As filed with the Securities and Exchange Commission on May 5, 2000.
Registration No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------------------
TXU AUSTRALIA HOLDINGS (PARTNERSHIP)
LIMITED PARTNERSHIP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Victoria, Australia
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
7389
(Primary Standard Industrial Classification Code Number)
98-0203436
(I.R.S. Employer Identification No.)
452 Flinders Street, Melbourne, Victoria Australia 3000
Tel: 011-613-9229-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
<TABLE>
<CAPTION>
<S> <C> <C>
ROBERT A. WOOLDRIDGE, Esq. PETER B. TINKHAM, Esq. ROBERT J. REGER, JR., Esq.
Worsham Forsythe Wooldridge LLP Executive Vice President Thelen Reid & Priest LLP
1601 Bryan Street TXU Business Services Company 40 West 57th Street
Dallas, Texas 75201 1601 Bryan Street New York, New York 10019
(214) 979-3000 Dallas, Texas 75201 (212) 603-2000
(214) 812-4600
</TABLE>
(NAMES AND ADDRESSES, INCLUDING ZIP CODES, AND TELEPHONE NUMBERS, INCLUDING
AREA CODES, OF AGENTS FOR SERVICE)
--------------------------------
It is respectfully requested that the Commission send copies of all notices,
orders and communications to:
RICHARD L. HARDEN, Esq. J.G. ATKIN
Winthrop, Stimson, Putnam & Roberts Treasurer
One Battery Park Plaza TXU Australia Pty Ltd
New York, New York 10004-1490 452 Flinders Street, Melbourne,
(212) 858-1000 Victoria Australia 3000
011-613-9229-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. |_|
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. |_|
--------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING REGISTRATION
REGISTERED REGISTERED OFFERING PRICE PER UNIT PRICE FEE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Junior Maturing Principal Securities US$300,000,000 100% US$300,000,000 US$79,200
================================================================================================================================
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell or the solicitation of an offer to buy these securities in any
jurisdiction in which an offer, solicitation or sale is not permitted.
SUBJECT TO COMPLETION, DATED MAY 5, 2000
PROSPECTUS
US$ AGGREGATE AMOUNT
TXU AUSTRALIA HOLDINGS (PARTNERSHIP)
LIMITED PARTNERSHIP
% JUNIOR MATURING PRINCIPAL SECURITIES DUE
-----------------------
The % JUnior Maturing Principal Securities (JUMPSSM) Due
will mature on . Distributions on the JUMPS are payable on ,
, , and of each year commencing .
TXU Australia Holdings (Partnership) Limited Partnership's ultimate
corporate parent is Texas Utilities Company, doing business as TXU Corp.
A brief description of the JUMPS can be found under "Summary " in this
prospectus.
Application will be made to list the JUMPS on the New York Stock
Exchange under the symbol ' '. We expect trading of the JUMPS to begin within 30
days after they are first issued.
INVESTING IN THE JUMPS INVOLVES RISKS. RISK FACTORS BEGIN ON PAGE 11.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE OR THE
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION HAS APPROVED OR DISAPPROVED OF
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------
<TABLE>
<CAPTION>
PER JUMPS TOTAL
--------- -----
<S> <C> <C>
Public offering price.............................................. US$ US$
Underwriting discount.............................................. US$ US$
Proceeds to TXU Australia Holdings (Partnership) Limited Partnership
(before expenses)............................................. US$ US$
Distributions on the JUMPS will accrue from the date of initial
delivery.
-----------------------
We expect the JUMPS will be ready for delivery in book-entry form only
through The Depository Trust Company on or about , 2000.
-----------------------
"JUMPSSM" is a service mark of Salomon Smith Barney Inc.
SALOMON SMITH BARNEY
[UNDERWRITERS]
, 2000
<PAGE>
TABLE OF CONTENTS
SUMMARY........................................................................3
RISK FACTORS..................................................................10
PRESENTATION OF FINANCIAL AND OTHER INFORMATION...............................15
EXCHANGE RATES................................................................15
TXU AUSTRALIA GENERAL OVERVIEW................................................16
USE OF PROCEEDS...............................................................24
CAPITALIZATION................................................................24
FORWARD-LOOKING STATEMENTS....................................................25
OVERVIEW OF THE GAS AND ELECTRIC INDUSTRIES IN
VICTORIA, AUSTRALIA........................................................27
BUSINESS OF TXU AUSTRALIA GROUP...............................................38
RETAIL BUSINESS...............................................................41
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS..............................48
SECURITY OWNERSHIP............................................................62
MANAGEMENT OF TXU AUSTRALIA...................................................62
DESCRIPTION OF THE JUMPS......................................................66
MATERIAL INCOME TAX CONSIDERATIONS............................................81
UNDERWRITING..................................................................85
EXPERTS.......................................................................86
LEGALITY......................................................................86
WHERE YOU CAN FIND MORE INFORMATION...........................................86
INDEX TO FINANCIAL STATEMENTS................................................F-1
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS.
TXU AUSTRALIA HOLDINGS (PARTNERSHIP) LIMITED PARTNERSHIP (TXU AUSTRALIA) HAS
NOT, AND THE UNDERWRITERS HAVE NOT, AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT
INFORMATION, YOU SHOULD NOT RELY ON IT. TXU AUSTRALIA IS NOT, AND THE
UNDERWRITERS ARE NOT, MAKING AN OFFER OF THESE SECURITIES IN ANY JURISDICTION
WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS ACCURATE AS OF THE DATE ON THE FRONT COVER OF
THIS PROSPECTUS ONLY. THE BUSINESS PROFILE, FINANCIAL CONDITION, RESULTS OF
OPERATIONS AND PROSPECTS OF TXU AUSTRALIA MAY HAVE CHANGED SINCE THAT DATE.
TXU AUSTRALIA HAS NOT AUTHORIZED OR TAKEN ANY ACTION TO CAUSE THE
ISSUANCE OR DISTRIBUTION OF THIS PROSPECTUS (OR ANY OTHER DOCUMENT INVITING
APPLICATIONS, SUBSCRIPTION OFFERS OR OFFERS FOR PURCHASE OF THESE JUMPS) IN THE
COMMONWEALTH OF AUSTRALIA, ANY OF ITS STATES, TERRITORIES, POSSESSIONS OR
POLITICAL SUBDIVISIONS (AUSTRALIA), OR TO ANY RESIDENT OF AUSTRALIA.
ACCORDINGLY, THESE JUMPS MAY NOT BE SOLD IN AUSTRALIA AND NEITHER THIS
PROSPECTUS NOR ANY OTHER DOCUMENT MAY BE ISSUED OR DISTRIBUTED IN AUSTRALIA OR
TO ANY RESIDENT OF AUSTRALIA FOR THE PURPOSE OF INVITING APPLICATIONS OR OFFERS
TO SUBSCRIBE FOR OR PURCHASE THESE JUMPS. NO PROSPECTUS RELATING TO THESE JUMPS
HAS BEEN FILED WITH OR REGISTERED BY THE AUSTRALIAN SECURITIES AND INVESTMENTS
COMMISSION.
IN CONNECTION WITH THE DISTRIBUTION OF THE JUMPS, EACH OF THE
UNDERWRITERS WILL SEVERALLY REPRESENT AND AGREE THAT IT HAS NOT AND WILL NOT,
DIRECTLY OR INDIRECTLY, OFFER FOR SUBSCRIPTION OR PURCHASE, ISSUE INVITATIONS TO
SUBSCRIBE FOR OR PURCHASE OR SELL JUMPS IN AUSTRALIA OR TO ANY RESIDENT OF
AUSTRALIA (INCLUDING CORPORATIONS AND OTHER ENTITIES ORGANIZED UNDER THE LAWS OF
AUSTRALIA BUT NOT INCLUDING A PERMANENT ESTABLISHMENT OF THOSE CORPORATIONS OR
OTHER ENTITIES LOCATED OUTSIDE OF AUSTRALIA.)
Until (25 days after the date of this prospectus), all dealers that
effect transactions in these securities, whether or not participating in this
offering, may be required to deliver a prospectus. This is in addition to the
dealers' obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
2
<PAGE>
SUMMARY
This summary may not contain all the information that may be important
to you. You should read the entire prospectus, including the financial
statements and related notes, before making an investment decision.
The issuer of the JUMPS is TXU Australia Holdings (Partnership)
Limited Partnership, whose ultimate corporate parent is Texas Utilities Company,
doing business as TXU Corp. TXU Corp. is a Dallas, Texas-based holding company
which, through its subsidiaries, engages in the generation, transmission and
distribution of electricity; the processing, transmission and distribution of
natural gas; and energy marketing, telecommunications, power development and
other businesses. TXU Corp. operates primarily in the United States, the United
Kingdom and Australia.
The following diagram is a summary of the TXU Corp. corporate
structure as it relates to the TXU Australia Group. In particular, only the
holding and operating companies of the TXU Australia Group discussed in this
prospectus are shown in the diagram, and several intermediate holding companies
are omitted where their only activity is as holding companies for one or more of
these operating companies. All ownership interests are 100% unless otherwise
indicated. The terms we use in this prospectus to describe the companies in the
TXU Australia Group structure are set forth next to those companies' names in
the diagram. In addition, "TXU Australia Group" or "Group" is a reference to TXU
Australia and all of the holding companies and operating companies directly or
indirectly owned by TXU Australia. Companies in TXU Australia Group are shaded
in the diagram. Companies in TXU Australia Group other than TXU Australia are
sometimes referred to individually as a "Group company" and collectively as the
"Group companies". The terms "us", "we", and "our" refer to TXU Australia and,
unless the context requires otherwise, the Group companies.
3
<PAGE>
TXU CORP. AND TXU AUSTRALIA GROUP CORPORATE
Chart appears here.
4
<PAGE>
TXU AUSTRALIA
TXU Australia is a Victorian limited partnership established in 1999.
Its general partner is AGP, a Victorian limited liability corporation. Its
limited partners are TXU Australia (LP) No. 1 Limited and TXU Australia (LP) No.
2 Limited, both of which are limited liability companies incorporated under the
laws of England and Wales. AGP is solely responsible for the management and
direction of TXU Australia. In addition, all of TXU Australia's assets,
consisting primarily of shares in Holdings, are owned through AGP. Moreover,
other than its ownership interest in Holdings, AGP does not directly own any of
the ordinary shares or any of the assets of other significant Group companies.
TXU Australia Group purchases, distributes, markets and sells
electricity and gas, primarily in the State of Victoria, Australia. The Group's
core businesses of Networks, Retail and Energy Trading are conducted through
three principal operating Group companies:
o TXU ELECTRICITY LIMITED, FORMERLY KNOWN AS EASTERN ENERGY
("EASTERN ENERGY"), which purchases, distributes, and sells
electricity to approximately 511,000 customers, mainly in
Victoria;
o TXU NETWORKS (GAS) PTY LTD, FORMERLY KNOWN AS WESTAR PTY LTD
("WESTAR"), which distributes natural gas to approximately
400,000 customers in central and west Victoria; and
o TXU PTY LTD, FORMERLY KNOWN AS KINETIK ENERGY ("KINETIK ENERGY"),
which sells natural gas to approximately 410,000 customers in
Victoria.
Since December 1995, TXU Australia Group has been pursuing a strategy
of building a diverse energy portfolio encompassing distribution, retailing and
access to peak supplies of electricity and gas. TXU Australia Group believes
this portfolio will give it a competitive advantage in the market, particularly
through economies of scale, the ability to offer both electricity and gas for
sale and diversification of risk.
THE JUMPS
The JUMPS will be issued under an indenture dated as of ,
2000 between TXU Australia and The Bank of New York,
which we refer to as the "indenture". We may amend and/or supplement the
indenture in the future.
The JUMPS..................... US$300,000,000 principal amount of
junior subordinated, unsecured debt
securities of TXU Australia.
Maturity...................... The JUMPS will mature on 20 .
The Issuer.................... TXU Australia.
Distributions; Distribution Dates. Distributions on the JUMPS will
accrue at a rate of % per annum
and will be payable quarterly on
, , and
of each year, beginning .
Distribution Deferrals........ TXU Australia has the right to defer
distributions on the JUMPS for up to 20
consecutive quarters. A deferral of
distributions cannot extend, however,
beyond the maturity date of the JUMPS.
During a deferral period, deferred
distributions will accrue additional
distributions at the same rate as the
JUMPS, compounded quarterly, to the date
of payment.
5
<PAGE>
If TXU Australia defers distributions on
the JUMPS, no payment (interest,
distributions, redemption, repurchase or
otherwise) may be declared or paid by
TXU Australia on or with respect to its
partnership interests or any other
securities, guarantees or other
obligations of TXU Australia ranking
junior to or equal with the JUMPS.
During a deferral period, holders of the
JUMPS will continue to recognize income
for US federal income tax purposes
before they receive any cash relating to
deferred distributions, even if they are
cash basis taxpayers.
Ratings....................... The JUMPS are expected to be assigned
ratings of by Standard & Poor's
Corporation, and by Moody's Investors'
Services, Inc. These ratings will have
been obtained with the understanding
that the rating agencies will continue
to monitor the credit rating of TXU
Australia, and will make future
adjustments when they feel it is
necessary. A rating reflects only the
view of a rating agency. It is not a
recommendation to buy, sell or hold the
JUMPS. Any rating can be revised upward
or downward or withdrawn at any time by
a rating agency if it decides the
circumstances warrant that change.
Ranking....................... The JUMPS will be unsecured and junior
subordinated obligations of TXU
Australia. The JUMPS will rank equal in
right of payment with all other
obligations issued under the indenture
and any of TXU Australia's securities
which are specifically unsecured,
"junior" and "subordinate" by their
terms, but will otherwise rank
subordinate and junior in right of
payment to all other debt instruments of
TXU Australia. Because TXU Australia is
a holding partnership, the JUMPS will
also be effectively subordinated to
existing and future liabilities and
preference share capital of the Group
companies.
The indenture does not limit the amount
of debt TXU Australia or any of the
Group companies may incur. As of
February 29, 2000, TXU Australia had
A$1,969 million (US$1,194 million) of
senior debt and A$363 million (US$220
million) of subordinated debt
outstanding. In addition, as of February
29, 2000, the Group companies had an
aggregate of A$821 million (US$498
million) in debt outstanding that would
be senior to the JUMPS. As of February
29, 2000, neither TXU Australia nor any
Group company had any preference share
capital outstanding.
TXU Australia derives substantially all
of its income from the Group companies.
Therefore, TXU Australia's ability to
make payments on the JUMPS depends on
the cash flows from the Group companies.
6
<PAGE>
Additional Amounts............ Any payments made by TXU Australia on
the JUMPS generally will be made without
withholding or deduction for taxes
unless required by law. If TXU Australia
is required to withhold or deduct taxes
from payments due on the JUMPS, then,
subject to exceptions specified in the
indenture, TXU Australia will pay any
Additional Amounts necessary so that the
net amount you receive after that
withholding or deduction will not be
less than the amount that you would have
received in the absence of the
withholding or deduction.
References in this prospectus to
payments made on the JUMPS include any
Additional Amounts that are required to
be paid unless the context requires
otherwise.
Optional Redemption........... The JUMPS may be redeemed in whole or in
part at a redemption price equal to the
principal amount plus accrued and unpaid
distributions and Additional Amounts, if
any, at any time on or after , 2005.
Tax Event Redemption.......... TXU Australia may redeem all of the
outstanding JUMPS, in whole but not in
part, at a redemption price equal to the
principal amount plus accrued and unpaid
distributions and Additional Amounts, if
any, at any time within 90 days
following the occurrence of a Tax Event.
Listing....................... TXU Australia will apply to list the
JUMPS on the New York Stock Exchange
under the symbol " ".
Form and Denomination......... The JUMPS will be issued in minimum
principal amounts of US$25 and multiples
of US$25. The JUMPS will be represented
by one or more global securities that
will be deposited with and registered in
the name of The Depository Trust Company
(DTC) or its nominee. This means that
you will not receive a certificate for
your JUMPS and that your broker will
maintain your position in the JUMPS. TXU
Australia expects that the JUMPS will be
ready for delivery through DTC on or
about , 2000.
Trustee and Paying Agent...... Initially, The Bank of New York.
Use of Proceeds............... TXU Australia will use the proceeds from
the issuance and sale of the JUMPS to
refinance short-term debt including
short-term debt estimated to be
A$413 million (US$250 million)
outstanding plus accrued interest to
June 30, 2000 under subordinated
facilities provided to TXU Australia and
its subsidiaries and, to the extent
there is excess, to repay other short-
term facilities.
Transfer Agent and Registrar.. Initially, TXU Business Services
Company.
Governing Law................. The JUMPS and the indenture will be
governed by the laws of the State of New
York.
7
<PAGE>
TXU AUSTRALIA GROUP
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The selected consolidated historical financial information presented
below for each of the three years in the period ended December 31, 1999 has been
derived from our consolidated financial statements, which have been audited by
Deloitte Touche Tohmatsu, independent auditors. These financial statements were
prepared in accordance with generally accepted accounting principles in the
United States of America (US GAAP) and are included on pages F-4 to F-31 of
this prospectus.
You should read the selected consolidated financial information
together with our historical consolidated financial statements and the section
of this prospectus entitled MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The selected consolidated financial information for the years ended
December 31, 1996 and 1995 is unaudited. The consolidated financial information
for the year ended December 31, 1995 reflects the financial position and results
of operations of Eastern Energy while it was owned by the Victorian government.
TXU Australia Group acquired Eastern Energy in December 1995 from the Victorian
government. The consolidated income statement data for the year ended December
31, 1995, includes the pre-acquisition and post-acquisition results of
operations for Eastern Energy. The consolidated balance sheet data at December
31, 1995 reflects the application of purchase accounting, including all
financing transactions, in connection with the acquisition. The information for
the year ended December 31, 1999 reflects the acquisition of Westar and Kinetik
Energy by TXU Australia Group on February 24, 1999 from the Victorian
government. All amounts for 1999 include Westar and Kinetik Energy only from the
date of acquisition.
The selected consolidated historical income statement data presented
below reflects the continuing operations of TXU Australia Group. The
discontinued operations of Enetech have not been reflected in such information.
For the convenience of the reader, December 31, 1999 amounts are shown
in US dollars, converted as of March 31, 2000, at a rate of A$1.00 = US$.6062,
which is 7.6% lower than the December 31, 1999 rate (A$1.00 = US$.6560).
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------------------------------------------------------------------
A$ US$
INCOME STATEMENT AND OTHER DATA
- -------------------------------------------------
(MILLIONS OF A$)
<S> <C> <C> <C> <C> <C> <C>
Operating revenues A$887.7 US$538.1 A$ 646.8 A$ 621.2 A$ 600.0 A$586.4
Operating income 167.8 101.7 172.0 152.1 133.4 133.9
Net interest expense (190.7) (115.6) (90.7) (95.2) (108.0) (44.5)
Income before interest and income taxes 165.0 100.0 172.5 152.3 133.7 133.9
Income/(loss) from continuing operations (5.9) (3.6) 46.2 26.1 9.2 76.7
Earnings before interest, taxes, depreciation
and amortization (EBITDA) (2) 295.7 179.2 240.9 217.8 197.1 168.2
8
<PAGE>
Cash provided by (used in) operating
activities from continuing operations (64.1) (38.9) 136.1 149.0 65.8 Not
Available
Cash provided by (used in) financing
activities from continuing operations 2,052.0 1,243.9 25.2 (64.5) (43.8) Not
Available
Cash used in investing activities
from continuing operations (1,862.4) (1,128.9) (153.9) (66.9) (47.6) Not
Available
BALANCE SHEET DATA (AT END OF PERIODS) (MILLIONS
OF A$ EXCEPT RATIOS AND PERCENTAGES)
Net property, plant and equipment A$2,697.0 US$1,634.9 A$1,551.8 A$1,446.3 A$1,457.8 A$1,464.8
Total assets 4,600.2 2,788.6 2,334.8 2,205.8 2,184.8 2,240.8
Short-term debt 1,280.5 776.2 201.5 252.5 74.5 50.0
Long-term debt 1,933.4 1,172.1 966.4 890.1 1,132.1 1,212.1
Owner's equity 947.6 574.4 926.0 880.9 853.7 832.5
Ratio of earnings to fixed charges 0.9(1) 0.9(1) 1.9 1.6 1.2 3.0
Consolidated debt/debt and equity 77% 77% 56% 56% 59% 60%
</TABLE>
(1) TXU Australia Group incurred a loss from continuing operations of
A$5.9 million (US$3.6 million) for the year ended December 31, 1999,
compared with income from continuing operations of A$46.2 million
(US$28.0 million) for the year ended December 31, 1998. The primary
cause of the loss was the effect of the Group's expansion program,
where EBITDA was insufficient to offset increases in depreciation,
interest expense and goodwill amortization. The ratio of earnings to
fixed charges of 0.9 for the year ended December 31, 1999 was less
than one to one coverage by A$25.7 million (US$15.6 million).
(2) EBITDA equals earnings before interest income, interest expense,
income taxes, depreciation and amortization. This information is
provided for informational purposes only. EBITDA is not a measure
defined under US GAAP and has not been presented in accordance with US
GAAP. EBITDA should not be construed as an alternative to income from
operations under US GAAP as an indicator of operating performance, or
as an alternative to cash flows from operating activities under US
GAAP as a measure of liquidity. EBITDA is a widely accepted financial
indicator of a company's ability to incur and service debt. However,
EBITDA may not be comparable to similar measures presented by other
companies.
For more detailed information, see NOTES to the CONSOLIDATED FINANCIAL
STATEMENTS.
9
<PAGE>
RISK FACTORS
In addition to the other information in this prospectus, you should
consider the following factors before purchasing the JUMPS.
IF THE GROUP COMPANIES ARE UNABLE TO PROVIDE SUFFICIENT CASH TO TXU
AUSTRALIA, TXU AUSTRALIA MAY NOT BE ABLE TO MAKE PAYMENTS ON THE JUMPS.
Almost all of TXU Australia's consolidated assets are held by, and
operating income comes from, Eastern Energy, Westar, Kinetik Energy and other
Group companies. Accordingly, TXU Australia's primary sources of cash to service
its debt and other obligations, including its obligations under the JUMPS, are
the dividends and other distributions it receives from the Group companies.
These companies will have no obligation to pay any amounts due on the JUMPS or
to make any funds available for those payments.
Unexpected declines in future business of the Group companies, which
may result from, among other things, the increasingly competitive environment in
the Victorian and Australian electric and gas utility industries, increases in
operating or capital costs, changes in regulatory policies or the inability to
borrow additional funds and other factors referred to in FORWARD-LOOKING
STATEMENTS, could impair those companies' ability to meet their debt service
obligations, or to pay dividends and make other payments to TXU Australia. If
the Group companies are unable to provide cash sufficient to permit TXU
Australia to service its debt and other obligations, TXU Australia may have no
source for amounts due on the JUMPS.
TXU AUSTRALIA GROUP'S SENIOR FINANCING DOCUMENTS MAY LIMIT TXU AUSTRALIA'S
ABILITY TO MAKE PAYMENTS ON THE JUMPS AND LIMIT THE ABILITY OF HOLDERS OF JUMPS
TO EFFECTIVELY EXERCISE REMEDIES AGAINST TXU AUSTRALIA IN THE EVENT OF A DEFAULT
UNDER THE JUMPS.
