-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QnQ7o4CSq0i5cExaKhfPiG8fHUz9XbYNnqMF2nz5iWYPF1JdTrtQd3RkMXs/qoUC ezI+AyAhGw3SXuv8+TamYg== 0000075594-95-000019.txt : 19951227 0000075594-95-000019.hdr.sgml : 19951227 ACCESSION NUMBER: 0000075594-95-000019 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951212 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19951226 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACIFICORP /OR/ CENTRAL INDEX KEY: 0000075594 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 930246090 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05152 FILM NUMBER: 95604225 BUSINESS ADDRESS: STREET 1: 700 NE MULTNOMAH STE 1600 CITY: PORTLAND STATE: OR ZIP: 97232 BUSINESS PHONE: 5037312000 FORMER COMPANY: FORMER CONFORMED NAME: PACIFICORP /ME/ DATE OF NAME CHANGE: 19890628 FORMER COMPANY: FORMER CONFORMED NAME: PC/UP&L MERGING CORP DATE OF NAME CHANGE: 19890628 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (date of earliest event reported): December 12, 1995 PACIFICORP (Exact name of registrant as specified in its charter) State of Oregon 1-5152 93-0246090 (State of Incorporation) (Commission (I.R.S. Employer File No.) Identification No.) 700 N.E. Multnomah, Suite 1600, Portland, Oregon 97232-4116 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (503) 731-2000 No Change (Former Name or Former Address, if changed since last report) 2 Item 2. ACQUISITION OR DISPOSITION OF ASSETS On December 12, 1995, PacifiCorp Holdings, Inc. ("Holdings"), a wholly owned subsidiary of PacifiCorp, purchased Powercor Australia, Limited ("Powercor"), an Australian electric distribution utility, from the State of Victoria for approximately $1.6 billion in cash. The purchase price was established pursuant to a bidding process. Powercor had assets of approximately $855 million at June 30, 1995 and revenues of approximately $561 million for the year ended June 30, 1995. Powercor's service territory includes a portion of suburban Melbourne and the western and central regions of the State of Victoria and has approximately 570,000 customers. The acquisition was financed with borrowings of A$1.2 billion in Australia under a A$1.325 billion credit facility co-arranged by Citibank Limited, National Australia Bank Limited, Morgan Guaranty Trust Company of New York and UBS Australia Limited and with an equity contribution from Holdings which has been initially financed with short-term debt in the U.S. The transaction was structured through a series of wholly owned U.S. and Australian companies. Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements for Businesses Acquired. 1. Audited Financial Statements of Powercor as of and for the period from May 11, 1994 to June 30, 1995, together with the Auditor-General's Report. (Page 1) 2. Unaudited Financial Statements of Powercor as of and for the three months ended September 30, 1995. (Page 42) (b) Pro Forma Financial Information. 1. Unaudited Pro Forma Condensed Consolidated Balance Sheet and Income Statement as of and for the year ended December 31, 1994. (Page 36) 2. Unaudited Pro forma Condensed Consolidated Balance Sheet and Income Statement as of and for the nine months ended September 30, 1995. (Page 38) (c) Exhibits. The Exhibits to this Report are listed below. 2.1 Asset Sale Agreement between Powercor Australia Limited and PacifiCorp Australia Holdings Pty Ltd. 2.2 Share Sale Agreement between the State Electricity Commission of Victoria and the State of Victoria and PacifiCorp Australia Holdings Pty Ltd. and PacifiCorp Holdings, Inc. 3 2.3 Asset Purchase Agreement between PacifiCorp Australia Holdings Pty Ltd. and Powercor Australia Limited. 23 Consent of the Auditor-General, Melbourne, Australia. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PACIFICORP (Registrant) By: RICHARD T. O'BRIEN ________________________________ Richard T. O'Brien Senior Vice President and Chief Financial Officer Date: December 22, 1995 All Dollars are Australian with Australian Accounting Standards applied. Powercor Australia Limited Financial Statements and Reports For The Period From 11 May 1994 to 30 June 1995 Contents Page ____ Profit and Loss Account 1 Balance Sheet 2 Statement of Cash Flows 3 Notes on and Forming Part of the Financial Statements 4 Auditor General's Report 34 1 All Dollars are Australian with Australian Accounting Standards applied.
PROFIT AND LOSS ACCOUNT for the period ended 30 June 1995 [i] ______________________________________________________________________________ 1995 Notes $000 ______________________________________________________________________________ Operating profit before income tax (2),(3) 111,079 Income tax attributable to operating profit (4) 43,221 __________ Operating profit after income tax 67,858 Retained profits at the beginning of the period 0 __________ Total available for appropriation 67,858 Less dividends provided for or paid (13) 44,108 __________ Retained profits at the end of the financial period 23,750 ========== The above profit and loss account of Powercor Australia Ltd (Powercor) should be read in conjunction with the Notes On and Forming Part of the Financial Statements. [i] Refer note 1 under the heading "Financial Period"
2 All Dollars are Australian with Australian Accounting Standards applied.
BALANCE SHEET as at 30 June 1995 ______________________________________________________________________________ 1995 Notes $000 ______________________________________________________________________________ Current Assets Cash 132 Receivables (7) 49,383 Inventories (8) 12,367 Other (9) 66,384 __________ Total Current Assets 128,266 __________ Non-current Assets Receivables (7) 3,525 Inventories (8) 3,412 Property, plant and equipment (10) 1,065,456 Other (9) 3,343 __________ Total Non-current Assets 1,075,736 __________ TOTAL ASSETS 1,204,002 __________ Current liabilities Creditors and borrowings (11) 749,490 Provisions (12) 51,134 __________ Total Current Liabilities 800,624 __________ Non-current Liabilities Creditors and borrowings (11) 315,658 Provisions (12) 63,970 __________ Total Non-current Liabilities 379,628 __________ TOTAL LIABILITIES 1,180,252 __________ NET ASSETS 23,750 ========== Shareholders Equity Share Capital (13) 0 Retained Profits 23,750 __________ SHAREHOLDERS' EQUITY 23,750 ==========
The above Balance Sheet should be read in conjunction with the Notes On and Forming Part of the Financial Statements. 3 All Dollars are Australian with Australian Accounting Standards applied.
STATEMENT OF CASH FLOWS for the period ended 30 June 1995 [i] ______________________________________________________________________________ 1995 Notes $000 ______________________________________________________________________________ Inflows (Outflows) Cash flows from operating activities Receipts from customers 747,659 Payments to suppliers and employees for goods and services (219,697) Interest and other items of a similar nature received 2,874 Interest and other costs of finance paid (57,171) Purchased electricity (342,449) __________ Net cash inflow from operating activities (5) 131,216 Cash flows from investing activities Payments to acquire property, plant and equipment (70,659) Purchase of investments and licences (106) Contributions from customers for capital works 24,222 Proceeds from sale of assets 685 __________ Net cash outflow from investing activities (45,858) Cash flows from financing activities Proceeds from borrowings 414,297 Repayment of borrowings (principal only) (484,230) Payment of dividends (13) (18,100) Net payment of trust moneys (502) Net transfer of cash from allocation statement 1,221 __________ Net cash outflow from financing activities (87,314) __________ Net decrease in cash held (1,956) Cash at the beginning of the period 0 __________ Cash at the end of the period (6) (1,956) ========== The Statement of Cash Flows should be read in conjunction with the Notes On and Forming Part of the Financial Statements. [i] Refer note 1 under the heading "Financial Period"
4 All Dollars are Australian with Australian Accounting Standards applied. NOTES ON AND FORMING PART OF THE FINANCIAL STATEMENTS ______________________________________________________________________________ 1 SUMMARY OF THE SIGNIFICANT ACCOUNTING POLICIES ______________________________________________ The following significant accounting policies have been adopted in the presentation of the Financial Statements. The Financial Statements have been drawn up in accordance with applicable Australian Accounting Standards, the provisions of Schedule 5 to the Corporations Regulations and other requirements of law. Although not mandatory, Powercor Australia Ltd (Powercor) has included additional disclosures where practical which relate to the Financial Management Act 1994. The Financial Statements have been drawn up in accordance with the Historical Cost Convention except where otherwise indicated. Allocation Statement As part of the current Victorian Government's Electricity Industry privatisation and reform process, Powercor was incorporated on 11 May 1994 as an independent Distribution company operating entirely within the Australian electricity retail and distribution industry. Before Powercor could effectively begin trading as a new entity within this new environment, certain regulations and processes had to be empowered by legislation in defining the legal, regulatory, and financial framework in which the business was to operate. One such process known as the `Allocation Statement' was prepared by order of the legislation and requirements of the Electricity Industry Act. The Allocation Statement itself was the formal vehicle established in order to provide for the transfer of all assets, liabilities, employees, debt balances and other interest and obligations. Under the predetermined guidelines and for various commercial reasons, the allocation of these balances were vested in Powercor's accounts effective from 1 July 1994. The valuations transferred for both Distribution and Subtransmission assets were based on an Optimised Depreciated Replacement Cost method which was then installed in the fixed asset register to reflect these valuations. Debt was transferred at market value and reflected in Powercor's opening accounts. All other assets and liabilities were transferred at book values with any residual equity after allowing for assets and the forementioned debt being reflected in shareholders loans. Certain obligations arising from payments made on Powercor's behalf for wages, salaries, related provisions, related tax instalments, and other contracted services were resolved through a separate process or `Settlement' which concluded 31 December 1994. 5 All Dollars are Australian with Australian Accounting Standards applied. Income Tax Tax effect accounting procedures are followed whereby the income tax expense in the Profit and Loss account is matched with the accounting profit (after allowing for permanent differences). The future tax benefit relating to tax losses is not carried forward as an asset unless the benefit can be regarded as being virtually certain of realisation. Income tax on net cumulative timing differences is set aside to the deferred income tax and future income tax benefit accounts at the rates which are expected to apply when those timing differences reverse. A tax rate of 33% has been used and a restatement in deferred tax was made as a result of an increase in the company tax rate to 36%. The $11.896M write back of the FITB during the financial period was attributable to proposed tax legislation for tax exempt bodies entering the Federal income tax arena which will apply a `rule the books' approach to determine whether outgoings connected to the tax exempt period are deductible. Financial Period As there were no financial transactions for the period from date of Incorporation 11 May 1994 to 30 June 1994, Powercor's Board of Directors have resolved to extend the initial reporting period for the preparation of the Financial Statements from the date of Incorporation, 11 May 1994 to 30 June 1995. Comparative Accounting Information As these accounts are the first accounts prepared by Powercor, comparisons against prior year results are not available. Acquisition of Assets The cost method of accounting is used for all acquisitions of assets regardless of whether shares or other assets are acquired. Cost is determined as the fair value of the assets acquired at the date of acquisition plus costs incidental to the acquisition. Recoverable Amount of Non-Current Assets The recoverable amount of an asset is the net amount expected to be recovered through the net cash inflows arising from its continued use and subsequent disposal. Where the carrying amount of a non-current asset is greater than its recoverable amount the asset is revalued to its recoverable amount. Where net cash inflows are derived from a group of assets working together, recoverable 6 All Dollars are Australian with Australian Accounting Standards applied. amount is determined on the basis of the relevant group of assets. To the extent that any revaluation decrement reverses a revaluation increment previously credited to, and still included in the balance of, an asset revaluation reserve, the decrement is debited directly to that reserve. Otherwise the decrement is recognised as an expense in the Profit and Loss Account. Revaluations do not result in the carrying value of assets exceeding their recoverable amount. The expected net cash inflows included in determining recoverable amounts of non-current assets are discounted to their present values using a market-determined, risk-adjusted discount rate. Capital Project Costs Powercor finances part of its distribution works programme by a self help scheme whereby customers requesting electricity supply are required to contribute all or part of the estimated capital cost. Contributions for Capital Works Customer contributions are treated as reductions to the carrying value of the assets to which they relate, with the corresponding depreciation calculated on the net asset value over the assets depreciable life. Refundable Contributions and Advances for Capital Works Where customers are required to lodge security deposits for capital works, Powercor will refund these amounts with interest over the period specified in each individual contract. All balances held in this category are included in the Balance Sheet item Loans. Cogeneration Contract Agreements Where Powercor installs interconnection facilities between its customers generation assets and its pre existing load bearing assets, and where the construction of these assets are funded by a long term interest bearing loan from Powercor, the loan has been recognised in the accounts at its face value with the cash flows discounted using the rate of interest implicit in the original contract. Where the customer generates electricity from these generation assets in excess of its own requirements, the surplus electricity will be fed back into Powercor's supply system. The tariffs for both the supply and purchase of electricity are governed by specific contracts in determining special rates for cogeneration customers. 7 All Dollars are Australian with Australian Accounting Standards applied. Insurance Powercor assesses the risk associated with all events which are specific to its operations and which are expected in the normal course of business. Powercor will in some circumstances take out insurance for catastrophic losses and other specific risks, and in other situations will elect to self insure. Powercor included in its accounts at 30 June 1995, a provision for uninsured losses for both outstanding claims by third parties and claims against Powercor which were not received at period end. An additional provision has been raised in the financial statements at 30 June 1995 for an amount which Powercor expects to expend to compensate employees for work related illnesses associated with both claims which have occurred and are ongoing, and claims which are expected to arise which have not yet been reported. Inventories Raw Materials and Stores, Work in Progress and Finished Goods Raw materials, goods manufactured for stock, and spare parts are recorded at the lower of cost and net realisable value. Cost is represented by weighted average cost of purchase or manufacture. An estimation of net realisable value is made after consideration of obsolete, obsolescent and slow moving stock. Construction Work in Progress Construction work in progress is stated at cost plus attributable overheads. Cost includes all costs directly related to specific projects and an allocation of capital overhead expenses incurred in connection with Powercor's operations. Restructuring and Establishment Costs Powercor is expected to expend resources as a direct result of the restructuring process associated with the disaggregation and privatisation of the State owned Electricity Services Victoria. Where these costs are identifiable to the `establishment' and/or `restructuring' of the business and are in addition to costs that would otherwise be incurred, a provision for these costs has been raised. The amount of the provision has been reassessed at balance date and allocated between current and non-current for the period ended 30 June 1995. 8 All Dollars are Australian with Australian Accounting Standards applied. Restoration An estimate of the total cost for land, heatbank, asbestos, PCB and environmental restoration is brought to account in the period that the requirement to restore a site arises, and where the cost associated in restoring such sites can be reliably measured. Depreciation Depreciation for all fixed assets other than freehold land is calculated on a straight-line basis to write off the net cost or revalued amount of each item of property, plant and equipment over its expected useful life. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments for major items. Depreciation for all assets commences on the first day of the month closest to the in-service date. Major spares purchased specifically for particular plant and equipment are capitalised and depreciated over the same period as the items of plant and equipment to which they relate. Cash For purposes of the Statement of Cash Flows, cash includes deposits at call which are readily convertible to cash on hand and which are used in the cash management function on a day-to-day basis, net of outstanding bank overdrafts. Interest on Term Debtors Interest is brought to account as income over the term of each contract in direct proportion to the estimated amounts owing in the relevant accounting periods. Estimated Doubtful Debts Powercor establishes a provision for doubtful debts based on a review of all electricity receivables greater than ninety days old, with an additional provision for doubtful debts being determined by specific review of other receivables. 9 All Dollars are Australian with Australian Accounting Standards applied. Leased Non-Current Assets A distinction is made between finance leases which effectively transfer, from the lessor to the lessee, substantially all the risks and benefits incidental to ownership of leased non-current assets (finance leases), and operating leases under which the lessor effectively retains substantially all such risks and benefits. Where a non-current asset is acquired by means of a finance lease, the asset is established at its fair value at the inception of the lease. The liability is established at the same amount. Lease payments are allocated between the principal component and the interest expense. Operating lease payments are representative of the pattern of benefits derived from the leased assets and accordingly are charged to the Profit and Loss Account in the period in which they are incurred. Construction of Non-Current Assets The cost of non-current assets constructed by Powercor includes the cost of all materials used in construction, direct labour on the project and an appropriate proportion of variable and fixed overhead. Investments Powercor's interests in listed and unlisted securities are brought to account at cost, with dividend income being recognised in the Profit and Loss Account when received. Negotiable Securities Where interest is paid in advance on negotiable securities, the interest is recognised as an asset and progressively charged to the Profit and Loss Account over the applicable interest period. Interest payable in arrears is accrued as it becomes due, and charged to the Profit and Loss Account. Discounts and premiums from face value on the issue of negotiable securities are recognised as variations of the liability to which they relate. The variations are amortised over the term of the issue, using the effective yield method. Changes in the capital value of Powercor's outstanding liability on Index linked securities are recognised as variations in the book value of the liability. Changes are charged to the Profit and Loss Account. Securities Securities are recorded at the lower of cost and net realisable value. 10 All Dollars are Australian with Australian Accounting Standards applied. Buybacks of Negotiable Securities Any gains or losses arising from the buyback of negotiable securities are charged to the Profit and Loss Account as incurred. Foreign Currency Translations Transactions in foreign currencies are recorded at the rate of exchange ruling on the date of each transaction. At balance date, amounts payable and receivable in foreign currencies are converted at the rates of exchange ruling at the end of the financial period. Exchange differences arising on foreign currency amounts payable and receivable are brought to account in the Profit and Loss Account. In the case of hedges of monetary items, exchange gains or losses are brought to account in the financial period in which the exchange rates change. Gains or costs arising at the time of entering into such hedging transactions are brought to account in the profit and loss account over the lives of the hedges. Joint Ventures and Other Interests The proportion of assets, liabilities and expenses attributable to the interest of the Company in a joint venture has been incorporated in the financial statements under the appropriate headings. Details of the joint ventures and other interests are set out in note 14. Research and Development Research and Development costs are expensed to the current year Profit and Loss Account. Employee Entitlements Wages and Salaries, Recreation Leave Liabilities for wages and salaries, and recreation leave are recognised, and are measured as the amount unpaid at the reporting date at current pay rates in respect of employee's services up to that date. Long Service Leave A liability for long service leave is recognised and is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using interest rates attaching, as at the reporting date, to national Government guaranteed 11 All Dollars are Australian with Australian Accounting Standards applied. securities with terms to maturity that match, as closely as possible, the estimated future cash outflows. Oncosts Consequential oncosts relating to Payroll Tax, Workcover, and Superannuation have been considered and taken to account in respect to Long Service and Recreation Leave Entitlements. Superannuation Contributions paid by Powercor to defined benefit superannuation plans are expensed in the year they are paid or become payable. No amount is recognised in Powercor's accounts in respect of the net surplus or deficiency of the Superannuation Trust, however a liability in respect of defined benefit Superannuation is included and disclosed in the accounts of the external Superannuation Trust Fund as governed by the required legislation. All moneys, investments or other property in the Fund are held in trust in the name of the Trustee company, VEI Super Pty Ltd for the benefit of the members and beneficiaries of the Fund. Maintenance and Repairs Maintenance, repair costs, and minor renewals are charged as expenses when incurred. Rounding of Amounts Powercor is a company of the kind referred to in the Corporations Law Regulation 3.6.05(6) and unless otherwise stated, the amounts in the accompanying accounts have been rounded to the nearest thousand dollars in accordance with section 311 of the Corporations Law. 12 All Dollars are Australian with Australian Accounting Standards applied.
2 OPERATING REVENUE 1995 $000 ______________________________________________________________________________ Operating profit is stated after crediting the following revenues Sales Revenue 734,093 Other Operating Revenue Charges for Minor Services 3,160 Proceeds from the sale of assets [i] 685 Customer transfer and reconnection fees 1,834 Bad debts recovered 647 Proceeds from Sales of Materials 1,899 Interest Revenue [ii] 2,874 New Business Ventures 505 Property Rentals 294 Trade Incentive and Rebate 1,290 Revenue from other Distribution Businesses 5,860 Other 2,063 __________ Total Operating Revenue 755,204 ========== [i] Losses arising from disposal of Non-current Assets 1,442 ========== [ii] Interest from Related bodies corporate 131 Other persons and/or corporations 2,743 __________ Total interest received 2,874 ==========
13 All Dollars are Australian with Australian Accounting Standards applied.
3 OPERATING PROFIT 1995 Notes $000 ______________________________________________________________________________ Operating Expenses Operating profit is stated after charging the following expenses: Interest Related bodies corporate 48,650 Other persons and/or corporations 2,282 __________ Total Interest Expense 50,932 ========== Operating lease rentals 667 ========== Provisions Employee entitlements 11,033 Accident Compensation (841) Uninsured losses 2,112 Stock write-off 201 Restoration 2,768 Provision for deferred tax (4) 32,037 __________ Total provisions 47,310 ========== Depreciation Buildings 1,268 Distribution system, net of customer contributions amortised 43,460 Plant and equipment 3,422 __________ Total depreciation 48,150 ========== Bad debt expense 2,538 ========== Abnormal items included in operating profit before income tax are: Abnormal profits Writeback of establishment and restructuring provision 13,221 Writeback of provision for future Cogeneration losses 9,010 __________ 22,231 ========== Tax calculated on abnormal items 2,973 ==========
14 All Dollars are Australian with Australian Accounting Standards applied.
4 INCOME TAX 1995 Notes $000 ______________________________________________________________________________ (a) The aggregate amount of income tax attributable to the financial period differs by more than 15% from the amount calculated on the operating profit. The differences are reconciled as follows: Operating profit before income tax 111,079 __________ Income tax calculated at 33% 36,656 Add/(deduct) reconciling items expressed on a tax effected basis: Tax losses not carried forward 1,011 Non-assessable items: General Investment Allowance (108) Building & Structural Improvement Allowance (199) Provision for Establishment Costs (8,601) Non-deductible items: Other 24 Future Income Tax Benefit write-back (1) 11,896 Restatement of deferred tax balances on change in tax rate to 36% 2,542 __________ Total income tax attributable to operating profit 43,221 ========== Total income tax expense comprises movements in: Provision for income tax 0 Provision for deferred income tax 32,037 Future income tax benefit (9) 11,184 __________ 43,221 ========== The allocation between these categories corresponds to the tax effect accounting entries. (b) The future income tax benefit attributable to tax losses but not recognised in the financial statements is 1,103 ==========
This benefit for tax loss will only be obtained if (i) Powercor derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised; (ii) Powercor continues to comply with the conditions for deductibility imposed by law; and (iii) no changes in tax legislation adversely affect Powercor in realising the benefit from the deductions for the losses. 15 All Dollars are Australian with Australian Accounting Standards applied.
