: Reguiations
B. I have carefully read this letter and the Merger Agreement and discussed
its requirements and other applicable limitations upon my ability to selL transfer or otherwise
dispose of Hold Co Securities, to ~e extent I Celt necessary, with my counselor counsel Cor the
, Co~any.
, .
NY1 :I~203227va
C. I have bee~ advised that the issuance ofHC?ldCo Securities to me pursuant
to the Menzer has been reriStCI'Cd with the Commission under the Act on a Resristration
Statement ~n Form F -4. However, I have also been ad\ised that, sinr:~ at the rime the Merger
was sUbmined for a vote of the StOckholders of the Company I may have ,been deemed to have
been an affiliate of the Company and a diStribution by me of Hold Co Securities has not been
registered Under the Act. the HoldCo Sc::unties mUSt be he~d by me indefinitely unless (i) a
distribution of Hold Co Securities by me bas been registered under the A-ct, ~i1) a sale ofHoJdCo
Securities by me is made in confonmtv with the volume and other limitations of.Rule 145
promulgated by the Commission und~ the Act or (lii) in the opinia~ ~f.counsel rc3sonably
acceptable to HQldCo, some other exemption from registration is av~I~Je with resi~ to proposed sale, ~fer or other disposition afthe HoidCo ~~tiesby me.
. D. I understand that HoidCo is under no obligati~n to register the sale,
transfer or other disposition of Hold Co Securities by me or on my b~ha1.f or to take any other
action. necessary in order to make compliance with. an ,c."Cemption ~m registration available.
E. I also understand thai stop tranSfer instructio~ will be given to HoIdCo
transfer agen~ With respect to the HoidCo SeCUrities and that there will be placed on the
certificates for ~e HoIdCo Securities, or any substitUtions .therefoi~ a l~gcnd stating in substance:
"The shares represented by this certificate were issued in a transaction to which
Rule 145 promulgatet:i under the ~ecurities Act of 1933, as amended, applies. The shares
represented by this certificate may.only be transferred in ~ordance with the teqfts of
agreement dated
-'
between the registered holder hereof and
(the "Corporation ), a copy of'Yhich agreementJs on.file at the principal offices of the
.corporation. "
F. I' also undemmd that unless the transfer by me of my HoldCo Securities
has be=: registcrcd:under the Act or isCl. sale m~4e in c;onfonnity with the provisions of Rule
145, HoldCo rescrvcs'the righuo,put:the following leg:nd on the certificates issued to my
traIls f cree:
Tqe shares repr::sented -by this certificate have not be:n registered under th~
Securities Act of 1933, as amended, and were acquired from a person who received such shares
in a transaction to which. Rule 145 promulgated under sUch Act applies. The shares have been
acquired by the holder not with a, view toy or for resale in connection with, any distribution
thereof within the meaning of such Act an~ may not be sold, p lcdged or otherwise transferred
except in accordance with an e;.emption from the registration requirc;mcnts ofsuch Act-"
. '. .
NY! :'J20J227v8
Richard T. O'Brien
Wtllialn D. LandeIs
Henry H. Hewitt
NaIaD. E. Karras
, Keith R. McKennon
Robert G. MiI1er
In addition, each of the Company and the ScotrishPower parties agree that Section
0 1 (d) of the. Merger Agreement shaIl be amended to read as fol1o~:
(d)~ub 1 sbaU contlnue to be the owner of a 10% general
p~ership interest in. the Partnership, and UKSub 2 sh811
continue to.be the owner of a 9O%,general partnersJUp in~restintheP~~p. .
Please indicate your acknowledgement and' agreement to the foregoing by signing
this letter agreement in $e space provided below.
v cry truly yours,
SCOTTISH POWER U.K. PLC
By: "11../ (711
TItle:
-:--.
SCOnISH POWER PLC
, -'
By-.