TXU Australia Group's senior financing documents restrict the ability
of TXU Australia to make payments or other distributions in relation to
subordinated debt, including the JUMPS, unless specific conditions, including
lack of defaults under such senior financing documents and satisfaction of
interest coverage ratios, are met. The events of default under the senior
financing documents are broadly defined and they can be construed in a manner
that would allow the senior lenders under the senior financing documents to
declare defaults and stop payments on the JUMPS in a wide variety of
circumstances. Please see TXU AUSTRALIA GENERAL OVERVIEW - CAPITALIZATION OF TXU
AUSTRALIA - "DEED OF COMMON TERMS" for an illustrative list of circumstances in
which the senior lenders can declare a default under the senior financing
documents. The subordination provisions contained in the indenture also require
holders of the JUMPS to turn over to the trustee under the senior financing
documents all moneys received or recovered through the exercise of remedies at
any time when there is a default under the senior financing documents, until
such time such default is cured or waived or the senior lenders are paid in
full. Please see DESCRIPTION OF THE JUMPS - "SUBORDINATION PROVISIONS." In the
case of a default involving the bankruptcy or other winding up of any Group
company or of TXU Australia, it is likely that the senior lenders would require
payment in full on the senior debt prior to any payments being made on any
subordinated securities, including the JUMPS. As of February 29, 2000, TXU
Australia and the Group companies had approximately A$1,969 million (US$1,194
million) of debt outstanding under these senior financing documents.
In addition, there is no protection for holders of the JUMPS against
the Group companies amending the existing senior financing documents or entering
into additional restrictive financing agreements including financial
arrangements which would limit the ability of the Group companies to make
dividend and other payments to TXU Australia. SEE TXU AUSTRALIA GENERAL OVERVIEW
- - CAPITALIZATION OF TXU AUSTRALIA - "DEED OF COMMON TERMS".
10
<PAGE>
TXU AUSTRALIA GROUP FACES A NUMBER OF REGULATORY AND COMPETITIVE RISKS
ASSOCIATED WITH ITS BUSINESSES.
A. PRICE REGULATION OF THE ELECTRICITY AND GAS DISTRIBUTION
BUSINESSES MAY LEAD TO PRICING ARRANGEMENTS BELOW CURRENT
LEVELS.
Westar and Eastern Energy levy regulated distribution charges on users
of their distribution networks. In the gas industry, distribution and retail
functions are performed by separate legal entities. Accordingly, Westar levies
distribution charges on users of its distribution network, including Kinetik
Energy. In the electricity industry, both distribution and retail functions are
performed within the same legal entity. Accordingly, Eastern Energy levies
distribution charges on its own retail customers within its distribution area,
as well as on third party retailers for sales by those retailers to
"contestable" customers in the Eastern Energy distribution area. By contestable,
we mean those gas or electric customers who are free to choose a retailer for
their gas and/or electricity needs. In contrast, those customers who are unable
to choose a retailer for electricity and/or gas and are required to remain with
their current retailer are referred to as "non-contestable" or "franchise"
customers.
The distribution network charges are levied in accordance with tariff
orders which are subject to regulation by the Office of the Regulator General in
Victoria (ORG).
The ORG is required to periodically review and, if appropriate,
change, pricing arrangements. The final determination for the first electricity
price review is currently scheduled to be delivered in September 2000, with
changes to apply from January 1, 2001. The final determination for the first gas
price review has not yet been scheduled. Any changes resulting from that review
will apply for five years from January 1, 2003. After the initial review,
reviews will take place at intervals of not less than 5 years for electricity
and as nominated by Westar and accepted by the ORG for gas. The outcomes of
these reviews are uncertain. There is a risk that the ORG could determine
pricing arrangements significantly below current levels, particularly since
interest rates in Australia, which are reflected in the return on the regulated
asset base, are presently significantly lower than when distribution network
tariffs were initially set. If this occurred for Eastern Energy or Westar, that
company's ability to meet its obligations and to provide cash to TXU Australia
would be diminished. See BUSINESS OF TXU AUSTRALIA GROUP -- "NETWORKS BUSINESS
SEGMENT."
B. PRICE REGULATION AND COMPETITION IN THE ELECTRICITY AND GAS
SUPPLY BUSINESSES MAY LEAD TO REDUCED PROFIT MARGINS.
When the Victorian electricity and gas businesses were privatized, all
customers were non-contestable and retail prices were regulated by tariff orders
approved by the regulator. The Victorian Government established a timetable by
which various customer groups would become contestable. The regulated prices
apply until the date on which a specific customer group becomes contestable.
After that date, the retail prices for that customer group are intended to be
determined by market forces without regulatory oversight.
Eastern Energy's customers who consume electricity in excess of 160
MWh per year are already fully contestable and can choose a supplier of their
choice, with the remainder becoming contestable on January 1, 2001.
Kinetik Energy's customers who consume gas in excess of 100,000 GJ per
year are already fully contestable. Those customers consuming in excess of 5,000
GJ, but less than 100,000 GJ per year become contestable on September 1, 2000
and the remainder on September 1, 2001.
Prior to a customer becoming contestable, Eastern Energy and Kinetik
Energy can charge that customer no more than the regulated prices set in their
respective tariff orders. As a result, they will be unable to pass all cost
increases on to customers who are not yet contestable. After contestability,
Eastern Energy and Kinetik Energy will be exposed to increased competition from
other retailers. There is a risk that competitive forces may result in the loss
of customers and the reduction of retail profit margins. Experience to date has
indicated that large electric customers, once becoming contestable, have
successfully negotiated price reductions with retailers.
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C. TXU AUSTRALIA GROUP MAY NOT BE ABLE TO EFFECTIVELY HEDGE
AGAINST ELECTRICITY PRICE VOLATILITY.
Eastern Energy obtains the electricity to satisfy its energy supply
obligations primarily by purchases from the electricity pool into which all
electricity output from generators within Victoria, New South Wales and South
Australia is centrally pooled and scheduled to meet the electricity demand in
those States in the National Electricity Market. Because the price of
electricity purchased from the pool can be volatile, Eastern Energy can be
exposed to risks arising from the differences between the prices at which it
sells and the prices at which it purchases electricity, unless it effectively
hedges such exposure. Eastern Energy actively manages these risks in order to
hedge most of its supply obligations and to monitor the volume and financial
risk of its unhedged position. No assurance can be given that the risks relating
to energy supply obligations may be effectively hedged in the future. See
BUSINESS OF TXU AUSTRALIA GROUP -- "RETAIL BUSINESS SEGMENT" and MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -
"QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK."
D. OTHER REGULATORY RISKS COULD RESULT IN INCREASED COSTS TO
THE GROUP COMPANIES.
Each of Eastern Energy, Westar and Kinetik Energy is required to
operate within the terms of its distribution and/or retail licenses. The
licenses require the companies to comply with applicable legislation and codes,
tariff orders, and standards and procedures determined by the ORG. Material
breaches of the terms of the licenses could result in increased cost to the
companies in the form of fines or other penalties adverse to the companies and,
in worst cases, could result in the revocation of licenses by the ORG.
Notwithstanding that the ORG may consult the industry prior to making changes,
there is a risk that the terms of these licenses could be changed without the
agreement of the companies, resulting in increased cost to the companies.
Similar risks apply in respect of licenses issued by regulators in
states other than Victoria.
THE VICTORIAN GAS SUPPLY COULD BE INTERRUPTED, WHICH COULD REDUCE THE GROUP'S
REVENUES AND NET INCOME.
The Victorian gas network is highly dependent on one source of supply
- - the Bass Strait gas fields, where gas is pumped onshore and processed at
Longford in Eastern Victoria. In September 1998, an explosion occurred at the
Esso Australia Resources Limited (Esso) gas processing plant at Longford, which
caused almost total loss of supply to the principal Victorian gas transmission
system for almost two weeks. There is a risk that the gas supply from this major
source could be interrupted again. See BUSINESS OF TXU AUSTRALIA GROUP --
"RETAIL AND ENERGY MANAGEMENT BUSINESS" and -- "LITIGATION."
TXU AUSTRALIA'S LEVEL OF INDEBTEDNESS MAY LIMIT ITS ABILITY TO SERVICE ITS DEBT
IN THE FUTURE.
The JUMPS will be treated as debt securities for US GAAP purposes. At
December 31, 1999, after giving effect to the issuance of the JUMPS and the
application of the proceeds from their sale to reduce existing debt, the ratio
of TXU Australia Group's consolidated net debt to consolidated net debt plus
equity as determined in accordance with US GAAP was approximately 77%. See
SUMMARY -- "SELECTED CONSOLIDATED FINANCIAL INFORMATION" and USE OF PROCEEDS.
The degree to which TXU Australia and the Group companies may be leveraged in
the future could affect their ability to service debt and other obligations, to
make distributions on the JUMPS, to make capital investments, to take advantage
of certain business opportunities, to respond to competitive pressures or to
obtain additional financing. TXU Australia and the Group companies may incur
substantial additional debt and other obligations such as those under leases,
letters of credit and other instruments. See MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- "LIQUIDITY AND
CAPITAL RESOURCES."
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IN THE EVENT OF A LIQUIDATION OR REORGANIZATION OF A TXU AUSTRALIA GROUP
COMPANY, CLAIMS OF THAT COMPANY'S CREDITORS AND HOLDERS OF ITS PREFERENCE SHARE
CAPITAL WILL BE SENIOR TO THOSE OF HOLDERS OF THE JUMPS AND WOULD BE PAID BEFORE
PAYMENTS ARE MADE ON THE JUMPS.
TXU Australia has no direct operations. All of TXU Australia's assets,
consisting primarily of shares in Holdings, are owned through AGP. The JUMPS
therefore will effectively be subordinated to debt and preference share capital
at the Group company level. Upon liquidation or reorganization of a Group
company, the claims of that company's creditors and holders of its preference
share capital will be senior to the claims of the holders of the JUMPS or other
creditors of TXU Australia. The financial statements of TXU Australia Group
included in this prospectus show the aggregate amount of Group company debt as
of the date of those statements. At February 29, 2000, senior and subordinated
debt of TXU Australia totaled approximately A$2,332 million (US$1,414 million)
and the Group companies' debt aggregated approximately A$871 million (US$528
million). At February 29, 2000, there was no preference share capital
outstanding within TXU Australia Group. TXU Australia and the Group companies
have the ability to incur substantial additional debt and other obligations such
as those under leases, letters of credit and other instruments. In addition, the
indenture imposes no restrictions:
o on the ability of TXU Australia to enter into transactions with
its affiliates,
o on the ability of TXU Australia to pay dividends or make other
distributions or make other payments (except during a deferral
period), or
o that would afford protection to the holders of JUMPS in the event
of a highly-leveraged transaction or change of control involving
TXU Australia.
The senior debt instruments by which TXU Australia is bound restrict
TXU Australia Group companies from taking specified actions without senior
lender consent. These prohibitions could prevent the Group companies from taking
actions they deem to be in their best interests. See MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- "LIQUIDITY AND
CAPITAL RESOURCES."
CHANGES IN CURRENCY EXCHANGE RATES MAY AFFECT TXU AUSTRALIA'S ABILITY TO MAKE
PAYMENTS ON THE JUMPS.
TXU Australia's revenues will be received in Australian dollars. The
proceeds to be paid to TXU Australia for the JUMPS will be paid in US dollars,
and the distributions and principal payment obligations on the JUMPS will be
payable in US dollars. As a result, any change in the currency exchange rate
that reduces the amount in Australian dollars obtained upon conversion of the US
dollar-based net proceeds of the JUMPS or that increases the effective principal
and distribution payment obligations represented by the JUMPS upon conversion of
Australian dollar-based revenues into US dollars may, if not appropriately
hedged, have a material adverse effect on TXU Australia or on its ability to
make payments on the JUMPS. Although TXU Australia expects to enter into
transactions to hedge risks associated with exchange rate fluctuations, there
can be no assurance that TXU Australia will be successful in entering into such
transactions or will be successful in reducing those risks. See EXCHANGE RATES
for information concerning the Noon Buying Rate for Australian dollars expressed
in US dollars.
TXU AUSTRALIA HAS THE OPTION TO DEFER DISTRIBUTIONS WHICH MAY HAVE TAX
CONSEQUENCES FOR JUMPS HOLDERS AND MAY AFFECT THE TRADING PRICE OF THE JUMPS.
TXU Australia will have the right, at any time and from time to time,
to defer distributions on the JUMPS for up to 20 consecutive quarters. A
deferral of distributions cannot extend, however, beyond the maturity date of
the JUMPS. If TXU Australia defers distributions on the JUMPS, you will continue
to recognize income in the form of original issue discount for US federal income
tax purposes before you receive any cash relating to deferred distributions,
even if you use the cash method of accounting. If you sell your JUMPS before the
record date for the payment of deferred distributions at the end of a deferral
period, you will not receive the cash related to those distributions. You should
consult your own tax advisor about these and other tax consequences of an
investment in the JUMPS.
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TXU Australia has no current intention of deferring distributions on
the JUMPS. However, if TXU Australia exercises its right in the future, the
JUMPS may trade at a price that does not fully reflect the value of accrued but
unpaid distributions. If you sell the JUMPS during a distribution deferral
period, you may not receive the same return on investment as someone else who
continues to hold the JUMPS. Moreover your adjusted tax basis in the JUMPS that
you sell will be increased by the amount of accrued original issue discount
attributable to deferred distributions. If your selling price is less than your
adjusted tax basis, you will recognize a capital loss. Your ability to deduct
capital losses for US federal income tax purposes is subject to limitations. In
addition, the existence of TXU Australia's right to defer payments of
distributions on the JUMPS may mean that the market price for the JUMPS may be
more volatile than other securities that do not have these rights.
THE JUMPS MAY BE REDEEMED AT ANY TIME IF SPECIFIED CHANGES IN TAX LAW OCCUR.
If specified changes in tax law occur and are continuing, TXU
Australia will have the right to redeem the JUMPS at the principal amount plus
accrued and unpaid distributions and Additional Amounts, if any, in whole but
not in part, at any time within 90 days of the occurrence of the changes. If TXU
Australia redeems the JUMPS, you may not be able to reinvest your redemption
proceeds at a rate of return that is as high as the rate you were earning on
your JUMPS. See also DESCRIPTION OF JUMPS - "TAX EVENT REDEMPTION" for more
information.
THE JUMPS MAY BE REDEEMED AT THE OPTION OF TXU AUSTRALIA.
At the option of TXU Australia, the JUMPS may be redeemed, in whole,
at any time or in part, from time to time, on or after , 2005, at a redemption
price equal to the principal amount to be redeemed plus accrued and unpaid
distributions and Additional Amounts, if any, to the redemption date. You should
assume that TXU Australia will exercise its redemption option if TXU Australia
is able to refinance at a lower interest rate or it is otherwise in TXU
Australia's best interest to redeem the JUMPS. If TXU Australia redeems the
JUMPS, you may not be able to reinvest your redemption proceeds at a rate of
return that is as high as the rate you were earning on your JUMPS.
A PUBLIC MARKET FOR THE JUMPS MAY NOT DEVELOP.
No public market for the JUMPS existed before this offering. Although
the JUMPS are expected to be listed on the New York Stock Exchange, there can be
no assurance that an active public market for the JUMPS will develop. If an
active trading market for the JUMPS does develop, there can be no assurance that
it will be sustained after this offering.
AUSTRALIAN COURTS MIGHT NOT ENFORCE JUDGMENTS RENDERED OUTSIDE OF AUSTRALIA
WHICH MAY MAKE IT DIFFICULT TO COLLECT ON JUDGMENTS RENDERED AGAINST TXU
AUSTRALIA.
TXU Australia is organized under the laws of the State of Victoria,
Commonwealth of Australia. Substantially all the assets of TXU Australia are
located outside the United States. TXU Australia has appointed Thelen Reid &
Priest LLP, New York, New York, as its authorized agent upon which process may
be served in any action arising out of or based upon the indenture or the JUMPS
that may be instituted in any US federal or state court having subject matter
jurisdiction in the Borough of Manhattan, The City of New York, New York, and
has consented to the jurisdiction of those courts in any of those actions.
However, it may not be possible for investors to enforce against TXU Australia,
in original actions or in actions for enforcement of judgments of US courts,
civil liabilities based upon US securities laws.
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PRESENTATION OF FINANCIAL AND OTHER INFORMATION
CERTAIN TERMS
We use the following terms in this prospectus as described below:
o "A$" , "$" OR "AUSTRALIAN DOLLARS" are the currency of the
Commonwealth of Australia.
o "GJ" - Gigajoule. A unit of gas energy equal to one billion
joules.
o "GWH" - A unit of electric energy equal to one thousand MWh.
o "MWH" - A unit of electric energy equal to one million watts of
power for one hour.
o "PJ" - Petajoule. A unit of gas energy equal to one million GJ.
o "US$" OR "US DOLLARS" are US currency.
o "US GAAP" means US generally accepted accounting principles.
EXCHANGE RATES
The following table sets out, for the periods indicated, information
concerning the exchange rates between Australian dollars and US dollars based on
the noon buying rate in New York City for cable transfers in Australian dollars
as certified for customs purposes by the Federal Reserve Bank of New York (Noon
Buying Rate). The "Average" is the average of the Noon Buying Rates in effect on
the last business day of each month during the relevant period.
FISCAL YEAR ENDED PERIOD END AVERAGE HIGH LOW
----------------- ---------- ------- ---- ---
(US$ PER A$1.00)
1995 0.7432 0.7407 0.7407 0.7088
1996 0.7944 0.7846 0.8137 0.7443
1997 0.6615 0.7393 0.7840 0.6615
1998 0.6123 0.6300 0.6852 0.5700
1999 0.6560 0.6445 0.6620 0.6205
o On March 31, 2000, the Noon Buying Rate was A$1.00 = US$0.6062.
For the convenience of the reader, this prospectus contains
translations of certain Australian dollar amounts into US dollars at the
exchange rate as of March 31, 2000 of A$1.00 = US$0.6062 unless otherwise
specified. TXU Australia does not make any representation that the Australian
dollar amounts have been, could have been or could be converted into US dollars
at the rates indicated or at any other rates.
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TXU AUSTRALIA GENERAL OVERVIEW
GENERAL
In January 1999, TXU Corp., through a series of subsidiaries, created
TXU Australia to acquire and hold, either directly or indirectly, all of its
Australian investments. Prior to this time, TXU Corp. principally conducted
business in Australia through TXU APL and its wholly-owned subsidiaries. In
connection with the acquisition of Westar and Kinetik Energy, TXU Australia
Group was restructured and TXU Australia was interposed as the ultimate holding
entity in Australia for TXU Australia Group.
TXU Australia is a limited partnership established pursuant to a
limited partnership deed, dated January 27, 1999, and formed and registered
under the Partnership Act 1958 of the State of Victoria, Australia (Partnership
Act). Its general partner, AGP, is a Victorian limited liability corporation.
Its limited partners are TXU Australia (LP) No. 1 Limited and TXU Australia (LP)
No. 2 Limited, both of which are limited liability companies incorporated under
the laws of England and Wales. AGP is solely responsible for the management and
direction of TXU Australia. In addition, all of TXU Australia's assets,
consisting primarily of shares in Holdings, are owned through AGP. Moreover,
other than its ownership interest in Holdings, AGP does not directly own any of
the assets, including ordinary shares, of other significant Group companies.
TXU Australia's headquarters is located at 452 Flinders Street,
Melbourne, Victoria, Australia 3000. Its telephone number is 613-9229-6000.
TXU Australia Group purchases, distributes, markets and sells
electricity and gas, primarily in the State of Victoria, Australia. The Group's
core businesses of Networks, Retail and Energy Trading are conducted through
three principal operating Group companies:
o EASTERN ENERGY, which purchases, distributes, and sells
electricity to approximately 511,000 customers, mainly in
Victoria;
o WESTAR, which distributes natural gas to approximately 400,000
customers in central and west Victoria; and
o KINETIK ENERGY, which sells natural gas to approximately 410,000
customers in Victoria.
TXU Australia's ultimate corporate parent is Texas Utilities Company,
doing business as TXU Corp. TXU Corp. is a Dallas, Texas-based holding company
which, through its subsidiaries, engages in the generation, transmission and
distribution of electricity; the processing, transmission and distribution of
natural gas; and energy marketing, telecommunications, power development and
other businesses. TXU Corp. operates primarily in the United States, Europe and
Australia.
The following diagram illustrates the relationship of TXU Australia to
TXU Corp., and to significant Group companies (all ownership interests are 100%
unless otherwise indicated).
This diagram is a summary of the TXU Corp. corporate structure as it
relates to TXU Australia Group. In particular, only the holding and operating
companies of TXU Australia Group discussed in this prospectus are shown in the
diagram, and several intermediate holding companies are omitted where their only
activity is as holding companies for one or more of these operating companies.
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TXU CORP. AND THE TXU AUSTRALIA GROUP CORPORATE STRUCTURE
Chart appears here.
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ACQUISITION OF WESTAR AND KINETIK ENERGY
In February 1999, TXU Australia Group completed the acquisition of the
gas distribution and retail assets and businesses of Westar and Kinetik Energy
from the Victorian Government. This acquisition was preceded by a competitive
tender arrangement run by the Victorian Government for the disposal of these
businesses and assets.
Prior to the acquisition of Westar and Kinetik Energy, the business of
TXU Australia Group was conducted by TXU APL. In connection with the acquisition
of Westar and Kinetik Energy, TXU Australia Group was restructured and TXU
Australia was interposed as the ultimate holding entity in Australia for TXU
Australia Group.
CAPITALIZATION OF TXU AUSTRALIA
PARTNERSHIP INTERESTS
TXU Australia (LP) No.1 Limited is a limited partner holding 49.75% of
the interests in TXU Australia.
TXU Australia (LP) No.2 Limited is a limited partner holding 49.75% of
the interests in TXU Australia.
AGP is the general partner and holds 0.5% of the interests in TXU
Australia.
SENIOR DEBT FUNDING
As a result of a financial restructuring in February 2000, TXU
Australia Group consolidated a significant portion of its debt at the TXU
Australia level. TXU Australia has entered into various loan agreements with
senior lenders ("Senior Lenders"), which financings are referred to as Senior
Debt.
The financial structure currently in place as Senior Debt for TXU
Australia Group consists generally of the following facilities (all amounts have
been converted at the noon buying rate at March 31, 2000 of A$1.00 = US$0.6062):
FACILITY A
Under a Syndicated Facilities Agreement dated February 24, 1999, TXU
Australia has agreed to borrow A$825 million (US$500 million) through a banking
syndicate. The facilities include:
o a three-year revolving Loan Note subscription facility for A$220
million (US$133 million); and
o a three-year non-revolving Loan Note subscription facility for
A$605 million (US$367 million), both with a maturity date of
February 24, 2002.
At February 29, 2000, Facility A was fully drawn at an interest rate
of 6.88% per annum.
FACILITY B
Under a Syndicated Facility Agreement dated February 22, 2000, TXU
Australia has agreed to borrow A$625 million (US$379 million) through a banking
syndicate. The facility comprises a fully revolving Loan Note subscription
facility with a maturity date of October 31, 2001.
At February 29, 2000, Facility B was fully drawn at an interest rate
of 6.43% per annum.
FACILITY C
Under three separate Working Capital Facility Agreements each dated
February 22, 2000 with each of National Australia Bank Limited, Australia and
New Zealand Banking Group Limited and Westpac Banking Corporation, TXU Australia
has agreed to borrow an aggregate amount of A$100 million (US$61 million). The
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facilities are all multi-option working capital facilities and all expire 364
days from (and including) the date of the agreements. The funding provided by
each bank is as follows:
o National Australia Bank Limited - A$50 million (US$30 million);
o Australia and New Zealand Banking Group Limited - A$25 million
(US$15 million); and
o Westpac Banking Corporation - A$25 million (US$15 million).
As at February 29, 2000, A$44 million (US$27 million) was drawn
against Facility C at an average interest rate of 6.36% per annum.
FACILITY D
Under a Syndicated Loan Facility dated April 30, 1999, TXU Australia
has agreed to borrow A$200 million (US$121 million) from The Chase Manhattan
Bank and Commonwealth Bank of Australia. The maturity date for this facility is
June 30, 2000.
As at February 29, 2000, Facility D was fully drawn at an interest
rate of 6.78% per annum.
FACILITY E
Under a Loan Agreement dated February 22, 2000, TXU Australia has
agreed to borrow the aggregate amount of A$275 million (US$167 million) from
National Australia Bank Limited and Westpac Banking Corporation (comprising an
aggregate of A$137.5 million (US$83.4 million) for each bank). The maturity date
for this facility is December 29, 2000.