5 CASH FLOW DISCLOSURES 1995 $000 ______________________________________________________________________________ During the reporting period, Powercor acquired assets and liabilities with an aggregate fair value of $466,704 million by means of Allocation. With the exception of cash and bank overdraft transfers, these allocations represent the non-cash financing and investing activities between the date of incorporation 11 May 1994, and the time of transfer 1 July 1994, and is not reflected in the Statement of Cash Flows. Since no prior trading occurred between these dates, the balances have been considered as opening balances in calculating the relative movements in operating cash flows. The amounts of assets and liabilities acquired by major class are Cash and Bank Overdraft 1,221 Receivables 45,684 Accrued Revenue 67,072 Inventories 15,688 Property, Plant and Equipment, Net 1,065,700 Other 17,047 Accounts Payable (66,203) Provisions (87,725) Deposits (9,811) Borrowings (581,969) __________ 466,704 ========== Reconciliation of operating profit after income tax to net cash flow from operating activities Operating Profit After Income Tax 67,858 Depreciation 48,419 Loss on disposal of assets 1,442 Amortised finance charges (8,849) Increase in deferred debtors (546) Increase in prepayments (610) Increase in accounts receivable (3,699) Increase in material inventories (291) Decrease in accrued revenue 2,310 Decrease in interest accrued (458) Increase in deferred revenue 4 Increase in accounts payable and accruals 10,489 Decrease in provisions (28,074) Increase in tax provisions 43,221 __________ Cash Flow from Operating Activities 131,216 ==========
16 All Dollars are Australian with Australian Accounting Standards applied.
6 CASH AT BANK AND SHORT TERM DEPOSITS 1995 $000 ______________________________________________________________________________ Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the Balance Sheet as follows: Cash Accounts - - National Australia Bank Advance Account 132 Bank overdraft - - National Australia Bank Drawing Account (2,088) __________ (1,956) ==========
17 All Dollars are Australian with Australian Accounting Standards applied.
7 RECEIVABLES 1995 $000 ______________________________________________________________________________ Current Trade debtors [i] 42,569 Less: Provision for doubtful debts 238 __________ 42,331 Non trade debtors 7,173 Less: Provision for doubtful debts 121 __________ 7,052 __________ Total Current Receivables 49,383 ========== Non-current Deferred debtors Amounts due from cogeneration customers 1,536 Other 1,989 __________ Total Non-current Receivables 3,525 ========== [i] Trade debtors comprise electricity accounts receivable. Powercor provides bridging finance in specified instances where employees are required to relocate their place of residence as part of a permanent appointment or transfer. Balances of employee loans are included in current non trade debtors, with outstanding amounts as at 30 June 1995 as follows. Balance Employee Loans Outstanding 630 ==========
18 All Dollars are Australian with Australian Accounting Standards applied.
8 INVENTORIES 1995 $000 ______________________________________________________________________________ Construction, General Purpose and Maintenance Stocks Current 12,568 Less provision for stock obsolescence 201 __________ 12,367 Non-current 3,412 __________ Total Construction, General Purpose and Maintenance Stocks 15,779 ==========
19 All Dollars are Australian with Australian Accounting Standards applied.
9 OTHER ASSETS 1995 $000 ______________________________________________________________________________ Current Prepayments 1,622 Accrued unread and unbilled meter revenues 64,762 __________ Total Current Other Assets 66,384 __________ Non-current Future income tax benefit: Attributable to carry forward tax losses 781 FITB carried forward from Allocation Statement 142 __________ 923 Attributable to timing differences Provision for restoration 180 Provision for uninsured losses 270 Provision for doubtful debts 351 __________ 801 Other: Other non-deductible items 198 Fringe benefits tax (50) __________ 148 __________ Total future income tax benefit 1,872 Investments in other corporations 56 Licences 50 Victorian Power Exchange Trust Fund 1,365 __________ Total Non-current Other Assets 3,343 __________ Total Other Assets 69,727 ==========
20 All Dollars are Australian with Australian Accounting Standards applied.
10 PROPERTY, PLANT AND EQUIPMENT 1995 $000 ______________________________________________________________________________ Land and Buildings Freehold land At cost 9,267 __________ Buildings At cost 28,260 Less: Accumulated depreciation 1,268 __________ 26,992 __________ Total Land and Buildings, Net 36,259 __________ Distribution System At cost 1,064,206 Less: Customer and Cogeneration Contributions 23,971 Less: Accumulated depreciation 43,650 __________ Total Distribution System, Net 996,585 __________ Other At cost 35,953 Less: Accumulated depreciation 3,341 __________ Total Other, Net 32,612 __________ Total Property, Plant and Equipment, Net 1,065,456 ==========
21 All Dollars are Australian with Australian Accounting Standards applied.
11 CREDITORS AND BORROWINGS 1995 $000 ______________________________________________________________________________ Current Shareholder's Loan [i] 466,704 Other Loans [ii] 190,443 Bank overdraft [iii] 2,088 Trade creditors 59,936 Accrued interest 11,571 Accruals and other creditors 8,073 Customer, contractor and miscellaneous deposits 10,675 __________ Total Current Creditors and Borrowings 749,490 ========== Non-current Other Loans [ii] 315,654 Deferred revenue 4 __________ Total Non-current Creditors and Borrowings 315,658 ========== [i] [ii] Security for Loans Shareholder's Loan and loans payable to Treasury Corporation Victoria under Other Loans, are guaranteed by the Victorian State Government. The Treasurer of Victoria for the Victorian State Government has indicated these loans will not be fully or partially called upon prior to privatisation, unless Powercor has the capacity to facilitate redemption as a result of build up of cash reserves from operational activities, or an alternative loan or other financial arrangement is put into place. (Facilitation to be assisted by the Government if necessary). Therefore the SECV shareholder loan represents an equity position as far as the Government and Powercor are concerned. [iii] Bank Overdraft Facilities Powercor has a bank overdraft facility of $5.0M which has no specific expiry date. At 30 June 1995, $2.1M of this limit was used.
22 All Dollars are Australian with Australian Accounting Standards applied.
12 PROVISIONS 1995 Allocation Current Non-current Total [i] Amounts $000 $000 $000 $000 ______________________________________________________________________________ Employee entitlements Recreation leave 7,878 0 7,878 6,522 Long service leave 354 15,410 15,764 13,494 ______ ______ _______ ______ 8,232 15,410 23,642 20,016 ______ ______ _______ ______ Restorations Environmental cleaning 3,449 5,436 8,885 6,502 Other 100 774 874 894 ______ ______ _______ ______ 3,549 6,210 9,759 7,396 ______ ______ _______ ______ Uninsured losses 5,184 680 5,864 4,079 Accident compensation 150 600 750 1,591 Future losses on Cogeneration agreements 0 0 0 9,009 Establishment and restructuring costs [ii] 8,011 8,700 16,711 45,300 Deferred Tax 0 32,370 32,370 333 Dividends Payable 26,008 0 26,008 0 ______ ______ _______ ______ 39,353 42,350 81,703 60,312 ______ ______ _______ ______ Total Provisions 51,134 63,970 115,104 87,724 ====== ====== ======= ====== [i] All amounts represented as "Allocation Amounts" were transferred from Electricity Services Victoria in the current year via an Allocation Statement in accordance with the Electricity Supply Industry Act 1993, and have been disclosed solely for the purpose of providing comparative data regarding the movement in provision balances. [ii] The decrease in the establishment and restructuring provision was as a result of voluntary departure packages of $10.3M, and other costs associated with restructuring of $5.1M being charged to the provision in the current period. A total amount of $13.2M representing planned Information Technology and other incremental establishment and restructuring expenditure was written back to the current periods Profit and Loss Account at 30 June 1995.
23 All Dollars are Australian with Australian Accounting Standards applied.
13 SHARE CAPITAL AND DIVIDENDS 1995 Notes $ ______________________________________________________________________________ (a) Ordinary shares of $1 each Authorised 500,000,000 =========== Issued and paid up 5 =========== (b) On Incorporation of the Company, 5 $1.00 ordinary shares were issued on 11 May 1994. (c) Dividends Provided for or Paid $000 Total dividends provided for or paid 44,108 Less: Interim dividend paid during the year [i] 18,100 ___________ Balance at end of year [ii] (12) 26,008 =========== Total dividends provided for or paid comprised: [i] In accordance with a recommendation from the Treasurer of Victoria, an interim dividend of $18.1M was approved by the Board of Directors and paid as per section 38 of the Electricity Industry Act 1993 to the State Electricity Commission of Victoria. [ii] A final dividend of $26.0M was provided on the basis of total dividends for the period being equal to 65% of after tax profits. Payment of the final dividend is subject to further recommendation from the Treasurer of Victoria and final approval from the Board of Directors in accordance with the Electricity Industry Act 1993.
24 All Dollars are Australian with Australian Accounting Standards applied.
14 JOINT VENTURES AND OTHER INTERESTS __________________________________________________________________________________________ Ventures/ Place of Principal Nature of Interest Method Net Value of Contribution Share in Interest Business Activity Interest % $000 of Products to Profit Assets & Accounting Received $000 Liabilities _____________________________________________________________________________________________________________________________ Energy Victoria Provision Ownership 8% 56 Shares Nil (299) Nil Business of Energy of 56,000 are valued Centre Pty Ltd Management ($1) "A" class at cost Services shares Agreement for Victoria Ongoing Cost Sharing 20% - Expenses Nil (140) Nil Distribution Development Arrangement recorded on Businesses of Industry only Accrual Basis Joint Venture Standards and Systems
25 All Dollars are Australian with Australian Accounting Standards applied. 15 RELATED PARTIES ______________________________________________________________________________ (a) Directors The names of persons who were Directors of Powercor at any time during the financial period are as follows: L Wilson (appointed 02/10/94) L Gason (appointed 02/10/94) P Griffin (appointed 02/10/94) R Guy OAM (appointed 02/10/94) R King (appointed 02/10/94) Y von Hartel (appointed 02/10/94) C Mitchell (appointed 15/12/94, resigned 15/08/95) J O'Rourke (resigned 16/05/94) S McCarthy (resigned 16/05/94) D Moulis (resigned 16/05/94) R Nicholson (resigned 02/10/94) S Mitchell (resigned 02/10/94) P Hay (resigned 02/10/94) (b) Remuneration Remuneration of Directors is disclosed in note 16. During the financial period there were no loans due to Powercor from any of the above-named Directors. (c) Other Transactions of Directors and Director-Related Entities No Director or their related entities has declared an interest in a contract, or proposed contract, during the period ended 30 June 1995 with Powercor other than: During the financial period ended 30 June 1995, payments were made to the Victorian Power Exchange of $2.65M in connection with pricing adjustments on electricity purchases. These payments were determined by VicPool rules taking into account the quantity and price of electricity purchased. Subsequent to 30 June 1995, the VicPool rules were amended due to an error affecting the payment calculations which resulted in a total of $1.325M being paid during the period ended 30 June 1995 in excess of amounts that would have been payable had the amended rules applied. Retrospective application of the amended rules was sought so as to recover the excess payments. As at the date of these financial statements, no agreement has been reached with the relevant power generators to recover the excess payments, and no amount receivable has been recognised in the Financial Statements. The Directors have resolved to continue to pursue recovery of the overpayment. 26 All Dollars are Australian with Australian Accounting Standards applied. Mr. Olaf B. O'Duill was appointed a Director of Powercor on 21 September 1995. He is also a Director of the Victorian Power Exchange and Chairman of Yallourn Energy Ltd. Due to the Victorian Government's common shareholding with Powercor and the Victorian Power Exchange, the aforementioned transaction has been disclosed. Powercor may directly or indirectly supply energy from time to time to its Directors or their director related parties. Transactions of this nature occur within a normal employee, customer or supplier relationship on terms and conditions no more favourable than those with which it is reasonable to expect Powercor to adopt if dealing with the Director or director related party at arm's length in similar circumstances. (d) Financing of Debt In accordance with the Borrowing and Investment Act 1987, Powercor is empowered to continue to negotiate its debt position directly with the Treasury Corporation of Victoria through the application of various borrowing, investment and hedging instruments. (e) Other Related Parties Powercor trades regularly with government bodies and departments. The Victorian Government still has control over Powercor and as such all transactions with the Government must be disclosed as related party transactions. A revised ruling has been made by the Australian Securities Commission under Accounting Standard AASB 1017: "The Commission has made an Order which provides limited relief under sub-section 313(2) of the Law which exempts the company from the requirement to disclose details relating to the classes of the related parties involved and the aggregate amount recognised, where the underlying transactions relate to either the supply of electricity or the purchase of operating supplies and other services which would impose an unreasonable burden on the company". The relief has only been provided for the financial year ended 30 June 1995. (f) Controlling Entities Powercor is an entity which is 100% controlled by the Victorian Government. The issued ordinary shares in Powercor are held by the State Electricity Commission of Victoria of which votes cannot be cast without the expressed written consent of the State of Victoria given by the Victorian Treasurer and the Minister for Energy and Minerals, or their joint nominee. 27 All Dollars are Australian with Australian Accounting Standards applied.
16 REMUNERATION OF DIRECTORS 1995 ______________________________________________________________________________ Remuneration received, or due and receivable, by Directors of the company $441,250 ============ The number of Directors whose income was within the specified bands are as follows (period covered is 3 October 1994 to 30 June 1995): 1995 $000 Number 30-40 5 60-70 1 210-220[i] 1 _____ Total 7 ===== Amounts are shown in summary form as the directors believe the provision of full particulars would be unreasonable. Remuneration of Directors covers the period from 3 October 1994 to 30 June 1995 and has not been annualised. [i] A Director is included in both note 16 - Directors' Remuneration (based on a period basis), and note 17 - Executives' Remuneration (based on an annualised basis).
______________________________________________________________________________ 28 All Dollars are Australian with Australian Accounting Standards applied. 17 REMUNERATION OF EXECUTIVES ______________________________________________________________________________ The number of Executive Officers domiciled in Australia who received, or were due to receive, directly or indirectly from the company, or from any related body corporate, a total annualised remuneration in connection with the management of affairs of the company, or any related body corporate, whether as Executive Officers or otherwise, is shown in the following bands:
1995 $000 Number 100-110 6 110-120 6 120-130 4 130-140 1 160-170 1 170-180 2 200-210 2 260-270[i] 1 _____ Total 23 ===== The aggregate (annualised) remuneration of the executives referred to in the above bands, including bonuses paid or payable under contract at 30 June 1995, was $3,177,120. Remuneration of executives at the directive of the Victorian Treasurer requires the reporting entity to report the information on an annual equivalent basis, Powercor therefore, has annualised the executive remuneration for the 1994/95 income year. [i] A Director is included in both note 16 - Directors Remuneration (based on a period basis), and note 17 - Executives Remuneration (based on an annualised basis).
29 All Dollars are Australian with Australian Accounting Standards applied. 18 CONTINGENCIES AND OTHER COMMITMENTS ______________________________________________________________________________ Contingent liabilities at balance date, not otherwise provided for in these financial statements, are categorised as, and supported by, the following notes: [i] Victorian Power Exchange Rules impose "collective responsibility" on Pool customers for the default of a fellow Pool customer. Although not anticipated to occur, there is a potential liability if a fellow Pool customer defaults on payment. [ii] Environmental provisions have been assessed as adequately provided for in the current periods Financial Statements however, further reviews currently being undertaken regarding additional costs associated with the restoration of the Brooklyn quarry, may reveal an increase in future liabilities. [iii] Powercor recently completed an external review and evaluation of all zone substations and capacitor banks for existing contamination levels which directly results from the current use of Polychlorinatedbiphenyls (PCBs). It is anticipated that proposed changes in environmental legislation will require the removal of all capacitor canisters containing PCBs. At 30 June the preliminary findings indicated a contingency may eventuate, estimated costs $2.7M for the replacement of capacitor bank canisters. [iv] Powercor has a contingent liability for termination benefits under various service agreements with General Managers and under the terms of individual employment contracts with other management executives. The maximum amount of such contingent liability at 30 June was $6.8M. [v] Powercor will be expected to refinance its debt portfolio at a future date. Depending upon the yield curve prevailing on the date of refinancing, a gain or loss will be realised. At 3 July 1995 a loss of $11.8M would have been realised had Powercor proceeded with refinancing. [vi] The Victorian Electricity Supply Industry Tariff Order established by Victorian Government legislation requires Powercor to supply electricity to a number of franchised customers at uncommercial prices under "Tariff H". These customers have the option of remaining on this tariff until the year 2000 or joining the contestable market when Tariff H aligns with cost reflective tariffs. At 30 June these contracts which represent 20% of Powercor's business were individually costed on an estimated total cost basis which revealed potential future losses to the business of $13.2M. [vii] Commercial cogeneration agreements currently exist with a number of Cogenerators. Under these contracts, Powercor undertakes to buy-back all excess electricity generated by the cogenerators at a specific price; this value represents a price higher than the cogenerators are required to pay for their usage. At 30 June 1995 a total estimated future loss of $11.2M measured at net present value was anticipated in honouring these contracts. Amounts disclosed in respect to any of the above contingent liabilities or other commitments are based on estimates only and may give rise to actual losses in future periods. 30 All Dollars are Australian with Australian Accounting Standards applied.
19 COMMITMENTS FOR EXPENDITURE 1995 $000 ______________________________________________________________________________ (a) Capital Commitments Total capital expenditure contracted for at balance date but not provided for in the accounts, payable: Not later than one year 715 =========== (b) Lease Commitments Total lease expenditure contracted for at balance date but not provided for in the accounts, payable: Not later than one year 1,306 Later than one year but not later than two years 392 Later than two years but not later than five years 1,680 Later than five years 53 ___________ 3,431 =========== Representing: Cancellable operating leases 34 Non-cancellable operating leases 3,397 ___________ 3,431 =========== Commitments in relation to non-cancellable operating leases are payable as follows: Not later than one year 1,282 Later than one year but not later than two years 382 Later than two years but not later than five years 1,680 Later than five years 53 ___________ 3,397 ===========
31 All Dollars are Australian with Australian Accounting Standards applied.
20 EMPLOYEE ENTITLEMENTS 1995 $000 ______________________________________________________________________________ (a) Aggregate employee entitlement liability The aggregate employee entitlement liability includes amounts for wages and salaries, annual leave, long service leave and superannuation contributions 23,642 =========== In accordance with the application of Accounting Standard AASB 1028, adjustments to employee liabilities were taken to account inclusive of relevant oncosts as follows: Provision for Long Service Leave 2,457 Provision for Annual Leave 1,228 ___________ 3,685 ===========
All amounts resulting from the application and compliance of AASB 1028 have been taken to the current periods Profit and Loss account. (b) Victorian Electricity Industry Superannuation Fund All permanent employees of the company and casual employees hired directly are entitled to benefits on termination from the V.E.I. Super Pty Ltd, casual employees, some executives and all permanent employees engaged after 3 October 1994 are members of an accumulation fund, Division D or other external accumulation funds. All other permanent employees are members of Divisions B or C of the Fund which provide defined benefits in the form of pensions (Division B) or lump sums (Division C). Both defined schemes are closed to new members. Division B members contribute at 6% of superannuation salary, and Division C members can contribute at 0, 3 or 6%. During 1994/95 the company contributed to the Fund at the rate of 10% for the defined benefit. The effective date of the most recent detailed valuation of the Fund was 30 June 1994. A summary valuation for annual accounts purposes was last made at 30 June 1995 by Mr G I Burgess, FIA, FIAA of William M Mercer Pty Ltd. At 30 June 1995 the Fund had a surplus of assets over liabilities of $5.0M. At 30 June 1995, Mr Burgess prepared a further assessment of the defined benefit schemes on an individual employer basis. 32 All Dollars are Australian with Australian Accounting Standards applied. Based on that assessment, the unaudited situation for the company as at 30 June 1995 was:
1995 $000 Present value of employees' accrued benefits 82,100 Net market value of assets held by the Fund to meet future benefit payments 87,100 ___________ Excess/(deficit) of assets over present value of employees' accrued benefits held to meet future benefit payments 5,000 =========== Employer contributions to the Fund for the year ended 30 June 1995 7,008 =========== Vested benefits 83,900 ===========
The present value of employees' accrued benefits is equal to the past membership liability calculated in accordance with Australian Accounting Standard AAS25 "Financial Reporting by Superannuation Plans". Vested benefits are those benefits which would have been paid on voluntary termination from the Fund. 33 All Dollars are Australian with Australian Accounting Standards applied.