(jail! 'Il
Title:
, ., '
, NY1:fm957SvI ,.. . 0'
: ~ : "',j::::-~ '
0, "
~;:-~~~:';;'~~.,-,~:-, '
Scottish Power
~ovember 28, 1999
, ,
Pacifi Corp
700N.E:Mu1tn~ (
Por:tJ.and, Oregon ~723~~ 116
. ...:- :"\;~ '
. ~ ...."'" I
...~ ;, .
:04 j-: .,. k",
, .
Sco,ttis,~PPwer
Ladies and,Oentlem'enz' , .
' '. .~ ,. - ~
. r
, '/ ' .; ,
e~~~~ ~~by ~e:tn:tbati~~ded an4
~~~~~~~
Plan of Merger, ~te~ ~;of.:peCeIIJ.b'er 6
, '
1998 as ~~e(tas. of J~u,ary'2~i: 1999 and Februaty11...
, "
. I'
' .
9, 1999, an~' ~ettde~,
~~'
z:e~ted'-as:ofFe~ru~ f~~ 1~99.Jthe i eI; ~e~ent") by and 'among Sco~h P~W~!J'..c?~~:pub1ic limi~,~Q;1p~y.:if1~rated Wider,Jhi l~ 'of ScotlandHoldCO"), Scot$h PpwCr U.~ pIc, a public'
~~~
com~any incoIpO.~te4 under the laws
Scotland ('~SCQ~hPowet,'" NA. (knera1I'~ei-sIUPt ~:Nev'.ada gen~ iarinersbip'indirectly
wholly oWned. bY'o~~Wer~the "Parhiership") 8n4P~Cofp', IIi Qrego~ corporatioz:1'(thC .Company")" ~ncr~fresPect to Section ,iJn of tJie M~g~ Agreem.. ~COttjSh Pow.er NA 1Limited, a imiitea~abiijiy, Company .in~~QCC#d
:~~~'
the'ia:wsofSCo~: ("UKSubl") andScottish PoWer,NA,2 '~fniited;a, limited 'liaQilitY- company bjcoIporated uhd~ the laws ,of!Scotlan(rC".:QKSub~" ~a,:.t~gether:withHoidClo
, '
$~~ower the P~p and;uKSublthe "ScottishPow~r Pa!ties"). ' C,pi~~~~i~~cid.liI~" turnot oth~c defined, shallhave the mcan;ngs assigneci"to such teIms ~ ~e:~erget Agreement.
~ '. ' ,
Each of the Co~y and the SCotti~ower Parties hereby agree that the following persons .shal! b;the Directors ~d Execuuye Offi~crs of the S~ymg Ccnporationuntil their successors shaU IuJ,ve been duty el~ or'Sppointed and qUalitied: or until their earlier-death, resignation or ~ova1 in accordance
~~
the :Surviving' CorpOration s Articles ofInCmporation and Byl~ws: .
Directon 'Executive Officen
Ian RObins9n,
IanM. Russell ::':.
Kenneth t. VoWles
, A1tiD V. Ri~harSlson
Alan V. Richardson, Chiefl;xe,cu.tive Officer
Richaf4 r. O'Bajen, PresidCm ct Chief Operating
Officer:
" :" .
i-
; !,
f i .'"0
, ~ :" ~ ! ~ ~!,
J ~ ~! Vl t":
NYI :13~951Svl
f : ~::, , --;
, ,
AGREED AND ACcEPTED:
.. ';,
PACIFICORP'
.. ::. ', ,: '
N~e:
TItle: '
N.YI:Jmg'1S~f
: .:;,;:,
~: ~r"
, . , . ,' ':" ,, ';:: ,
. r..
, ..'. ,
~,~" l~:-
:~:::,, , ,. "; "
i "
, ." '
.3i,
..'.. ' "
:';'1:' - .:
" ':~', ",
A~",
,,:.
NA GENERAL PARTNERSHIP
BY:
, Name:
. Title:
SCOTTISH pOWER NA 1 LIMITED
scomSH,POWER NA 2 LIMITED
. '.: ':, ~, .~. ' .: ~:::"
i: '
. ,,:'; ,-,~. '
I .
. ,, , ;"