As at February 29, 2000, Facility E was fully drawn at an interest
rate of 6.29% per annum.
All funds borrowed by TXU Australia were used to subscribe for shares
in Holdings. Holdings lent the funds it received from TXU Australia to TXU (No.
8) Pty Ltd ("TXU8"), the internal treasury arm of TXU Australia Group, in the
form of intercompany loans. TXU8, in turn, then onlends those funds to the
operating companies in the Group on an as needed basis.
SECURITY STRUCTURE
No direct security interest has been granted to the Senior Lenders
over the assets of the operating companies of TXU Australia Group. However, two
subsidiaries of TXU Australia, TXU Australia Holdings Pty Ltd and TXU8 granted a
guarantee and indemnity of the obligations of TXU Australia in favour of the
Senior Lenders.
DEED OF COMMON TERMS
All Senior Debt ranks equally and is governed by common terms set
forth under a separate Deed of Common Terms dated February 24, 1999, as amended
on February 24, 2000 ("DCT"). The key representations, warranties, covenants,
undertakings, events of default and related provisions in respect of the
facilities with each Senior Lender are contained in the DCT. The facility
documents relating to the Senior Debt and the DCT are jointly referred to as the
"Financing Documents."
Under the DCT, there are no restrictions on TXU Australia's raising
further debt from alternative sources and independent of the terms of the DCT,
provided that certain financial ratio tests are being complied with.
In addition, TXU Australia is able to raise "qualifying subordinated
debt" (as defined in the DCT) that is fully subordinated to Senior Debt. The
JUMPS will be "qualifying subordinated debt" and holders of JUMPS and the
trustee under the indenture for the JUMPS will be required to agree to certain
subordination provisions which satisfy the terms of the DCT. . Please see
DESCRIPTION OF THE JUMPS - "SUBORDINATION PROVISIONS."
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The DCT contains detailed subordination provisions which, in effect,
restrict repayment of principal and payment of distributions on qualifying
subordinated debt when the principal amount of qualifying subordinated debt
exceeds 15% of the aggregate of consolidated Senior Debt and consolidated net
worth of the Group Companies and TXU Australia.
If the aggregate of qualifying subordinated debt does not exceed this
15% threshold, TXU Australia may pay distributions in respect of such
subordinated debt provided that:
o no amount owing to the Senior Lenders is due but unpaid;
o no event of default or other event which, with the giving of
notice or the lapsing of time, would become an event of default
("potential event of default") exists under the DCT; and
o the distribution rate on the subordinated debt is determined on
normal arm's length commercial terms.
If the aggregate of qualifying subordinated debt exceeds the 15%
threshold, TXU Australia cannot prepay or repay, in whole or in part, the
principal amount in respect of any qualifying subordinated debt before payment
in full of amounts owing to the Senior Lenders, unless such subordinated debt is
effectively repaid and refinanced and replaced by other debt, or pay any
distributions in respect of any part of the principal amount of qualifying
subordinated debt which exceeds the 15% threshold, unless the following
conditions are satisfied:
o no event of default or potential event of default exists under
the DCT, or under the terms of any other funding considered to be
Senior Debt; and
o the following Senior Debt interest coverage ratios are satisfied:
o on and after each of the following dates and until the next
specified date: June 30, 2000, September 30, 2000 and December
31, 2000 - not less than 1.90:1; and
o on or after March 31, 2001 - not less than 2.00:1
The relevant Senior Debt interest coverage ratios are calculated in
accordance with Australian GAAP on the basis of the proportion that earnings of
TXU Australia Group, on a consolidated basis and before abnormal and
extraordinary items, interest expense, income taxes, depreciation and
amortization, bears to debt service on the amount owing to the Senior Lenders
and any other unsubordinated indebtedness of TXU Australia Group for the
twelve-month period ending on each specified date.
At December 31, 1999, the ratio of all qualifying subordinated debt of
TXU Australia Group to the aggregate of Senior Debt and consolidated net worth
was 11%. The issuance of the JUMPS will not materially affect this ratio because
the proceeds of the JUMPS will be used to repay qualifying subordinated debt.
Nor does TXU Australia currently have any plans to incur any further
subordinated indebtedness that might result in its aggregate subordinated
indebtedness exceeding this 15% threshold. Accordingly, payment of distributions
on the JUMPS should not be affected if TXU Australia were unable to meet the
above Senior Debt interest coverage ratio tests.
The occurrence of an event of default or potential event of default
under the Financing Documents will prevent any payment on any subordinated debt,
including the JUMPS. In the context of a default, amounts owing under the
Financing Documents must be paid in full before any subordinated debt, including
the JUMPS, can be serviced or repaid. The following are some of the events of
default under the DCT.
o (PAYMENT)- TXU Australia or its affiliates that are borrowers
under the DCT do not pay any money payable (excluding interest)
when due or, in the case of interest, any interest due under the
DCT within two business days of notice of the non-payment being
given to the non-paying borrower;
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o (BREACH OF FINANCIAL UNDERTAKINGS): TXU Australia fails at any
time to comply with the consolidated interest coverage ratios;
o (INSOLVENCY EVENT): an insolvency event occurs in respect of TXU
Australia or its material subsidiaries, except in the cases of
the voluntary winding up, deregistration or dissolution of a
solvent entity which owns no assets;
o (CESSATION OF BUSINESS): TXU Australia or any of its material
subsidiaries stops payment generally, ceases to carry on its
business or a material part of it, or threatens to do either of
those things, except to effect a voluntary winding up,
deregistration, dissolution, reconstruction or amalgamation while
solvent on terms approved by the senior debt trustee;
o (CHANGE IN GROUP STRUCTURE): subsidiaries of TXU Australia cease
to be wholly-owned subsidiaries of TXU Australia;
o (INVESTIGATION): a person is appointed under applicable law to
investigate any part of the affairs of TXU Australia or its
material subsidiaries, unless TXU Australia or the applicable
subsidiary has demonstrated to the reasonable satisfaction of the
senior debt trustee within 10 business days of the appointment
that no material adverse effect will, or is likely to, result
from the investigation or as a consequence thereof;
o (LICENSES): if (i) TXU Australia or its material subsidiaries who
are license holders (each a "License Holder") fail to take any
step necessary or desirable to preserve a license or to avoid a
license being placed in jeopardy; (ii) a license is varied in a
material adverse respect without the prior written consent of the
senior debt trustee or is suspended, cancelled, transferred
(except to TXU Australia or its material subsidiaries), revoked
or allowed to lapse; (iii) any person (other than TXU Australia
or its material subsidiaries) is issued a distribution license in
respect of all or any part of a borrower's distribution area and
the issue of the license is likely to have a material adverse
effect on the borrower; (iv) a License Holder receives any notice
of revocation of a license; (v) an administrator is appointed to
all or any part of the business of a License Holder under the Gas
Industry Act 1994, or the Electricity Industry Act 1993 or any
corresponding legislation in a jurisdiction other than Victoria,
Australia; (vi) the receipt by a License Holder of a notice of
intention to serve a provisional or final enforcement order or
the receipt by a License Holder of a provisional or final
enforcement order under the Office of the Regulator-General Act
1994 or any corresponding legislation in a jurisdiction other
than Victoria, Australia; (vii) a material clause in a License is
or becomes wholly or partly void, voidable or unenforceable, or
is claimed to be so by TXU Australia or its affiliates or by
anyone on their behalf and, if capable of remedy, that state of
affairs is not remedied within 10 business days of TXU Australia
or its affiliates becoming aware of it; or
o (LEGISLATION): any legislation is passed or amended (including,
without limitation, any amendment to the Gas Industry Act 1994,
the Electricity Industry Act 1993, the Office of the
Regulator-General Act 1994) which has a material adverse effect
on the ability of TXU Australia or any of its material
subsidiaries to fulfill its obligations under the DCT, carry out
its business as it is being conducted or on the rights of the
Senior Lenders under the DCT.
Various Group Companies have restrictions imposed under the terms of
the DCT on their ability to raise further debt. Certain exceptions include
transactional banking facilities. TXU Australia Group has agreed not to grant
any further security interests over any of their assets except permitted
security interests.
SUBORDINATED DEBT
TXU Australia and Eastern Energy entered into a Subordinated Facility
Agreement dated February 24, 1999 to provide the balance of the funds required
to pay the purchase price for the Westar and Kinetik Energy assets and
businesses. This facility matures on June 30, 2000. Under this agreement, TXU
Australia can borrow up to A$363 million and Eastern Energy can borrow up to
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<PAGE>
A$50 million. The breakdown of amounts owing to the lenders (Citibank, N.A., BA
Australia Limited and Westpac Banking Corporation) as of February 29, 2000 was
as follows:
o TXU Australia - A$363 million (US$220 million) and
o Eastern Energy - A$50 million (US$30 million).
This facility is guaranteed by TXU Corp. At February 29, 2000, the
interest rate on this facility was 7.04% per annum.
OTHER TXU AUSTRALIA GROUP COMPANIES' DEBT FACILITIES
Eastern Energy had the following debt in place at February 29, 2000, in
addition to the debt described above under "SUBORDINATED DEBT."
o Commercial paper - A$338 million (US$205 million) and
o Senior Notes - US$350 million swapped into A$483 million.
At February 29, 2000, the weighted average interest rates on the
commercial paper and senior notes were 5.71% and 6.20%, respectively, per annum.
The terms of the DCT require that Eastern Energy fully repay amounts
outstanding under its commercial paper program by May 24, 2000.
TXU Australia has established a A$750 million (US$455 million)
combined short-term/medium-term note program, primarily aimed at the Australian
market. At February 29, 2000, there was no outstanding debt under these
arrangements. It is envisaged that notes issued under this program will fully
replace Eastern Energy's commercial paper program by May 24, 2000.
TXU Australia is also planning to replace Eastern Energy's existing
Senior Notes with debt at the TXU Australia level. TXU Australia will offer to
exchange (1) any and all of Eastern Energy's 6.75% Senior Notes due 2006 for TXU
Australia Senior Notes and (2) any and all of Eastern Energy's 7.25% Senior
Notes due 2016 for TXU Australia Senior Notes in the aggregate principal amount
of US$350 million, upon the terms and subject to the conditions to be set forth
in an offering memorandum and accompanying transmittal letters. It is
contemplated that the exchange offer would be exempt from registration pursuant
to Rule 144A promulgated under the Securities Act of 1933, as amended. The TXU
Australia Senior Notes will be issued under and be entitled to all of the rights
and benefits of, and subject to the limitations under, a new indenture to be
entered into between TXU Australia and The Bank of New York. TXU Australia
cannot predict the level of success of the exchange offer or the extent of its
indebtedness at the conclusion of the exchange.
TXU AUSTRALIA' S PARTNERSHIP DEED AND THE VICTORIAN PARTNERSHIP ACT
The liability of each of the limited partners under the partnership
deed is generally limited to the partner's partnership interest in TXU
Australia, together with the amount of any capital contribution remaining to be
paid by such partner. The limitation on the liability of each limited partner
extends to any obligation incurred in connection with the conduct of the
partnership business outside of the State of Victoria. AGP as the general
partner of TXU Australia is generally liable for claims against TXU Australia.
AGP is a limited liability company with nominal capitalization.
TXU Australia will continue for so long as the partnership business is
carried on or until the general partner decides to dissolve the partnership.
However, the general partner cannot dissolve the partnership while the DCT
remains in place except with the consent of the Trustee under the DCT. See
- -"CAPITALIZATION OF TXU AUSTRALIA - SENIOR DEBT FUNDING" and "----SUBORDINATED
DEBT." In addition, the partners have agreed that TXU Australia will not be
dissolved upon the happening of any of the events set out in the Victoria
Partnership Act.
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TXU Australia will dissolve and commence winding up and liquidating
generally upon an insolvency of a partner, provided however, that dissolution
will not occur, and TXU Australia will not be required to be wound up, if within
90 days after the insolvency occurs, the general partner gives notice in writing
to all partners of the continuation of TXU Australia, at a time when there is at
least one general partner and one limited partner to continue the partnership
business.
A limited partner cannot dissolve TXU Australia by notice.
A partner may dispose of or encumber the whole or any part of its
interests in TXU Australia only:
o with the prior written consent of the other partners; and
o in accordance with the DCT.
To acquire an interest in TXU Australia or any of its property a new
partner must execute a deed in favor of the existing partners in the form
required by the general partner.
A new partner in TXU Australia cannot be added without the prior
written consent of the partners and the Trustee under the DCT.
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<PAGE>
USE OF PROCEEDS
TXU Australia will use the proceeds from the issuance of the JUMPS in
the following manner:
o to refinance short-term debt including short-term debt estimated
to be A$413 million (US$250 million) outstanding plus accrued
interest to June 30, 2000 under subordinated facilities provided
to TXU Australia and Eastern Energy by Citibank, BA Australia
Limited and Westpac Banking Corporation to assist in the
acquisition of the gas distribution and retail assets and
business of Westar and Kinetik Energy from the Victorian
Government (see GENERAL OVERVIEW OF TXU AUSTRALIA -
"CAPITALIZATION OF TXU AUSTRALIA - SUBORDINATED DEBT"
for a more detailed description of the debt being repaid with
the proceeds of the JUMPS); and
o to the extent there is excess, to repay short-term debt
facilities.
CAPITALIZATION
The following table describes the actual consolidated capitalization
of TXU Australia Group at December 31, 1999, and the consolidated capitalization
of TXU Australia Group adjusted to reflect the issuance of the JUMPS. Amounts
have been converted at the Noon Buying Rate on March 31, 2000 of A$1.00 =
US$0.6062. This table should be read in conjunction with SUMMARY -- "SELECTED
CONSOLIDATED FINANCIAL INFORMATION," MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS and the CONSOLIDATED FINANCIAL
STATEMENTS and accompanying notes of TXU Australia Group included elsewhere in
this prospectus. Except as disclosed in the "As Adjusted" columns, there have
been no material changes in the capitalization of TXU Australia Group since
December 31, 1999.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
(MILLIONS OF AUSTRALIAN OR US DOLLARS, EXCEPT PERCENTAGES (UNAUDITED))
- ------------------------------- -------------- --------------- --------------- ------------- ------------
AS ADJUSTED
- ------------------------------- -------------- --------------- --------------- ------------- ------------
OUTSTANDING AT
DECEMBER 31, 1999 AMOUNT PERCENTAGE
- ------------------------------- -------------- --------------- --------------- ------------- ------------
A$ US$ A$ US$ %
- ------------------------------- -------------- --------------- --------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Long-term debt,
less amounts due currently A$1,933 US$1,172 A$1,933 US$1,172 57%
- ------------------------------- -------------- --------------- --------------- ------------- ------------
JUMPS A$0 US$0 A$495 US$300 15%
- ------------------------------- -------------- --------------- --------------- ------------- ------------
Owner's equity A$948 US$575 A$948 US$575 28%
- ------------------------------- -------------- --------------- --------------- ------------- ------------
TOTAL Capitalization A$2,881 US$1,747 A$3,376 US$2,047 100%
- ------------------------------- -------------- --------------- --------------- ------------- ------------
</TABLE>
In addition, at December 31, 1999, TXU Australia Group had A$1,280
million (US$776 million) of short-term debt outstanding on a consolidated basis,
including A$413 million (US$250 million) owing under the subordinated facilities
agreement provided to TXU Australia and Eastern Energy.
The proceeds from the issuance of the JUMPS (A$495 million) (US$300
million), less estimated issuance costs including underwriting discounts of A$17
million (US$10 million) will be used to repay principal and interest owing under
the subordinated facilities agreement comprising A$413 million (US$250 million)
principal plus A$15 million (US$9 million) accrued interest. The balance of the
funds raised from the JUMPS issue will be used to repay other short-term debt
facilities. When adjusted to reflect these transactions, consolidated short-term
debt equals approximately A$817 million (US$495 million).
24
<PAGE>
FORWARD-LOOKING STATEMENTS
Certain statements contained in this prospectus are forward-looking statements.
We have based these forward-looking statements on our current expectations and
projections about future events and on assumptions we believe to be reasonable.
These forward-looking statements are not statements of historical fact.
Forward-looking statements involve risks, uncertainties and assumptions that may
cause our actual financial condition, results of operations, business or
performance to be materially different from the expectations of future financial
condition, results of operations, business or performance we express or imply in
any forward-looking statements. Some of the important factors that could cause
our actual financial condition, results of operations, business or performance
to differ materially from our expectations include:
o general economic and business conditions in Australia and in the
areas serviced by TXU Australia's principal operating
subsidiaries;
o unanticipated changes in interest rates, in rates of inflation,
or in foreign exchange rates;
o prevailing governmental, statutory, regulatory or administrative
policies and initiatives affecting TXU Australia, its
subsidiaries or the Australian or Victorian electric and gas
industries;
o general industry trends;
o competition;
o power and natural gas costs and availability;
o changes in business strategy, development plans or vendor
relationships;
o availability, terms and deployment of capital and capital market
conditions, including the amount of TXU Australia's outstanding
indebtedness;
o availability of qualified personnel;
o changes in, or the failure or inability to comply with,
governmental regulations, including, among other things,
environmental regulations;
o changes in tax laws or the ability of TXU Australia Group to
utilise its carryforward tax losses;
o weather conditions and other natural phenomena;
o unanticipated population growth or decline, and changes in market
demand and demographic patterns;
o access to adequate natural gas and electricity transmission
facilities to meet changing demand;
o unanticipated changes in operating expenses and capital
expenditures and the availability and terms of any financing
thereof;
o counterparties to financial hedging agreements upon which TXU
Australia relies to hedge various market risks not being able to
meet their obligations under those agreements;
o changes in technology used and services offered by TXU Australia
and its competitors;
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<PAGE>
o force majeure events such as interruption of gas or electricity
supplies; and
o other factors described in this prospectus.
Any forward-looking statements speak only as of the date of this
prospectus. TXU Australia does not undertake any obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
26
<PAGE>
OVERVIEW OF THE GAS AND ELECTRIC INDUSTRIES IN VICTORIA, AUSTRALIA
GENERAL
The gas and electric industries in the State of Victoria, Australia
have historically been State-owned, vertically-integrated enterprises (except
for private enterprise gas producers), controlling the production, transmission,
distribution and ultimate sale of gas and electricity to end-users. Beginning in
the early 1990s following a pronouncement towards competitive markets at the
national level, the State of Victoria began the restructuring and privatization
of the electric industry to prepare for a fully competitive market. More
recently, Victoria has restructured and privatized the gas industry in the same
manner.
In moving towards a fully-competitive market, the Victorian Government
has established a phase-in schedule for electric and gas customers to become
"contestable," or free to choose their own gas or electricity retail provider.
Generally, the larger industrial and commercial customers are the first to
become contestable with residential customers becoming contestable by January
2001, in the case of electricity, and September 2001, in the case of gas.
The following table sets forth the timetables for customer
contestability:
VICTORIAN ELECTRICITY AND GAS CONTESTABILITY TIMETABLES
<TABLE>
<CAPTION>
- --------------------- --------------- -------------- --------------- --------------
ELECTRICITY GAS
------------------------------ ------------------------------
DATE CUSTOMER SIZE % OF MARKET(1) CUSTOMER SIZE % OF MARKET(1)
- --------------------- --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Currently contestable >160 MWh/year 49% >100,000 GJ/year 39%
September 1, 2000 n/a >5,000 GJ/year 51%
January 1, 2001 All customers 100% n/a
September 1, 2001 n/a All customers 100%
- --------------------- --------------- -------------- --------------- --------------
</TABLE>
(1) Estimated cumulative percentage of the market by volume
In December 1998, the National Electricity Market was established by
Queensland, Victoria, New South Wales, South Australia, and the Australian
Capital Territory. It is expected that Tasmania will join the National
Electricity Market when an undersea cable is built between the Victorian
Electricity Grid and the Tasmanian Electricity Grid. The purpose of the National
Electricity Market is to establish a single interstate wholesale market for
electricity, characterized by non-discriminatory open access to transmission and
distribution assets without regard to State borders.
GAS INDUSTRY
GAS INDUSTRY PARTICIPANTS. With the exception of the private
enterprise gas producers, all areas of the gas industry in Victoria have
historically been run by government-owned entities, the Gas and Fuel
Corporation, and later GASCOR. After a series of reforms, formal disaggregation
of the old government entities occurred on December 11, 1997 when the gas
industry was formally separated into various legal entities with specific
allocated assets and functions.
PRODUCERS. The Gippsland basin in Bass Strait, Victoria contains most
of Victoria's natural gas reserves. The Gippsland basin production permits are
held by a joint venture between BHP Petroleum (Bass Strait) Pty Ltd. (BHPP) and
Esso, with Esso as the principal operator. The balance of Victoria's gas
requirements are supplied from gas reserves in the Otway basin in western
Victoria, or is carried into Victoria through the interconnect pipeline between
Victoria and New South Wales.
TRANSMISSION. Gas is piped from the offshore fields and conveyed
through raw gas pipelines to the processing facility operated by Esso at
Longford in the southeast of Victoria. This gas is then delivered into the high
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<PAGE>
pressure transmission pipeline owned since privatization by GPU GasNet (formerly
Transmission Pipelines of Australia).
DISTRIBUTION. The gas is transferred from the high pressure
transmission system into the lower pressure distribution system, from which it
is conveyed to the customer's premises. The distribution systems in Victoria are
owned by three privatized gas distributors: Westar, Envestra (formerly Stratus
Networks) and Multinet Partnership (formerly Multinet Gas).
RETAIL. There are three privatized gas retailers: Kinetik Energy,
Boral Energy (formerly Energy 21) and Ikon Energy. Each of these three gas
retailers is entitled to sell gas to non-contestable customers located within
its franchise territory, and to contestable customers anywhere in Victoria.
Additionally, other persons who have been granted a gas retail license
(described below) are permitted to sell gas to contestable customers anywhere in
Victoria. As of February 29, 2000, eight additional entities have been issued
retail licenses by the ORG.
RELATIONSHIPS BETWEEN INDUSTRY PARTICIPANTS. Generally, the gas
industry in Victoria operates in the following manner. The three initial
retailers purchase gas under contracts with GASCOR, which in turn acquires gas
from Esso/BHPP (one other retailer has also acquired an entitlement to purchase
gas from GASCOR). The retailers then sell and purchase any excess gas purchased
under these contracts in the Victorian wholesale gas market operated by
Victorian Energy Networks Corporation (VENCorp). Other persons who have gas
retail licenses but do not have contracts with the producers for purchase of
gas, are also able to register as market participants in the wholesale gas
market, and purchase gas in the market. Retailers then pay for the use of the
transmission and distribution systems and charge their customers for the supply
and sale of gas. These commercial relationships are regulated under a series of
legislative acts, regulations and legal documents which form the regulatory
framework for gas industry participants, as described below.
CROSS-OWNERSHIP PROVISIONS. Complicated cross-ownership restrictions
are present in the Victorian gas industry. In particular, the ability of
substantial producers, such as Esso and BHP, and persons who have a 20% interest
in substantial producers, to own other gas industry entities is heavily
regulated. The ability of the transmission company, GPU GasNet, and VENCorp to
own interests in other gas industry bodies is also regulated.
The following cross-ownership provisions apply to distributors such as
Westar and to individuals, corporations or other entities who have an interest
of more than 20% in such distributors. Generally, such an entity:
o must not own a 20% interest in GPU GasNet;
o must not own interests in retailers greater than a 20% interest
in one retailer or more than a 5% interest in more than one other
retailer; and
o must not own more than a 20% interest in one other distributor or
more than a 5% interest in more than one other distributor.
Analogous cross-ownership provisions apply to retailers such as
Kinetik Energy, and to individuals, corporations or other entities who have an
interest of more than 20% in such retailers. Generally, such an entity:
o must not own a 20% interest in GPU GasNet;
o must not own interests in distributors greater than a 20%
interest in one distributor or more than a 5% interest in more
than one other distributor; and
o must not own more than a 20% interest in one other retailer or
more than a 5% interest in more than one other retailer.