21 AUDIT AND ACCOUNTING FEES ______________________________________________________________________________ 1995 AUDITORS REMUNERATION $000 Amounts paid or payable to: Victorian Auditor-General Audits of the Financial Statements - current year 88 Other Auditors Arthur Andersen internal audit services - current year 262 ___________ Total Audit Fees 350 ___________ OTHER ACCOUNTING FEES Charged to Other Accounts - - Arthur Andersen 97 - - Price Waterhouse 56 ___________ 153 ___________ Total Audit and Accounting Fees 503 ===========
______________________________________________________________________________
22 CONSULTANCY FEES 1995 $000 ______________________________________________________________________________ Amounts paid or payable TOTAL CONSULTANCY FEES 1,752 =====
______________________________________________________________________________ 23 SUBSEQUENT EVENTS ______________________________________________________________________________ On 15 August 1995, Mr Chris Mitchell resigned from the position of Chief Executive Officer and Managing Director with Powercor. As a result of the current Victorian Government's privatisation process, Powercor is expected to be sold within the 1995/96 financial year. The sale is expected to be transacted through a trade sale. On 21 September 1995 Mr Olaf B. O'Duill was appointed as a Director of Powercor. (These events have no material impact on the state of affairs or results of Powercor for the period ended 30 June 1995.) 34 Auditor-General's Report ________________________ AUDITOR-GENERAL'S REPORT Audit Scope The accompanying financial statements of Powercor Australia Limited for the period 11 May 1994 to 30 June 1995, comprising profit and loss account, balance sheet, statement of cash flows and notes to the financial statements, have been audited. The company's directors are responsible for the preparation and presentation of the financial statements and the information they contain. An independent audit of these financial statements has been carried out in order to express an opinion on them to the members of the company as required by the Corporations Law and the Audit Act 1994. ________________ _________ The audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to whether the financial statements are free of material misstatement. The audit procedures included an examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial statements, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial statements are presented fairly in accordance with applicable Accounting Standards and other mandatory professional reporting requirements and comply with the Corporations Law, so as to present a view which is consistent with my ________________ understanding of the company's financial position and the results of its operations and its cash flows. The audit opinion expressed on the financial statements has been formed on the above basis. Audit Opinion In my opinion, the financial statements of Powercor Australia Limited are properly drawn up: (a) so as to give a true and fair view of: (i) the company's state of affairs as at 30 June 1995 and of its profit and cash flows for the period ended on that date; and (ii) the other matters required by Divisions 4, 4A and 4B of Part 3.6 of the Corporations Laws to be dealt with in the _________________ financial statements; (b) in accordance with the Corporations Law, and ________________ (c) in accordance with applicable Accounting Standards and other mandatory professional reporting requirements. MELBOURNE C.A. BARAGWANATH 3/10/1995 Auditor-General _________ _______________ Level 14.222 Exhibition St, Melbourne, Victoria 3000 ____________________________________________________ Tel (03) 9651 6012 Fax (03) 9651 6050 ______________________________________ 35 All Dollars are Australian with Australian Accounting Standards applied. Appendix I RECONCILIATION TO U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) (UNAUDITED) ______________________________________________________________________________ No significant adjustments to the income statement would be required if U.S. GAAP had been applied instead of Australian accounting principles. 36 PACIFICORP PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT For the Year Ended December 31, 1994 In Millions of U.S. Dollars (Unaudited)
Historical Historical Purchase of Proforma Consolidated Powercor Powercor and Consolidated PacifiCorp Australia Adjustments PacifiCorp ____________ __________ ____________ ____________ Revenues $3,506.5 $560.9 - $4,067.4 Expenses Depreciation and amortization 424.3 35.8 27.8 487.9 Operations, maintenance and other 2,059.9 419.7 - 2,479.6 _____________________________________________________ Total 2,484.2 455.5 27.8 2,967.5 _____________________________________________________ Income from Operations 1,022.3 105.4 (27.8) 1,099.9 Other Expense (Income) Interest expense 334.5 37.8 73.4 445.7 Other (30.0) (14.9) - (44.9) _____________________________________________________ Total 304.5 22.9 73.4 400.8 _____________________________________________________ Income before Income Taxes 717.8 82.5 (101.2) 699.1 Income taxes 249.8 32.1 (36.4) 245.5 _____________________________________________________ Net Income $468.0 $50.4 $(64.8) $453.6 =================================================== Earnings on Common Stock $428.3 $50.4 $(64.8) $413.9 Earnings per Share $1.51 $1.46 Average Number of Common Shares Outstanding 282,912 282,912 See accompanying notes to pro forma condensed consolidated financial information.
37 PACIFICORP PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET As of December 31, 1994 In Millions of U.S. Dollars (Unaudited)
Historical Purchase of Pro Forma Consolidated Historical Powercor and Consolidated PacifiCorp Powercor Adjustments PacifiCorp ____________ __________ ____________ ____________ Assets Property, plant and equipment - net $8,446.2 $756.8 $538.1 $9,741.1 Current assets 815.4 91.1 0.0 906.5 Other assets 2,584.0 7.3 265.0 2,856.3 ______________________________________________________ Total Assets $11,845.6 $855.2 $803.1 $13,503.9 ====================================================== Capitalization and Liabilities Common equity $3,459.8 $16.9 $(16.9) $3,459.8 Preferred stock 367.4 - - 367.4 Preferred stock subject to mandatory redemption 219.0 - - 219.0 Long-term debt and capital lease obligations 3,768.2 224.2 628.2 4,620.6 Short-term debt and long-term currently maturing 550.5 466.7 214.8 1,232.0 Other current liabilities 718.5 101.9 - 820.4 Deferred income taxes and investment tax credits 2,012.7 23.0 (23.0) 2,012.7 Other deferred credits 641.6 22.5 664.1 Minority interest 107.9 - 107.9 ______________________________________________________ Total Capitalization and Liabilities $11,845.6 $855.2 $803.1 $13,503.9 ===================================================== See accompanying notes to pro forma condensed consolidated financial information.
38 PACIFICORP PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT For the Nine Months Ended September 30, 1995 In Millions of U.S. Dollars (Unaudited)
Historical Historical Purchase of Proforma Consolidated Powercor Powercor and Consolidated PacifiCorp Australia Adjustments PacifiCorp ____________ ___________ ____________ ____________ Revenues $2,511.8 $424.1 $ - $2,935.9 Expenses Depreciation and amortization 331.1 24.6 20.8 376.5 Operations, maintenance and other 1,414.3 294.0 - 1,708.3 ______________________________________________________ Total 1,745.4 318.6 20.8 2,084.8 ______________________________________________________ Income from Operations 766.4 105.5 (20.8) 851.1 Other Expense (Income) Interest expense 282.2 31.9 51.2 365.3 Other (68.2) (2.1) - (70.3) ______________________________________________________ Total 214.0 29.8 51.2 295.0 ______________________________________________________ Income before Income Taxes 552.4 75.7 (72.0) 556.1 Income taxes 175.1 27.6 (25.9) 176.8 ______________________________________________________ Net Income $377.3 $48.1 $(46.1) $379.3 ====================================================== Earnings on Common Stock $346.9 $48.1 $(46.1) $348.9 Earnings per Share $1.22 $1.23 Average Number of Common Shares Outstanding 284,271 284,271 See accompanying notes to pro forma condensed consolidated financial information.
39 PACIFICORP PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET As of September 30, 1995 In Millions of U.S. Dollars (Unaudited)
Historical Purchase of Pro Forma Consolidated Historical Powercor and Consolidated PacifiCorp Powercor Adjustments PacifiCorp ____________ __________ ____________ ____________ Assets Property, plant and equipment - net $8,543.3 $806.7 $573.9 $9,923.9 Current assets 734.0 102.9 - 836.9 Other assets 2,677.7 7.2 219.4 2,904.3 ______________________________________________________ Total Assets $11,955.0 $916.8 $793.3 $13,665.1 ====================================================== Capitalization and Liabilities Common equity $3,586.8 $12.2 $(12.2) $3,586.8 Preferred stock 367.4 - - 367.4 Preferred stock subject to mandatory redemption 219.0 - - 219.0 Long-term debt and capital lease obligations 3,707.2 212.7 694.0 4,613.9 Short-term debt and long-term currently maturing 682.4 521.0 141.5 1,344.9 Other current liabilities 671.2 116.9 - 788.1 Deferred income taxes and investment tax credits 2,053.2 30.0 (30.0) 2,053.2 Other deferred credits 646.3 24.0 670.3 Minority interest 21.5 - - 21.5 ______________________________________________________ Total Capitalization and Liabilities $11,955.0 $916.8 $793.3 $13,665.1 ====================================================== See accompanying notes to pro forma condensed consolidated financial information.
40 PacifiCorp NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED) NOTE 1. BASIS OF PRESENTATION The accompanying unaudited pro forma condensed consolidated balance sheets reflect the financial position of PacifiCorp (the "Company") after giving effect to the acquisition of Powercor Australia, Limited ("Powercor") on December 12, 1995 and the related financings as if it were consummated at the end of the periods presented. The unaudited pro forma condensed consolidated income statements reflect the acquisition of Powercor as if it had occurred as of the beginning of the periods presented. As no financial information is available for Powercor for periods earlier than July 1, 1994, the pro forma condensed consolidated income statement for the Company for the year ended December 31, 1994 has been prepared using the results of Powercor for the period from May 11, 1994 to June 30, 1995 as if such results were for the year ended December 31, 1994. The unaudited pro forma condensed consolidated financial information has been prepared by the Company based upon assumptions deemed proper by it and a preliminary allocation of the purchase price paid. The unaudited pro forma condensed consolidated financial information presented herein are shown for illustrative purposes only and are not necessarily indicative of the future financial position or future results of operations of the Company, or of the financial position or results of operations of the Company that would have actually occurred had the transaction been in effect as of the date or for the periods presented. In addition, it should be noted that the Company's financial statements will reflect the acquisition only from December 12, 1995, the closing date for the acquisition. The unaudited pro forma condensed consolidated financial information should be read in conjunction with the historical financial statements and related notes of the Company. PacifiCorp -- Represents the condensed consolidated balance sheets of the Company as of September 30, 1995 and December 31, 1994 and condensed consolidated income statements of the Company for (a) the nine months ended September 30, 1995 and (b) the year ended December 31, 1994 as they appear in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995 and the Company's 1994 Annual Report on Form 10-K. Powercor -- Represents the condensed balance sheets as of September 30, 1995 and June 30, 1995 and condensed income statements of Powercor for (a) the nine months ended September 30, 1995 and (b) the period from May 11, 1994 to June 30, 1995 as reflected on Powercor's statements of profit and loss adjusted to U.S. generally accepted accounting principles. 41 NOTE 2 PRO FORMA ADJUSTMENTS Balance Sheet (a) Property, plant and equipment was increased to reflect balances at fair market value. (b) Other assets were increased to reflect the value of licenses acquired. (c) Additional short-term and long-term debt issued to fund the acquisition of Powercor was included and the retirement of Powercor's short-term and long-term debt was reflected. (d) The payment of deferred taxes related to the sale of fixed assets was reflected. Income Statement (a) Intangible assets related to the purchase of Powercor were amortized on a straight-line basis over a 40 year life. (b) Interest expense related to Powercor's pre-acquisition activities was removed and interest expense related to the acquisition debt was included. (c) Additional depreciation expense related to an increase in property, plant and equipment to reflect balances at fair value was included. (d) No material adjustments to conform to U.S. Generally Accepted Accounting Principles were required. (e) For the six months ended June 30, 1995, Powercor's revenues were $277 million and net income was $36 million. 42 All Dollars are Australian with Australian Accounting Standards applied. See Footnote 2 for Reconciliation to U.S. GAAP Powercor Australia, Limited Condensed Income Statement For the Three Months Ended September 30, 1995 (Unaudited) In Millions of Australian Dollars
Revenues $198.7 Cost of Sales 115.2 Operating expenses 34.5 Depreciation 12.0 Interest expense 12.9 ______ Income before taxes 24.1 Income taxes 7.9 ______ Net Income $16.2 ====== See accompanying notes to condensed consolidated financial information.
43 All Dollars are Australian with Australian Accounting Standards applied. See Footnote 2 for Reconciliation to U.S. GAAP Powercor Australia, Limited Condensed Balance Sheet As of September 30, 1995 (Unaudited) In Millions of Australian Dollars
Assets Property, plant and equipment - net $1,067.7 Current assets 136.2 Other assets 9.4 ________ Total Assets $1,213.3 ======== Capitalization and Liabilities Common equity $16.2 Long-term debt and capital lease obligations 281.5 Current liabilities 844.2 Deferred credits 71.4 ________ Total Capitalization and Liabilities $1,213.3 ======== See accompanying notes to condensed consolidated financial information.
44 All Dollars are Australian with Australian Accounting Standards applied. See Footnote 2 for Reconciliation to U.S. GAAP Powercor Australia, Limited Condensed Statement of Cash Flows For the Three Months Ended September 30, 1995 (Unaudited) In Millions of Australian Dollars
Cash flows from operating activities Receipts from customers $196.8 Payments to suppliers and employees for goods (55.2) Interest and other (14.2) Purchased electricity (98.6) ______ Net cash inflow from operating activities $28.8 ====== Cash flows from investing activities Payments to acquire property, plant and equipment (17.0) Other (4.8) ______ Net cash outflow from investing activities $(21.8) ====== Cash flows from financing activities Proceeds from borrowings 171.4 Repayment of borrowings (principal only) (171.7) Other 1.8 ______ Net cash inflow from investing activities $1.5 ====== Net increase in cash held 8.5 Cash at the beginning of the period (2.0) ______ Cash at the end of the period $6.5 ====== See accompanying notes to condensed consolidated financial information.
45 Powercor Australia, Limited NOTES TO CONDENSED FINANCIAL STATEMENTS SEPTEMBER 30, 1995 UNAUDITED Note 1 The financial statements of Powercor Australia, Limited ("Powercor") for the three months ended and as of September 30, 1995 are unaudited. The financial statements, in the opinion of Powercor's management, include all adjustments, constituting only normal recording of accruals, necessary for a fair presentation of financial position and results of operations. In addition, such statements are denominated in Australian dollars. The acquisition, related adjustments, including acquisition financing, have not been reflected in the attached statements. No adjustments have been made to reflect the statements in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Note 2 No significant adjustments to the condensed income statement for the three months ended September 30, 1995 would be required if U.S. GAAP had been applied instead of Australian accounting principles. INDEX TO EXHIBITS
EXHIBIT DESCRIPTION PAGE _______ ___________ ____ 2.1 Asset Sale Agreement between Powercor Australia Limited and PacifiCorp Australia Holdings Pty Ltd. 2.2 Share Sale Agreement between the State Electricity Commission of Victoria and the State of Victoria and PacifiCorp Australia Holdings Pty Ltd. and PacifiCorp Holdings, Inc. 2.3 Asset Purchase Agreement between PacifiCorp Australia Holdings Pty Ltd. and Powercor Australia Limited. 23 Consent of the Auditor-General, Melbourne, Australia.