The interest of a person in a gas company is traced through interposed
entities by the application of various tracing rules promulgated under gas
industry legislation. There are also rules that would result in a person being
deemed to have an interest in a gas company if that person, either itself, or
through the tracing rules, is entitled to voting shares in the gas company or
28
<PAGE>
shares in the gas company conferring a right to a dividend or other property, or
if the person is able, either alone or with other persons, to dominate or
control the gas company or its financial and operating policies, management or
other activities.
However, commencing July 1, 2002, the ORG may permit cross-ownership
among gas industry participants if it is satisfied that the resulting
cross-ownership would not substantially lessen competition in the Victorian gas
market.
The following key governmental and regulatory bodies play a major role
in the gas transmission, distribution and retail industries in Victoria:
o the Office of Gas Safety, the statutory authority responsible for
monitoring gas safety standards;
o the Office of the Regulator-General, the regulatory body
primarily responsible for regulating gas industry licensing,
distribution pricing and retail pricing for franchise customers
and referred to as the ORG;
o VENCorp, the State-owned market and transmission system operator;
and
o GASCOR, the State owned entity which continues to be primarily
responsible for the sale of gas to non-contestable customers,
although it has appointed Kinetik Energy, Boral Energy and Ikon
Energy to act as its agents for the sale of that gas within their
respective franchise territories.
REGULATORY FRAMEWORK. Entities operating in the gas industry in
Victoria operate under a series of legislative acts, regulations and legal
documents which form the regulatory framework. This regulatory framework is
outlined below.
GAS INDUSTRY ACT (VIC) 1994. The Gas Industry Act (Vic) 1994 is the
primary legislation governing the reformed gas industry in Victoria. It sets up
the Victorian regulatory framework, which complements the national regulatory
framework (see NATIONAL ACCESS REGIME below). In particular, it contains the
provisions relating to the privatization of the gas industry, establishes the
functions of the key regulatory bodies in the industry and provides for the
establishment of the key regulatory instruments taking effect under the Act,
including the Market and System Operations Rules, the Victorian Gas Industry
Tariff Order and the distribution and retail licenses. It also contains industry
cross-ownership restrictions and government emergency powers.
OFFICE OF THE REGULATOR-GENERAL ACT (VIC) 1994. This Act establishes
the ORG, which has general regulatory authority over regulated industries in
Victoria, including gas distribution and retailing. The ORG has the power to
issue licenses authorizing the distribution and retailing of gas in Victoria,
and to enforce and administer the various codes applicable to these licenses.
The ORG also administers the application of the Victorian Gas Industry Tariff
Order to gas distributors and retailers.
MSO RULES. An integral part of the reform of the Victorian gas
industry was the establishment of a gas market administered by VENCorp. The
market comprises a net pool through which participants in the market sell and
purchase excess gas purchased under contract with the gas producers. The Market
and System Operations (MSO) Rules comprise the market rules for the Victorian
gas market to be administered by VENCorp, and also contain rules relating to
technical operation of the gas transmission system.
DISTRIBUTION LICENSES. The Gas Industry Act provides that a person
must not distribute gas without being issued a distribution license by the ORG.
The license requires distributors to comply with all relevant laws and any
guidelines issued by the ORG. In particular, the license holder must comply with
the Distribution System Code issued by the ORG. This Code prescribes minimum
standards for the operation and use of the distribution system including
requirements for the installation and maintenance of connections and metering
installations, disconnections and reconnections and the provision of metering
data.
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<PAGE>
TARIFF ORDER. The Victorian Gas Industry Tariff Order 1998 regulates
the prices that the transmission company and distribution companies such as
Westar may charge for the use of their systems, the tariffs VENCorp may charge
for its market and systems operations functions and the charges that retailers
such as Kinetik Energy may make for the supply and sale of gas to
non-contestable customers, including sales as agent for GASCOR.
The ORG is responsible for regulating the distribution and retail
tariffs set out in the Tariff Order. The Australian Competition and Consumer
Commission is responsible for regulating transmission tariffs.
The initial tariffs as specified in the Tariff Order are subject to a
"CPI - X" mechanism by which they are adjusted yearly during the period for
which the tariff order applies. The "CPI - X" mechanism adjusts the previous
year's tariff by a factor equal to movements in the Consumer Price Index, minus
a prescribed efficiency factor "X" which is separately determined for each
company.
Until the tariffs are reset, they may only be varied (apart from the
CPI - X formula) to allow for a pass through of certain new taxes, with the
consent of the ORG. The tariffs charged by retailers to non-contestable
customers may also be varied, with the consent of the ORG, in the case of
certain force majeure events.
The retail tariffs cease applying to a customer when that customer
becomes contestable, after which point only the transmission and distribution
tariffs remain regulated.
The distribution tariffs applying to Westar are effective until
December 31, 2002, at which time a price review process will occur prior to new
tariffs being approved by the ORG for the next five-year period. After the next
period, prices will be set for periods nominated by Westar and approved by the
ORG. See NATIONAL ACCESS REGIME below.
The Tariff Order also regulates certain other charges by distributors
for "excluded services", that is, services other than gas transportation
services, such as connection or metering services or services beyond the minimum
specifications prescribed. These services are not prescriptively regulated in
the same way the "use of system" services are regulated. However, there are some
initial prices for excluded services set out in the Tariff Order and
distributors must charge these prices unless varied by the ORG. The balance of
the excluded services must be charged on a "fair and reasonable" basis.
RETAIL LICENSES. The Gas Industry Act provides that a person must not
supply gas to customers without a retail license issued by the ORG. Kinetik
Energy's license gives it the right to sell gas to non-contestable customers
within its franchise territories and to contestable customers anywhere in
Victoria. It obligates Kinetik Energy to supply non-contestable customers upon
request and to purchase enough gas to meet the requirements of those customers.
It also imposes other obligations on Kinetik Energy relating to rights of
non-contestable customers and procedures to be followed by Kinetik Energy when
customers become contestable.
The retail license also requires the license holder to comply with all
relevant laws and any guidelines issued by the ORG. In particular, the retailer
must comply with the Victorian Gas Customer Service Code, which prescribes a
minimum level of gas customer service. This code focuses on the direct
relationship between the customer and supplier. The distributors are subject to
conditions in the code with respect to the distribution assets and certain
contractual arrangements between the retailer and distributor.
QUALITY MANAGEMENT SYSTEM. Various acts, regulations and codes have an
impact on gas industry safety and performance. The gas distribution companies
are required to operate pursuant to a quality management system in the key areas
of technical standards, procedures and quality assurance. The documents forming
part of this system are developed with due regard to applicable acts,
regulations, codes of practice, Australian and international standards, and
manufacturer, supplier and expert recommendations, together with the gas
companies' experience in operating a gas distribution system.
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<PAGE>
ELECTRIC INDUSTRY
ELECTRIC INDUSTRY PARTICIPANTS. Historically, the State Electricity
Commission of Victoria (SECV) was the State-owned entity responsible for most
generation activities, all of the high voltage transmission and approximately
85% of the distribution network. Eleven locally controlled entities known as
municipal electricity undertakings had responsibility for the remaining 15% of
the distribution network.
After a period of reform, the electricity industry in Victoria was
disaggregated and privatized beginning in 1995. It was separated into five
separate generation companies and five distribution/retail companies, including
Eastern Energy. The transmission system responsibilities were divided between
the privatized GPU PowerNet, which owns the high voltage transmission grid, and
the State-owned Victorian Power Exchange (VPX). VPX leased the transmission grid
from GPU PowerNet and, before the start of the National Electricity Market
discussed below, was responsible for system security and operation of the
Victorian wholesale electricity market. VPX has now merged with VENCorp, the
independent operator of the gas transmission system, and has a narrower role in
the Victorian electricity industry, being essentially responsible for
transmission system planning.
GENERATION. Most of the electricity consumed in Victoria is produced
by coal-fired power stations located in the Latrobe Valley in the southeast of
Victoria, where there are significant reserves of brown coal. Other power
required for use in Victoria is produced at two gas fired-power stations and at
hydro-electric plants and is imported over transmission lines from generators
located outside the State.
TRANSMISSION. The electricity produced by the generators is
transported by way of high voltage transmission lines. These transmission assets
are owned since privatization by GPU PowerNet.
DISTRIBUTION. At various terminal stations, electricity is transformed
from higher voltages used in the transmission system to lower voltages. It is
then transported for use at premises through the distribution systems. The
distribution systems are owned by five privatized distribution companies:
Eastern Energy, Citipower, Powercor, AGL Electricity (formerly Solaris Power)
and United Energy. Each of these entities has been allocated a territory. United
Energy, AGL Electricity and Citipower are predominantly urban-based distribution
companies covering the Melbourne metropolitan area. Powercor and Eastern Energy
are predominantly rural distribution companies, with Powercor's territory
covering western Victoria and Eastern Energy's territory covering eastern
Victoria.
RETAIL. Each of the distribution companies also holds a retail license
and may sell to franchise customers in its distribution territory and
contestable customers anywhere in Victoria. Electricity retailing activity is
also conducted by other persons who have been granted electricity retail
licenses. As of February 29, 2000, 16 additional entities have been issued
retail licenses by the ORG and are able to sell electricity to contestable
customers anywhere in the State.
RELATIONSHIPS BETWEEN INDUSTRY PARTICIPANTS. Generally, the Victorian
electricity industry works as follows. The Victorian generators sell their
electricity into the National Electricity Market operated by the National
Electricity Market Management Company (NEMMCO). SEE NATIONAL ACCESS REGIME -
ELECTRIC INDUSTRY. Electricity retailers purchase electricity from the National
Electricity Market. Retailers also pay for use of the transmission and
distribution systems by their customers. The retailers then charge their
customers for the supply and sale of electricity. These commercial relationships
are regulated by the regulatory instruments described below.
CROSS-OWNERSHIP PROVISIONS. The Electricity Industry Act 1993 contains
electricity industry cross-ownership restrictions. Generally, a person
(including an individual, corporation or other entity) who has an interest of
over 20% in one licensed Victorian electricity distribution, transmission or
generation company (electricity company), cannot have a 20% or greater interest
in another electricity company or a 5% interest in more than two other
electricity companies. In addition, a person who has an interest of 5% or
greater in an electricity company cannot have interests of 5% or greater in two
other electricity companies.
However, commencing from July 1, 2001, the ORG may permit
cross-ownership among electric industry participants that would otherwise breach
these rules if it is satisfied that such cross-ownership would not substantially
lessen competition in the Victorian electricity market.
31
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As in the gas industry, various tracing rules are provided for in the
Electric Industry Act which operate to trace the interest of a person in an
electricity company through interposed entities. This Act also contains rules
that deem a person to have an interest in an electricity company if that person,
either itself, or through the tracing rules, is entitled to voting shares in the
electricity company or shares in the electricity company conferring a right to a
dividend or other property, or if the person is able, either alone or with other
persons, to dominate or control the electricity company or its financial and
operating policies, management or other activities.
In addition, the cross-ownership restrictions prohibit an electricity
distribution company, or any person who has an interest of 20% in such a
company, from holding any entitlement to generating capacity of more than 200MW.
The following key government and regulatory bodies play a major role
in the electricity distribution and retail industries in Victoria:
o the Office of the Chief Electrical Inspector, the statutory
authority responsible for monitoring electricity safety
standards;
o the ORG, the regulatory body primarily responsible for regulating
electricity industry licensing and distribution and retail
pricing;
o VENCorp, the State-owned body responsible for transmission system
planning; and
o SECV, the State-owned entity, which retains a residual role in
respect of some elements of the industry.
REGULATORY FRAMEWORK. Entities operating in the electric industry in
Victoria operate under a series of legislative acts, regulations and legal
documents which form the regulatory framework. This regulatory framework is
outlined below.
ELECTRICITY INDUSTRY ACT 1993, AS AMENDED. The Electricity Industry
Act 1993 is the primary legislation governing the reformed electricity industry
in Victoria. It sets up the Victorian regulatory framework, which complements
the national regulatory framework (see NATIONAL ACCESS REGIME below). In
particular, it contains the provisions relating to the privatization of the
electricity industry, establishes the functions of the key regulatory bodies in
the industry and provides for the establishment of the key regulatory
instruments taking effect under the Act, including the Victorian Electricity
Supply Industry Tariff Order and the generation, transmission, trading,
distribution and retail licenses issued by the ORG. It also contains industry
cross-ownership provisions and government emergency powers.
OFFICE OF THE REGULATOR-GENERAL ACT (VIC) 1994. This Act establishes
the ORG, which has general regulatory authority over all regulated industries in
Victoria, including the electricity industry. The ORG may issue licenses
authorizing the generation, transmission, distribution, supply or sale of
electricity and the operation of the wholesale power market. The five
distribution companies formed upon the disaggregation of the SECV, including
Eastern Energy, have each received licenses from the ORG both to distribute and
sell electricity. Kinetik Energy has also received a license from the ORG to
sell electricity.
The ORG is also responsible for administration and enforcement of the
various industry codes applicable to the licenses, and is responsible for
administration of the Victorian Electricity Supply Industry Tariff Order as it
relates to electricity distributors and retailers.
THE VICTORIAN ELECTRICITY SUPPLY INDUSTRY TARIFF ORDER. This order
sets tariffs for, among other things, use of the electricity transmission
system; use of the electricity distribution systems; transmission connection
charges; and charges that retailers may charge to those customers consisting
generally of non-contestable franchise customers.
TARIFFS CHARGED TO FRANCHISE CUSTOMERS. As an electricity retailer,
Eastern Energy may charge its franchise customers no more than the maximum
retail tariffs set out in the Tariff Order, until those customers become
contestable and no longer subject to Tariff Order protection. These prices
include all grid charges and energy costs, and they may be adjusted only if the
ORG approves a pass through of indirect taxes attributable to the supply of
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electricity, such as a goods and service tax or force majeure events. They are
adjusted annually according to a CPI-X formula.
PRICES CHARGED TO CONTESTABLE CUSTOMERS. Eastern Energy's retail
energy charges to contestable customers are not generally subject to price
regulation. However, elements that make up those charges are regulated. In
particular, charges for connection to and use of the transmission grid are
regulated under the Tariff Order. Charges for use of the distribution system are
also regulated. This means that Eastern Energy, in its role as a distributor,
must charge for use of its distribution network no more than the distribution
tariffs set out in the Tariff Order.
Upon full retail contestability, the regulatory framework currently
provides that all customers will lose the protection of the regulated retail
tariffs (and only the transmission and distribution components will be
regulated). However, a new government was elected in Victoria in late 1999.
Prior to the election, those now constituting the new government proposed to
extend retail tariff protection for domestic customers indefinitely beyond
contestability. The new government has not yet made any moves to implement this
proposal through changes to the Tariff Order or to legislation.
DISTRIBUTION TARIFFS. These distribution tariffs were originally
calculated to permit each distributor to recover costs and a rate of return
thereon. Now, apart from adjustments which may be approved by the ORG for
changes in taxes, these distribution tariffs are adjusted annually according to
a CPI-X formula until they are reset by the ORG. This reset will not occur
before January 1, 2001. In resetting the tariffs, the Tariff Order provides that
the ORG is required to, among other things:
o use CPI-X price capping and not rate of return regulation;
o set the new tariffs for a period of at least 5 years;
o provide each distributor with incentives to operate efficiently;
o ensure a fair sharing of the benefits achieved through efficiency
gains between customers and distribution businesses; and
o ensure appropriate incentives for capital expenditure and
maintenance in the distributor's distribution systems.
The ORG must also consider the provisions regulating distribution
prices contained in the National Electricity Code. See NATIONAL ACCESS REGIME -
ELECTRICITY below.
Charges that Eastern Energy may impose for connections to its
distribution system are not regulated by the Tariff Order, but Eastern Energy is
required by its distribution license to charge a "fair and reasonable" charge
regulated by the ORG.
LICENSES. The Electricity Industry Act 1993 requires entities to
obtain a license from the ORG before they may engage in generation,
transmission, administration of a wholesale market, distribution, trading or
retailing of electricity in Victoria. As an electricity distributor and
retailer, Eastern Energy has been issued both a distribution license and a
retail license under this Act. Kinetik Energy has also been issued an
electricity retail license.
DISTRIBUTION LICENSE. The distribution license contains rules relating
to the distributor's obligations to supply and connect certain persons to its
network; requires distributors to act as the "retailer of last resort" if the
retailer servicing a contestable customer in their distribution territory
becomes unable to provide that customer with electricity; regulates certain
charges of the distributor not regulated by the Tariff Order; requires the
distributor to co-operate with the ORG in the development of standards and
procedures; sets out information provision and accounting separation
requirements; and requires the distributor to comply with all laws and relevant
industry codes.
RETAIL LICENSE. The retail license issued to Eastern Energy contains
rules relating to the retailer's obligation to supply non-contestable customers
within its franchise territory and to billing of customers; requires Eastern
Energy to co-operate with the ORG in relation to the development of standards
and procedures; sets out information provision and accounting separation
requirements; and requires Eastern Energy to comply with all laws and relevant
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industry codes. A retail license holder can sell electricity to any contestable
Victorian retail customer.
CODES. In addition to complying with the National Electricity Code
(see NATIONAL ACCESS REGIME-ELECTRIC INDUSTRY below), electricity distributors
and retailers are required to comply with the following codes:
SYSTEM CODE. This code sets out requirements to ensure the secure
operation of the Victorian power system; requirements relating to the operation
of the transmission network and equipment connected to the transmission network;
and design and technical requirements and quality of supply standards for
connection points to the transmission network. It also specifies performance
requirements required of industry participants to ensure that the technical
performance of the Victorian Power System is adequate. On January 1, 2001,
responsibility for regulation of the electricity transmission network will pass
from the ORG to the Australian Competition and Consumer Commission (ACCC).
Accordingly, the System Code will cease to have effect on that date. The ORG is
currently redrafting the System Code so that it no longer overlaps with the
National Electricity Code (see NATIONAL ACCESS REGIME) and so that it simply
contains transitional provisions necessary for the transfer of jurisdiction of
the transmission network between the two regulators.
DISTRIBUTION CODE. This code regulates the distribution of electricity
by distributors; the connection of customers' electrical installations to the
distribution system; the connection of embedded generation units to the
distribution system and the transfer of electricity between distribution
systems.
SUPPLY AND SALE CODE. This code forms the customer contract between
non-contestable customers and the electricity supplier which supplies them. It
sets out the minimum conditions under which a supplier may supply and sell
electricity to such customers. It contains provisions relating to information
provision; guaranteed service levels; connection and disconnection of supply;
billing and complaints; privacy and confidentiality; reliability of supply and
access to the supply address.
RETAIL TARIFF METERING CODE. This code contains technical metering
provisions in relation to meters designed to measure and record the amount of
electricity supplied from the distribution system to customers. It regulates
standards and installation of new metering equipment; the operation and
maintenance of new and existing metering equipment and establishes obligations
in respect of metered data.
ELECTRIC NETWORK PRICE REVIEW. Initial tariffs for use of the
electricity distribution network were first set in 1995 for the period ending
December 31, 2000, at which time they will be reset by the ORG in accordance
with principles set out in the Tariff Order described above. Tariffs will be
reset for a further period of 5 years, commencing on January 1, 2001.
The process for the review of the distribution network tariffs
commenced in 1998 with the issue by the ORG of a series of consultation papers.
In December 1999, Victoria's five electricity distribution businesses
each lodged with the ORG their price and service proposals for the 2001-05
regulatory period. Eastern Energy lodged a "base case" submission and an
alternative submission based on higher performance standards. This was followed
by a presentation by Eastern Energy to the ORG and a series of public meetings
within its license area held to inform customers about the price review process,
present the key points in the submissions and seek feedback about other issues
or concerns customers might have in relation to the submission. In mid-December
the ORG released a paper summarizing the key points from the submissions of all
distributors.
In February 2000, the ORG released an Issues Paper for the 2001
Electricity Distribution Price Review. The purpose of the Issues Paper was to
identify some of the major issues that the ORG considers warrant public
examination, comment and further analysis during the price review process. The
ORG states that the aim of its Issues Paper is to highlight some of the
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<PAGE>
important features of the distributors' proposals as well as comparisons with
past trends, current performance, external benchmarks, other regulatory
decisions and independent consultants' views. The Issues Paper does not purport
to represent the ORG's view on the issues. The ORG has called for public comment
on the distributors' submissions and on the matters raised in the Issues Paper.
On March 15, 2000, Eastern Energy submitted a response to the ORG's
Issues Paper addressing concerns raised in the Issues Paper and reiterating key
information from its December submission.
The current timetable to complete the price review is as follows:
May 17, 2000 Release date for draft ORG report
July 14, 2000 Deadline for submissions on draft report
July - August 2000 Public forums to be convened by the ORG
September 15, 2000 Final decision issued by the ORG
January 1, 2001 Implementation
The ORG proposes to utilize a "building block" approach to determine
the tariffs. Under this approach, the required revenue of each distribution
business will be determined based on a return on the regulated asset base,
depreciation of the regulated asset base, forecast capital expenditures during
the second regulatory period and a carry over of efficiency gains from the first
regulatory period. The aggregate revenue so determined is then translated into
tariffs on the basis of demand forecasts. Once established as described above,
the tariffs are not retrospectively adjusted for either changes in demand
(except to the extent of forecasting errors) or for actual capital or operating
expenditures, so that the distribution business retains the benefit, at least
for the current regulatory period and perhaps longer, of growth in demand
(subject to the exact tariff control methodology adopted) and capital and
operating expenditure savings.
There is a risk that the ORG could determine tariffs for the next 5
years significantly below the current levels, particularly since interest rates
in Australia, which are reflected in the return on the regulated asset base, are
presently significantly lower than when distribution network tariffs were
initially set.
NATIONAL ACCESS REGIME
GAS INDUSTRY. On July 1, 1999, the national regulatory regime for
regulation of access to gas transmission and distribution systems was
implemented in Victoria. This regime is comprised of the Gas Pipelines Access
Law and the National Third Party Access Code for Natural Gas Pipeline Systems,
otherwise known as the National Access Code.
The Gas Pipelines Access Law sets up a regime for arbitration of
access disputes; deals with applications for classification of pipelines as
transmission or distribution pipelines; deals with the jurisdiction in which
cross-jurisdictional pipelines will be regulated; deals with amendments to the
National Access Code; sets out the procedures to be taken in respect of breaches
of the Gas Pipelines Access Law or the National Access Code, and for
administrative review of decisions of the regulators; and contains provisions
dealing with the regulators' powers to obtain information and restrictions on
the disclosure of confidential information.
The National Access Code regulates national gas pipeline access. It
deals with the mechanisms by which pipelines become subject to the Code;
requires the owners or operators of those pipelines to produce an "access
arrangement" accepted by the relevant regulator outlining services and tariffs
applicable to the pipeline; sets out the pricing principles on which those
tariffs must be based; sets out requirements for pipeline owners to
"ring-fence," or separate, their pipeline ownership business from their retail
business and sets out the mechanism for arbitration in the event of access
disputes. The ORG is the relevant regulator of the National Access Code in
Victoria for distribution pipelines.
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<PAGE>
Westar's pipelines transferred to it from GASCOR are subject to the
National Access Code. However, Westar has an existing access arrangement
approved by the ORG that applies until December 31, 2002, which is deemed to be
an access arrangement for the purposes of the National Access Code.
Westar's access arrangement provides that it will supply distribution
services in accordance with the Distribution Code described above. The access
arrangement further provides that Westar will charge for these services in
accordance with the tariffs for tariffed distribution services set out in the
Victorian Gas Industry Tariff Order described above. With the exception of
extensions that service more than 5,000 customers, Westar's access arrangement
will apply to any extensions or expansions of the system. Pricing arrangements
applicable to these extensions or expansions are set out in the access
arrangement.
Under the National Access Code, Westar is able to specify in an access
arrangement certain "fixed principles" that will apply to the pricing provisions
of its next access arrangement. The fixed principles that will apply to Westar's
next access arrangement, which will apply for five years from January 1, 2003,
are set out in the Victorian Gas Industry Tariff Order, and include a
requirement for the regulator to:
o use CPI-X and not rate of return regulation;
o ensure a fair sharing of efficiency gains between customers and
the distribution business;
o have regard to the cost of supplying the services which the
distributor supplies; and
o have regard to any relevant benchmarks in comparable private
sector industries.
ELECTRIC INDUSTRY. On December 13, 1998, the National Electricity
Market commenced operation in Australia. The National Electricity Market is a
wholesale market for the sale of electricity which is combined with an open
access regime for the use of physical electricity networks within the
participating jurisdictions of Queensland, New South Wales, Victoria, South
Australia and the Australian Capital Territory. It is expected that Tasmania
will join the National Market when an undersea cable is built between the
Victorian Electricity Grid and the Tasmanian Electricity Grid. It is unlikely
that Western Australia or the Northern Territory will participate in the
National Electricity Market, given the large physical distance separating them
from the eastern states.
The rules for participation in the National Electricity Market are
found in the National Electricity Code. In Victoria, the National Electricity
Code takes effect pursuant to the National Electricity Law, which is enacted as
a law of Victoria under the National Electricity (Victoria) Act 1997. As is the
case with the Gas Pipelines Access Law, the same law and code have been enacted
in each jurisdiction.
The national scheme has involved the establishment of an independent
operator, NEMMCO, and an independent body which administers the code itself, the
National Electricity Code Administrator (NECA). These bodies are companies owned
by the participating jurisdictions.
The National Electricity Market currently operates a wholesale
electricity pool into which all electricity output from generators within
Victoria, New South Wales and South Australia is centrally pooled and scheduled
to meet the electricity demand of those States. NEMMCO matches the supply and
demand requirements among participants in the National Electricity Market.
Generators bid their electricity into the market, offering NEMMCO different
prices for the generation levels. In turn, market customers submit bids and
quantities of demand they wish to be scheduled. These are evaluated and met by
NEMMCO on the basis of minimizing the cost of meeting demand. Generators are
paid the market clearing price for the electricity they sell into the market.
The clearing price is the price at which supply and demand is matched as
calculated by NEMMCO and measured at half hour intervals each day. The clearing
price is often referred to as the "spot price".
With limited exception, all electricity generated must be traded in an
electricity pool. Thus, all significant generators are pool participants. Each
electricity supplier is required to purchase electricity through a pool, unless
the electricity is purchased and consumed on the site of a generating station or
purchased from a generator too small to trade through a pool or through another
supplier who has purchased that electricity from a pool. A contestable customer
may also apply to NEMMCO to become a participant in a pool. New participants
will be admitted to a pool if they satisfy NEMMCO that they have sufficient
financial standing to meet their financial and other obligations under the rules
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of such pool and that they will be able to maintain compliance with the National
Electricity Code.
Eastern Energy, in its capacity as an electricity retailer, is
registered as a market customer for the purposes of the market established under
the National Electricity Code, and purchases its power requirements from the
National Electricity Market. It manages its risk of exposure to high prices in
this market, however, by entering into hedging arrangements with market
generators.
The National Electricity Code also contains various other rules
relating to industry technical requirements, access requirements of electricity
transmission and distribution systems and principles and methodology applicable
to the determination of transmission and distribution pricing arrangements. In
addition, this Code deals with power system security, and obligates NEMMCO to
maintain the national power system in a secure and reliable operating state.
Finally, this Code also contains technical rules relating to metering, generally
at the wholesale level.
Under the Code, each owner of an electricity transmission or
distribution system is required to lodge an access undertaking with the ACCC
affirming that the transmission and distribution company will comply with the
National Electricity Code, and with the jurisdictional regulatory requirements
of the State in which the network is located.
Accordingly, Eastern Energy, in its capacity as a distribution network
owner, has lodged an access undertaking with the ACCC to comply with the
National Electricity Code, as well as the provisions of the Victorian regulatory
regime. In this respect, the National Electricity Code contains rules to
determine which regulations take priority when jurisdictional regulatory
requirements overlap with the National Electricity Code. For example, the
distribution pricing arrangements for the next regulatory review set out in the
Victorian Electricity Supply Industry Tariff Order discussed above will take
precedence over the pricing arrangements set out in the National Electricity
Code.
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BUSINESS OF TXU AUSTRALIA GROUP
GENERAL
TXU Australia Group purchases, distributes, markets and sells
electricity and gas, primarily in the State of Victoria, Australia. The Group's
core businesses of Networks, Retail and Energy Trading are conducted through
three principal operating companies:
o EASTERN ENERGY, which purchases, distributes and sells
electricity to approximately 511,000 customers, mainly in
Victoria;
o WESTAR, which distributes natural gas to approximately 400,000
customers in central and west Victoria; and
o KINETIK ENERGY, which sells natural gas to approximately 410,000
customers in Victoria.
Since December 1995, TXU Australia Group has been pursuing a strategy
of building a diverse energy portfolio encompassing distribution, retailing and
access to peak supplies of electricity and gas. TXU Australia Group believes
this portfolio will give it a competitive advantage in the market, particularly
through economies of scale, the ability to offer both electricity and gas for
sale and diversification of risk.
In December 1995, TXU Australia Group acquired Eastern Energy for
A$2.1 billion (US$1.27 billion) in connection with the Government of Victoria's
disaggregation and privatization of the government-owned electricity industry.
In January 1997, the construction and maintenance activities of Eastern Energy
were transferred into a new subsidiary, Enetech Pty Ltd. (Enetech). In June
1997, Enetech purchased the construction business of Streamline from Melbourne
Water Corporation. In January 1998, the customer service activities of Eastern
Energy were transferred into a new subsidiary, Global Customer Solutions Pty Ltd
(Global Customer Solutions).
In November 1998, TXU Australia Group purchased the rights to
construct and operate an underground gas storage facility in western Victoria. A
company in TXU Australia Group, Western Underground Gas Storage Pty Ltd (Western
Underground Gas Storage), constructed this facility during 1999.
In February 1999, TXU Australia Group acquired Westar and Kinetik
Energy for A$1.6 billion (US$0.97 billion) in connection with the Government of
Victoria's disaggregation and privatization of the government-owned gas
industry.
In April 1999, Eastern Energy entered into a twenty year option
agreement with AES Ecogen. The agreement provides Eastern Energy with the
ability to enter into contracts with AES Ecogen that require the exchange of
cash for the difference between the amount specified in the agreement and
the then current spot price of electricity.
In January 2000, TXU Australia Group sold the construction and
maintenance activities of Enetech to Tenix Pty Ltd (Tenix), a major Australian
technology contractor for A$48.6 million (US$29.5 million), subject to the
finalization of any post-closing adjustments. At the same time TXU Australia
Group entered into a ten-year strategic contract with Tenix to provide a wide
range of operations, maintenance and construction services to the Group.
On May 4, 2000, TXU Australia Group was selected by the South
Australian government as the successful bidder for a 100 year lease of the
assets of the South Australian electricity generator, Optima Energy Pty
Ltd (Optima Energy). The purchase price, which is payable on financial
closing expected to be on June 6, 2000, is A$295 million (US$179 million).
Optima Energy operates the gas-fired Torrens Island power station in South
Australia, which has a total power generating capacity of 1,280 megawatts.
The station currently supplies 28% of South Australia's electricity needs.
TXU Australia Group intends to fund its initial investment of A$295 million
in Optima by an equity injection of A$181 (US$110 million), and the balance
debt. The debt component will be provided under a bridging loan with
Citibank maturing on December 29, 2000. This debt will rank equally with
the other senior debt described under TXU AUSTRALIA GENERAL OVERVIEW -
"Senior Debt Funding."
See MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION for additional information regarding these events.
BUSINESS SEGMENTS
Following the acquisition of the Westar and Kinetik Energy gas
businesses in February 1999, TXU Australia Group undertook a major integration
process which resulted in the Group being organized into three core businesses
for operating purposes:
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1. A NETWORKS BUSINESS SEGMENT, which
o distributes electricity to approximately 500,000 supply points
located in the eastern suburbs of Melbourne and in rural areas in
eastern Victoria; and
o distributes natural gas to approximately 400,000 supply points
located in the western suburbs of Melbourne and in rural towns in
western Victoria; and
o will operate the underground gas storage facility.
2. A RETAIL BUSINESS SEGMENT, which
o sells electricity to approximately 511,000 customers located in
the eastern suburbs of Melbourne and in rural areas in eastern
Victoria; and
o sells natural gas to approximately 410,000 customers located in
the northern suburbs and central business district of Melbourne
and in rural towns in the west of the State of Victoria.
3. An ENERGY TRADING BUSINESS SEGMENT, which
o manages electricity and gas supplies on behalf of the Retail
Business, including purchasing gas and electricity, trading
electricity and gas (both physical and derivatives) within
approved risk limits, managing electricity hedging agreements,
and managing TXU Australia Group's gas supplies from Western
Underground Gas Storage.
TXU Australia Group also operates a non-core third party CUSTOMER
SERVICE BUSINESS providing call center services, through another Group company,
Global Customer Solutions. Until January 2000, TXU Australia Group also operated
an infrastructure construction and maintenance business through a Group company,
Enetech. This business was sold in January 2000.
The following maps show Eastern Energy's electric distribution and
initial retail territories, Westar's gas distribution territory and Kinetik
Energy's initial gas retail territory.
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Maps appear here.
40
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TXU AUSTRALIA GROUP OPERATING STATISTICS
The following table provides unaudited summary statistical information regarding
the TXU Australia Group's operations. Gas results for the year ended December
31, 1999 relate only to the period from February 24, 1999, the date of
acquisition of Westar and Kinetik Energy.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997
---------- ---------- -------
NETWORKS BUSINESS
<S> <C> <C> <C>
Electricity Distributed (GWh)........................... 5,982 5,681 5,633
Gas Distributed (PJ)
Tariff V (customers < 10,000 GJ/year)............... 24 - -
Tariff D (customers > 10,000 GJ/year)............... 36 - -
--------- ---------- -------
Total gas distributed................................... 60 - -
========= ========== =======
Distribution Revenues (millions of A$)
Electricity
Use of network...................................... $ 298 $ 303 $ 287
Other............................................... 16 7 10
--------- ---------- -------
Total electricity distribution revenue.................. $ 314 $ 310 $ 297
--------- ---------- -------
Gas
Tariff V (customers < 10,000 GJ/year)............... $ 85 $ - $ -
Tariff D (customers > 10,000 GJ/year)............... 5 - -
Other.............................................. 4
--------- ---------- -------
Total gas distribution revenue.......................... $ 94 $ - $ -
--------- ---------- -------
Total distribution revenues............................. $ 408 $ 310 $ 297
========= ========== =======
RETAIL BUSINESS
Electricity Sold (GWh)
Residential......................................... 2,550 2,468 2,410
Industrial, Commercial and others................... 2,959 2,745 2,780
--------- ---------- -------
Total electricity retail sales...................... 5,509 5,213 5,190
========= ========== =======
Gas Sold (PJ)
Residential......................................... 18 - -
Industrial, Commercial and others.................... 35 - -
--------- ---------- -------
Total gas retail
sales............................................... 53 - -
--------- ---------- -------
Retail Revenue (millions of A$)
Electricity (includes use of system charges)
Residential......................................... $ 294 $ 302 $ 295
Industrial, Commercial and others................... 261 270 283
Other.............................................. 29 14 3
--------- ---------- -------
Total electricity retail
revenue............................................. $ 584 $ 586 $ 581
========= ========== =======
Gas Revenue
Residential......................................... $ 104 $ - $ -
Industrial, Commercial and others................... 96 - -
Other............................................... 2 - -
--------- ---------- -------
Total gas retail revenue ............................... 202 - -
--------- ---------- -------
Total retail revenues................................... $ 786 $ 586 $ 581
========= ========== =======
Electricity Customers (thousands)........................ 511 499 489
Gas Customers (thousands)................................ 410 - -
</TABLE>
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NETWORKS BUSINESS SEGMENT
ELECTRICITY NETWORK - EASTERN ENERGY. Eastern Energy is the holder of
an electricity distribution license, which provides the right to distribute
electricity within a defined geographical area in Victoria in accordance with a
set of conditions that attach to the license. The regulatory framework under
which the license is issued has been outlined above under OVERVIEW OF THE GAS
AND ELECTRIC INDUSTRIES IN VICTORIA, AUSTRALIA.
Virtually all customers within Eastern Energy's service territory are
connected to Eastern Energy's distribution network, whether electricity is
purchased from Eastern Energy or any other retail supplier. There is, however,
open access to the distribution network. Open access means that all retailers
licensed to sell electricity in Victoria have equal rights of access to the
distribution network. Eastern Energy has the right to charge network tariffs to
the retailers who access its network. These charges provide the primary revenue
of Eastern Energy's electricity network.
Eastern Energy's distribution area covers approximately 31,000 square
miles from the outer eastern metropolitan suburbs of Melbourne to the eastern
coastal areas of Victoria and north to the New South Wales border. The
distribution service territory encompasses three of the four fastest-growing
suburban areas in Melbourne, Australia's second-largest city. Almost 60 percent
of Eastern Energy's customers live in suburban Melbourne. See the maps on page
39.
Eastern Energy distributes electricity to approximately 500,000
customers in a distribution territory with a population of approximately 1.2
million. The region accounts for approximately 28% of Victoria's population and
approximately 35% of its total territory. Eastern Energy's service territory has
the fastest population growth rate of the service territories of the five
Victorian distribution companies, and is expected to average an annual
population growth of approximately 1.5% for the next ten years. Eastern Energy's
service territory has a predominantly residential and commercial customer base,
but also includes a diverse range of industrial customers, including logging
paper mills, food manufacturers, electricity generators, dairy producers and
other light industry.
Eastern Energy's distribution network consists of approximately 24,000
miles of distribution lines. About 89% of Eastern Energy's lines and cables are
overhead and 70% of the poles are timber. The high voltage system mainly employs
steel crossarms and porcelain insulators. Eastern Energy considers its network
to be in good condition. This has been confirmed by a 1999 ORG audit and by a
review of asset conditions by an independent consultant.
Eastern Energy has rights under Section 47 of the Electricity Industry
Act 1993 to enter upon public or private land and construct or maintain works
and take other action, subject to any conditions in its license or any code
issued by the ORG. Eastern Energy holds a range of property interests, including
freehold and leasehold interests, licenses, easements and memoranda of
understanding to grant an easement and permit access to property if required.
Field operation of the electrical system is carried out by authorized
electrical operators under direction from the Eastern Energy control center. A
System Control and Data Acquisition (SCADA) system is being installed to allow
the control center to monitor energy supply, isolate faulted sections and
restore supply to the rest of the network.
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Eastern Energy's electricity network has operated at significantly
better levels than those achieved by the State Electricity Commission of
Victoria prior to privatization. Maintenance of performance was a primary
objective of the industry reforms. Eastern Energy's network has operated within
the performance limits of the regulatory regime. The network is particularly
sensitive to related outages during storms, due to the high number of customers
living in heavily treed areas, particularly in hilly areas surrounding
Melbourne.
o GAS NETWORK - WESTAR. Westar is the holder of a gas distribution
license, which provides a right to distribute gas within a defined geographical
area in accordance with a set of conditions that attach to the license. The ORG
issued its final approval of Westar's current access arrangement in December
1998. The regulatory framework under which the license is issued has been
outlined above under OVERVIEW OF THE GAS AND ELECTRIC INDUSTRIES IN VICTORIA,
AUSTRALIA. Westar charges retailers (including Kinetik Energy) tariffs for
providing distribution services. Under the regulatory arrangements, the initial
tariffs are subject to increase or decrease based on a CPI-X formula based on
the Consumer Price Index and a multiplier that is set through December 2002.
Westar also earns revenue from other activities related to its distribution
business, some of which are regulated on a "fair and reasonable" basis.
Westar's gas distribution network includes approximately 4,800 miles
of pipelines over approximately 800 square miles in the western and northwestern
Melbourne metropolitan area, together with 19 rural localities in central and
western Victoria. As of December 31, 1999, Westar served approximately 400,000
customer connection points.
Westar's initial distribution territory covers part of both Kinetik
Energy and Ikon Energy's retail non-contestable agency areas. In addition,
Westar also transports gas for use by affiliates of Esso and BHPP at sites
within its distribution areas pursuant to the terms of a gas transportation deed
between GASCOR, Esso and BHPP. See the maps on page 39.
As part of the GASCOR disaggregation process in 1997, Westar's network
was physically isolated from the networks of Envestra and Multinet Partnership
by the severing of pipes across boundaries. Additional network pipe construction
was also carried out to ensure all areas were adequately supplied.
A SCADA system is used to monitor and/or control the operation of 82%
of the high pressure system. The SCADA system is operated from VENCorp's Fitzroy
control center.
Westar also currently operates a tempered liquefied petroleum gas
plant at Colac in western Victoria. Prior to the operation of this plant, there
has been no natural gas supply within the proximity of Colac. However, a natural
gas transmission pipeline from Geelong to Port Campbell has recently been
constructed which runs close to Colac. Under the asset sale agreement with the
Victorian Government, Westar must connect the Colac distribution system to the
natural gas pipeline and Kinetik Energy must supply customers in Colac with
natural gas by June 2001.
Since Westar's formation, gas distribution system reliability and
supply for consumers have been in excess of industry standards. Minor supply
interruptions occur from time to time due to water ingress into low-pressure
pipelines or damage by third parties to a part of the distribution system.
Westar has easements and licenses which provide it with the legal
right to access land for installation, operation and maintenance of its
distribution pipelines, city gates and also for access routes to various Westar
assets.
STRATEGIC ALLIANCE. In January 2000, at the same time that the
infrastructure construction and maintenance business of Enetech was sold to
Tenix, the Networks Business entered into a long-term strategic alliance with
Tenix. Tenix is one of Australia's leading technology contractors, with over A$1
billion (US$0.6 billion) in assets and over 4,000 employees in Australia. The
alliance agreement runs for ten years, promoting the ability for technological
and strategic investment, and targeting significant cost reduction in the
provision of operations, maintenance and capital works for the gas and
electrical networks. The structure of the agreement allows for Tenix and
the Networks Business to work together and share incentives to enhance the
efficiency of the business.
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WESTERN UNDERGROUND GAS STORAGE. In November 1998, TXU Australia
purchased the rights to construct and operate an underground gas storage
facility near Port Campbell in western Victoria. Construction was completed in
August 1999. The facility is expected to be fully operational by September 2000.
It both processes raw gas and stores processed gas. The Western Underground Gas
Storage facility is connected to the principal Victorian gas transmission system
by a recently constructed 95 mile pipeline. The pipeline is owned and operated
by GPU GasNet.
TXU Australia agreed to acquire three additional gas fields in the
Port Campbell area together with their remaining gas reserves. The acquisition
included the right and the obligation to build gas processing facilities to
process both TXU Australia's own gas and gas from other producers. Pursuant to
an Underground Storage, License and Sale Agreement with the State of Victoria,
Western Underground Gas Storage is required to keep its business separate from
the retail business of TXU Australia Group and must not offer discriminatory
terms in favor of related businesses. Western Underground Gas Storage's
customers are Kinetik Energy and other gas retailers for storage services and
gas producers for gas processing.
Western Underground Gas Storage provides TXU Australia Group with the
strategic advantage of having a ready access to an alternative supply of natural
gas at times of peak demand.
The Networks Business manages the underground storage and processing
facilities on behalf of Western Underground Gas Storage.
THE RETAIL BUSINESS SEGMENT
ELECTRICITY RETAIL. Eastern Energy has retailing licenses to sell
electricity to contestable customers in Victoria, New South Wales, Queensland,
South Australia and the Australian Capital Territory. Eastern Energy also holds
an exclusive franchise to sell electricity to retail customers with electricity
loads of less than 160 MWh/year within the same geographic area of Victoria as
its distribution license. This franchise is in effect until January 1, 2001,
when all customers become able to purchase from retailers of their choice. See
RISK FACTORS and OVERVIEW OF THE GAS AND ELECTRIC INDUSTRIES IN VICTORIA,
AUSTRALIA.
Kinetik Energy also has a retail license to sell electricity to
contestable customers in Victoria. Since the acquisition of the business by TXU
Australia, Kinetik Energy has not actively pursued new electricity sales.
COMPETITION IN ELECTRICITY RETAILING. In July 1996, customers in
Victoria with loads greater than 750 MWh/year became contestable. In July 1998,
customers with loads between 160 and 750 MWh/year became contestable. Together
these two customer classes accounted for approximately 49% of total Victorian
volumes. In both cases, the introduction of contestability was characterized by
the entry of several new retailers, significantly lower prices, and a high level
of switching between retailers. Eastern Energy estimated that it had lost a net
500 GWh/year in load as a result of contestability in both Victoria and
interstate. Because of the low profitability of these customers, volume
retention has not been a priority to TXU Australia.
The most profitable segment of the retail electricity market in
Victoria is the final class of customers with loads below 160 MWh/year, which
becomes contestable in January 2001. Based on information available from the
experience of mass market contestability in other industries and other
countries, TXU Australia expects that the competition, and therefore the
downward pressure on profit margins, will be less intense for these smaller
customers. TXU Australia expects only a limited number of these customers will
seek to change their retailer.
However, if the new Victorian government implements its pre-election
proposal to retain retail tariff protection for domestic customers after
contestability (see RISK FACTORS and OVERVIEW OF THE GAS AND ELECTRIC INDUSTRIES
IN VICTORIA, AUSTRALIA), TXU Australia expects that the impact of competition
will be reduced in the domestic market.
GAS RETAIL. Kinetik Energy has a retail license which gives it the
exclusive right to supply gas to approximately 410,000 non-contestable customers
in its geographic agency area, as agent for GASCOR, until such time as those
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customers become contestable. Its license also gives it the right to supply gas
to any customer in Victoria after contestability.
Kinetik Energy, as agent for GASCOR, serves a base of approximately
410,000 customers. Large industrial or commercial customers have individual
sales contracts. The contracted customers have the option of terminating their
contracts when they become contestable subject to paying all outstanding
charges. The portfolio of business customers currently served by Kinetik Energy
includes food manufacturing, chemicals, paper, health, hospitality and
recreation. Approximately 52% of Kinetik Energy's agency customers are connected
to Westar's distribution network, with the balance connected to Envestra's
distribution system.
COMPETITION IN GAS RETAILING. Customers consuming over 500,000 GJ/year
became contestable on October 1, 1999, and those consuming between 100,000 and
500,000 GJ/year become contestable on March 1, 2000. The remaining gas
consumers, including new connections, are supplied by GASCOR and are
non-contestable until the dates set out below.
CUSTOMER CONTESTABILITY TIMETABLE
- --------------------- ----------------- ------------- ---------------
APPROXIMATE NUMBER OF CUSTOMERS
CUSTOMER LOAD
DATE (GJ/YEAR) VICTORIA KINETIK ENERGY
- --------------------- ----------------- ------------- ---------------
Currently > 100,000 148 47
September 1, 2000 5,000-99,999 1,077 418
September 1, 2001 All others 1,337,000 395,000
- --------------------- ----------------- ------------- ---------------
Contestable customers are able to choose their own retailer of gas.
Upon contestability, Kinetik Energy ceases to supply gas as agent of GASCOR, and
commences supplying contestable customers in its own right with gas purchased
from GASCOR and other sources.
In the first stage of contestability (customers consuming over 500,000
GJ/year who became contestable on October 1, 1999), TXU Australia has been very
successful both in retaining its existing customer base and in gaining customers
from other retailers at favorable margins. Prior to October 1, 1999, Kinetik
Energy had 10 first stage customers consuming approximately 13.2 PJ/year. By
March 1, 2000 it had 14 first stage customers consuming approximately 26.1
PJ/year. While competition for customers has been fierce, the downward pressure
on margins which occurred in the early stages of electricity contestability has
been nowhere near as intense in gas. It is too early to assess the results of
the second stage of contestability (customers consuming between 100,000 and
500,000 GJ/year) which occurred on March 1, 2000.