EX-2.1 2 EXHIBIT 2.1 POWERCOR AUSTRALIA LIMITED ACN 064 651 109 and PACIFICORP AUSTRALIA HOLDINGS PTY LTD ACN 068 231 005 ________________________________________________ Asset Sale Agreement ________________________________________________ Mallesons Stephen Jaques Solicitors Level 28 525 Collins Street Melbourne VIC 3000 Australia Telephone: (03) 9619 0619 Facsimile: (03) 9614 1329 Reference: MELBOURNE/JAP/56973 1 THIS ASSET SALE AGREEMENT is made on 16 November 1995 between the following parties: 1. POWERCOR AUSTRALIA LIMITED ACN 064 651 109 of Level 3, 77 Southbank Boulevard, Southbank, Victoria 3006 ("Seller"); and 2. PACIFICORP AUSTRALIA HOLDINGS PTY LTD ACN 068 231 005 of 50th Floor, 120 Collins Street, Melbourne, 3000 ("Asset Buyer"). RECITALS: A. The Seller is the owner of the Assets. B. The Seller agrees to sell and the Asset Buyer agrees to buy the Assets on the terms and conditions set out in this agreement. THE PARTIES AGREE as follows: 1. DEFINITIONS AND INTERPRETATION 1.1 DEFINITIONS In this agreement: "ASSETS" means the Plant and Equipment and Intellectual Property. "AUTHORISATION" includes: (a) any consent, registration, filing, agreement, notarisation, certificate, licence, approval, permit, authority or exemption from, by or with a Governmental Agency; and (b) in relation to anything which may be proscribed or restricted in whole or in part by law or otherwise if a Governmental Agency intervenes or acts in any way within a specified period after lodgement, registration or other notification of anything, the expiration of that period without the intervention or action by that Governmental Agency. "BUSINESS DAY" means a day on which banks are open for business in Melbourne, excluding a Saturday or a Sunday or a public holiday. "ASSET BUYER'S WARRANTIES" means the warranties and representations of the Asset Buyer set out in clause 4.1. "COMPLETION" means completion of the sale and purchase of the Assets under clause 3. "COMPLETION DATE" is the day on which Completion occurs under the Share Sale Agreement. "DOLLARS" "A$" and "$" means the lawful currency of the Commonwealth of Australia. "DUTY" means any stamp, transaction or registration duty or similar charge imposed by any Governmental Agency and includes, but is not limited to, any interest, fine, penalty, charge or other amount imposed in respect of the above, but excludes any Tax. 2 "ELECTRICITY ACT" means the Electricity Industry Act 1993. "GOVERNMENTAL AGENCY" means the government of any country or the government of any state, territory, municipality or other political subdivision of a country, and any minister, administrative or judicial body, department, commission, authority, instrumentality, tribunal, agency or entity of any such government. "INTELLECTUAL PROPERTY" means rights to all patents, copyrights and designs used in the business of the Company, and includes: (a) rights under licence in respect of such patents, copyrights or designs; and (b) equitable rights in respect of such patents, copyrights or designs or such licences. "OFFICER" means a director or secretary of the relevant party or Seller (as the case may be). "PLANT AND EQUIPMENT" means all: (a) plant, equipment and articles owned by the Seller; and (b) (in relation to all land which is not owned by the Seller) structures permanently affixed to land and other improvements to land owned by the Seller (but not the land itself), including without limitation all electricity transmission and distribution lines, power poles, underground cables, stations, substations, switch yard equipment and all other plant and equipment used in the reticulation, transformation or metering of electrical power which, in its ordinary use, is located in a fixed position wherever located, but excludes motor vehicles and mobile plant owned or leased by the Seller and, for the avoidance of doubt, does not include capital works in progress. "POWER" means any right, power, authority, discretion or remedy conferred on the parties by this agreement or any applicable law. "PURCHASE PRICE" means $1,650,000,000. "SECURITY INTEREST" means an interest or power: (a) reserved in or over an interest in any asset excluding any retention of title; or (b) created or otherwise arising in or over any interest in any asset under a bill of sale, mortgage, charge, lien, pledge, trust or power, by way of security for the payment of a debt or any other monetary obligation or the performance of any other obligation and includes, but is not limited to, any agreement to grant or create any of the above. "SHARE SALE AGREEMENT" means the agreement so titled to be entered into between State Electricity Commission of Victoria, the State of Victoria and the Asset Buyer under which the Asset Buyer shall acquire, inter alia, all the issued ordinary shares in the capital of the Seller. "TAX" means any tax, levy, charge, impost, duty, fee, deduction or withholding which is assessed, levied, imposed or collected by any State Governmental Agency and includes, but is not limited to, any interest, fine, penalty, charge, fee or any other amount imposed on, or in respect of, any of the above and any amount imposed under section 88 of the State Owned Enterprises Act 1992 but excludes any Duty. 3 1.2 INTERPRETATION In this agreement, unless the context otherwise requires: (a) headings and underlinings are for convenience only and do not affect the interpretation of this agreement; (b) words importing the singular include the plural and vice versa; (c) words importing a gender include any gender; (d) other parts of speech and grammatical forms of a word or phrase defined in this agreement have a corresponding meaning; (e) an expression importing a natural person includes any company, partnership, joint venture, association, corporation or other body corporate and any Governmental Agency; (f) a reference to a clause, party, annexure, exhibit or schedule is a reference to a clause of, and a party, annexure, exhibit and schedule to, this agreement and a reference to this agreement includes any such annexure, exhibit and schedule; (g) a reference to a statute, regulation, proclamation, ordinance or by-law includes all statutes, regulations, proclamations, ordinances or by-laws amending, consolidating or replacing it, and a reference to a statute includes all regulations, proclamations, ordinances and by-laws issued under that statute; (h) a reference to a document includes all amendments or supplements to, or replacements or novations of, that document; (i) a reference to a party to a document includes that party's successors and permitted assigns; (j) where the day on or by which any thing is to be done is not a Business Day, that thing must be done on or by the next Business Day; (k) no rule of construction applies to the disadvantage of a party because that party was responsible for the preparation of this agreement or any part of it; (l) a covenant or agreement on the part of two or more persons binds them jointly and severally; (m) a reference to an agreement other than this agreement includes an undertaking, agreement or legally enforceable arrangement or understanding whether or not in writing; (n) a reference to an asset includes all property of any nature, including, but not limited to, a business, and all rights, revenues and benefits; (o) a reference to a document includes any agreement in writing, or any certificate, notice, instrument or other document of any kind; (p) a reference to liquidation includes appointment of an administrator, compromise, arrangement, merger, amalgamation, reconstruction, winding-up, dissolution, assignment for the benefit of creditors, scheme, composition or arrangement with creditors, insolvency, bankruptcy, or any similar procedure or, where applicable, changes in the constitution of any partnership or person, or death; and (q) terms defined in the Corporations Law at the date of this agreement have the meanings given to them in the Corporations Law at that date. 4 2. SALE AND PURCHASE 2.1 SALE OF ASSETS Subject to the terms of this agreement, to the maximum extent permitted by law, the Seller must sell free of Security Interests and the Asset Buyer must buy the Assets for the Purchase Price on the Completion Date. The parties agree that the allocation of the Purchase Price between the Assets is as follows: Plant and Equipment $1,610,000,000 Intellectual Property $40,000,000 __________ Total: $1,650,000,000 _____________ The Purchase Price allocated to the above asset categories is then further allocated to each individual asset rateably on the basis of the current book value of the asset as a proportion of the total book value of that respective class. 2.2 DATES FOR PAYMENT On and subject to the terms of this agreement the Asset Buyer must pay the Purchase Price on the Completion Date. 2.3 METHOD OF PAYMENT All payments to be made under this agreement must be made by bank cheque or in such other method as may be agreed in writing between the Seller and the Asset Buyer. 3. COMPLETION 3.1 DATE FOR COMPLETION Completion must take place on the Completion Date at 10 am at the office of the Seller's solicitors, Mallesons Stephen Jaques, 525 Collins Street, Melbourne. 3.2 DELIVERY OF DOCUMENTS At Completion, the Seller must deliver to the Asset Buyer a copy of the special resolution passed by the State Electricity Commission of Victoria (as shareholder) approving the sale of Assets by the Seller on and subject to the terms of this agreement. 3.3 ASSET BUYER'S OBLIGATIONS AT COMPLETION At Completion the Asset Buyer must pay the Seller the Purchase Price as described in clause 2. 3.4 PROPERTY AND RISK Property and risk in the Assets shall pass to the Asset Buyer on the Completion Date. 5 3.5 INTERDEPENDENCY BETWEEN THIS AGREEMENT AND SHARE SALE AGREEMENT It is the intention of the parties that: (a) Completion under this agreement; (b) completion under the Share Sale Agreement; and (c) payment of the SECV Loan and TCV Loan under clause 6 of the Share Sale Agreement, are interdependent, so that if the obligations of the parties in respect of a particular completion or payment under clause 6 are not satisfied, then no delivery or payment which has been made, will be deemed to have been made. For the avoidance of doubt the parties acknowledge and agree that once Completion under this agreement, completion under the Share Sale Agreement and the payments under clause 6 of the Share Sale Agreement have occurred, as a chronological sequence of events, all deliveries and payments will be deemed to have taken place in the order in which they occurred. 3.6 INCONSISTENCIES In the event there are any inconsistencies between this agreement and the Share Sale Agreement, the provisions of the Share Sale Agreement shall prevail. 3.7 EXERCISE OF RIGHTS With effect from Completion, the Seller shall exercise all of its statutory and other rights with respect to the Assets including, without limitation, its rights under Part 3 of the Electricity Act, consistently with ownership of the Assets having been vested in the Asset Buyer and shall act in accordance with any directions given by the Asset Buyer to the Seller as to the manner of exercise of such rights. 3.8 TERMINATION This agreement shall automatically terminate on termination of the Share Sale Agreement. 4. ASSET BUYER'S WARRANTIES 4.1 ASSET BUYER'S WARRANTIES The Asset Buyer represents and warrants to the Seller as at the date of this agreement and the Completion Date that: (a) it has the corporate power to enter into this agreement and has taken all necessary action (including all shareholder approvals and Authorisations) to authorise the execution, delivery and performance of this agreement; (b) the agreement constitutes a legally valid and binding obligation of the Asset Buyer enforceable in accordance with its terms; and (c) the execution, delivery and performance of this agreement will not violate any provision of: (1) any law, regulation, order, rule or decree of any Governmental Agency of the Commonwealth of Australia or any state or territory or any recognised stock exchange on which its shares or the shares of any related body corporate are listed; (2) the memorandum or articles of association (or equivalent constituent documentation) of the Asset Buyer; and (3) any security agreement, deed, contract, undertaking or other instrument to which the Asset Buyer is a party or which is binding on it and does not and will not result in the creation or imposition of any security over any of its assets pursuant to the provision of any such security agreement, deed, contract, undertaking or other instrument. 6 4.2 ACKNOWLEDGEMENT The Asset Buyer acknowledges and agrees that: (a) none of the Assets is "land" for the purposes of section 32 of the Sale of Land Act 1962; and (b) in no event is it entitled to rescind this agreement or claim damages under this agreement. 5. DUTIES, COSTS AND EXPENSES 5.1 PAYMENT OF DUTY The Asset Buyer must pay: (a) any Duty in respect of the execution, delivery and performance of this agreement and any document entered into or signed under this agreement; and (b) any fine, penalty or other cost in respect of a failure to pay any Duty. 5.2 INDEMNITY The Asset Buyer indemnifies the Seller against any amount payable under clause 5.1. 5.3 COSTS AND EXPENSES Subject to clause 5.1, each party must pay its own costs and expenses in respect of the negotiation, preparation, execution, delivery, stamping and registration of this agreement or other document described in clause 5.1(a). 5.4 COSTS OF PERFORMANCE Any action to be taken by a party in performing its obligations under this agreement must be taken at its own cost and expense unless otherwise provided in this agreement. 6. NOTICES 6.1 GENERAL Any notice or other communication including, but not limited to, any request, demand, consent or approval, to or by a party to this agreement: (a) must be in legible writing and in English addressed as shown : (1) if to the Seller: The Administrator, Address: State Electricity Commission of Victoria, Level 5, 452 Flinders Street Melbourne 3000 Attention: Mr G Brooke Facsimile: (03) 9679 4747; (2) if to the Asset Buyer: Pacificorp Australia Holdings Pty Ltd C/- Phillips Fox Address: 120 Collins Street Melbourne 3000 Attention: Peter Vines/Judith Earls Facsimile: (03) 9274 5111, or as specified to the sender by any party by notice; (b) where the sender is a company, must be signed by an Officer or under the common seal of the sender; (c) is regarded as being given by the sender and received by the addressee: (1) if by delivery in person, when delivered to the addressee; (2) if by post within Australia, 3 Business Days from and including the date of postage; or (3) if by facsimile transmission, when transmitted legibly to the addressee, but if the delivery or receipt is on a day which is not a Business Day or is after 4.00 pm (addressee's time) it is regarded as received at 9.00 am on the following Business Day; and (d) can be relied upon by the addressee and the addressee is not liable to any other person for any consequences of that reliance if the addressee believes it to be genuine, correct and authorised by the sender. 7 6.2 LEGIBILITY OF FACSIMILE TRANSMISSION A facsimile transmission is regarded as legible unless the addressee telephones the sender within 2 hours after the transmission is received or regarded as received under clause 6.1(c)(3) and informs the sender that it is not legible. 7. GENERAL 7.1 GOVERNING LAW AND JURISDICTION (a) This agreement is governed by the laws of Victoria. Each party irrevocably submits to the exclusive jurisdiction of the courts of Victoria. (b) Each party irrevocably waives any objection to the venue of any legal process on the basis that the process has been brought in an inconvenient forum. 8 7.2 WAIVERS (a) Waiver of any right arising from a breach of this agreement or of any Power arising upon default under this agreement must be in writing and executed by the party granting the waiver. (b) A failure or delay in exercise, of: (1) a right arising from a breach of this agreement; or (2) a Power created or arising upon default under this agreement, does not result in a waiver of that right or Power. (c) A party is not entitled to rely on a delay in the exercise or non- exercise of a right or Power arising from a breach of this agreement or on a default under this agreement as constituting a waiver of that right or Power. (d) A party may not rely on any conduct of another party as a defence to exercise of a right or Power by that other party. (e) This clause 7.2 may not itself be waived except by writing executed by the party granting the waiver. 7.3 VARIATION A variation of any term of this agreement must be in writing and executed by the parties. 7.4 FURTHER ASSURANCES Each party must do all things, and execute all further documents, necessary to give full effect to this agreement. 7.5 THIRD PARTY RIGHTS No person other than a party to this agreement is intended to have any right, power or remedy or derives or is intended to derive any benefit under this agreement. 7.6 THIS AGREEMENT SUPERSEDES OTHERS This agreement and the Share Sale Agreement embodies the entire agreement between the parties with respect to the subject matter of this agreement and supersedes any prior negotiation, arrangement, understanding or agreement with respect to the subject matter or any term of this agreement. EXECUTED by the parties as an agreement. THE COMMON SEAL of ) POWERCOR AUSTRALIA ) LIMITED (ACN 064 651 109) was ) affixed to this document in the ) presence of: ) Secretary Director Name (please print) Name (please print) THE COMMON SEAL of ) PACIFICORP AUSTRALIA ) HOLDINGS PTY LTD (ACN 068 ) 231 005) was affixed to this ) document in the presence of: ) Secretary Director Name (please print) Name (please print) TABLE OF CONTENTS 1. DEFINITIONS AND INTERPRETATION 1 1.1 Definitions 1 1.2 Interpretation 3 2. SALE AND PURCHASE 4 2.1 Sale of Assets 4 2.2 Dates for Payment 4 2.3 Method of Payment 4 3. COMPLETION 4 3.1 Date for Completion 4 3.2 Delivery of documents 4 3.3 Asset Buyer's obligations at Completion 4 3.4 Property and Risk 4 3.5 Interdependency between this agreement and Share Sale Agreement 5 3.6 Inconsistencies 5 3.7 Exercise of Rights 5 3.8 Termination 5 4. ASSET BUYER'S WARRANTIES 5 4.1 Asset Buyer's Warranties 5 4.2 Acknowledgement 6 5. DUTIES, COSTS AND EXPENSES 6 5.1 Payment of Duty 6 5.2 Indemnity 6 5.3 Costs and expenses 6 5.4 Costs of performance 6 6. NOTICES 6 6.1 General 6 6.2 Legibility of facsimile transmission 7 7. GENERAL 7 7.1 Governing law and jurisdiction 7 7.2 Waivers 8 7.3 Variation 8 7.4 Further assurances 8 7.5 Third party rights 8 7.6 This agreement supersedes others 8 EX-2.2 3 EXHIBIT 2.2 STATE ELECTRICITY COMMISSION OF VICTORIA and THE STATE OF VICTORIA and PACIFICORP AUSTRALIA HOLDINGS PTY LTD and PACIFICORP HOLDINGS, INC. ________________________________________________ Share Sale Agreement relating to POWERCOR AUSTRALIA LIMITED ________________________________________________ Mallesons Stephen Jaques Solicitors 525 Collins Street Melbourne VIC 3000 Australia Telephone: (03) 9619 0619 Facsimile: (03) 9614 1329 Reference: MELBOURNE/JAP/58197.01 THIS SHARE SALE AGREEMENT is made on 16 November 1995 between the following parties: 1. STATE ELECTRICITY COMMISSION OF VICTORIA of Level 5, 452 Flinders Street, Melbourne 3000 ("Seller"); 2. The HONOURABLE ALAN ROBERT STOCKDALE in his capacity as Treasurer of the State of Victoria for and on behalf of the Crown in right of the State ("State"); 3. PACIFICORP AUSTRALIA HOLDINGS PTY LTD ACN 068 231 005 of Level 50, 120 Collins Street, Melbourne, 3000 in its capacity as Buyer and Asset Buyer; and 4. PACIFICORP HOLDINGS, INC. of 700 NE Multnomah - 1600 POP, Portland, Oregon, United States of America ("Guarantor"). RECITALS: A. The Seller is the beneficial owner of the Shares. B. The Seller agrees to sell (and procure the sale by the Nominees) and the Buyer agrees to buy, the Shares on the terms and conditions set out in this agreement. C. The parties have agreed to effect the following transactions in the following sequence at Completion: (a) the Asset Buyer will, under the Asset Sale Agreement, purchase the Plant and Equipment and the Intellectual Property from the Company for $1,650,000,000; (b) the Company will pay a dividend from the retained earnings of the Company for the period ended on 30 June 1995 of $23,750,000 to the Seller; (c) the Company will pay a dividend from the earnings of the Company for the period after 1 July 1995 to the Seller; (d) the Buyer will pay the Estimated Purchase Price to the Seller; (e) the Company will pay the Estimated State Equivalent Tax to the State; (f) the Company will repay the SECV Loan; and (g) the Company will repay the TCV Loan. D. Immediately after the sale of the Shares, the Company will, under the Asset Purchase Agreement, purchase the assets acquired by the Asset Buyer under the Asset Sale Agreement. E. Thus, if Completion occurs on 12 December 1995, the estimated total proceeds to the State and the Seller, including dividends from the profits of the Company for the year ended 30 June 1995 which were not 2 provided for at 30 June 1995 (but excluding any working capital movements from signing to Completion) are set out as follows: (a) Sale of Shares $383,832,072 (b) Repayment of SECV Loan $466,704,000 (c) Repayment of TCV Loan $553,953,629 (d) Payment of Estimated State Equivalent Tax on the sale of the Plant and Equipment and Intellectual Property $136,684,000 (e) Payment of dividends on the profits from the sale of the Plant and Equipment and Intellectual Property $583,094,000 (f) Payment of dividends on profits in the period after 1 July 1995 $ Nil (g) Payment of dividends on pre-30 June 1995 profits $23,750,000 (h) Payment of stamp duty $2,302,993 $2,150,320,694 ______________ F. The State agrees to guarantee the obligations of the Seller under this agreement. G. The Guarantor agrees to guarantee the obligations of the Buyer under this agreement. THE PARTIES AGREE as follows: 1. DEFINITIONS AND INTERPRETATION 1.1 DEFINITIONS In this agreement: "ADVISERS" means all of the advisers of the State or the Seller in relation to the sale of the Company and all other transactions contemplated by this agreement including without limitation, CS First Boston Australia Limited, KPMG, KPMG Corporate Finance (Vic.) Pty Ltd, Freehill Hollingdale & Page and Mallesons Stephen Jaques. "ALLOCATION STATEMENT" means, in relation to the Company, any Statement which, for the purposes of section 117 or 137 of the Electricity Act, is an allocation statement pursuant to which any property, rights or liabilities of Electricity Services Victoria were vested in the Company and includes the Electricity Services Victoria allocation statement dated 29 September 1994 (as amended on 7 March 1995 and 7 August 1995) (the "ESV Allocation Statement"). "APPROVAL DATE" means the date on which the Company is able to give the Financial Assistance, being: (a) (where no application is made under section 205(12) of the Corporations Law) the first Business Day after the 21 day notice period referred to in section 205(12) has expired; or (b) (where an application is or applications are made under section 205(12) of the Corporations Law) the first Business Day after: (1) the application or each application has been withdrawn; or (2) the Court has approved the giving of the Financial Assistance, whichever applicable date first occurs. 3 "APPROVED SELL DOWN TRANSACTION" means the issue, transfer, sale or other disposal of: (a) Equity Securities in the Buyer, the Company, a shareholder in the Buyer or any Group Member held by the Pacificorp Group to any person; or (b) the assets or undertaking, or any substantial part of the assets or undertaking, of the Buyer, the Company, a shareholder in the Buyer or any Group Member held by the Pacificorp Group to any person, which takes place, (c) after Completion (as that term is defined and used in the agreement) has occurred with respect to the sale of the issued share capital in each of Citipower Ltd, Eastern Energy Limited, Solaris Power Limited and Powercor Australia Ltd; or (d) with the prior written consent of the Treasurer, or (e) to a person other than an Australian-based financial institution, investment company or pension or superannuation fund; or (f) pursuant to the Buyer implementing the steps envisaged by the Buyer with respect to the proposed compliance with section 205 of the Corporations Law in accordance with this agreement and the sale of the Plant and Equipment and Intellectual Property to the Company under the Asset Purchase Agreement, provided: (g) the issue, transfer, sale or other disposal of the Equity Securities does not form part of an initial public offering on a recognised stock exchange nor are any Equity Securities in the person to whom the assets or undertaking are sold, to be issued, transferred, sold or otherwise disposed of as part of an initial public offering on a recognised stock exchange; and (h) the aggregate number of Equity Securities in the Company held by the Pacificorp Group does not reduce below 75% of the total number of Equity Securities in the Company or (as appropriate) the aggregate value of the assets or undertaking of the Company (calculated at book value, excluding intangibles, cash and short term marketable securities) held by the Pacificorp Group does not reduce below 75% of the total value of the assets or undertaking of the Company (calculated at book value, excluding intangibles, cash and short term marketable securities) . "ASSET BUYER" means the Buyer in its capacity as Asset Buyer under the Asset Sale Agreement. "ASSET SALE AGREEMENT" means the agreement so titled of today's date between the Company and the Asset Buyer under which the Asset Buyer shall acquire the Plant and Equipment and the Intellectual Property. "ASSET PURCHASE AGREEMENT" means the agreement so titled to be entered into between the Asset Buyer and the Company under which the Company shall purchase the assets acquired by the Asset Buyer under the Asset Sale Agreement. "ASSOCIATE" has the meaning given to that term in the Electricity Act. "AUDITOR-GENERAL" means the Auditor-General for the State. "AUTHORISATION" includes: (a) any consent, registration, filing, agreement, notarisation, certificate, licence, approval, permit, authority or exemption from, by or with a Governmental Agency; and 4 (b) in relation to anything which may be proscribed or restricted in whole or in part by law or otherwise if a Governmental Agency intervenes or acts in any way within a specified period after lodgement, registration or other notification of anything, the expiration of that period without the intervention or action by that Governmental Agency. "BASE RATE" means, in respect of a given date, the rate percent per annum which is described as the "Average Mid Rate" and appears on the page entitled "BBSW" on the Reuters Monitor System at or about 10.00 am (Melbourne time) on that date for a bank accepted bill of exchange having a tenor of 30 days. "BORROWING ACT" means the Borrowing and Investment Powers Act 1987. "BUSINESS" means the businesses of the distribution of electricity, the retail sale of electricity and the provision of related field, technical and engineering services carried on by the Company in the State of Victoria. "BUSINESS DAY" means a day on which banks are open for business in Melbourne, excluding a Saturday or a Sunday or a public holiday. "BUYER" means Pacificorp Australia Holdings Pty Limited ACN 068 231 005. "BUYER'S WARRANTIES" means the warranties and representations of the Buyer set out in clause 8.1. "COMPANY" means POWERCOR AUSTRALIA LIMITED ACN 064 651 109. "COMPANY'S FUND" means that part of the Victorian Electricity Industry Superannuation Fund which relates to the Company. "COMPLETION" means completion of the sale and purchase of the Shares under clause 5. "COMPLETION DATE" means the first Business Day after the Approval Date, or such other date as may be agreed in writing between the parties. "COMPLETION DATE PAYMENTS" means the payments to be made on the Completion Date under clause 4.2(b). "CONTROL" has the same meaning as that in parts 3.6 and 3.7 of the Corporations Law. "CONTROLLING GROUP MEMBER" has the meaning given to that term in clause 5.6(c)(4). "DATA ROOM DOCUMENTATION" means all documentation referred to in schedule 2. "DEPOSIT" means $50,000,000. "DISCLOSURES" means the information described in schedule 2. "DISPOSE OF" includes transfer, sell or otherwise dispose of any right, title or interest in or otherwise allow any person to acquire a Relevant Interest in, but does not include the giving of any Security Interest to a bank or other financial institution. "DISTRIBUTION LICENCE" means the distribution licence issued to the Company by the Office of the Regulator-General on 3 October 1994, as amended on 7 August 1995. "DOLLARS" "A$" and "$" means the lawful currency of the Commonwealth of Australia. "DRAFT BALANCE SHEET" means the: (a) unaudited draft balance sheet of the Company as at 30 September 1995 based on accounts prepared by management of the Company; and (b) any notes attached to and forming part of that balance sheet, 5 a copy of which is set out in annexure C. "DUTY" means any stamp, transaction or registration duty or similar charge imposed by any Governmental Agency and includes, but is not limited to, any interest, fine, penalty, charge or other amount imposed in respect of the above, but excludes any Tax. "ELECTRICITY ACT" means the Electricity Industry Act 1993. "EMPLOYEES" means those employees engaged in the Business as at Completion. "ENERGY LEVY ORDER" means any order made under section 158B of the Electricity Act. "EQUITY SECURITIES" means, in relation to a company, fully or partly paid shares in the capital of that company (including stock), options in respect of or rights to subscribe for any such shares, securities (debt or equity) convertible into or exchangeable for any such shares, and equity securities the income and/or capital rights of which are determined by reference to the income and/or capital rights of any such shares in the company (together with options to subscribe for any such securities and securities convertible into or exchangeable for any such securities). "ESTIMATED PURCHASE PRICE" means $383,832,072, being the estimated amount of the Purchase Price under clause 4.1(a)(1), subject to adjustment under clause 4.1(a)(4) or 4.1(b)(3). "ESTIMATED STATE EQUIVALENT TAX" has the meaning given to that term in clause 10.8. "ESV ALLOCATION STATEMENT" has the meaning given that term in the definition of "Allocation Statement". "FINANCIAL ASSISTANCE" means the financial assistance which the Company may give for the purpose of, or in connection with, the acquisition by the Buyer of the Shares, the procedure relating to which has been agreed between the parties. "GOVERNMENTAL AGENCY" means the government of any country or any state, territory, municipality or other political subdivision of a country, and any minister, administrative or judicial body, department, commission, authority, instrumentality, tribunal, agency or entity of any such government. "GROUP" means, in relation to each shareholder in the Buyer or the Asset Buyer (and each person who holds a beneficial interest in the shares held by that shareholder) ("first named person"): (a) the Ultimate Holding Vehicle of that first named person; and (b) every person interposed between that Ultimate Holding Vehicle and the first named person, with each such vehicle, person or corporation being a "Group Member". "INTELLECTUAL PROPERTY" means rights to all patents, copyrights and designs used in the business of the Company, and includes: (a) rights under licence in respect of such patents, copyrights or designs; and (b) equitable rights in respect of such patents, copyrights or designs or such licences. "JUNE ACCOUNTS" means the financial statements of the Company comprising: (a) the audited balance sheet of the Company as at 30 June 1995; (b) the audited profit and loss account and statement of cash flows of the Company for the period 11 May 1994 to 30 June 1995; and 6 (c) any notes attached to and forming part of those financial statements, a copy of which is set out in annexure A. "LICENCES" means the Distribution Licence and the Retail Licence. "NOMINEES" means Messrs Greaves, Drewett, Coughlin and McMahen. "OFFICER" means a director or secretary of the relevant party or Company (as the case may be). "PACIFICORP GROUP" means the Guarantor and any wholly owned or wholly Controlled entity of the Guarantor. "PLANT AND EQUIPMENT" means all: (a) plant, equipment and articles owned by the Company; and (b) (in relation to all land which is not owned by the Company) structures permanently affixed to land and other improvements to land owned by the Company (but not the land itself), including without limitation all electricity transmission and distribution lines, power poles, underground cables, stations, substations, switch yard equipment and all other plant and equipment used in the reticulation, transformation or metering of electrical power which, in its ordinary use, is located in a fixed position wherever located, but excludes motor vehicles and mobile plant owned or leased by the Company and, for the avoidance of doubt, does not include capital works in progress. "POWER" means any right, power, authority, discretion or remedy conferred on the parties by this agreement or any applicable law. "PROHIBITED INTEREST" has the meaning given to that term in the Electricity Act (as modified by the draft regulations set out in schedule 5). "PURCHASE PRICE" means the price payable for the Shares under clause 4.1. "RELEVANT AGREEMENT" has the meaning given to that term in the Electricity Act. "RELEVANT INTEREST" has the meaning given that expression in the Corporations Law. "RETAIL LICENCE" means the retail licence issued to the Company by the Office of the Regulator-General on 3 October 1994 as amended on 7 August 1995. "SALES TAX AGREEMENT" means the sales tax agreement to be entered into between the Seller and the Company in substantially the same form as set out in annexure D. "SECURITY INTEREST" means an interest or power: (a) reserved in or over an interest in any asset including, but not limited to, any retention of title; or (b) created or otherwise arising in or over any interest in any asset under a bill of sale, mortgage, charge, lien, pledge, trust or power, by way of security for the payment of a debt or any other monetary obligation or the performance of any other obligation and includes, but is not limited to, any agreement to grant or create any of the above. 7 "SECV LOAN" means any liability pursuant to sections 121 and 141 of the Electricity Act (on such terms and conditions as apply on the Completion Date) of the Company to the Seller arising as a result of a direction given by the Treasurer under sub-sections 153W(1) or (2) of the Electricity Act (which on the Completion Date shall not exceed $466,704,000). "SELLER'S WARRANTIES" means the warranties and representations of the Seller set out in schedule 1. "SHARES" means the five issued ordinary shares of $1.00 each in the capital of the Company. "STATE EQUIVALENT TAX" means such amounts due to the Treasurer under section 88(1)(a) of the State Owned Enterprises Act 1992 in respect of tax (not being sales tax) that would be payable by the Company if it were liable to pay taxes under the law of the Commonwealth. "TARGET GROUP MEMBER" has the meaning given to that term in clause 5.6(c)(4). "TARIFF ORDER" means any order made under section 158A of the Electricity Act. "TAX" means any tax, levy, charge, impost, duty, fee, deduction or withholding which is assessed, levied, imposed or collected by any State Governmental Agency and includes, but is not limited to any interest, fine, penalty, charge, fee or any other amount imposed on, or in respect of, any of the above and any amount imposed under section 88 of the State Owned Enterprises Act 1992 but excludes: (a) any Duty; and (b) the SECV Loan. "TCV" means Treasury Corporation of Victoria. "TCV LOAN" means the amount specified in clause 5.9(a)(2). "THIRD PARTY CLAIM" has the meaning given to that term in clause 11.3. "TREASURER" means the Treasurer of the State of Victoria. "ULTIMATE HOLDING VEHICLE" means: (a) in relation to a body corporate, the same meaning as that given to "Ultimate Holding Company" in the Corporations Law; and (b) in relation to any other investment vehicle (trust or otherwise), the person who Controls that investment vehicle and is itself not Controlled by any person. 1.2 INTERPRETATION In this agreement, unless the context otherwise requires: (a) headings and underlinings are for convenience only and do not affect the interpretation of this agreement; (b) words importing the singular include the plural and vice versa; (c) words importing a gender include any gender; (d) other parts of speech and grammatical forms of a word or phrase defined in this agreement have a corresponding meaning; (e) an expression importing a natural person includes any company, partnership, joint venture, association, corporation or other body corporate and any Governmental Agency; 8 (f) a reference to a clause, party, annexure, exhibit or schedule is a reference to a clause of, and a party, annexure, exhibit and schedule to, this agreement and a reference to this agreement includes any annexure, exhibit and schedule; (g) a reference to a statute, regulation, proclamation, ordinance or by-law includes all statutes, regulations, proclamations, ordinances or by-laws amending, consolidating or replacing it, and a reference to a statute includes all regulations, proclamations, ordinances and by-laws issued under that statute; (h) a reference to a document includes all amendments or supplements to, or replacements or novations of, that document; (i) a reference to a party to a document includes that party's successors and permitted assigns; (j) where the day on or by which any thing is to be done is not a Business Day, that thing must be done on or by the next Business Day; (k) no rule of construction applies to the disadvantage of a party because that party was responsible for the preparation of this agreement or any part of it; (l) a covenant or agreement on the part of two or more persons binds them jointly and severally; (m) a reference to an agreement other than this agreement includes an undertaking, agreement or legally enforceable arrangement or understanding whether or not in writing; (n) a reference to an asset includes all property of any nature, including, but not limited to, a business, and all rights, revenues and benefits; (o) a reference to a document includes any agreement in writing, or any certificate, notice, instrument or other document of any kind; (p) a reference to liquidation includes appointment of an administrator, compromise, arrangement, merger, amalgamation, reconstruction, winding-up, dissolution, assignment for the benefit of creditors, scheme, composition or arrangement with creditors, insolvency, bankruptcy, or any similar procedure or, where applicable, changes in the constitution of any partnership or person, or death; (q) terms used in this agreement and defined in the Corporations Law at the date of this agreement have the meanings given to them in the Corporations Law at that date; (r) the benefit of this agreement to the extent it relates to any undertaking given by the Buyer to the State in relation to its contributions to the Company's Fund, shall be held by the State beneficially for itself and as trustee for all other contributing employers to, and the trustee of, that Fund; and (s) the benefit of this agreement to the extent it relates to a representative of the Company or an Adviser, shall be held by the State beneficially for itself and as trustee for that representative or Adviser (as the case may be). 2. SALE AND PURCHASE 2.1 SALE OF SHARES Subject to the terms of this agreement, the Seller must sell (and procure the Nominees to sell) free of Security Interests and other third party rights and the Buyer must buy the Shares for the Purchase Price on Completion. 2.2 TREASURER'S APPROVAL For the purposes of section 12A(1)(e) of the State Electricity Commission Act 1958, the Treasurer (in his capacity as such) hereby approves the sale of the Shares by the Seller on and subject to the terms of this agreement. 2.3 METHOD OF PAYMENT All payments to be made under this agreement must be made by bank cheque or in such other immediately available funds as may be agreed in writing between the Seller and the Buyer. 9 2.4 PROFIT ENTITLEMENT The Seller shall be entitled to all accumulated profits (after State Equivalent Tax) of the Company in respect of the period up to and including 30 June 1995 and accordingly, the Seller shall procure, to the extent it has not already been done, that the Company declares and pays a dividend in an amount equal to that profit entitlement, on or before the Completion Date. 2.5 DIVIDEND PAYMENT The Buyer shall be entitled, at any time before the date which is 5 Business Days before Completion, to notify the Seller that it wishes the Company to declare and pay to the Seller a dividend out of the profit (after State Equivalent Tax), including all profits on the sale of the Plant and Equipment and Intellectual Property, in respect of the period on and from 1 July 1995. The Seller shall procure that the board of directors of the Company declares and pays to the Seller, to the maximum extent permissible under the Corporations Law, the amount of the dividend so notified. Save for the dividend to be paid to the Seller as contemplated under this clause, any dividend which is provided for in the June Accounts and the dividend referred to in Recital E(g) no dividend or other distribution of profits or capital has been declared or made to the Shareholders in the Company on or since 1 July 1995 nor will be declared or made prior to Completion. 2.6 SECTION 205 The Seller shall pass, and procure that the Nominees ensure that the Company passes resolutions in relation to obtaining all approvals, authorisations or other requirements set out in section 205 of the Corporations Law in a form proposed by the Buyer and agreed to by the Seller. 3. DEPOSIT 3.1 PAYMENT If Completion does not occur on 12 December 1995 then the Buyer must, on that date, pay to the Seller the Deposit, unless the failure to Complete arises solely because of: (a) a Court failing to make an order under section 205(13) of the Corporations Law if a person not associated with the Buyer makes an application under section 205(12) of the Corporations Law with respect to the Financial Assistance; (b) the Foreign Investment Review Board or the Treasurer (after being given by the Buyer all necessary information and notices in a timely and proper manner) failing to provide an Authorisation required (or reasonably necessary) to complete the purchaser of the Shares; or (c) a default by the State or the Seller in meeting their obligations to complete under this agreement. If any of the reasons specified in (a), (b) or (c) above cease to prevent Completion occurring then the Buyer must, on the first Business Day after the reason ceases to prevent Completion occurring, pay to the Seller the Deposit. 3.2 NON-REFUND The Deposit shall be refunded to the Buyer (and the Seller must refund the Deposit) if the State exercises its right to terminate this agreement under clause 5.7 and the Buyer is not in breach of this agreement. 10 3.3 NOTICE OF TERMINATION FOR BREACH If the Buyer does not pay to the Seller the Deposit as required under clause 3.1, then the State may, at any time after 12 December 1995 give written notice (the "First Notice") to the Buyer that it may terminate this agreement (and the Asset Sale Agreement and Asset Purchase Agreement) by a further notice in writing to the Buyer, if the Buyer does not pay the Deposit (together with interest calculated in accordance with clause 4.3) within three Business Days of receipt of the First Notice by the Buyer. 3.4 AUTOMATIC TERMINATION If the Deposit and interest is not paid within such period then, the Seller may at any time after the expiration of the three Business Day period terminate this agreement promptly by notice in writing to the Buyer. On termination of this agreement, the Asset Sale Agreement and the Asset Purchase Agreement shall automatically terminate. 3.5 REMEDIES If this agreement is terminated under this clause then in addition to any other rights provided by law, the Seller retains the rights it has against the Buyer, including without limitation, the right to claim and recover damages for loss of profit. 4. PURCHASE PRICE AND PAYMENTS 4.1 AMOUNT The price ("Purchase Price") payable for the Shares is as follows: (a) the sum of: (1) $383,832,072;\ (2) the amount (if any) by which the State Equivalent Tax paid by the Company for the period commencing on and from 1 July 1995 and ending on the Completion Date is less than the Estimated State Equivalent Tax for the equivalent period; and (3) an amount (if any) equal to the amount by which the aggregate Victorian Duty paid by the Company, Asset Buyer or the Buyer in respect of: (i) the sale of the Plant and Equipment and Intellectual Property from the Company to the Asset Buyer under the Asset Sale Agreement and the sale of assets by the Asset Buyer to the Company under the Asset Purchase Agreement; (ii) the sale of Shares under this agreement; and (iii) financing relating to the foregoing (if any), is less than $2,302,993; and (4) the amount (if any) by which any dividend declared and paid pursuant to clause 2.5 is less than $583,094,000, less (b) the sum of: (1) the amount (if any) by which the State Equivalent Tax paid by the Company for the period commencing on and from 1 July 1995 and ending on the Completion Date exceeds the Estimated State Equivalent Tax for the equivalent period; and (2) an amount (if any) equal to the amount by which the aggregate Victorian Duty paid by the Company, Asset Buyer or the Buyer in respect of: (i) the sale of the Plant and Equipment and Intellectual Property from the Company to the Asset Buyer and the sale of assets by the Asset Buyer to the Company under the Share Purchase Agreement; (ii) the sale of Shares under this agreement; and (iii) financing relating to the foregoing (if any), exceeds $2,302,993; and (3) the amount (if any) by which any dividend declared and paid pursuant to clause 2.5 exceeds $583,094,000. 11 4.2 PAYMENTS (a) Subject to clause 3.1, on 12 December 1995 the Buyer will pay to the Seller the Deposit. (b) On the Completion Date, the Buyer and the Company will make the following payments: (1) the Company will pay any dividend pursuant to clause 2.5 to the Seller (the "Dividend Payment"); (2) the Company will pay the Estimated State Equivalent Tax to the State; (3) the Buyer will pay the Estimated Purchase Price to the Seller (less any Deposit paid); (4) the Company will repay the SECV Loan pursuant to clause 5.9 (the "SECV Loan Payment"); and (5) the Company will repay the TCV Loan and other amounts owing to TCV pursuant to clause 5.9 (the "TCV Loan Payment"). (c) Within 7 days after payment of both the Duty payable pursuant to clause 14.3 and the State Equivalent Tax payable pursuant to clause 10.8, the Buyer will provide written notice, and evidence, to the Seller that those payments have been made. The Buyer or the Seller (as appropriate) must, within 7 days after the notice referred to above is provided, pay the amount of the adjustment to the Purchase Price under clause 4.1 to the other party. 4.3 INTEREST If: (a) any party or the Company fails to pay any sum payable by it under this agreement at the time and otherwise in the manner provided in this agreement, that party must pay interest on that sum from the due date of payment until that sum is paid in full; (b) the Buyer or the Seller is obliged to pay money under clause 4.2(c), the Buyer or Seller (as the case may be) must pay interest on that sum from the Completion Date until that sum is paid in full; or (c) Completion does not occur on the first Business Day after the Approval Date due to the fault of the Buyer, the Buyer must pay interest on the Estimated Purchase Price (less the Deposit paid) from that Business Day until that sum is paid in full, at the rate equal to the Base Rate plus 4%. The parties acknowledge and agree that if Completion does not occur on 12 December 1995 solely because an application is made under section 205(12) of the Corporations Law in respect of the Financial Assistance, then the Buyer must pay interest on the Estimated Purchase Price (less the Deposit paid) from that date until the sum is paid in full at the rate equal to the Base Rate. Interest accrues from day to day and is payable on demand. 12 5. COMPLETION 5.1 DATE FOR COMPLETION The actions required on the Completion Date, including Completion shall commence at 10 am on the Completion Date at the office of the Seller's solicitors, Mallesons Stephen Jaques, 28th Floor, 525 Collins Street, Melbourne. 5.2 COMPLETION DATE ACTIONS On the Completion Date, the following actions shall be taken and shall be presumed to have occurred in the order listed: (a) completion under the Asset Sale Agreement; (b) the Dividend Payment; (c) Completion under this Agreement including payment of the Estimated Purchase Price; (d) payment of the Estimated State Equivalent Tax; (e) the TCV Loan Payment; and (f) the SECV Loan Payment. 5.3 DELIVERY OF DOCUMENTS At Completion, the Seller must: (a) deliver to the Buyer share certificates for the Shares; (b) deliver to the Buyer completed transfers of the Shares to the Buyer in registrable form, executed by the Seller and, where applicable, the Nominees; (c) deliver to the Buyer the certificate of incorporation, common seal and all statutory, minute and share certificate books of the Company; (d) deliver to the Buyer the written resignations of all directors of the Company except those directors whom the Buyer notifies the Seller no later than five Business Days before the Completion Date that it wishes to retain, to be effective on the appointment of the directors to be appointed at the Board meeting to be convened under clause 5.4; (e) make available to the Buyer at the respective offices or places of business of the Company: (1) all ledgers, journals and books of account of the Company; (2) all cheque books of the Company and a list of all bank accounts maintained by the Company; and (3) all documents in the possession of the Company relating to the ownership and use of the assets of the Company; (f) deliver to the Buyer copies of the Distribution Licence and the Retail Licence; and (g) deliver to the Buyer one counterpart of the Sales Tax Agreement duly executed by the Seller. 13 5.4 FIRST MEETING At Completion, the Seller must ensure that a meeting of the directors or shareholders (as appropriate) of the Company is convened and conducts the following business: (a) approval of the registration of the Buyer or its nominee as the holder of the Shares in the books of the Company, subject to the payment of Duty on the transfer of the Shares; (b) appointment of the nominees of the Buyer as directors of the Company with effect from the close of the meeting; (c) revocation of all existing mandates for the operation of bank accounts of the Company and approval of new mandates in favour of the officers of the Company nominated by the Buyer; (d) acceptance of the resignations of the existing directors (except those directors to be retained as notified to the Seller under clause 5.3(d)), with effect from the close of the meeting; and (e) adoption of memorandum and articles of association prepared by the Buyer. 