The most profitable segment of the retail gas market in Victoria is
the final class of customers with loads below 5,000 GJ/year, which become
contestable in September 2001. As with competition in the electric industry, TXU
Australia's expectation is that the competition will be less intense for these
smaller customers.
THE ENERGY TRADING BUSINESS SEGMENT
ELECTRICITY SUPPLY MANAGEMENT. In the eastern Australia electricity
supply industry, generators over 30 MW are required to offer all of their energy
output for sale through the wholesale market. As all electricity available for
sale comes from the national market, holders of retail electricity licenses are
required to participate in and comply with rules established by the wholesale
market operators if they want to purchase electricity. Eastern Energy is a
member of the National Electricity Market.
Eastern Energy and other distribution and retail companies in Victoria
purchase most of their electric energy needs from the National Electricity
Market. The National Electricity Market is discussed in more detail in OVERVIEW
OF THE GAS AND ELECTRIC INDUSTRIES IN VICTORIA, AUSTRALIA.
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Because the spot price of electric energy can vary substantially from
time to time, Eastern Energy is exposed to the risk arising from the difference
between the fixed price at which they sell electricity and the variable price at
which they purchase electricity from the wholesale market. To manage this risk,
Eastern Energy enters into hedging contracts with electric energy generators and
others to manage exposure to such price fluctuations. See RISK FACTORS and
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The trading activities at TXU Australia Group are still being
developed. In May 1999, TXU Australia Group entered into a twenty year option
agreement with AES Ecogen which owns 966MW of gas fired generation facilities
that are typically used during peak periods of demand for electricity in
Victoria. The agreement provides TXU Australia Group with the ability to enter
into contracts with AES Ecogen, at TXU Australia Group's option, which would
require an exchange of cash for the difference between the amounts specified in
the contracts and the spot price of electricity.
TXU Australia Group also has an agreement to supply gas to AES Ecogen
to run the facilities for twenty years. TXU Australia Group made an initial
option premium payment of A$201 (US$121 million) million and is required to make
further future payments. The option is marked to market and had a fair value of
A$201 million at December 31, 1999.
ENERGY MANAGEMENT - GAS SUPPLY. Approximately 98% of Victoria's
current gas supply of 172 PJ per annum is sourced from the Bass Strait gas
producers, Esso Australia Resources Ltd and BHP Petroleum (Bass Strait) Pty Ltd,
pursuant to long term gas supply contracts with GASCOR. As a part of the gas
industry disaggregation and privatization, GASCOR has allocated to Kinetik
Energy and the other gas retailers, gas delivered under these contracts, with
Kinetik Energy entitled to a maximum of approximately 53PJ/year until 2009 at
fixed prices. Kinetik Energy initially is entitled to these gas volumes in its
agency capacity to GASCOR to supply gas to non-contestable customers. As
customers become contestable, Kinetik Energy is entitled to these volumes in its
capacity as a gas retailer to the contestable customers it serves. The gas is
pumped onshore and processed at Longford in Eastern Victoria.
Kinetik Energy also purchases gas from Boral Energy in western
Victoria to supply customers in that region. Historically, the western
transmission system was not connected to the principal transmission system
supplied from Longford. A new transmission pipeline from Geelong to Port
Campbell has recently been constructed.
In September 1998, an explosion occurred at Esso's gas processing
plant at Longford, which caused almost total loss of supply to the principal
Victorian gas transmission system for almost two weeks. The only sources of
supply were a small flow over a newly constructed interconnect with New South
Wales, plus a storage tank of liquefied natural gas at Dandenong in Melbourne's
outer suburbs.
Measures have since been taken to mitigate the risk of such an event
recurring including:
o The New South Wales interconnect has been upgraded.
o The previously isolated transmission system in Western Victoria
has been linked to the principal system via a new 95 mile
pipeline from Geelong to Port Campbell, thereby permitting gas to
flow from the western gas fields into the principal system.
o Western Underground Gas Storage has constructed an underground
storage facility at Port Campbell, which is linked via the same
new pipeline.
o Development of synthetic natural gas as an alternative energy
supply.
o A new transmission pipeline from Longford to Sydney is under
construction, through which, if necessary, gas could flow back.
A gas spot market opened in Victoria in April 1999. Kinetik Energy
must specify the injections (volume and price) it is willing to make from its
supply sources, and must settle any imbalance between its injections and the
demands of its customers with counterparties in the spot market. Because of the
dominant volume of the Esso/BHPP supply source, market price volatility has been
minimal to date.
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LITIGATION
Actions, suits and claims are brought against TXU Australia and the
Group companies from time to time for damage to property and for personal
injuries sustained in the ordinary course of the business of TXU Australia. All
such actions, suits and claims are dealt with in the ordinary course of business
of TXU Australia or the appropriate Group company and their ultimate resolution
is not expected to have a material, adverse effect upon the business or
financial condition of TXU Australia.
POTENTIAL SUCCESSOR LIABILITY. Pursuant to Allocation Statements made
under the Electricity Industry Act 1993 (Vic.) and the Gas Industry Act 1994
(Vic.) Eastern Energy, Westar, Kinetik Energy and Western Underground Gas
Storage were allocated liability for all claims arising in respect of certain
causes of action accrued against their predecessors as at September 29, 1994, in
the case of Eastern Energy, October 9, 1998 in the case of Western Underground
Gas Storage and February 24, 1999 in the case of Westar and Kinetik Energy.
LONGFORD CLAIM. Esso's gas processing plant at Longford exploded in
September 1998 causing prolonged interruption of gas supplies in Victoria.
Subsequently, a class action was commenced in the Federal Court of Australia
against Esso and Esso Australia Limited (Esso defendants) on behalf of a large
number of domestic and commercial consumers claiming damages for loss of supply.
The Esso defendants have joined the Victorian Government and related
entities to the action, including those which sold and distributed Esso gas
prior to these businesses being acquired by private operators. The Esso
defendants have also joined private operators as well (Esso Cross-Claim),
including Westar, Kinetik Energy and Western Underground Gas Storage, claiming
any such liability passed to them as part of the sale of the businesses from the
government.
As currently pleaded before the Federal Court of Australia, the claims
cover actions in negligence and in misleading and deceptive conduct.
On April 3, 2000, the State of Victoria and the state-owned entities
who were vendors of the business and assets to Westar and Kinetik Energy served
a cross-claim (State Cross-Claim) on Westar and Kinetik Energy. The State
Cross-Claim seeks orders against Westar and Kinetik Energy that they are liable
for any liability of the state owned vendors which may be found against those
entities in relation to the Esso Cross-Claim. To the extent the State
Cross-Claim raises issues which are already raised against Westar and Kinetik
Energy in the Esso Cross-Claim, it does not materially affect the potential
liability of Westar and Kinetik Energy in the litigation.
If Esso is found liable and is successful in its cross claims, the
potential liability of Westar, Kinetik Energy and Western Underground Gas
Storage could be significant.
Based on a legal analysis of pleadings filed so far and the likely
defenses available, TXU Australia Group believes that the claims against Westar,
Kinetik Energy and Western Underground Gas Storage (and the proposed State
Cross-Claim) are without merit. However, given the complexity and magnitude of
the claims involved in this litigation, TXU Australia Group cannot predict the
outcome at this time. TXU Australia Group intends to vigorously pursue all of
its defenses in this litigation.
With the exception of the Longford claim, TXU Australia Group is not
aware of any actual or threatened actions, suits or claims against TXU Australia
Group likely to have a material adverse effect upon the business or financial
condition of TXU Australia Group.
EMPLOYEES
As of December 31, 1999, TXU Australia Group employed 2,232 persons.
By February 29, 2000 this had reduced to 1,191 persons, principally as a result
of the sale of the infrastructure construction and maintenance business of
Enetech. TXU Australia Group considers its relations with its employees
satisfactory.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The consolidated financial statements of TXU Australia Group have been
prepared in accordance with US GAAP and are expressed in Australian dollars
(A$). Accordingly, the following discussion is expressed in Australian dollars
and should be read in conjunction with the consolidated financial statements and
the notes thereto, included elsewhere in this prospectus.
In January 1999, TXU Corp., through a series of subsidiaries, created
TXU Australia to acquire and hold, either directly or indirectly, all of its
Australian investments. Prior to this time, TXU Corp. principally conducted
business in Australia through TXU APL and its wholly-owned subsidiaries. In
connection with the acquisition of Westar and Kinetik Energy, TXU Australia
Group was restructured and TXU Australia became the ultimate holding entity in
Australia for TXU Australia Group. The consolidated financial statements of TXU
Australia Group give retroactive effect to these transactions, which have been
accounted for at historical cost in a manner similar to that of
pooling-of-interest accounting.
TXU Australia Group's principal operations are conducted through
Eastern Energy, Westar and Kinetik Energy. Through these companies, the Group
engages in the purchase, distribution, trading and retailing of electricity and
gas, mainly in the State of Victoria, Australia. In addition, TXU Australia
Group's other operations are conducted through Western Underground Gas Storage,
Global Customer Solutions, and (until January 2000) Enetech. The activities of
these companies include gas storage for supplying gas into the gas distribution
network.
ACQUISITIONS
In December 1997, TXU Australia Group acquired certain assets and
liabilities of the Victorian Power Exchange's metering business for A$7.7
million. In 1998, TXU Australia Group purchased Western Underground Gas Storage
Pty Ltd, an underground gas storage facility for A$53 million. These
acquisitions were accounted for as purchase business combinations. The excess of
the purchase consideration plus acquisition costs over the net fair value of
tangible and identifiable intangible assets acquired and liabilities assumed
resulted in goodwill of A$5.5 million and A$0.5 million for the 1997 and 1998
acquisitions, respectively, which is being amortized over 20 and 25 years,
respectively. The results of the acquired operations have been included in the
results of operations of TXU Australia Group from their respective dates of
acquisitions.
On February 24, 1999, TXU Australia Group acquired the gas retail
operations of Kinetik Energy and the gas distribution operations of Westar and
Westar (Assets) Pty Ltd from Gascor Holdings No. 2 Pty Ltd, a controlled entity
of the Government of Victoria, Australia. The purchase price was A$1.6 billion,
which has been financed principally through bank borrowings by TXU Australia
Group. The excess of the purchase consideration plus acquisition costs over the
net fair value of tangible and identifiable intangible assets acquired and
liabilities assumed resulted in goodwill of A$747 million, which is being
amortized over 40 years. The acquisition of Westar and Kinetik Energy was
treated for accounting purposes as a purchase business combination, and the
results of operations of Westar and Kinetik Energy have been included in the
results of operations of TXU Australia Group, since the acquisition date.
In connection with the acquisition of Westar and Kinetik Energy, TXU
Australia Group developed a plan to terminate 90 employees of the acquired
entities and recorded a liability for employee termination costs of A$4.6
million. At December 31, 1999, 45 employees had been terminated at a cost of A$2
million. The remaining employee termination costs of approximately A$2.6 million
are expected to be paid by June 30, 2000.
On May 4, 2000, TXU Australia Group was selected by the South
Australian government as the successful bidder for a 100 year lease of the
assets of the South Australian electricity generator, Optima Energy. The
purchase price, which is payable on financial closing expected to be on
June 6, 2000, is A$295 million. Optima Energy operates the gas-fired
Torrens Island power station in South Australia, which has a total power
generating capacity of 1,280 megawatts. The station currently supplies 28%
of South Australia's electricity needs. TXU Australia Group intends to fund
its initial investment of A$295 million in Optima by an equity injection of
A$181, and the balance debt. The debt component will be provided under a
bridging loan with Citibank maturing on December 29, 2000. This debt will
rank equally with the other senior debt described under TXU AUSTRALIA GENERAL
OVERVIEW - "Senior Debt Funding."
DISPOSALS
In July 1999, TXU Australia Group determined that it would sell
Enetech, its construction and maintenance subsidiary. In January 2000, TXU
Australia Group completed the sale of certain assets and liabilities of Enetech
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to Tenix Pty Ltd (Tenix), a major Australian technology contractor. Under the
terms of the Purchase Agreement, TXU Australia Group received cash consideration
of A$48.6 million, subject to the finalization of any post-closing adjustments.
TXU Australia Group entered into a ten-year alliance contract with Tenix under
which Tenix will provide engineering and maintenance services for TXU Australia
Group's gas and electricity networks throughout Victoria.
At December 31, 1999, TXU Australia Group held a 26% interest in
Eastcoast Power Pty Ltd (Eastcoast), a company developing a 43 MW power station
in eastern Victoria, Australia. On April 17, 2000, TXU Australia Group sold its
interest in Eastcoast resulting in an A$8.7 million gain.
RESULTS OF OPERATIONS
Comparisons between periods are affected by the timing of the acquired
companies' operations from dates of acquisitions.
The operating results for Enetech are presented as discontinued
operations. The loss from discontinued operations for 1999 includes the
operating loss for the period from January 1, 1999, to July 31, 1999. The
operating loss for the period from August 1, 1999 (the measurement date) to
December 31, 1999, has been deferred and will be recognized upon realization of
the ultimate gain from the sale in the first quarter of 2000. The operating
results for TXU Australia Group for 1998 and 1997 reflect Enetech as a
discontinued operation.
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998
OPERATING REVENUES
Operating revenues rose from A$647 million in 1998 to A$888 million in
1999, an increase of 37%. The principal reason for the increase was the addition
of A$252 million of revenue of the Westar and Kinetik Energy gas retailing and
distribution businesses from February 24, 1999. Revenues, excluding Westar and
Kinetik Energy, decreased from A$647 million for 1998 to A$636 million in 1999,
primarily as a result of reduced prices in the contestable market.
OPERATING EXPENSES
Purchased energy and distribution costs increased between the two
periods from A$270 million in 1998 to A$415 million in 1999 or 54%. The $145
million increase includes $110 million of gas purchases and distribution costs
associated with Westar and Kinetik Energy, with the remainder of the increase
due primarily to higher purchased electricity and distribution costs as a result
of the increase in energy sold and higher electricity pool prices.
Operation and maintenance expenditures increased from A$137 million in
1998 to A$174 million in 1999. The increase of A$37 million was mainly
attributable to operation and maintenance costs associated with the Westar and
Kinetik Energy gas business and to costs associated with the integration of the
gas business with the existing electricity business. Depreciation and
amortization expense (other than goodwill) increased between the two periods
from A$53 million to A$99 million, an increase of 87%. The increase was
primarily attributable to additional depreciation expense of A$23 million
associated with Westar and Kinetik Energy, and the amortization of debt issuance
costs of A$11 million associated with the financing of the acquisition and
the depreciation of A$12 million relating to capital additions. Goodwill
amortization expense increased from A$16 million in 1998 to A$32 million in
1999, due to the amortization of goodwill associated with the acquisition of
Westar and Kinetik Energy.
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OTHER INCOME/(EXPENSE) - NET
Other income/(expense) - net changed from income of A$0.4 million in
1998 to expense of A$2.8 million in 1999. The variance between the two periods
was due primarily to a loss on sale of network assets of A$2 million, and a loss
of A$0.8 million representing the Group's share of losses incurred on equity
investments.
INTEREST INCOME
Interest income increased from A$0.4 million in 1998 to A$2 million in
1999, due to the interest earned on restricted cash that TXU Australia Group was
required to deposit with a third party in connection with the acquisition of
Westar and Kinetik Energy.
INTEREST EXPENSE
Interest expense increased from A$91 million in 1998 to A$193 million
in 1999 due primarily to an increase in outstanding debt used to finance the
acquisition of Westar and Kinetik Energy and to purchase a twenty-year option
from AES Ecogen.
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INCOME TAX EXPENSE/(BENEFIT)
The effective income tax rate changed from 44% in 1998 to (77%) in
1999. The change reflected the effect of the loss from continuing operations in
1999, and the effect of the enacted change in the Australian statutory tax rate
on the deferred tax assets and liabilities.
INCOME/(LOSS) FROM CONTINUING OPERATIONS
As a result of the factors discussed above, TXU Australia Group had a
loss from continuing operations of A$6 million for 1999 compared with income
from continuing operations of A$46 million for 1998. The primary cause of the
loss was the effect of TXU Australia Group's expansion program, where earnings
were insufficient to offset increases in depreciation and other amortization,
interest expense and goodwill amortization.
INCOME/(LOSS) FROM DISCONTINUED OPERATIONS
Income (loss) from discontinued operations of Enetech decreased from a
loss of A$1 million in 1998 to a loss of A$9 million in 1999. The increased loss
in 1999 was primarily attributable to losses on construction contracts.
REPORTABLE OPERATING SEGMENTS
TXU Australia Group has three main reportable operating segments:
Networks, Retail and Energy Trading. The financial data of each of the segments
is set out, in brief, as follows:
NETWORKS - This segment recorded net income of A$38 million and A$26
million in 1998 and 1999, respectively. The reduction of A$12 million occurred
primarily because the additional gas distribution revenues generated in 1999
were insufficient to offset increases in depreciation, other amortization and
interest expense associated with the acquisition of the gas business.
RETAIL - Net income for the years ended December 31, 1998 and 1999 was
A$21 million and A$15 million, respectively. The reduction of A$6 million
occurred primarily because the additional gas retail revenues generated in 1999
were insufficient to offset the increases in depreciation, other amortization
and interest expense associated with the acquisition of the gas business.
ENERGY TRADING - TXU Australia Group commenced this activity during
1999, and the net income for the year ended December 31, 1999 was A$5 million.
OTHER -A net loss of A$52 million was reported for the year ended
December 31, 1999, compared to a net loss of A$13 million for the previous year.
The change between 1998 and 1999 was primarily attributable to costs associated
with various business development projects (e.g. Western Underground Gas
Storage) and amortization of goodwill resulting from the acquisition of Westar
and Kinetik Energy and depreciation of capital additions in the Victorian
Power Exchange metering business.
For detailed financial data by segment, see NOTE 16 TO TXU AUSTRALIA
GROUP'S CONSOLIDATED FINANCIAL STATEMENTS.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
OPERATING REVENUES
Operating revenues rose from A$621 million in 1997 to A$647 million in
1998, an increase of 4%. This increase was largely due to higher networks
business revenue, which rose 4% from A$297 million in 1997 to A$310 million in
1998, reflecting increased electricity consumption in TXU Australia Group's
distribution territory. In addition, TXU Australia Group received a net
settlement of A$8.5 million from the Victorian government to cover required
rebates to customers and to settle a sales tax reimbursement contract.
Electricity sales for the period rising marginally from 5,190 GWh in 1997 to
5,213 GWh in 1998, increased electricity retail revenues from A$581 million in
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1997 to A$586 million in 1998. The retail sales revenue (excluding other
revenues) was slightly reduced, due primarily to declining prices, as further
classes of electricity customers were free to choose their electric suppliers.
Customers with electricity usage in excess of 160 MWh/year but less than
750 MWh/year were able to choose their suppliers from July 1, 1998. As of
December 31, 1998, TXU Australia Group estimated that it lost approximately
500 GWh as a result of those customers within TXU Australia Group's franchised
area electing to choose another energy retailer to supply their energy needs.
This loss was net of gains made during the same period by TXU Australia Group
acquiring customers from other retailers in Victoria and New South Wales.
OPERATING EXPENSES
Purchased energy and distribution costs decreased from A$294 million
in 1997 to A$270 million in 1998, a reduction of 9%. This reduction was largely
attributable to a reduction in electricity purchases of A$17 million and a
reduction of the franchise fee of A$14 million charged by the Victorian
Government. (After the first quarter of 1998, the Government phased out the
franchise fee). These reductions were offset by an increase in network charges
from other retailers of A$7 million. Operation and maintenance expenditures
increased from A$110 million in 1997 to A$137 million in 1998, the major
increase relating to external business development costs, Year 2000 costs,
salary increases and increased material costs due to increase in maintenance
work.
INTEREST EXPENSE
The reduction in interest expense from A$95 million in 1997 to A$91
million in 1998 is attributable to debt repayments and decreases in interest
rates in 1998.
INCOME TAX EXPENSE/(BENEFIT)
The effective income tax rate decreased from 54% in 1997 to 44% in
1998 primarily due to a reduction in non-tax deductible franchise fee payments.
INCOME FROM CONTINUING OPERATIONS
As a result of the various factors discussed above, TXU Australia
Group reported income from continuing operations of A$46 million in 1998
compared to A$26 million in 1997. The increase was primarily attributable to the
various factors discussed above. The most significant factor was a reduction in
non-tax deductible franchise fee payments, which fell from A$18 million in 1997
to A$4 million in 1998.
INCOME/(LOSS) FROM DISCONTINUED OPERATIONS
Income/(loss) from discontinued operations decreased from income of
A$1 million in 1997 to a loss of A$1 million in 1998. The change between the two
periods largely reflected the inclusion of a full year of operating expenses of
Streamline, the former maintenance division of Melbourne Water acquired by
Enetech, and increased management costs associated with the expansion of the
business.
REPORTABLE OPERATING SEGMENTS
NETWORKS - Net income increased by A$9 million from A$29 million in
1997 to A$38 million in 1998. Revenues increased by A$12 million, or 29%, due
mainly to increased electricity consumption in TXU Australia Group's
distribution territory. Interest expense decreased by A$5 million due
to reduced debt and lower effective interest rates. These amounts were offset
by increased income tax expense, rising from A$10 million in 1997 to A$17
million in 1998 attributable to increased revenues.
RETAIL - Net income increased by A$4 million from A$17 million in 1997
to A$21 million in 1998 due to an increase in revenues by A$5 million and the
net settlement of A$8.5 million from the Victorian government to cover required
rebates to customers and to settle a sales tax reimbursement contract. However,
this was offset by higher marketing costs associated with the introduction of
the contestability of customers with electricity usage of more than 160 MWh/year
but less than 750 MWh/year.
52
<PAGE>
OTHER - This segment incurred a net loss of A$13 million for the year
ended December 31, 1998 compared to a net loss of A$20 million for the previous
year. The change was due to an increase in miscellaneous revenue, including new
business ventures of A$1.7 million, and the expansion of meter reading service
revenue of A$2 million.
For further financial data by segment, see NOTE 16 TO the TXU
AUSTRALIA GROUP'S CONSOLIDATED FINANCIAL STATEMENTS.
53
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
In 1998 and 1997, TXU Australia Group generated cash from operations
sufficient to meet operating needs and service its debt requirements, while in
1999 its cash needs were supplemented by other means, such as borrowings. Net
cash generated by continuing operating activities before changes in operating
assets and liabilities for the years ended December 31, 1999, 1998 and 1997 was
A$108 million, A$149 million and A$123 million, respectively. Decreased net
income and higher depreciation and amortization expense were the primary
contributing factors in the fluctuations. Cash provided by (used in) changes in
operating assets and liabilities of the continuing operations was (A$172
million), (A$13 million) and A$26 million for the years ended 1999, 1998 and
1997, respectively. The variances arose primarily due to the purchase of a
twenty-year option from AES Ecogen in 1999, changes in working capital
requirements and interest accrued. Net cash used in discontinued operations for
1999, 1998 and 1997 was A$56 million, A$9 million, and A$18 million,
respectively. The variance was primarily due to a large increase in construction
work-in-progress in 1999 over the other years.
Cash flows used in investing activities for the year ended December
31, 1999 totaled A$1.9 billion, including A$1.6 billion for the acquisition of
Westar and Kinetik Energy, compared with A$154 million, including A$53 million
for business acquisitions, for the year ended December 31, 1998. Cash flows used
for investing activities for the same period in 1997 was A$67 million.
Capital expenditures for the year ended December 31, 1999 were A$260
million, compared with A$104 million and A$62 million for the comparable periods
in 1998 and 1997, respectively. The increase from 1998 to 1999 was primarily due
to capital projects related to Westar and Kinetik Energy (A$20 million) and the
construction of the Western Underground Gas Storage facility (A$100 million).
During 1999, cash provided by financing activities of TXU Australia
Group amounted to A$2 billion due primarily to a large increase in borrowings in
1999 to fund the acquisition of Westar and Kinetik Energy. The details of the
additional borrowings are discussed below.