5.5 SECOND MEETING At Completion, the Seller and the Buyer must ensure that a meeting of the directors or shareholders (as appropriate) of the Company is convened following the meeting referred to in clause 5.4, and conducts the following business: (a) such action as may be required to facilitate the Buyer's financing for this transaction; and (b) authorising the dividend contemplated by this agreement. 5.6 BUYER'S OBLIGATIONS AT COMPLETION At Completion the Buyer must: (a) pay the Seller the Estimated Purchase Price and procure that the Company pays the remaining Completion Date Payments pursuant to clause 4.2(b); (b) deliver to the State covenants (in form and substance satisfactory to the State) from each shareholder in the Buyer (and each person who holds a beneficial interest in the shares held by that shareholder) (not being a person who holds that interest by virtue of its shareholding or investments in an Ultimate Holding Vehicle listed on a recognised stock exchange) that it will not, except with the prior written consent of the Treasurer, for two years after the Completion Date: (1) create, grant or issue any Equity Securities in the Buyer (except to the shareholders of the Buyer, where the relative percentage beneficial ownership of shares in the Buyer (as they exist as at the Completion Date) are maintained); (2) dispose of any Equity Securities in the Buyer; (3) transfer, sell or otherwise dispose of any right, title or interest in the whole or any substantial part of the undertaking or assets of the Buyer, provided that nothing in this clause 5.6(b) shall prohibit an Approved Sell Down Transaction (and the covenants referred to in this clause may be so limited); (c) deliver to the State in respect of each Group, covenants (in form and substance satisfactory to the State) from each Group Member (not being a Group Member who holds that interest by virtue of its shareholding or investment in an Ultimate Holding Vehicle listed on a recognised stock exchange), that it will not, except with the prior written consent of the Treasurer, for two years after the Completion Date: (1) create, grant or issue (or permit the creation, grant or issue of) any Equity Securities, units or other interests in any Group Member it Controls; or (2) dispose of any Equity Securities, units or other interests in any Group Member it Controls; (3) transfer, sell or otherwise dispose of any right, title or interest in the whole or any substantial part of the undertaking or assets of any Group Member it Controls, unless (4) it (the "Controlling Group Member") is able to show to the Treasurer, that the book value at cost of the Group's investment in the Buyer constitutes less than 50% of the book value at cost of the total assets (excluding intangibles, cash and short term marketable securities) of the Group Member it Controls ("Target Group Member"), in which event (5) the Controlling Group Member may dispose of up to 49.9% of the Target Group Member (or 49.9% of the Target Group Member after allowing for full dilution on the creation, grant or issue of any Equity Securities, units or other interests in the Target Group Member); and (6) where the Controlling Group Member is the Ultimate Holding Vehicle of the Target Group Member, any restriction that might otherwise be imposed on the shareholders or investors in that vehicle shall not apply, provided that nothing in this clause 5.6(c) shall prohibit an Approved Sell Down Transaction (and the covenants referred to in this clause may be so limited); (d) procure that the Asset Buyer delivers to the State the same covenants in respect of each of its shareholders (and each person who holds a beneficial interest in the shares held by that shareholder) and Group Members as those to be delivered by the Buyer under paragraphs (b) and (c) above (mutatis mutandis), provided that nothing in this clause 5.6(d) shall prohibit an Approved Sell Down Transaction (and the covenants referred to in this clause may be so limited); and (e) deliver to the Seller one counterpart of the Sales Tax Agreement duly executed by the Company. 14 5.7 TERMINATION BY LAPSE OF TIME If: (a) this agreement has not already been terminated by the State under clause 3.3; and (b) Completion has not occurred on or before 28 February 1996 (or such other date as the parties may have agreed in writing), then either the Buyer on the one part or the State on the other part may, if not in breach of this agreement, give written notice to the other of its intention to terminate this agreement (and the Asset Sale Agreement and Asset Purchase Agreement) after three Business Days of receipt of the notice. After such notice has been delivered both parties shall use their best efforts to reach Completion within the three day notice period. If Completion does not occur within such period then this agreement, the Asset Sale Agreement and the Asset Purchase Agreement shall automatically terminate on expiration of the three Business Day notice period. 15 5.8 REMEDIES If this agreement is terminated under clause 5.7 then in addition to any other rights provided by law: (a) each party is released from its obligations to continue performance under this agreement except those imposing obligations of confidentiality; and (b) each party retains the rights it has against any other party in respect of any past breach. 5.9 REPAYMENT OF LOANS At Completion: (a) the Buyer shall ensure that the Company has available to it sufficient funds to repay, and the Buyer shall procure that the Company repays: (1) the SECV Loan; and (2) in respect of the TCV Loan, either: (A) (if Completion occurs on 12 December 1995), $553,953,629 (being the TCV Loan); or (B) (if Completion does not occur on 12 December 1995), $553,953,629 together with interest accrued on that amount, at the Cash Rate plus 0.05 per cent per annum, reset and compounded daily from and including 13 December 1995 to the Completion Date; (b) the Buyer shall ensure that the Company has available to it sufficient funds to pay and the Buyer shall procure that the Company pays (or the Seller, as the case may be, shall pay) the following payments: (1) if on the Completion Date the outstanding level of cash advances made by TCV for working capital requirements exceeds the money standing to the credit of the Company with TCV in respect of dealings with TCV on or after the date of this agreement), then the Company must pay to TCV the amount of the excess; (2) if on the Completion Date the level of money standing to the credit of the Company with TCV exceeds the outstanding level of cash advances made by TCV for working capital requirements in respect of dealings with TCV on or after the date of this agreement, then TCV must pay to the Company the amount of the excess; (3) all Accrued Interest; and (4) all outstanding TCV administration fees (being an amount per month not to exceed $13,750); and (c) the State shall deliver to the Buyer a full discharge and release in respect of the SECV Loan, the TCV Loan, any other amounts owing to TCV and any liability to the Treasurer under section 121 or section 141 of the Electricity Act. 16 5.10 DEFINITIONS For the purposes of clause 5.9: (a) a certificate signed by an officer of TCV stating the aggregate amount of such cash advances, all accrued interest and all TCV administration fees is, in the absence of manifest error, conclusive evidence of that value; (b) "ACCRUED INTEREST" means in respect of transactions with TCV after the date of this agreement, the net amount of interest which has accrued but remains unpaid to the account of TCV or the Company from the date of this agreement to the Completion Date. For the purposes of calculating the accrued interest: (1) all interest shall be calculated each day on the balance owing to TCV or the Company; (2) where on the relevant day there is a cash advance owing from the Company to TCV, the interest rate shall be the Cash Rate plus 0.05 per cent per annum; (3) where on the relevant day there is a deposit from the Company to TCV, the interest rate shall be the Cash Rate less 0.05 per cent per annum; and (4) the aggregated amount of daily interest payable or received shall be paid by TCV or the Company (as appropriate) on the last day of each calendar month prior to Completion and at Completion (in respect of the period from the first day of the month in which Completion occurs to the day of Completion); and (c) "CASH RATE" means on the relevant date, the rate per cent per annum determined by TCV by taking the rates quoted on the page entitled "IIAM" on the Reuters Monitor System at or about 11am (Melbourne time). 6. INTERDEPENDENCY 6.1 INTERDEPENDENCY BETWEEN AGREEMENTS For the avoidance of doubt the parties acknowledge and agree: (a) the Buyer shall not be obliged to complete this agreement if the Company fails to complete under, or is otherwise in breach of, the Asset Sale Agreement immediately before Completion; and (b) that once Completion under this agreement and the Asset Sale Agreement have occurred, as a chronological sequence of events, all deliveries and payments will be deemed to have taken place in the order in which they occurred. 7. AUDITOR-GENERAL REVIEW 7.1 AUDIT BY AUDITOR-GENERAL The Buyer acknowledges that financial statements as nominated by the Treasurer for the period from 1 July 1995 until 30 September 1995 may be audited by the Auditor-General (or his agent) and/or reviewed by independent accountants appointed by the Treasurer ("Treasurer's Accountants"), who may publish accounts for any period up to and including 30 September 1995 or publish his (or their) report on such accounts. 17 7.2 ACCESS TO BOOKS The Buyer must grant, and procure that the Company grants, the Auditor-General and the Treasurer's Accountants (and/or the agents of any of them) full and free access at all reasonable times to those employees of the Company whose knowledge or information is needed by the Auditor-General and/or the Treasurer's Accountants (and/or the agents of any of them) and to all books, records and other data pertaining to the Company, in order to enable the Auditor-General and/or the Treasurer's Accountants to conduct his (or their) audit(s). 8. BUYER'S OBLIGATIONS 8.1 BUYER'S WARRANTIES The Buyer represents and warrants to the Seller and the State as at: (a) the date of this agreement and the Completion Date that, except as set out in schedule 4, no person has any legal or beneficial interest (or obligation (actual, contingent or otherwise) to acquire a legal or beneficial interest) in: (1) the capital of the Buyer or the Asset Buyer; or (2) (in relation to each shareholder in the Buyer and the Asset Buyer which is not listed on any recognised stock exchange) the capital of each Group Member; (b) the date of this agreement and the Completion Date that, annexure B sets out complete and accurate details of all agreements, arrangements or understandings to which Group Members or shareholders in the Buyer or the Asset Buyer (or each person who holds a beneficial interest in the shares held by that shareholder) are a party which have (directly or indirectly) an impact on or relate to: (1) the financial and operating policies or management of the Company or the Business; (2) the activities of the Company as a licensee; or (3) the exercise of any voting power in another Group Member. (c) the date of this agreement and the Completion Date that, it has the corporate power to enter into this agreement and has taken all necessary action (including obtaining all shareholder approvals and Authorisations) to authorise the execution, delivery and performance of this agreement; (d) the date of this agreement and the Completion Date, that, the agreement constitutes a legally valid and binding obligation of the Buyer enforceable in accordance with its terms; (e) the date of this agreement and the Completion Date that, it will on 12 December 1995 and at Completion have sufficient funds available to it to pay the Estimated Purchase Price and otherwise satisfy its obligations on Completion; (f) the date of this agreement and the Completion Date that, the execution, delivery and performance of this agreement (and, subject to the resolutions relating to the Financial Assistance being passed and no successful application being made under section 205(12) of the Corporations Law, the giving of the Financial Assistance) will not violate any provision of: (1) any law, regulation, order, rule or decree of any Governmental Agency of the Commonwealth of Australia or any state or territory or any recognised stock exchange on which its shares or the shares of any related body corporate are listed; (2) the memorandum or articles of association (or equivalent constituent documentation) of the Buyer or the Asset Buyer; and (3) any security agreement, deed, contract, undertaking or other instrument to which the Buyer or the Asset Buyer is a party or which is binding on it and does not and will not result in the creation or imposition of any security over any of its assets pursuant to the provision of any such security agreement, deed, contract, undertaking or other instrument; (g) as at the Completion Date that: (1) neither it nor any of its Associates will hold a Prohibited Interest; and (2) it is not aware of any fact, matter or circumstance (including without limitation any pending or contemplated Relevant Agreement to which it or any of its Associates is or may be a party) which might, after the Completion Date, result in the Company acquiring a Prohibited Interest; or the Buyer or any Associate of the Buyer holding a Prohibited Interest; and (h) as at the date of this agreement it has (and on the Completion Date it will have) disclosed to the State complete and accurate details of all Relevant Agreements to which it or any of its Associates is or may be a party under which a Prohibited Interest has or may be acquired. 18 8.2 CERTIFICATION Subject to clause 8.1(h), the Buyer must before Completion apply to the Treasurer for a certificate from him, setting out whether or not, based on the information disclosed to him, the Buyer and any Associate of the Buyer holds a Prohibited Interest. 8.3 CONTINUED HOLDING Except with the prior written consent of the Treasurer, for the period from the date of this agreement to the Completion Date and for the period of 2 years commencing on the Completion Date, the Buyer must not, and must cause the Company not to: (a) create, grant or issue any Equity Securities in the Company to any person (except to the shareholders of the Company listed in schedule 4 where the relative percentage beneficial ownership of shares in the Company (as set out in schedule 4) are maintained); (b) dispose of the Shares or any Equity Securities in the Company to any person; or (c) transfer, sell or otherwise dispose of any right, title or interest in the whole or any substantial part of the distribution or retail business of the Company, provided that this shall not prohibit the Buyer creating any security in relation to any bona fide loan or debt, provided that nothing in this clause 8.3 shall prohibit an Approved Sell Down Transaction. 8.4 BUYER'S UNDERTAKINGS The Buyer undertakes to the State that it will, on and from the Completion Date: (a) ensure that the Company pays, in a timely manner, all superannuation contributions imposed on the Company by the trustee (acting on the advice of the actuary) of the Company's Fund; and (b) promptly notify the State in writing of any variations to the agreements, arrangements and understandings set out in annexure B. 19 8.5 BUYER'S INDEMNITIES Without prejudice to clause 10, the Buyer indemnifies the Seller and the State against any liability or loss suffered or incurred by one or both of them which arises from (and any costs, charges or expenses incurred by one or both of them in connection with): (a) any material breach of, or material default under, this agreement by the Buyer; (b) any act or decision of the directors of the Company as contemplated by this agreement or failure to comply with section 205(10) of the Corporations Law; and (c) any failure by the Company to discharge (as and when they fall due) all debts incurred by the Company on or before the Completion Date for which either of them may be or become liable under section 186 of the Corporations Law. 8.6 CROSS OWNERSHIP REGULATIONS The State acknowledges that it is its present intention to ensure, by legislating or passing regulations, that the cross ownership provisions of the Electricity Act are modified to achieve the effect of the draft regulations set out in schedule 5 (including their extension to apply to trusts). 9. EMPLOYEE EQUITY The Buyer undertakes to the State that if, at any time, the Company, the Buyer or the Asset Buyer (or any other company/trust which is controlled by the Buyer or the Asset Buyer which owns or conducts the Business or any substantial part of the assets used to conduct any part of the Business) is listed on the Australian Stock Exchange Limited, it will ensure that as part of that listing, employees of the Business will be given an opportunity to invest in the relevant company or trust. 10. SELLER'S WARRANTIES 10.1 GIVING OF WARRANTIES The Seller gives the Seller's Warranties in favour of the Buyer as at the date of this agreement. 10.2 RELIANCE The Buyer has entered into this agreement in reliance on the Seller's Warranties and other terms of this agreement and nothing else. 10.3 ACKNOWLEDGMENT The Buyer acknowledges and agrees that: (a) on the basis that the Disclosures have, to the knowledge and belief of the State, been made in good faith and that the State has no knowledge that the information therein is misleading or deceptive (but acknowledging that the State is under no obligation to make any enquiries to verify that state of knowledge) any statement, representation, term, warranty, condition, promise or undertaking made, given or agreed to by the Seller, the State, a representative of the Company or an Adviser in any prior negotiation, arrangement, understanding or agreement, has no effect except to the extent expressly set out or incorporated by reference in this agreement; (b) it has entered into this agreement after satisfactory inspection and investigation, and with a knowledge of the affairs of the Company by a review of the Disclosures and other information available to it, including in meetings with management of the Company arranged by the Advisers, and including in connection with the Buyer's due diligence investigations on any other electricity distribution companies sold or to be sold by the Seller; (c) the energy levy payable by the Company under the pool rules as modified by any Energy Levy Order is an integral part of the regulatory framework under which the Company carries on the Business, and accepts that the Company must, to carry on that Business, pay the energy levy. Accordingly, the Buyer will not, and will ensure that the Company does not, challenge the appropriateness, amount or basis of such levies at the rates set by, or pursuant to, any law as at the date of this agreement; (d) no representation or warranty is made by the Seller or the State (nor has the Seller or the State any liability whatsoever to the Buyer) in relation to: (1) the principles to be applied by the Office of the Regulator- General or its successor(s) or other Governmental Agencies with respect to the regulation of the Victorian electricity industry and in particular matters affecting prices and charges; (2) the regulation of the Victorian electricity industry (including any act or omission by the Office of the Regulator-General, Victorian Power Exchange, the Pool Consultative Committee or Chief Electrical Inspector) and other industries in Victoria (and the relationship of such other industry regulation to the regulation of the Victorian electricity industry); (3) the status of relations between the Company and its employees, including in respect of any enterprise bargaining agreement or draft thereof, contained within the Data Room Documentation; (4) the future cost of wholesale electricity to, and its impact on, the Company, including as to the existence and terms of vesting contracts entered into by the Company on or about 31 March 1995 and contained in the Data Room Documentation; (5) the value of the Shares or the value ascribed by the Electricity Act and Allocation Statement to each asset acquired by the Company (in particular the Plant and Equipment and Intellectual Property), for the purposes of depreciation, capital gains or otherwise; or (6) the giving of the Financial Assistance by the Company; (e) it has made its own enquiries about the structure and ambit of the development of a "national" electricity market involving some or all of the eastern States of Australia and the ACT and the impact such a market and market rules would (or would be likely to) have on the profitability or otherwise of the Business or any part thereof; and (f) no "land" for the purposes of section 32 of the Sale of Land Act 1962 is being sold under the Asset Sale Agreement. In this clause 10.3, a reference to the knowledge and belief or opinion of the State or the Seller shall be limited to and constituted by the knowledge and belief or opinion obtained or formed by the State or the Seller (as the case may be) after due enquiry of Peter Troughton and Sally Farrier. 20 10.4 REMEDIES The sole remedy of the Buyer for breach of any Seller Warranty is to damages in accordance with this clause 10, and in no event is the Buyer to be entitled to rescind this agreement. 21 10.5 ABILITY TO CLAIM The Buyer is precluded from bringing a claim for breach of any Seller Warranty, to the extent: (a) that the claim is based on any fact, matter or circumstance: (1) set out in the Disclosures; (2) (i) peculiar to the electricity industry; and (ii) within the actual knowledge of the Guarantor or which ought to have been known by the Guarantor or the Buyer, having regard to its knowledge (and the knowledge of its advisers) of the electricity industry and having regard to its opportunities to make enquiries of the State and the Company; or (3) which, before the date of this agreement, had been communicated in writing to the Buyer or the Guarantor; (b) that the claim is attributable to action taken (or not taken as the case may be) by the Seller or the Company on or after the date of this agreement (including, without limitation, all actions taken by the Company on Completion as contemplated by this agreement), after consultation with, and receipt of no objection within a reasonable period from, the Buyer; (c) of the provision made in the Draft Balance Sheet for the fact, matter or circumstance on which the claim is based; (d) to which the claim is recoverable (or would have been recoverable under insurance if notified to the Seller or the insurers in a timely manner after the date of this agreement); (e) that (except in the case of a claim relating to sales tax) the claim is based on any risk (actual or potential), fact, matter or circumstance peculiar to the electricity industry which was generally known in relation to the Victorian electricity industry before the Completion Date; (f) of any change after the Completion Date in any applicable federal law which has retrospective effect; (g) that either the Buyer or the Company has failed to comply with the procedures set out in clause 11, so that the Seller is effectively unable to assume or conduct (or is materially prejudiced in so assuming or conducting) any defence or other action contemplated by that clause; (h) (in the case of a claim relating to sales tax paid or payable by the Company in respect of the period before Completion) to which the Buyer or the Company is entitled to compensation from the Commonwealth of Australia or the State of Victoria; or (i) that the claim is based on any forecasts, projections or representations as to the future revenue or profits in respect of the Company or the Business given by or on behalf of the Seller, the State, representatives of the Company or the Advisers. 22 10.6 LIMITATION ON CLAIMS The Buyer's right to claim under the Seller's Warranties is limited as follows: (a) the Buyer must give written notice to the State of the general nature of the claim as soon as is reasonable after it becomes aware of the facts, matters or circumstances on which the claim is based (and where the claim is recoverable under insurance the time limits imposed by the relevant insurer shall be taken into account in determining what is reasonable) and in any event within twelve months after the Completion Date; (b) in the case of a single claim, where the amount claimed exceeds $1 million provided that no claim may be brought by the Buyer unless and until the aggregate of all such claims exceeds $3 million (and then only to the extent of the excess); and (c) the maximum aggregate amount which the Buyer may recover from the Seller in respect of all claims is $40 million. 10.7 QUANTIFICATION OF CLAIMS The quantum of any liability the Seller has to the Buyer under the Seller's Warranties and otherwise under this agreement shall be determined solely by reference to the direct financial impact on the Company which results from the facts, matters or circumstances on which the claim is based, not being as Warranted. 10.8 ESTIMATED STATE EQUIVALENT TAX The State Equivalent Tax imposed on the Company with respect to the period commencing on and from 1 July 1995 and ending on 28 February 1996 is estimated to be as follows: (a) in respect of profit (before State Equivalent Tax) on sale of the Plant and Equipment and Intellectual Property by the Company: $136,684,000; (b) in respect of operating profit (before State Equivalent Tax) earnt by the Company in the months of: . 