In February 1999, TXU Australia obtained a A$1.1 billion syndicated
acquisition facility from a group of banking institutions, and TXU Australia and
Eastern Energy obtained a A$413 million subordinated acquisition facility to
fund the acquisition of Westar and Kinetik Energy. Under the Deed of Common
Terms, there are detailed provisions that, in effect, restrict payments of
principal and interest on the subordinated acquisition facility unless
certain conditions, including interest coverage ratios are satisfied.
In April 1999, TXU Australia obtained a loan facility in the amount of
A$200 million, which expires on June 30, 2000. See TXU AUSTRALIA GENERAL
OVERVIEW - "SENIOR DEBT FUNDING." The amount borrowed, A$200 million, was used
to purchase a twenty-year option from AES Ecogen. See BUSINESS OF THE TXU
AUSTRALIA GROUP -- "ELECTRICITY SUPPLY MANAGEMENT".
In 1999, TXU Australia Group borrowed an additional A$123 million
under its commercial paper program and an additional A$68 million and A$142
million under its lines of credit and its Australian dollar-denominated
revolving credit facility, respectively. Funds borrowed were primarily used for
construction activity related to the underground gas storage facility,
acquisition costs associated with Westar and Kinetik Energy and for general
corporate purposes.
During 1998 cash provided by financing activities of TXU Australia
Group was A$25 million. Eastern Energy received proceeds of approximately A$51
million from the settlement of cross currency swaps associated with its US
dollar-denominated debt and borrowed A$25 million under a syndicated facility
agreement. These funds were primarily used to fund the acquisition of the
Western Underground Gas Storage facility and for general corporate purposes.
During 1998, Eastern Energy repaid approximately A$51 million on its outstanding
lines of credit.
During 1997, cash used in financing activities by TXU Australia Group
was A$65 million. Borrowings of A$177 million were raised through Eastern
Energy's commercial paper program. These funds, along with cash from operations,
were used to repay Eastern Energy's syndicated facility agreement of A$242
million.
54
<PAGE>
On February 24, 2000 TXU Australia Group restructured its senior bank
debt. All bank debt previously borrowed by Eastern Energy has been repaid and
replaced with bank debt borrowed by TXU Australia. The terms of all bank debt
previously borrowed by TXU Australia have been renegotiated, so that all bank
debt, aggregating approximately A$2 billion, now ranks equally as corporate debt
of TXU Australia.
Refer also to TXU AUSTRALIA GENERAL OVERVIEW - "SENIOR DEBT FUNDING."
FUTURE CAPITAL REQUIREMENTS
TXU Australia Group plans to replace the A$413 million subordinated
acquisition facility with the JUMPS offered hereby. It also plans to replace the
A$200 million loan facility (Facility D as described in TXU AUSTRALIA GENERAL
OVERVIEW - "SENIOR DEBT FUNDING") with a capital markets issue in either the US,
Euro or Australian market.
TXU Australia Group also plans to replace the A$275 million loan
facility (Facility E as described in TXU AUSTRALIA GENERAL OVERVIEW - "SENIOR
DEBT FUNDING") with a domestic capital markets issue in Australia.
TXU Australia Group intends to make an offer to the holders of Eastern
Energy's senior notes, totaling A$483 million, to exchange their notes for
senior notes issued by TXU Australia. TXU Australia Group will also seek to
assign and novate the associated cross currency and interest rate swaps from
Eastern Energy to TXU Australia.
In March 2000, TXU Australia Group established a A$750 million
combined short-term/medium-term note program. It is envisaged that notes issued
under this program will fully replace Eastern Energy's commercial paper program
by May 24, 2000.
TXU Australia Group believes that it will have adequate access to
capital to enable it to complete successfully all of the transactions
contemplated above.
TXU Australia Group 's capital expenditures are estimated at A$112.1
million for 2000. At December 31, 1999, TXU Australia Group had commitments of
A$3.5 million related to these capital expenditures. Approximately 75% of the
estimated capital expenditures will be spent on the electricity and gas
networks, 23% on information technology, and 2% on plant and equipment.
EFFECT OF INFLATION
Because of the relatively low level of inflation experienced in
Australia, inflation did not have a material impact on results of operations for
the periods presented.
CHANGES IN ACCOUNTING STANDARDS
Statement of Financial Accounting Standards (SFAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as extended, is
effective for TXU Australia Group beginning January 1, 2001. SFAS No. 133
establishes accounting and reporting standards for derivative financial
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires the recognition of
derivatives as either assets or liabilities in the statement of financial
position and the measurement of those instruments at fair value. The TXU
Australia Group is currently evaluating the impact the adoption of the Standard
will have on its statement of financial position and results of operations.
55
<PAGE>
YEAR 2000 ISSUES
BACKGROUND
TXU Australia Group initiated a Year 2000 (Y2K) Program in 1997 with
the compilation of a Y2K inventory of supported information technology assets
and systems. A Y2K remediation plan for items in the inventory assessed as
having Y2K risk and a methodology for addressing the Y2K risks of all other
assets and systems was carried out. After the assets of Westar and Kinetik
Energy were purchased in February 1999, the Y2K programs of these businesses
were incorporated into TXU Australia Group's Y2K Program in April 1999.
Assessments of potential impact due to Y2K were completed by July 1999.
Remediation and testing work on these systems was completed by December 31,
1999.
RESULTS
During the year 2000 roll over, none of TXU Australia Group's
customers experienced service interruptions due to computer hardware, software
or embedded chip failures. A few minor problems occurred with internal systems,
but these were considered to be no more than normal system issues.
COSTS
The total estimated cost of TXU Australia Group's Y2K program was
A$2.5 million, of which $A2.3 million had been spent by December 31, 1999, with
the remaining A$0.2 million expected to be spent in 2000. There can be no
assurance that these estimates will not change as a result of the discovery of
unexpected additional remediation work.
56
<PAGE>
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
TXU Australia Group enters into derivative instruments, including
options, swaps, futures and other contractual commitments for both trading and
non-trading purposes. TXU Australia Group enters into derivative instruments for
non-trading purposes in order to manage market risks related to changes in
interest rates, foreign currency exchange rates and commodity prices. TXU
Australia Group also enters into derivative instruments and other contractual
commitments for trading purposes.
INTEREST RATE RISK --The table below provides information concerning
TXU Australia Group's financial instruments as of December 31, 1999 that are
sensitive to changes in interest rates, which include debt obligations (by
principal amount), interest rate swaps and forward rate agreements. For debt
obligations, the table presents principal cash flows and related weighted
average interest rates by expected maturity dates. TXU Australia Group has
entered into interest rate swaps under which it has agreed to exchange the
difference between fixed-rate and variable-rate interest amounts calculated with
reference to specified notional principal amounts. The contracts require
settlement of net interest receivable or payable at specified intervals which
generally coincide with the dates on which interest is payable on the underlying
debt. When differences exist between the swap settlement dates and the dates on
which interest is payable on the underlying debt, the basis risk is managed by
means of forward rate agreements and basis swaps. For interest rate swaps and
forward rate agreements, the table presents notional amounts and weighted
average interest rates by expected (contractual) maturity dates. Weighted
average variable rates are based on rates in effect at the reporting date.
EXPECTED MATURITY DATE (A$ IN MILLIONS, EXCEPT FOR PERCENTAGES)
----------------------
<TABLE>
<CAPTION> 1999 1998
THERE- 1999 FAIR 1998 FAIR
2000 2001 2002 2003 2004 AFTER TOTAL VALUE TOTAL VALUE
---- ---- ---- ---- ---- ------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Long-term Debt
(including current
maturities)
Fixed Rate -- -- -- -- -- A$483 A$483 A$492 A$483 A$605
Average interest rate -- -- -- -- -- 6.89% 6.89% -- 6.89% --
Variable Rate A$1,280 A$625 A$825 -- -- -- A$2,730 A$2,730 A$685 A$685
Average interest rate 6.34% 5.53% 6.28% -- -- -- 6.14% -- 5.31% --
Cross Currency Swaps
(including current
maturities)
Variable Rate -- -- -- -- -- A$483 A$483 A$46 A$483 A$86
Average interest rate -- -- -- -- -- 6.18% 6.18% -- 5.26% --
Interest Rate Swaps
(notional amounts)
Variable to Fixed A$655 A$140 A$651 -- -- A$859 A$2,305 A$23 A$940 (A$100)
Average pay rate 6.10% 6.77% 6.94% -- -- 5.97% 6.33% -- 7.13% --
Average receive rate 5.71% 5.16% 5.05% -- -- 5.08% 5.26% -- 5.13% --
Fixed to Variable -- -- -- -- -- A$533 A$533 (A$24) A$570 A$42
Average pay rate -- -- -- -- -- 6.55% 6.55% -- 5.70% --
Average receive rate -- -- -- -- -- 6.89% 6.89% -- 6.89% --
Basis Swaps and Forward
Contracts (notional
amounts) A$432 A$432 A$432 A$432 -- -- A$432 A$0.2 A$432 A$2
Average pay rate 6.08% 5.86% 5.86% 5.86% -- -- 5.92% -- 5.98% --
Average receive rate 6.12% 5.86% 5.86% 5.86% -- -- 5.93% -- 6.01% --
Forward Rate Agreements
(notional amounts)
Variable to Fixed A$100 -- -- -- -- -- A$100 (A$0.1) A$95 --
Average pay rate 5.70% -- -- -- -- -- 5.70% -- 4.99% --
Average receive rate 5.83% -- -- -- -- -- 5.83% -- 4.89% --
</TABLE>
57
<PAGE>
FOREIGN CURRENCY RISK -- TXU Australia Group enters into currency
swaps to manage foreign currency exposures, primarily with the US dollar.
At December 31, 1999, Eastern Energy had cross-currency swaps for its
US dollar-denominated debts. The notional amount outstanding on cross-currency
swaps was A$483 million. These cross-currency swaps mature in December 2006 and
December 2016 for A$360 million and A$123 million, respectively. The maturity of
these swaps coincides with the maturity of the US dollar denominated debt.
ENERGY PRICE RISK -- NON-TRADING ACTIVITIES - Electricity prices are
established through power pool, which is controlled by a statutory, independent
corporation. Substantially all power must be sold into and purchased from the
pool. In order to manage the exposure to fluctuations in electricity pool
prices, TXU Australia Group enters into both short- and long-term derivative
instruments whereby the pool price is fixed for an agreed-upon quantity and
duration by reference to an agreed-upon strike price.
TXU Australia Group has entered into wholesale market contracts to
hedge most of its forecasted franchise load through the end of 2000. At December
31, 1999, these contracts cover a notional volume of approximately 3.5 million
MWh. The Group has also entered into wholesale market contracts to cover a
portion of its contestable load for the period from January 2000 through
December 2001. At December 31, 1999, these contracts covered a notional load of
approximately 0.8 million MWh. The net loss deferred under the franchise and
contestable contracts at December 31, 1999, was A$56 million.
The hypothetical loss in fair value of TXU Australia Group's contracts
in existence at December 31, 1999 and 1998 entered into for non-trading purposes
arising from a 10% adverse movement in future electricity prices is estimated at
A$12 million and A$19 million, respectively. This loss is calculated by modeling
the contracts against an internal forecast of Pool prices.
TRADING ACTIVITIES -- The trading activities of TXU Australia Group
commenced in May 1999 when TXU Australia Group entered into a twenty-year option
agreement with AES Ecogen which owns 966MW of gas fired generation facilities
that are typically used during peak periods of demand for electricity in
Victoria, Australia. The agreement provides TXU Australia Group with the ability
to enter into contracts with AES Ecogen, at TXU Australia's option, which would
require an exchange of cash for the difference between the amounts specified in
the contracts and the spot price of electricity. TXU Australia Group also has an
agreement to supply gas to AES Ecogen to run the facilities for twenty years.
TXU Australia Group made an initial option premium payment of A$200 million and
is required to make further future payments. The option is marked to market and
had a fair value of A$201 million at December 31, 1999.
In 1999, TXU Australia Group began offering price risk management
services to customers through a variety of financial and other instruments,
including swaps, options, caps and swaptions. The net fair value of the sale and
purchase contracts was A$4.7 million at December 31, 1999.
TXU Australia Group manages the market risk on a portfolio basis
within limitations imposed by the Board of Directors and in accordance with its
overall risk management policies. Market risks are monitored daily, utilizing
appropriate mark-to-market methodologies, which value the portfolio of contracts
and hypothetical effect on this value from changes in market conditions. TXU
Australia Group uses techniques and methodologies that simulate forward price
curves in the energy market to estimate the size and probability of changes in
market value resulting from price movements.
TXU Australia Group is subjected to a number of risks and costs
associated with the future contractual commitments, including price risk, credit
risk associated with counter-parties and market liquidity. TXU Australia Group
continuously monitors the valuation of identified risks and adjusts the
portfolio valuation based on present market conditions. To manage its exposure
to price risk, TXU Australia Group has established corporate strategies,
policies and limits, including the adoption of a Value At Risk. The Value At
Risk governs the size of the maximum short or long exposure that TXU Australia
Group can adopt. It is measured at 95% confidence level. The exposures are
monitored regularly against these benchmarks.
58
<PAGE>
TXU Australia Group's sale and purchase commitments for trading
purposes amounting to 2.7 million MWh and 3.1 million MWh respectively, with
terms extending up to 2002, are included in the electricity portfolio as of
December 31, 1999. The hypothetical loss in fair value of TXU Australia Group's
trading contracts and other energy purchase contracts in existence at December
31, 1999 entered into for trading purposes arising from a 10% adverse movement
in future electricity prices is estimated at A$31 million.
REGULATION AND RATES
TXU Australia Group is subject to regulation by the ORG. The ORG has
the power to issue licenses for the supply, distribution and sale of electricity
within Victoria and regulates tariffs for the use of the distribution system.
The ACCC is responsible for regulating transmission system tariffs. The
distribution tariffs applying to Eastern Energy are effective until December 31,
2000. The ORG plans to issue by September 2000 a determination of the maximum
prices for use of the electrical network for the period from December 31, 2000
to December 31, 2005, at least. TXU Australia Group is not able to predict the
outcome of this review or the impact on its financial position or results of
operations. There is a possibility that the ORG could determine pricing
arrangements significantly below current levels.
Maximum retail prices for remaining franchise electricity customers,
those with usage below 160MWh/year, are fixed by the Tariff Order until December
31, 2000. Retail prices for non-franchise customers are subject to competitive
forces and are not regulated. All electricity retail prices are scheduled to be
deregulated beginning January 1, 2001. TXU Australia Group is analyzing how the
long-range implications of the unregulated market will affect its financial
position, results of operations and cash flows, and is developing a strategy to
address these issues.
The distribution tariffs applying to Westar are effective until
December 31, 2002, at which time a price review process will occur prior to new
tariffs being approved by the ORG for the next five-year period. After the next
period, prices will be set for periods nominated by Westar and approved by the
ORG. TXU Australia Group is not able to predict the outcome of this review or
the impact on its financial position or results of operations.
COMPETITION
ELECTRICITY RETAIL - In July 1996, customers in Victoria with loads
greater than 750 MWh/year became contestable. In July 1998, customers with loads
between 160 and 750 MWh/year became contestable. Together these two customer
classes accounted for approximately 49% of total Victorian volumes. In both
cases, the introduction of contestability was accompanied by the entry of
several new retailers into the market, significantly lower prices, and a high
level of switching between retailers. Because of the low profitability of
serving these customers, volume retention has not been a priority to TXU
Australia. The most profitable segment of the retail electricity market in
Victoria is the final class of customers with loads below 160 MWh/year, which
will become contestable in January 2001. Based on information available from the
experience of mass-market competition in other industries and other countries,
TXU Australia Group believes that the competition, and therefore the downward
pressure on profit margins, will be less intense for these smaller customers.
GAS RETAIL - Customers consuming over 500,000 GJ/year became
contestable on October 1, 1999, and those consuming between 100,000 and 500,000
GJ/year on March 1, 2000. The remaining gas consumers, including new
connections, are supplied by GASCOR and are non-contestable until the dates set
out below.
CUSTOMER CONTESTABILITY TIMETABLE
- -------------------- ---------------- ------------- -----------------
APPROXIMATE NUMBER OF CUSTOMERS
CUSTOMER LOAD
DATE (GJ/YEAR) VICTORIA KINETIK ENERGY
- -------------------- ---------------- ------------- -----------------
Currently > 100,000 148 47
September 1, 2000 5,000-99,999 1,077 418
September 1, 2001 All others 1,337,000 395,000
- -------------------- ---------------- ------------- -----------------
59
<PAGE>
Contestable customers are able to choose their own retailer of gas. On
contestability Kinetik Energy ceases to supply gas as agent of GASCOR, and
commences supplying contestable customers in its own right with gas purchased
from GASCOR and other sources.
In the first stage of contestability (customers consuming over 500,000
GJ/year who became contestable on October 1, 1999), TXU Australia has been very
successful both in retaining its existing customer base and in gaining customers
from other retailers at favorable margins. Prior to October 1, 1999 Kinetik
Energy had 10 first stage customers consuming approximately 13.2 PJ/year. By
March 1, 2000 it had 14 first stage customers consuming approximately 26.1
PJ/year. While competition for customers has been fierce, the downward pressure
on margins which occurred in the early stages of electricity contestability has
been nowhere near as intense in gas. It is too early to assess the results of
the second stage of contestability (customers consuming between 100,000 and
500,000 GJ/year) which occurred on March 1, 2000.
The most profitable segment of the retail gas market in Victoria is
the final class of customers with loads below 5,000 GJ/year, which become
contestable in September 2001. As with competition in the electric industry, TXU
Australia's belief is that the competition will be less intense for these
smaller customers.
RECENT AUSTRALIAN TAX REFORMS
Australia's business tax system is currently undergoing major reform.
It is anticipated that, on the whole, the tax reforms will be beneficial to TXU
Australia Group. The most significant area of reform from the standpoint of TXU
Australia Group is the reduction of the company tax rate from 36% to 34% for the
year ending December 31, 2000 and to 30% for the year ending December 31, 2001
and thereafter.
On December 10, 1999, legislation was enacted giving effect to a
number of these reforms, including the above tax rate reduction. Accordingly,
TXU Australia Group's deferred tax asset and liability balances at December 31,
1999, reflected the new tax rates.
GOODS AND SERVICES TAX (GST)
Legislation has been enacted for a GST to apply in Australia from July
1, 2000. The GST will be imposed at the rate of 10% on most transactions
involving the supply of goods and services, subject to certain exemptions.
The GST is not intended to be a cost to business, but rather a tax to
be met by the final consumers of goods and services. Ordinarily, businesses will
be entitled to claim a tax credit for the GST charged to them on all goods,
services and other transactions purchased or acquired in the course of their
business activities.
TXU Australia Group's primary products and services supplied will be
subject to the GST. TXU Australia Group will be required to collect the GST on
behalf of the Australian Taxation Office. In most cases TXU Australia Group will
be entitled to claim a credit for "input tax", being the GST paid on inputs
required for the taxable goods and services it supplies. TXU Australia Group is
currently evaluating the impact of the GST on its operations.
Various existing taxes will be abolished as part of the introduction
of the GST. In particular, the existing wholesale sales tax will be abolished
from July 1, 2000. TXU Australia Group is currently assessing the combined
impact of the abolition of wholesale sales tax and the introduction of the GST
on the pricing of its products and services. In general TXU Australia Group will
be permitted to increase its prices by 10% less any savings arising from the
abolition of existing taxes. Any pricing decisions made must comply with
existing regulatory requirements and the guidelines issued by the Australian
Competition and Consumer Commission.
TXU Australia Group is currently preparing for the implementation of
the GST and to ensure compliance with the legislation governing the tax. The
total implementation cost, including systems modification and other costs, is
estimated to be approximately A$5 million. Of this amount, A$0.2 million was
expensed in the year ended December 31, 1999, with the remainder expected to be
expensed during the year ending December 31, 2000.
60
<PAGE>
SECURITY OWNERSHIP
The partnership deed of TXU Australia provides that its general
partner, AGP, is solely responsible for the management and direction of TXU
Australia. In addition, essentially all of TXU Australia's operations are
managed by the officers of TXU APL.
TXU Australia and its general partner, AGP, and TXU APL are indirectly
wholly-owned by TXU Corp. The following tables show the number of shares of
common stock of TXU Corp. owned by the directors of AGP and TXU APL, as of
December 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF SHARES
------------------------------------------------------
NAME PHANTOM
---- BENEFICIALLY OWNED STOCK PLANS* TOTAL
------------------ ----------------- --------------
<S> <C> <C> <C>
Erle Nye............................................. 126,613 73,869 200,482
H. Jarrell Gibbs..................................... 36,069 30,893 66,962
Robert S. Shapard.................................... 7,954 9,436 17,390
Paul O'Malley........................................ 0 0 0
Dr. John Onto........................................ 0 0 0
Geoffrey McIntyre.................................... 0 0 0
Graham Inns.......................................... 0 0 0
Brian Dickie......................................... 10,556 6,967 17,523
Directors of AGP and TXU APL as a group (8 persons) 181,192 121,165 302,357
</TABLE>
*Share units held in individual accounts in phantom stock plans of TXU
Corp. Although the plans allow the units to be paid only in the form of
cash, investments in the units create essentially the same investment stake
in the performance of the common stock of TXU Corp. as do investments in
actual shares of common stock.
The named individuals have sole voting and investment power for the
shares of common stock reported as beneficially owned. Ownership of that
common stock by each individual and director and for all directors as a
group constituted less than 1% of the outstanding shares of TXU Corp.
MANAGEMENT OF TXU AUSTRALIA
DIRECTORS OF AGP
The partnership deed provides that AGP is solely responsible for the
management and direction of TXU Australia. Limited partners do not take part in
the management of TXU Australia's business.
The following table lists certain information with respect to the
directors of AGP as of December 31, 1999:
NAME AGE POSITION
---- --- --------
Robert S. Shapard 43 Chairman and Director, appointed
January 27, 1999
Paul O'Malley 35 Director, appointed April 29, 1999
Robert S. Shapard has been the Chairman and a director of AGP since
January 27, 1999. He has also been the Managing Director of TXU APL and Chairman
of Eastern Energy since October 29, 1998. Mr. Shapard was Treasurer and
Assistant Secretary of TXU Corp. from August 5, 1997 to September 14, 1998.
Prior to August 1997, Mr. Shapard was the Manager of Investor Relations of TXU
Corp.
Paul O'Malley has served as a director of AGP since April 29, 1999 and
the Chief Financial Officer of TXU APL since April 15, 1999. Mr. O'Malley was
director of corporate finance at Deloitte Touche Tohmatsu from June 1997 to
March 1999. Prior to June 1997, Mr. O'Malley was a consultant with Deloitte
Touche Tohmatsu. On October 1, 1999, Paul O'Malley appointed J.G. (Tom) Atkin as
61
<PAGE>
an alternate director to act when Mr. O'Malley is unable to attend meetings or
otherwise act as director. Mr. Atkin has been Treasurer of TXU APL since June
1999. From April 1997 to June 1999, he was Chief Financial Officer of Westar and
Kinetik Energy and prior to that was Treasurer of Alcoa of Australia Limited.
Mr. Atkin owns no shares in TXU Corp.
There are no family relationships between any of the above-named
directors. AGP has no executive officers other than its secretary, Anthony
William Kelly (appointed January 27, 1999), an employee of TXU APL (see
description below).
DIRECTORS OF TXU APL AND HOLDINGS
The business of TXU Australia is directed through the key holding
company, TXU APL. All the stock of this company is owned by Holdings. In turn,
AGP, on behalf of the partnership, owns all of the stock of Holdings.
The directors of Holdings are the same as those for AGP. Mr. Shapard
was appointed director on January 25, 1999, and Mr. O'Malley was appointed on
April 29, 1999. Mr. Atkin was appointed alternate director for Mr. O'Malley on
October 1, 1999.