1 July - 30 November 1995 $Nil . December 1995 $Nil . January 1996 $Nil . February 1996 $Nil, (in aggregate the "Estimated State Equivalent Tax"). The Buyer shall procure the Company does not challenge the basis of the amounts specified above. The Buyer shall procure that the Company lodges a return in respect of the State Equivalent Tax payable by the Company for the above periods within 60 days after the Completion Date. The Company must prepare the return consistently with past practice and, in particular, consistent with binding tax rulings and instructions of the Treasurer. Any necessary adjustment of the actual State Equivalent Tax payable by the Company shall be made as part of the Purchase Price calculation. 11. CLAIMS PROCEDURE 11.1 CLAIMS PROCEDURE On receipt of a notice under clause 10.6(a) which involves a Third Party Claim, the State shall assume the defence of the claim unless the claim is covered by insurance, in which event the defence will be conducted by the insurer's lawyers. The Buyer shall have the right, at its own cost, to employ separate lawyers or other advisers in any such action or claim and, subject to the consent of the relevant insurance company, to participate in the defence. The Buyer agrees that: (a) it shall not, and shall ensure the Company does not, pay or settle any claim in respect of which an indemnity may be claimed under this clause 11 or make any admission in respect of any claim in respect of which an indemnity may be claimed under this clause 11 without the prior written consent of the State; (b) it shall procure that the Company executes such forms and documents and also makes such personnel and documents available to the State as the State may reasonably require to enable the State to assume, defend or take such other action in respect of any such Third Party Claim (including without limitation the lodgment of an objection to the assessment or decision by the Commissioner of Taxation relating to Tax within the time required by the relevant applicable law); and (c) it must promptly notify the State of receipt by it or the Company of any advice, correspondence or other communication with the third party (or its advisers) which relates to the Third Party Claim. In this clause "THIRD PARTY CLAIM" means any liability of the Company to a third party which arises out of or results from claims asserted against the Company by a third party, and in respect of which the Seller or the State may be liable to the Buyer under this agreement. 23 12. ACTION PENDING COMPLETION 12.1 CARRYING ON OF BUSINESS (a) Before Completion the Seller and the State will ensure that, except as expressly contemplated by this agreement, the Company carries on the Business (including payment of its debts as and when they fall due) in the ordinary and normal course so as to preserve the value of the assets, financial and trading position of the Business. (b) The Seller and the State must also ensure that before Completion unless the Buyer consents (or fails to object) in accordance with clause 12.2 or as otherwise contemplated by this agreement: (1) the Company does not enter into any contractual commitment requiring the Company to pay more than $100,000 (or commitments with a particular person where the aggregate value of those commitments is more than $100,000) or a commitment for a period more than 5 years from the Completion Date, except as otherwise disclosed in the Disclosures, commitments to Victorian Power Exchange made in the ordinary course of business and the Company's program of bushfire mitigation; (2) the Company does not issue any shares, options or securities which are convertible into shares in the Company; (3) the Company does not dispose of, or agree to dispose of or grant an option to purchase, any material asset of the Company or the Business, or any interest in such asset except pursuant to the Asset Sale Agreement; (4) the Company does not engage any new employee with an annual remuneration package in excess of $100,000, (and, except in the ordinary course of business) terminate any of the Employees, change the terms of employment (including remuneration) of any of the Employees, or pay or provide any bonus to any Employee; (5) the Company manages the working capital requirements and any liabilities of the Company in the ordinary course of business (with both the Seller and the Buyer having the right to have their respective representatives observe management in carrying out such activities); (6) the Company obtains the authorisation of the Buyer to any expenditure or payment in excess of $100,000; (7) the Company does not incur any indebtedness, except under the TCV Loan or with TCV in the ordinary course of business; (8) the Company does not declare or pay any dividend or make any distribution of profits or capital; (9) the Company does not mortgage, pledge or encumber any of its assets, except as a result of operation of law; (10) the Company does not, except in the ordinary course of business, dispose of, or agree to dispose of any assets; and (11) the Company does not acquire any assets outside the ordinary course of business or acquire any Equity Securities. 24 12.2 BUYER'S REPRESENTATIVE (a) The Buyer must nominate a person ("Buyer's Representative") who has authority to act on behalf of the Buyer in relation to any queries, consents or approvals required under this agreement. The Buyer's Representative shall be Peter Vines. (b) If the Buyer's Representative does not consent or object to the entry into of a particular contract or conduct of the type described in clause 12.1(b) within 5 Business Days of being notified of the Company's intention to enter into that contract or implement that conduct, the Buyer shall be deemed to have consented to the entry into of that contract or implementation of that course of conduct. 12.3 ACCESS Before the Completion Date the Seller and the State must use reasonable endeavours to: (a) ensure that the Buyer, and any person authorised by the Buyer, is given all reasonable access during normal business hours to the assets, properties, books of account, records and documents of the Company; (b) provide the Buyer with copies of all documents listed in the Data Room Index dated 8 November 1995, excluding copies of documents already provided as listed in schedule 2; (c) promptly provide the Buyer with all explanations and information it requests in respect of the Company or the Business; (d) ensure that the Buyer, and any person authorised by the Buyer is given reasonable access to senior management of the Company; and (e) provide an office for personnel of Buyer at the Company's headquarters. 25 13. ANNOUNCEMENTS 13.1 LEGAL REQUIREMENTS The Buyer may not (and must procure that the Asset Buyer does not) disclose anything in respect of this agreement or the terms of sale of the Shares or Plant and Equipment and Intellectual Property except as required: (a) by applicable law; or (b) by the requirements of any recognised stock exchange on which its shares or the shares of any related body corporate are listed, but must consult with the State before making the disclosure; and the Buyer must (c) use reasonable endeavours to accommodate reasonable requests by the State as to the form and content of the disclosure; (d) claim and apply for, to the maximum extent possible, any exemptions or rights of confidentiality that may be afforded the Buyer or the Asset Buyer under such laws or requirements; and (e) co-operate with the State's lawyers and, if reasonably required by the State or its lawyers, follow the directions of the State's lawyers in making any such claims or applications and in making submissions and approaches to relevant authorities in respect of the claims or applications referred to in (d). 13.2 DISCLOSURE TO OFFICERS AND PROFESSIONAL ADVISERS A party may disclose anything in respect of this agreement or the terms of the sale of the Shares or Plant and Equipment and Intellectual Property to such of the officers and professional advisers of that party and its related bodies corporate as need to know that thing for the ordinary business purposes of the Company, the Buyer or the Asset Buyer but it must use its best endeavours to ensure all matters disclosed are kept confidential. 13.3 FURTHER PUBLICITY Subject to clauses 13.1 and 13.2 the Buyer must not (and must procure that the Asset Buyer does not) disclose the provisions of this agreement, the Asset Sale Agreement or Asset Purchase Agreement, the terms on which the Shares are sold or the terms on which the Plant and Equipment and Intellectual Property are sold and repurchased unless the State has first consented in writing. 13.4 COMPANY'S COMPLIANCE WITH ELECTRICITY ACT The Buyer, the Seller and the State each acknowledge that the Company is, while it is a public distribution company under the Electricity Act, under obligations to provide information to the Minister or the Treasurer under sections 35 and 36 of that Act. 14. JOINT COVENANTS, DUTIES, COSTS AND EXPENSES 14.1 GOVERNMENT NOTIFICATION, ETC Promptly following the execution of this agreement, the parties will proceed to prepare and file with the appropriate governmental authorities any notices, requests for approval or waiver, if any, that are required from governmental authorities in connection with transactions contemplated hereby, and the parties shall diligently and expeditiously prosecute and co-operate fully in the prosecution of such requests for approval or waiver and all proceedings necessary to secure such approvals and waivers. 26 14.2 BEST EFFORTS; NO INCONSISTENT ACTION Each party will use its best efforts to effect the transaction contemplated by this agreement and to fulfil the conditions to the obligations of the parties set forth in this agreement. No party will take any action inconsistent with its obligations under this agreement or that could hinder or delay the consummation of the transactions contemplated by this agreement. 14.3 DUTY The Buyer must pay: (a) any Duty in respect of the execution, delivery and performance of this agreement and any document entered into or signed under this agreement; and (b) any fine, penalty or other cost in respect of a failure to pay any Duty. 14.4 COSTS AND EXPENSES Subject to clause 14.3, each party must pay its own costs and expenses in respect of the negotiation, preparation, execution, delivery, stamping and registration of this agreement or other document described in clause 14.3(a). 14.5 COSTS OF PERFORMANCE Any action to be taken by a party in performing its obligations under this agreement must be taken at its own cost and expense unless otherwise provided in this agreement. 15. GUARANTOR'S GUARANTEE AND INDEMNITY 15.1 GUARANTEE The Guarantor unconditionally and irrevocably guarantees to the Seller and the State the due and punctual performance of the Buyer's obligations under this agreement (including any indemnities given in favour of the Seller or the State). 15.2 INDEMNITY As a separate and independent principal obligation, the Guarantor indemnifies the Seller and the State against all liabilities, losses, damages, costs or expenses incurred or suffered by the Seller or the State and all actions, proceedings, claims or demands made against the Seller or the State as a result of default by the Buyer in the performance of any such obligation or from any such express or implied obligations being unenforceable. 15.3 EXTENT OF GUARANTEE AND INDEMNITY (a) This clause 15 applies: (1) to the present and future obligations of the Buyer under this agreement; and (2) to this agreement, as amended, supplemented, renewed or replaced. (b) The obligations of the Guarantor under this clause 15 extend to any change in the obligations of the Buyer as a result of: (1) any amendment, supplement, renewal or replacement of this agreement; or (2) the occurrence of any other thing. (c) This clause 15 is not affected, nor are the obligations of the Guarantor under this agreement released or discharged or otherwise affected, by anything which, but for this provision, might have that effect. (d) This clause 15.3 applies: (1) regardless of whether the Guarantor is aware of, or has consented to, or is given notice of, any amendment, supplement, renewal or replacement of any agreement to which the Seller, the State, the Buyer are a party or the occurrence of any other thing; and (2) irrespective of any rule of law or equity to the contrary. 27 15.4 AVOIDANCE OF PAYMENTS (a) If any payment, conveyance, transfer or other transaction relating to or affecting any obligation of the Buyer under this agreement is: (1) void, voidable or unenforceable in whole or in part; or (2) is claimed to be void, voidable or unenforceable and that claim is upheld, conceded or compromised in whole or in part, the liability of the Guarantor under this clause 15 and any Power is the same as if: (3) that payment, transaction, conveyance or transfer (or the void, voidable or unenforceable part of it); and (4) any release, settlement or discharge made in reliance on any thing referred to in clause 15.4(a)(3), had not been made and the Guarantor must immediately take all action and sign all documents necessary or required by the Seller or the State to restore to the Seller and the State the benefit of this clause 15 and any Security Interest held by the Seller or the State immediately before the payment, conveyance, transfer or transaction. (b) Clause 15.4(a) applies whether or not the Seller or the State knew, or ought to have known of, anything referred to in that clause. 15.5 CONTINUING GUARANTEE AND INDEMNITY This is a continuing obligation of the Guarantor, despite: (a) any settlement of account; or (b) the occurrence of any other thing, and remains in full force and effect until: (c) the obligations of the Buyer under this agreement have been performed; and (d) this clause 15 has been finally discharged by the Buyer. 15.6 WARRANTIES OF THE GUARANTOR The Guarantor represents and warrants that: (a) it has the corporate power to enter into this guarantee and indemnity and has taken all necessary action to authorise the execution, delivery and performance of this agreement; (b) this guarantee and indemnity constitutes a legally valid and binding obligation of the guarantor enforceable in accordance with its terms; and (c) the execution, delivery and performance of this guarantee and indemnity will not violate any provision of: (1) any law or regulation or any order or decree of any Governmental Agency of the Commonwealth of Australia or any state or territory; (2) the memorandum or articles of association of the Guarantor or equivalent constituent documents; and (3) any security agreement, deed, contract, undertaking or other instrument to which the Guarantor is a party or which is binding on it and does not and will not result in the creation or imposition of any security over any of its assets pursuant to the provision of any such security agreement, deed, contract, undertaking or other instrument. 28 16. STATE'S GUARANTEE AND INDEMNITY 16.1 GUARANTEE The State, pursuant to section 85B of the State Electricity Commission Act 1958, unconditionally and irrevocably guarantees to the Buyer the due and punctual performance of the Seller's obligations under this agreement (including any indemnities given in favour of the Buyer). 16.2 INDEMNITY As a separate and independent principal obligation, the State indemnifies the Buyer against all liabilities, losses, damages, costs or expenses incurred or suffered by the Buyer and all actions, proceedings, claims or demands made against the Buyer as a result of default by the Seller in the performance of any such obligation or from any such express or implied obligations being unenforceable. 16.3 EXTENT OF GUARANTEE AND INDEMNITY (a) This clause 16 applies: (1) to the present and future obligations of the Seller under this agreement; and (2) to this agreement, as amended, supplemented, renewed or replaced. (b) The obligations of the State under this clause 16 extend to any change in the obligations of the Seller as a result of: (1) any amendment, supplement, renewal or replacement of this agreement; or (2) the occurrence of any other thing. (c) This clause 16 is not affected, nor are the obligations of the State under this agreement released or discharged or otherwise affected, by anything which, but for this provision, might have that effect. (d) This clause 16.3 applies: (1) regardless of whether the State is aware of, or has consented to, or is given notice of, any amendment, supplement, renewal or replacement of any agreement to which the Buyer and the Seller are a party or the occurrence of any other thing; and (2) irrespective of any rule of law or equity to the contrary. (e) The indemnity in clause 16.2 does not apply to the giving of the Financial Assistance nor the resolutions to be passed by the Seller and the directors of the Company as contemplated by this agreement. 29 16.4 AVOIDANCE OF PAYMENTS (a) If any payment, conveyance, transfer or other transaction relating to or affecting any obligation of the Seller under this agreement is: (1) void, voidable or unenforceable in whole or in part; or (2) is claimed to be void, voidable or unenforceable and that claim is upheld, conceded or compromised in whole or in part, the liability of the State under this clause 16 and any Power is the same as if: (3) that payment, transaction, conveyance or transfer (or the void, voidable or unenforceable part of it); and (4) any release, settlement or discharge made in reliance on any thing referred to in clause 16.4(a)(3), had not been made and the State must immediately take all action and sign all documents necessary or required by the Buyer to restore to the Buyer the benefit of this clause 16 and any Security Interest held by the Buyer immediately before the payment, conveyance, transfer or transaction. (b) Clause 16.4(a) applies whether or not the Seller knew, or ought to have known of, anything referred to in that clause. 16.5 CONTINUING GUARANTEE AND INDEMNITY This is a continuing obligation of the State, despite: (a) any settlement of account; or (b) the occurrence of any other thing, and remains in full force and effect until: (c) the obligations of the Seller under this agreement have been performed; and (d) this clause 16 has been finally discharged by the Buyer. 16.6 WARRANTIES OF THE STATE The State represents and warrants that this guarantee and indemnity constitutes a legally valid and binding obligation of the guarantor enforceable in accordance with its terms. 17. NOTICES 17.1 GENERAL Any notice or other communication including, but not limited to, any request, demand, consent or approval, to or by a party to this agreement: (a) must be in legible writing and in English addressed as shown: (1) if to the Seller: The Administrator, Address: State Electricity Commission of Victoria, Level 5, 452 Flinders Street Melbourne 3000 Attention: Mr G Brooke Facsimile: (03) 9679 4747; (2) if to the State: The Treasurer Address: Office of the Treasurer Level 4, 1 Treasury Place East Melbourne 3002 Attention: Mr John Perham Facsimile: (03) 9651 6487; (3) if to the Buyer: Pacificorp Australia Holdings Pty Limited C/- Phillips Fox Address: Level 50, 120 Collins Street Melbourne 3000 Attention: Peter Vines/Judith Earls Facsimile: (03) 9274 5111; and (4) if to the Guarantor: Pacificorp Holdings, Inc. Address: 700 NE Multnomah 1600 POP Portland, Oregon United States of America Attention: Daniel L Spalding/Bruce Williams Facsimile: (503) 731 2136 or as specified to the sender by any party by notice; (b) where the sender is a company, must be signed by an Officer or under the common seal of the sender; (c) is regarded as being given by the sender and received by the addressee: (1) if by delivery in person, when delivered to the addressee; or (2) if by facsimile transmission, when transmitted legibly to the addressee, but if the delivery or receipt is on a day which is not a Business Day or is after 4.00 pm (addressee's time) it is regarded as received at 9.00 am on the following Business Day; and (d) can be relied upon by the addressee and the addressee is not liable to any other person for any consequences of that reliance if the addressee believes it to be genuine, correct and authorised by the sender. 30 17.2 LEGIBILITY OF FACSIMILE TRANSMISSION A facsimile transmission is regarded as legible unless the addressee telephones the sender within 2 hours after the transmission is received or regarded as received under clause 17.1(c)(2) and informs the sender that it is not legible. 31 18. ON-GOING OBLIGATIONS 18.1 CONTINUED ACCESS The Buyer acknowledges that the State has continuing reporting obligations under: (a) the uniform budget presentation standards and Australian loan council standards, as agreed from time to time by the Premiers of various States within Australia; and (b) the Financial Management Act 1994 and the Audit Act 1994. Accordingly, the Buyer must ensure that from Completion up until 31 December 1996: (a) the State is granted full and free access at all reasonable times to those employees of the Company whose knowledge or information is needed by the State (together with all books, records and other data pertaining to the Company and which are referrable to the period on and before the Completion Date) to enable it to comply with these obligations; (b) if, to comply with such reporting obligations, the Auditor-General or the Treasurer requires the Company to prepare any accounts or other financial information, the Company must either: (1) prepare such accounts or other financial information on a basis consistent with the accounting policies and practices applied by the Company in the June Accounts; or (2) prepare such accounts or other financial information on the basis of its then current accounting policies and practices, but with a reconciliation setting out the differences between its current accounting policies and practices and those which applied in the June accounts; and (c) the Company at all times keeps the State promptly informed on all rulings received on asset valuations for depreciation purposes. 19. GENERAL 19.1 GOVERNING LAW AND JURISDICTION (a) This agreement is governed by the laws of Victoria. Each party irrevocably submits to the exclusive jurisdiction of the courts of Victoria. (b) Each party irrevocably waives any objection to the venue of any legal process on the basis that the process has been brought in an inconvenient forum. 19.2 WAIVERS (a) Waiver of any right arising from a breach of this agreement or of any Power arising upon default under this agreement must be in writing and executed by the party granting the waiver. (b) A failure or delay in exercise, of: (1) a right arising from a breach of this agreement; or (2) a Power created or arising upon default under this agreement, does not result in a waiver of that right or Power. (c) A party is not entitled to rely on a delay in the exercise or non- exercise of a right or Power arising from a breach of this agreement or on a default under this agreement as constituting a waiver of that right or Power. (d) A party may not rely on any conduct of another party as a defence to exercise of a right or Power by that other party. (e) This clause 19.2 may not itself be waived except in writing executed by the party granting the waiver. 32 19.3 VARIATION A variation of any term of this agreement must be in writing and executed by the parties. 19.4 FURTHER ASSURANCES Each party must do all things, and execute all further documents, necessary to give full effect to this agreement. 19.5 THIRD PARTY RIGHTS No person (including, but not limited to, an Employee) other than a party to this agreement and those persons expressly referred to in paragraphs (r) and (s) of clause 1.2 has or is intended to have any right, power or remedy or derives or is intended to derive any benefit under this agreement. 19.6 THIS AGREEMENT SUPERSEDES OTHERS This agreement and the Asset Sale Agreement embody the entire agreement between the parties with respect to the subject matter of this agreement and supersede any prior negotiation, arrangement, understanding or agreement with respect to the subject matter or any term of this agreement. EXECUTED by the parties as an agreement. SCHEDULE 1 SELLER'S WARRANTIES SCHEDULE 1 SELLER'S WARRANTIES 1. TITLE The Seller will at Completion be the beneficial owner of the Shares (which are free of all Security Interests and other third party interests or rights) with the legal ownership of the Shares held as follows: the Seller: one ordinary share; Mr Graeme Greaves: one ordinary share; Mr John Drewett: one ordinary share; Mr Peter Coughlin: one ordinary share; and Mr Noel McMahen: one ordinary share. 2. CONSENTS On Completion the Seller and Nominees will be able to sell and transfer the Shares without the consent of any other person and free of any pre-emptive rights or rights of first refusal. 3. ISSUED CAPITAL On Completion the Shares are all the issued Equity Securities in the capital of the Company. 4. AUTHORISED CAPITAL The authorised capital of the Company at the date of this agreement is $500,000,000 divided into 500,000,000 ordinary shares of $1.00 each. 5. FULLY PAID On Completion the Shares will be fully paid and no money will be owing in respect of them. 6. ISSUE OF OTHER SECURITIES The Company is not under any obligation to issue or allot, and has not granted any person the right to call for the issue or allotment of, any shares or other securities of the Company at any time. 7. NO LEGAL IMPEDIMENT Except for those matters relating to the giving of the Financial Assistance by the Company, the execution, delivery and performance by the Seller and the State of this agreement complies with: (a) each law, regulation, Authorisation, ruling, judgment, order or decree of any Governmental Agency; and (b) any Security Interest or document which is binding on the Seller. 2 8. AUTHORISATIONS The Treasurer has the power to execute this agreement on behalf of the State, and, except for those matters relating to the giving of the Financial Assistance by the Company, the Seller has taken all necessary action to authorise the execution, delivery and performance of this agreement in accordance with its terms. SCHEDULE 2 DISCLOSURES 1. All information which is available on public record. 2. All information set out in the Information Memorandum dated August 1995. 3. All information set out in the documents listed in the table set out on the next two pages. TABLE OF CONTENTS 1. DEFINITIONS AND INTERPRETATION 2 1.1 Definitions 2 1.2 Interpretation 7 2. SALE AND PURCHASE 8 2.1 Sale of shares 8 2.2 Treasurer's Approval 8 2.3 Method of Payment 8 2.4 Profit Entitlement 9 2.5 Dividend Payment 9 2.6 Section 205 9 3. DEPOSIT 9 3.1 Payment 9 3.2 Non-refund 9 3.3 Notice of termination for breach 10 3.4 Automatic termination 10 3.5 Remedies 10 4. PURCHASE PRICE AND PAYMENTS 10 4.1 Amount 10 4.2 Payments 11 4.3 Interest 11 5. COMPLETION 12 5.1 Date for Completion 12 5.2 Completion Date Actions 12 5.3 Delivery of documents 12 5.4 First meeting 13 5.5 Second meeting 13 5.6 Buyer's obligations at Completion 13 5.7 Termination by lapse of time 14 5.8 Remedies 15 5.9 Repayment of Loans 15 5.10 Definitions 16 6. INTERDEPENDENCY 16 6.1 Interdependency between agreements 16 7. AUDITOR-GENERAL REVIEW 16 7.1 Audit by Auditor-General 16 7.2 Access to books 17 8. BUYER'S OBLIGATIONS 17 8.1 Buyer's Warranties 17 8.2 Certification 18 8.3 Continued Holding 18 8.4 Buyer's Undertakings 18 8.5 Buyer's Indemnities 19 8.6 Cross Ownership Regulations 19 9. EMPLOYEE EQUITY 19 10. SELLER'S WARRANTIES 19 10.1 Giving of Warranties 19 10.2 Reliance 19 10.3 Acknowledgment 19 10.4 Remedies 20 10.5 Ability to claim 21 10.6 Limitation on claims 22 10.7 Quantification of Claims 22 10.8 Estimated State Equivalent Tax 22 11. CLAIMS PROCEDURE 22 11.1 Claims procedure 22 12. ACTION PENDING COMPLETION 23 12.1 Carrying on of business 23 12.2 Buyer's Representative 24 12.3 Access 24 13. ANNOUNCEMENTS 25 13.1 Legal requirements 25 13.2 Disclosure to officers and professional advisers 25 13.3 Further publicity 25 13.4 Company's compliance with Electricity Act 25 14. JOINT COVENANTS, DUTIES, COSTS AND EXPENSES 25 14.1 Government Notification, etc 25 14.2 Best Efforts; No Inconsistent Action 26 14.4 Costs and expenses 26 14.5 Costs of performance 26 15. GUARANTOR'S GUARANTEE AND INDEMNITY 26 15.1 Guarantee 26 15.2 Indemnity 26 15.3 Extent of guarantee and indemnity 26 15.4 Avoidance of payments 27 15.5 Continuing guarantee and indemnity 27 15.6 Warranties of the Guarantor 27 16. STATE'S GUARANTEE AND INDEMNITY 28 16.1 Guarantee 28 16.2 Indemnity 28 16.3 Extent of guarantee and indemnity 28 16.4 Avoidance of payments 29 16.5 Continuing guarantee and indemnity 29 16.6 Warranties of the State 29 17. NOTICES 29 17.1 General 29 17.2 Legibility of facsimile transmission 30 18. ON-GOING OBLIGATIONS 31 18.1 Continued Access 31 19. GENERAL 31 19.1 Governing law and jurisdiction 31 19.2 Waivers 31 19.3 Variation 32 19.4 Further assurances 32 19.5 Third party rights 32 19.6 This agreement supersedes others 32 SCHEDULES Schedule 1 Seller's Warranties Schedule 2 Disclosures Schedule 3 Zone Sub-Station Properties Schedule 4 Buyer's Shareholding Schedule 5 Cross Ownership Regulations ANNEXURES Annexure A June Accounts Annexure B Agreements etc between Group Members/Shareholders in the Buyer Annexure C Draft Balance Sheet (as at 30 September 1995) Annexure D Sales Tax Agreement SCHEDULE 2 DISCLOSURES SCHEDULE 3 ZONE SUB-STATION PROPERTIES NOT APPLICABLE SCHEDULE 4 BUYER'S SHAREHOLDING SEE STRUCTURE CHART ATTACHED SCHEDULE 5 CROSS OWNERSHIP REGULATIONS THE COMMON SEAL of STATE ) ELECTRICITY COMMISSION OF ) VICTORIA was affixed to this ) document in accordance with the State ) Electricity Commission Act ) in the presence of: ) .............................. ......................................... Witness Administrator .............................. Name (please print) ......................................... Name (please print) SIGNED by THE HONOURABLE ) ALAN ROBERT STOCKDALE for ) and on behalf of the Crown in right of ) the State of Victoria in the presence of: ) ) ......................................... ) Signature of witness ) ) ......................................... ) Name of witness (block letters) ) ) ......................................... ) .............................. Address of witness ) Signature of ) Alan Robert Stockdale ......................................... ) Occupation of witness ) ) THE COMMON SEAL of ) PACIFICORP AUSTRALIA ) HOLDINGS PTY LTD (ACN 068 231 ) 005) is affixed in accordance with its ) articles of association in the presence ) of: ) ......................................... .............................. Signature of authorised person Signature of authorised person ......................................... .............................. Office held Office held ......................................... .............................. Name of authorised person (block letters) Name of authorised person (block letters) SIGNED by Daniel L Spalding as ) authorised representative for ) PACIFICORP HOLDINGS, INC. in ) the presence of: ) ......................................... .............................. Signature of witness Daniel L. Spalding ......................................... Occupation ......................................... Name of witness (block letters) ANNEXURE A JUNE ACCOUNTS ANNEXURE B AGREEMENTS ETC BETWEEN GROUP MEMBERS/SHAREHOLDERS IN THE BUYER NOT APPLICABLE ANNEXURE C DRAFT BALANCE SHEET (AS AT 30 SEPTEMBER 1995) ANNEXURE D SALES TAX AGREEMENT EX-2.3 4 EXHIBIT 2.3 PACIFICORP AUSTRALIA HOLDINGS PTY LTD ACN 068 231 005 and POWERCOR AUSTRALIA LIMITED ACN 064 651 109 ____________________________________________________________________________ Asset Purchase Agreement ____________________________________________________________________________ PHILLIPS FOX 50th Floor 120 Collins Street Melbourne VIC 3000 Ref: JAE:PACI9000-006 1 THIS ASSET PURCHASE AGREEMENT is made on 12 December 1995 between the following parties: 1. PACIFICORP AUSTRALIA HOLDINGS PTY LTD ACN 068 231 005 of 50th Floor, 120 Collins Street, Melbourne in the State of Victoria ("Seller"); and 2. POWERCOR AUSTRALIA LIMITED ACN 064 651 109 of Level 3, 77 Southbank Boulevard Southbank in the State of Victoria ("Asset Buyer") RECITALS: A. The Seller is the owner of the Assets. B. The Seller agrees to sell and the Asset Buyer agrees to buy the Assets on the terms and conditions set out in this agreement. THE PARTIES AGREE as follows: 1. DEFINITIONS AND INTERPRETATION 1.1 Definitions In this agreement: "APPROVAL DATE" means the date on which the Asset Buyer is able to give the Financial Assistance, being: (a) (where no application is made under section 205(12) of the Corporations Law) the first Business Day after the 21 days notice period referred to in section 205(12) has expired; or (b) (where an application is or applications are made under section 205(12) of the Corporations Law) the first Business Day after: (1) the application or each application has been withdrawn; or (2) the Court has approved the giving of the Financial Assistance, whichever applicable date first occurs. "ASSETS" means the Plant and Equipment and Intellectual Property. 2 "AUTHORISATION" includes: (a) any consent, registration, filing, agreement, notarisation, certificate, licence, approval, permit, authority or exemption from, by or with a Governmental Agency; and (b) in relation to anything which may be proscribed or restricted in whole or in part by law or otherwise if a Governmental Agency intervenes or acts in any way within a specified period after lodgement, registration or other notification of anything, the expiration of that period without the intervention or action by that Government Agency. "BUSINESS DAY" means a day on which banks are open for business in Melbourne, excluding a Saturday or a Sunday or a public holiday. "ASSET BUYER'S WARRANTIES" means the warranties and representations of the Asset Buyer set out in clause 4.1. "COMPLETION DATE" is the day on which Completion occurs under the Share Sale Agreement. "DOLLARS "A"" and "$"" means the lawful currency of the Commonwealth of Australia. "DUTY" means any stamp, transaction or registration duty or similar charge imposed by any Governmental Agency and includes, but is not limited to, any interest, fine, penalty, charge or other amount imposed in respect of the above, but excludes any Tax. "ELECTRICITY ACT" means the Electricity Industry Act 1993. "FINANCIAL ASSISTANCE" means the financial assistance which the Asset Buyer may give for the purpose of, or in connection with, the acquisition of shares by the Seller under the Share Sale Agreement. "GOVERNMENTAL AGENCY" means the government of any country or the government of any state, territory, municipality or other political subdivision of a country, and any minister, administrative or judicial body, department, commission, authority, instrumentality, tribunal, agency or entity of any such government. 3 "INTELLECTUAL PROPERTY" means rights to all patents, copyrights and designs used in the business of the Seller, and includes: (a) rights under licence in respect of such patents, copyrights or designs; and (b) equitable rights in respect of such patents, copyrights or designs or such licences. "OFFICER" means a director or secretary of the relevant party or Seller (as the case may be). "PLANT AND EQUIPMENT" means all: (a) plant, equipment and articles owned by the Seller; and (b) (in relation to all land which is not owned by the Company) structures permanently affixed to land and other improvements to land owned by the Seller (but not the land itself), including without limitation all electricity transmission and distribution lines, power poles, underground cables, stations, substations, switchyard equipment and all other plant and equipment used in the reticulation, transformation or metering of electrical power which, in its ordinary use, is located in a fixed position wherever located, but excludes motor vehicles and mobile plant owned or leased by the Seller and, for the avoidance of doubt, does not include capital works in progress. "POWER" means any right, power, authority, discretion or remedy conferred on the parties by this agreement or any applicable law. "PURCHASE PRICE" means A$1,650,000,000.00. "SECURITY INTEREST" means an interest or power: (a) reserved in or over an interest in any asset excluding any retention of title; or (b) created or otherwise arising in or over any interest in any asset under a bill of sale, mortgage, charge, lien, pledge, trust or power, by way of security for the payment of a debt or any other monetary obligation for the performance of any other obligation and includes, but is not limited to, any agreement to grant or create any of the above. "SHARE SALE AGREEMENT" means the agreement dated 16 December 1995, between State Electricity Commission of Victoria, the State of Victoria, the Seller and PacifiCorp Holdings Inc. under which the Seller shall acquire, inter alia, all the issued ordinary shares in the capital of the Asset Buyer. "TAX" means any tax, levy, charge, impost, duty, fee, deduction or withholding which is assessed, levied, imposed or collected by any State Governmental Agency and includes, but is not limited to, any interest, fine, penalty, charge, fee or any other amount imposed on, or in respect of any of the above and any amount imposed under Section 88 of the State Owned Enterprises Act 1992 but excludes any Duty. 4 1.2 INTERPRETATION In this agreement, unless the context otherwise requires: (a) headings and underlinings are for convenience only and do not affect the interpretation of this agreement; (b) words importing the singular include the plural and vice versa; (c) words importing a gender include any gender; (d) other parts of speech and grammatical forms of a word or phrase defined in this agreement have a corresponding meaning; (e) an expression importing a natural person includes any company, partnership, joint venture, association, corporation or other body corporate or any Governmental Agency; (f) a reference to a clause, party, annexure, exhibit or schedule is a reference to a clause of, and a party, annexure, exhibit and schedule to, this agreement and a reference to this agreement includes any such annexure, exhibit and schedule; (g) a reference to a statute, regulation, proclamation, ordinance or by-law includes all statutes, regulations, proclamations, ordinances or by-laws amending, consolidating or replacing it, and a reference to a statute includes all regulations, proclamations, ordinances and by-laws issued under that statute; (h) a reference to a document includes all amendments or supplements to, or replacements or novations of, that document; (i) a reference to a party to a document includes that party's successors and permitted assigns; (j) where the day on or by which anything is to be done is not a Business Day, that thing must be done or by the next Business Day; (k) no rule of construction applies to the disadvantage of a party because that party was responsible for the preparation of this agreement or any part of it; (l) a covenant or agreement on the part of two or more persons binds them jointly and severally; (m) a reference to an agreement other than this agreement includes an undertaking, agreement or legally enforceable arrangement or understanding whether or not in writing; (n) a reference to an asset includes all property of any nature, including, but not limited to, a business, and all rights, revenues and benefits; (o) a reference to a document includes any agreement in writing, or any certificate, notice, instrument or other document of any kind; (p) a reference to liquidation includes appointment of an administrator, compromise, arrangement, merger, amalgamation, reconstruction, winding-up, dissolution, assignment for the benefit of creditors, scheme, composition or arrangement with creditors, insolvency, bankruptcy, or any similar procedure or, where applicable, changes in the constitution of any partnership or person, or death; (q) terms defined in the Corporations Law at the date of this agreement have the meanings given to them in the Corporations Law at that date; and (r) terms defined in the Share Sale agreement shall have the meanings given to them in the Share Sale Agreement in this agreement unless the context otherwise requires. 5 2. SALE OF PURCHASE 2.1 SALE OF ASSETS Subject to the terms of this agreement, the Seller must sell free of Security Interests and the Asset Buyer must buy the Assets for the Purchase Price on the Completion Date. The parties agree that the allocation of the Purchase Price between the Assets is as follows: Plant and Equipment $1,610,000,000.00 Intellectual Property $40,000,000.00 _________________ Total: $1,650,000,000.00 _________________ The Purchase Price allocated to the above asset categories is then further allocated to each individual asset rateably on the basis of the current book value of the asset as a proportion of the total book value of that respective class. 6 2.2 DATE FOR SATISFACTION OF PURCHASE PRICE On and subject to the terms of this agreement the Asset Buyer must satisfy the Purchase Price on the Completion Date. 3. COMPLETION 3.1 DATE AND TIME FOR COMPLETION Completion must take place on the Completion Date at the place nominated for completion under the Share Sale Agreement and shall occur immediately after completion under the Asset Sale Agreement. 3.2 PROPERTY AND RISK Property and risk in the Assets shall pass to the Asset Buyer on the Completion Date, subject to satisfaction of the Purchase Price. 4. ASSET BUYER'S WARRANTIES The Asset Buyer represents and warrants to the Seller as at the date of this agreement and the Completion Date that: (a) it has the corporate power to enter into this agreement and has taken all necessary action (including all shareholder approvals and Authorisations) to authorise the execution, delivery and performance of this agreement; (b) this agreement constitutes a legally valid and binding obligation of the Asset Buyer enforceable in accordance with its terms; and (c) the execution, delivery and performance of this agreement will not violate any provision of: (1) any law, regulation, order, rule or decree of any Governmental Agency of the Commonwealth of Australia or any state or territory or any recognised stock exchange on which its shares or the shares of any related body corporate are listed; (2) the memorandum or articles of association (or equivalent constituent documentation) of the Asset Buyer; and (3) any security agreement, deed, contract, undertaking or other instrument to which the Asset Buyer is a party or which is binding on it and does not and will not result in the creation or imposition of any security over any of its assets pursuant to the provision of any such security agreement, deed, contract, undertaking or other instrument. 7 5. SELLER'S WARRANTIES 5.1 The Seller represents and warrants to the Asset Buyer as at the date of this agreement and the Completion Date that: (a) it has the corporate power to enter into this agreement and has taken all necessary action (including all shareholder approvals and Authorisations) to authorise the execution, delivery and performance of this agreement; (b) the agreement constitutes a legally valid and binding obligation of the Seller enforceable in accordance with its terms; and (c) the execution, delivery and performance of this agreement will not violate any provision of: (1) any law, regulation, order, rule or decree of any Governmental Agency of the Commonwealth of Australia or any state or territory or any recognised stock exchange on which its shares or the shares of any related body corporate are listed; (2) the memorandum or articles of association (or equivalent constituent documentation) of the Seller; and (3) any security agreement, deed, contract, undertaking or other instrument to which the Seller is a party or which is binding on it and does not and will not result in the creation or imposition of any security over any of its assets pursuant to the provision of any such security agreement, deed, contract, undertaking or other instrument. 5.2 The sole remedy of the Asset Buyer for breach of any representation or warranty in relation to the Assets is to damages in accordance with this agreement and in no event is the Asset Buyer to be entitled to rescind this agreement. 8 6. DUTIES, COSTS AND EXPENSES 6.1 PAYMENT OF DUTY The Asset Buyer must pay: (a) any Duty in respect of the execution, delivery and performance of this agreement and any document entered into or signed under the agreement; and (b) any fine, penalty or other cost in respect of a failure to pay any Duty. 6.2 INDEMNITY The Asset Buyer indemnifies the Seller against any amount payable under clause 6.1. 6.3 COSTS AND EXPENSES Subject to clause 6.1, each party must pay its own costs and expenses in respect of the negotiation, preparation, execution, delivery, stamping and registration of this agreement or other document described in clause 6.1(a). 6.4 COSTS OF PERFORMANCE Any action to be taken by a party in performing its obligations under this Agreement must be taken at its own cost and expense unless otherwise provided in this agreement. 7. NOTICES 7.1 GENERAL Any notice or other communication including, but not limited to, any request, demand, consent or approval, to or by a party to this agreement: (a) must be in legible writing and in English addressed as shown below: (1) if to the Seller: Address: 50th Floor 120 Collins Street, Melbourne Vic 3000 Attention: Mr Peter Vines/Ms J Earls Facsimile: (03) 9274 5111 (2) if to the Asset Buyer: Address: Level 3 77 Southbank Boulevard Southbank Vic 3006 Attention: The Company Secretary Facsimile: 9679 4566 or as specified to the sender by any party by notice; 9 (b) where the sender is a company, must be signed by an Officer or under the common seal of the sender; (c) is regarded as being given by the sender and received by the addressee: (1) if by delivery in person, when delivered to the addressee; (2) if by post within Australia, 3 Business Days from and including the date of postage; or (3) if by facsimile transmission, when transmitted legibly to the addressee, but if the delivery or receipt is on a day which is not a Business Day is after 4.00pm (addressee's time) it is regarded as received at 9.00am on the following Business Day; and (d) can be relied upon by the addressee and the addressee is not liable to any other person for any consequences of that reliance if the addressee believes it to be genuine, correct and authorised by the sender; 10 7.2 LEGIBILITY OF FACSIMILE TRANSMISSION A facsimile transmission is regarded as legible unless the addressee telephones the sender within 2 hours after the transmission is received or regarded as received under clause 7.1(c)(3) and informs the sender that it is not legible. 8. GENERAL 8.1 GOVERNING LAW AND JURISDICTION (a) The agreement is governed by the laws of Victoria. Each party irrevocably submits to the exclusive jurisdiction of the courts of Victoria. (b) Each party irrevocably waives any objection to the venue of any legal process on the basis that the process has been brought in an inconvenient forum. 8.2 WAIVERS (a) Waiver of any right arising from a breach of this agreement or of any Power arising upon default under this agreement must be in writing and executed by the partys granting the waiver. (b) A failure or delay in the exercise, of: (1) a right arising from a breach of this agreement; or (2) a Power created or arising upon default under this agreement, does not result in a waiver of that right or Power. (c) A party is not entitled to rely on a delay in the exercise or non- exercise of a right or Power arising from a breach of this agreement or on a default under this agreement as constituting a waiver of that right or Power. (d) A party may not rely on any conduct of another party as a defence to exercise of a right or Power by that other party. (e) This clause 8.2 may not itself be waived except by writing executed by the party granting the waiver. 11 8.3 VARIATION A variation of any term of this agreement must be in writing and executed by the parties. 8.4 FURTHER ASSURANCES Each party must do all things, and execute all further documents, necessary to give full effect to this agreement. 8.5 THIRD PARTY RIGHTS No person other than a party to this agreement is intended to have any right, power or remedy or derives or is intended to derive any benefit under this agreement. 8.6 THIS AGREEMENT SUPERSEDES OTHERS This agreement embodies the entire agreement between the parties with respect to the subject matter of this agreement and supersedes any prior negotiation, arrangement, understanding or agreement with respect to the subject matter or any term of this agreement. EXECUTED by the parties as an agreement. 12 THE COMMON SEAL of ) PACIFICORP AUSTRALIA ) HOLDINGS PTY LTD ACN 068 231 ) 005 was hereunto affixed in ) accordance with its Articles of ) Association in the presence of: ) .................................. Director - Daniel L. Spalding .................................. Director - Verl R Topham THE COMMON SEAL of ) POWERCOR AUSTRALIA LIMITED ) (ACN 064 651 109) was hereunto ) affixed in accordance with its ) Articles of Association in the ) presence of: ) .................................. Director - Daniel L. Spalding .................................. Director - Verl R Topham i CONTENTS 1. DEFINITIONS AND INTERPRETATION 1 1.1 Definitions ................................................ 1 1.2 Interpretation ............................................. 4 2. SALE OF PURCHASE 5 2.1 Sale of Assets ............................................. 5 2.2 Date for Satisfaction of Purchase Price .................... 6 3. COMPLETION 6 3.1 Date and Time for Completion ............................... 6 3.2 Property and Risk .......................................... 6 4. ASSET BUYER'S WARRANTIES 6 5. SELLER'S WARRANTIES 7 6. DUTIES, COSTS AND EXPENSES 8 6.1 Payment of Duty ............................................ 8 6.2 Indemnity .................................................. 8 6.3 Costs and expenses ......................................... 8 6.4 Costs of performance ....................................... 8 7. NOTICES 8 7.1 General .................................................... 8 7.2 Legibility of facsimile transmission ....................... 10 8. GENERAL 10 8.1 Governing law and jurisdiction ............................. 10 8.2 Waivers .................................................... 10 8.3 Variation .................................................. 11 8.4 Further assurances ......................................... 11 8.5 Third Party rights ......................................... 11 8.6 This agreement supersedes others ........................... 11 EX-23 5 EXHIBIT 23 AUDITOR'S CONSENT I consent to the incorporation by reference in Registration Statement Nos. 33-51163, 33-55309 and 33-62095, all on Form S-3; in Post-Effective Amendment No. 1 to Registration Statement No. 33-17970 and Registration Statement Nos. 33-51277, 33-54169, 33-56625, 33-57043 and 33-58461, all on Form S-8; and in Registration Statement Nos. 33-36239 and 33-58569 on Form S-4 of my report, dated 3 October, 1995, included with the Current Report on Form 8-K of PacifiCorp dated 12 December, 1995. Melbourne, Australia C.A. BARAGWANATH 12 December, 1995 Auditor-General -----END PRIVACY-ENHANCED MESSAGE-----