The table below lists certain information concerning the directors of
TXU APL.
NAME AGE POSITION
---- --- --------
Erle Nye.................. 62 Chairman and Director, appointed
January 15, 1996
H. Jarrell Gibbs.......... 62 Director, appointed October 31, 1995
Robert S. Shapard.......... 43 Director, appointed October 29, 1998
Dr. John Onto............. 59 Director, appointed April 19, 1996
Geoffrey McIntyre......... 63 Director, appointed April 19, 1996
Graham Inns............... 62 Director, appointed April 19, 1996
Brian Dickie.............. 44 Director, appointed July 29, 1999
Erle Nye has been a director of TXU APL since January 15, 1996. He has
served as a director and Chairman of the Board and Chief Executive of TXU Corp.
since May 1997 and of TXU Gas Company since August 1997. He has also been a
director and Chairman of the Board and Chief Executive of TXU Electric Company
for more than the last five years. Mr. Nye is also a director of TXU Europe
Limited (formerly known as TXU Eastern Holdings Limited). In addition, Mr. Nye
was President of TXU Corp. from February 1987 through May 1995 and President and
Chief Executive of TXU Corp. from May 1995 through May 1997.
H. Jarrell Gibbs has served as a director of TXU APL since October 13,
1995. He has also been Vice Chairman of TXU Corp. and a director and Vice
Chairman of the Board of TXU Gas Company since August 5, 1997. Before that, Mr.
Gibbs was the President of TXU Electric Company and Vice President and Principal
Financial Officer of TXU Corp. Mr. Gibbs is also a director of Eastern Group plc
and of TXU Europe Limited.
Robert S. Shapard has been the Chairman and a director of AGP since
January 27, 1999. He has also been the Managing Director of TXU APL and Chairman
of Eastern Energy since October 29, 1998. Mr. Shapard was Treasurer and
Assistant Secretary of TXU Corp. from August 5, 1997 to September 14, 1998.
Prior to August 1997, Mr. Shapard was the Manager of Investor Relations of TXU
Corp.
Dr. John Onto has served as director of TXU APL since April 19, 1996.
He is currently an Associate Professor of International Business at the
Melbourne Business School, University of Melbourne. Prior to his current
position he spent eight years on the management faculty of Georgetown University
Business School where he was also Associate Dean for Graduate Business Programs.
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Geoffrey McIntyre has served as a director of TXU APL since April 19,
1996. Mr. McIntyre has held many positions in international banking and is
currently the Honorary Trade representative for Singapore in Australia. He is
also a consultant to the Church and Grace law firm.
Brian Dickie has served as a director of TXU APL since July 29, 1999.
He is Executive Vice President of TXU Corp. and President of the Emerging
Business Group. Prior to joining TXU Corp., Mr. Dickie was President and Chief
Operating Officer of Booz-Allen & Hamilton in New York.
Graham Inns has served as a director of TXU APL since April 19, 1996.
Mr. Inns is an Alderman of the Adelaide City Council and Deputy Lord Mayor of
the City of Adelaide and is a partner at J.K. McLachlan & Company Consulting
Services.
There are no family relationships between any of the above-named
directors. Neither Holdings nor TXU APL has any statutory appointed officers or
directors other than its directors and the secretary.
DIRECTOR COMPENSATION
The directors of AGP, Holdings and TXU APL, listed above, have
received, and will continue to receive, compensation in respect of services
performed by those persons as directors of these companies from their primary
employer which is either TXU Corp. or another subsidiary of TXU Corp. Those
directors receive no cash or non-cash compensation beyond that which they would
otherwise receive from TXU Corp. or a TXU Corp. subsidiary for the services
performed by them for such companies.
EXECUTIVE MANAGEMENT OF TXU AUSTRALIA
Although TXU Australia has no executive officers, the AGP board of
directors has effectively delegated the management of essentially all of TXU
Australia's day-to-day operations to the officers of TXU APL. The following
table lists certain information with respect to the executive management of TXU
APL as of December 31, 1999:
NAME AGE POSITION
---- --- --------
Robert S. Shapard....... 43 Chief Executive Officer
Paul O'Malley........... 35 Chief Financial Officer
Peter Magarry........... 50 General Manager Networks
Leonard Gill............ 42 General Manager Energy Trading
Caryle Demarte.......... 51 General Manager Retail
Robert S. Shapard has been the Chairman and a director of AGP since
January 27, 1999. He has also been the Managing Director of TXU APL and Chairman
of Eastern Energy since October 29, 1998. Mr. Shapard was Treasurer and
Assistant Secretary of TXU Corp. from August 5, 1997 to September 14, 1998.
Prior to August 1997, Mr. Shapard was the Manager of Investor Relations of TXU
Corp.
Paul O'Malley has served as a director of AGP since April 29, 1999 and
the Chief Financial Officer of TXU APL since April 15, 1999. Mr. O'Malley was
director of corporate finance at Deloitte Touche Tohmatsu from June 1997 to
March 1999. Prior to June 1997, Mr. O'Malley was a consultant with Deloitte
Touche Tohmatsu.
Peter Magarry is General Manager of TXU Networks. In this role, Mr.
Magarry is responsible for the functions associated with operating the combined
Electricity and Gas networks of Eastern Energy and Westar in Victoria. Mr.
Magarry has spent 35 years in the utilities industry in Australia with extensive
experience in the management of electricity networks in regional and city based
utilities in Queensland and Victoria.
Leonard Gill is General Manager, Wholesale Energy Trading. Prior to
joining TXU Australia in May 1999, Mr. Gill held the position of General
Manager, Marketing and Strategy for Ecogen, a Victorian based electricity
generator.
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Caryle Demarte is General Manager of the Retail business segment of
TXU Australia. Prior to joining TXU Australia in February 1999, Ms. Demarte held
the position of General Manager, Kinetik Energy from its inception in 1997. Ms.
Demarte has held senior positions in the Government-owned Gas & Fuel
Corporation. Ms. Demarte is a Board Member of the Australian Gas Association,
the Energy Industry Ombudsman Victoria and of VENCorp.
There are no family relationships between any of the above-named
executive managers.
COMPENSATION OF EXECUTIVE OFFICERS
The officers of TXU APL, listed above, have received, and will
continue to receive, compensation in respect of services performed by those
persons as officers of their primary employer, which is TXU Corp., TXU APL or
another subsidiary of TXU Corp. Those officers receive no cash or non-cash
compensation for the services they perform for TXU Australia beyond that which
they would otherwise receive from their primary employer.
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DESCRIPTION OF THE JUMPS
The JUMPS will be issued under an indenture dated as of , 2000
between TXU Australia and The Bank of New York, as trustee.
Global certificates for the JUMPS will be held by DTC. Beneficial
interests in the JUMPS will trade through DTC. Specific terms of the JUMPS will
be described in an officer's certificate delivered to the trustee. Material
terms of the JUMPS and the indenture are summarized below. You should read the
indenture, the United States Trust Indenture Act of 1939, as amended, and the
officer's certificate for a more complete description. You should also read the
Deed of Common Terms dated February 24, 1999, as amended on February 24, 2000,
among TXU Australia, National Bank Australia Bank Limited and others which
contains limitations on certain rights of holders of the JUMPS. Copies of the
indenture and the officer's certificate are available upon request to the
trustee. Whenever particular provisions or defined terms in the indenture are
referred to under this DESCRIPTION OF THE JUMPS, those provisions or defined
terms are incorporated by reference in this prospectus. For your convenience, we
indicate sections of the indenture where they are described.
The JUMPS will be issued as debt securities. The indenture permits the
issuance of an unlimited principal amount of debt securities in series, the
first of which series is the JUMPS. The JUMPS will be unsecured, subordinated
obligations of TXU Australia. The indenture does not limit the number of series
or amount of debt securities that may be issued under the indenture or limit the
aggregate amount of indebtedness that TXU Australia or Group companies may issue
under other bonds, notes, debentures or similar instruments.
The covenants contained in the indenture will not afford beneficial
owners or holders of JUMPS protection in the event of a highly-leveraged
transaction or change of control involving TXU Australia.
DISTRIBUTIONS AND MATURITY
The JUMPS will mature on , 20 .
Distributions on the JUMPS will:
o Be payable in US dollars at the rate of per annum;
o Be computed on the basis of a 360-day year of twelve 30-day
months, and for any period shorter than a month, on the basis of
the actual number of days elapsed (Indenture, Section 310);
o Be payable quarterly in arrears on , , and of each year,
beginning , unless deferred as described below under - "OPTION TO
DEFER DISTRIBUTIONS;"
o Originally accrue from and including the date of initial
issuance, to and excluding the first distribution date;
o Generally accrue from and including the last distribution date to
which distributions have been paid to and excluding the next
distribution date or the redemption date, whichever comes first;
and
o Be payable on overdue distributions to the extent permitted by
law at the same rate as distributions are payable on principal.
If any payment date is not a business day, payment will be made on the
next business day, except that if the next business day would be in the next
calendar year, the payment will be made on the business day immediately
preceding the payment date. In either case, the payment will be made with the
same force and effect as if made on the payment date, without any further
distributions or other payments resulting from the delay. With respect to
payments, a business day is a day, other than a Saturday, Sunday or a day on
which banking institutions and trust companies are generally authorized or
required to remain closed in the place of payment.
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Distributions on each JUMPS will be paid on a distribution date to the
holder in whose name that JUMPS is registered at the close of business on the
related record date, except that distributions payable upon redemption will be
paid on the redemption date to the holder to whom the principal is paid. The
regular record date for payment of distributions on JUMPS in global form will be
the business day in The City of New York immediately preceding the date of such
distribution. See "--CERTIFICATED JUMPS" for the regular record date for payment
of distributions on JUMPS in certificated form. If any distribution has not been
paid when due on any JUMPS, the defaulted distributions may be payable to the
registered owner as of the close of business on a date selected by the trustee.
A distribution will not be considered payable by TXU Australia on any
distribution date falling within a deferral period unless TXU Australia elects
to make a full or partial payment of accrued distributions on the JUMPS on that
distribution payment date. (Indenture, Section 307)
Payments of principal will be paid on a redemption date in US dollars
to the registered owners of the JUMPS only upon surrender of the JUMPS to the
trustee.
The Bank of New York is the initial paying agent for the JUMPS in The
City of New York. Payments on the JUMPS will be made at the office of The Bank
of New York maintained for that purpose in The City of New York which, may be
changed, to an office or agency of TXU Australia or a successor trustee in The
City of New York. However, at the option of TXU Australia, payments on the JUMPS
may be made:
o By checks mailed by the trustee or a paying agent to the holders
at their registered addresses; or
o By wire transfers to accounts maintained in the USA by the
holders of more than $ principal amount of JUMPS as specified in
the register for the JUMPS.
OPTION TO DEFER DISTRIBUTIONS
So long as no Event of Default under the indenture has occurred and is
continuing, TXU Australia will have the right, at any time and from time to
time, to defer distributions on the JUMPS for up to 20 consecutive quarters. TXU
Australia will pay additional distributions on any deferred distribution at the
same rate as the JUMPS, compounded quarterly, to the date of payment, to the
extent legally permitted. When the deferral period has ended, TXU Australia will
pay all accrued and unpaid distributions on the next distribution payment date.
Before any deferral period ends, TXU Australia may further defer distributions.
However, a deferral period, together with any previous and further deferral
periods, may not exceed 20 consecutive quarters and may not extend beyond the
maturity date of the JUMPS. During a deferral period, TXU Australia will have
the right to pay partial distributions on any distribution payment date. After a
deferral period terminates and all amounts due are paid, TXU Australia may
select a new deferral period, subject to the previously mentioned requirements.
If TXU Australia defers payment on the JUMPS, no payment (interest,
distributions, redemption, repurchase or otherwise) may be declared or paid by
TXU Australia on or with respect to its partnership interests or any other
securities, guarantees or other obligations of TXU Australia ranking junior to
or equal with the JUMPS. Based upon TXU Australia's current financial condition,
TXU Australia believes that the deferral of any distributions on the JUMPS is
currently unlikely, and it has no current intention to defer any distributions.
TXU Australia will notify the holder or holders of the JUMPS and the
trustee of its election or extension of a deferral period at least one business
day before the earlier of:
o the record date for the distribution date on which the deferral
period is to begin or the record date for the distribution date
on which the deferral period that is being extended would
otherwise terminate; or
o the date that TXU Australia is required to give notice to the
NYSE or other exchange on which the JUMPS are listed of the
record date or of the date those distributions are payable.
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REDEMPTION
TXU Australia may redeem all or any part of the JUMPS at any time and
from time to time on or after , 2005 at a redemption price equal to the
principal amount of the JUMPS to be redeemed plus accrued and unpaid
distributions and Additional Amounts, if any, to the redemption date.
If TXU Australia elects to redeem less than all the JUMPS, the
particular JUMPS to be redeemed will be selected by lot or by such other method
of random selection as the security registrar deems fair and appropriate and the
book-entry interests in the JUMPS will be redeemed in accordance with the
depositary's standard procedures. See "--BOOK-ENTRY ONLY ISSUANCE - THE
DEPOSITORY TRUST COMPANY."
If the JUMPS are in global form, TXU Australia will give notice to the
holder of the JUMPS to be redeemed 30 days to 60 days before the redemption
date. See "--CERTIFICATED JUMPS" for redemption notice provisions for JUMPS in
certificated form. (Indenture, Section 404)
Any notice of redemption may state that redemption is conditional on
receipt by the trustee or paying agent or agents, on or before 11:00 a.m., New
York City time, on the redemption date, of money sufficient to pay the principal
of and accrued distributions, if any, on the JUMPS and that if the money has not
been so received, TXU Australia will not be required to redeem the JUMPS.
TXU Australia may not redeem less than all outstanding JUMPS unless
all accrued and unpaid distributions have been paid on all JUMPS for all
quarterly distribution periods terminating on or prior to the redemption date.
If TXU Australia gives a notice of redemption of any JUMPS held by the
depositary and has irrevocably deposited with the trustee or a paying agent or
agents sufficient cash to pay those JUMPS on or before the redemption date,
then, by 12:00 noon, New York City time, on the redemption date, the trustee or
the paying agent or agents will deposit with the depositary sufficient funds to
pay the redemption price for those JUMPS. TXU Australia will also give the
depositary instructions and authority to pay the redemption price through its
procedures to its participants for the benefit of the applicable beneficial
owners of the JUMPS.
If TXU Australia gives a notice of redemption of any JUMPS and has
irrevocably deposited with the trustee or a paying agent or agents sufficient
cash to pay those JUMPS on or before the redemption date, then on the redemption
date distributions will cease to accrue on those JUMPS and all rights of the
holders of those JUMPS will cease, except for the right to receive the
redemption price on those JUMPS, without any distributions or other payments
after the redemption date. If any redemption date is not a business day in New
York City, then payment of the amounts payable on the redemption date will be
made to the holders on the next succeeding day that is a business day, without
any interest or other payment in respect of any delay. However, if that business
day falls in the next calendar year, the payment will be made to the holders on
the immediately preceding business day.
TXU Australia may, at any time and from time to time, purchase any
outstanding JUMPS by tender, in the open market or by private agreement,
provided that it complies with United States federal securities laws and any
other applicable laws.
TAX EVENT REDEMPTION
TXU Australia may redeem all of the outstanding JUMPS at any time
within 90 days following the occurrence of a Tax Event. A Tax Event means that
the general partner of TXU Australia:
(A) has requested, received and delivered to the trustee an opinion
from a reputable legal counsel or other tax adviser in the US, Australia or the
UK, as appropriate, experienced in these matters that there has been:
o an amendment to, or change (or announced prospective change) in,
the laws or treaties (or related regulations) of any of those
jurisdictions or any political subdivision or taxing authority of
any of those jurisdictions,
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o a judicial decision or an official administrative pronouncement,
ruling, regulatory procedure, notice or announcement, including a
notice or announcement of intent to issue or adopt any
administrative pronouncement, ruling, regulatory procedure or
regulation (each, an Administrative Action), or
o an amendment to, or change in, the official position or
interpretation of an Administrative Action or judicial decision
or any interpretation or pronouncement that provides for a
position with respect to an Administrative Action or judicial
decision that differs from the previously generally accepted
position, in each case, by any legislative body, court,
governmental authority or regulatory body, regardless of when or
how the amendment or change is introduced or made known,
which amendment or change is effective or which Administrative Action is taken
or which judicial decision is issued on or after the date of issuance of the
JUMPS, and which relates to the event described below in this paragraph, and
that as a result of the occurrence of any of the above there is more than an
insubstantial risk that:
o distributions on the JUMPS will not be, or are not, fully
deductible for UK taxation purposes, or
(B) has requested, received and delivered to the trustee an opinion
from a reputable legal counsel or other tax adviser in the US, Australia or the
UK, as appropriate, experienced in these matters that there has been a tax
action, which means
o an amendment, change, Administrative Action, judicial decision,
or administrative pronouncement, ruling, regulation, procedure,
notice or announcement as described in (A) above, or
o a clarification of the laws or treaties (or related regulations)
of any of those jurisdictions or any political subdivision or
taxing authority of any of those jurisdictions, or
o a clarification of the official position or interpretation of an
Administrative Action or judicial decision or any interpretation
or pronouncement that provides for a position with respect to an
Administrative Action or judicial decision that differs from the
previously generally accepted position, in each case, by any
legislative body, court, governmental authority or regulatory
body, regardless of when or how the clarification is introduced
or made known,
which tax action is effective on or after the date of issuance of the JUMPS,
which tax action relates to any of the events described below in this paragraph,
and that as a result of the occurrence of that tax action there is more than an
insubstantial risk that:
o distributions on the JUMPS will not be, or are not, deductible
for Australian income tax purposes, or
o distributions on the JUMPS will not be, or are not, fully
deductible for US federal income tax purposes, or
o tax losses of, or other amounts in respect of, TXU Australia
which, but for such tax action, would be eligible for surrender
by way of group relief for UK corporation tax purposes against
the taxable profits of any company which at the date of the issue
of the JUMPS is a member of the same group of companies as TXU
Australia for purposes of group relief, as a result of the tax
action, will not be, or are not, so eligible, or
(C) has certified to the trustee that, as a result of a tax action,
Additional Amounts, as described under "-- ADDITIONAL AMOUNTS" below, are, or
will be payable with respect to any payments made on the JUMPS, and has further
certified to the trustee that it cannot avoid the requirement to pay such
Additional Amounts by using reasonable efforts.
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SUBORDINATION PROVISIONS
The JUMPS will rank equal in right of payment with all other
obligations issued under the indenture and any of TXU Australia's securities
which are specifically unsecured, "junior" and "subordinate" by their terms, but
will otherwise rank subordinated and junior in right of payment to all other
debt instruments of TXU Australia, including Senior Indebtedness.
The subordination provisions include a requirement for any holder of
JUMPS or the Trustee to turn over to the senior debt trustee under the Financing
Documents any moneys received or recovered through the exercise of remedies
under the indenture or otherwise, at all times during the occurrence and
continuance of a default under the Financing Documents, until the Senior
Indebtedness is paid in full. So long as there is Senior Indebtedness
outstanding and to the extent permitted by the Trust Indenture Act and other
applicable law, each Holder of the JUMPS, by its acceptance thereof, and the
Trustee (on behalf of all Holders) agrees that all amounts owing under the JUMPS
are subordinated to the Senior Indebtedness and further agree:
(a) if an event of a nature specified in or contemplated by the fourth
through the fifteenth bullet-points of the -"EVENTS OF DEFAULT" section (any
such event, a "Bankruptcy Event") occurs, then the JUMPS shall become due and
payable immediately and the Holders and the Trustee shall act in conformity with
the provisions of any Senior Indebtedness then outstanding, including, but not
limited to, appointing any trustee or other person acting on behalf of the
Senior Indebtedness as the Holder's attorney-in-fact to file, process, or
otherwise deal with any claims to be filed in any proceeding in connection with
such Bankruptcy Event, all in accordance with the terms of the Senior
Indebtedness; provided, however, that the Holder may otherwise file, prosecute
and defend a proof of claim or similar filing in connection with such proceeding
if, and only if, (i) the trustee or other person acting on behalf of the Senior
Indebtedness in connection with such proceeding has failed to file such proof of
claim on behalf of the Holder, and (ii) a final deadline for filing such proof
of claim will occur within the next 10 business days;
(b) except as permitted by the terms of any Senior Indebtedness then
outstanding or with the prior written consent of the trustee or other person
acting on behalf of any Senior Indebtedness outstanding or, following the
occurrence of an event of default under the Senior Indebtedness, as directed by
the trustee or other person acting on behalf of the Senior Indebtedness, not to
vote for the winding up of TXU Australia, apply to any court to wind up TXU
Australia, or requisition a meeting to consider (i) a resolution for winding up
of TXU Australia, (ii) a scheme of arrangement for TXU Australia, or (iii) a
resolution for the appointment of an administrator to TXU Australia;
(c) not to set off the debt represented by any JUMPS against any
indebtedness owing to TXU Australia;
(d) not to accept the benefit of any guarantee in respect of the JUMPS
except as allowed by the terms of the Senior Indebtedness then outstanding;
(e) agree not to suffer to exist or take any security interest to
secure payment of the JUMPS except as allowed by the terms of the Senior
Indebtedness then outstanding; and
(f) not to amend or vary the JUMPS or the indenture if such variation
or amendment would result in the JUMPS ceasing to be subordinated to the Senior
Indebtedness.
In the event that in a proceeding in connection with a Bankruptcy
Event, any amount due and owing on the JUMPS is set off against amounts owing to
TXU Australia by a Holder of JUMPS, then that Holder agrees to indemnify the
holders of Senior Indebtedness, to the extent of such set off, against any
amount the holders of Senior Indebtedness are unable to recover on the Senior
Indebtedness in that proceeding directly as a result of such set off.
In furtherance of the foregoing, the Trustee and the Holders of the
JUMPS appoint the trustee under the Senior Indebtedness as their
attorney-in-fact to do anything the Trustee or the Holder may lawfully do to
exercise a right of proof of claim following a Bankruptcy Event (including,
without limitation, executing drawdown notices, repayment notices, executing
deeds and instituting, conducting and defending legal proceedings and receiving
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any dividend arising out of such right); provided, however, that no
attorney-in-fact acting in such capacity on behalf of the Holders of JUMPS may
waive or compromise TXU Australia's obligations with respect to the JUMPS or any
amounts due thereon. The trustee under the Senior Indebtedness, acting as such
attorney-in-fact, may delegate its powers to any person for any period and may
revoke a delegation and may exercise or concur in exercising its powers even if
the attorney-in-fact has a conflict of duty in exercising its powers or has a
direct or personal interest in the means or result of that exercise of powers.
Except as otherwise contemplated above, the Trustee or the Holders of the JUMPS
may not exercise any such right of proof of claim in any such proceeding in
connection with such Bankruptcy Event independently of the power-of-attorney
granted. (Indenture Section 1501).
Upon any voluntary or involuntary distribution of assets of TXU
Australia to its creditors in any bankruptcy, insolvency, receivership or other
similar proceedings, all principal of, and premium, if any, and interest due or
to become due on, all Senior Indebtedness must be paid in full before the
holders of the JUMPS are entitled to receive or retain any payment. To the
extent that any distributions in these proceedings applicable to the JUMPS are
paid to holders of Senior Indebtedness, the holders of the JUMPS will be
subrogated to the rights of the holders of Senior Indebtedness to receive
further distributions applicable to Senior Indebtedness after the Senior
Indebtedness is paid in full. (Indenture 1504)
The term "Senior Indebtedness" is defined in the indenture to mean all
obligations (other than indebtedness issued under the indenture and other
equally ranking indebtedness) of, or guaranteed or assumed by, TXU Australia for
borrowed money, including both senior and subordinated indebtedness for borrowed
money (other than debt securities issued under the indenture, including the
JUMPS), or for the payment of money relating to any lease which is capitalized
on the consolidated balance sheet of TXU Australia Group in accordance with
generally accepted accounting principles applicable to TXU Australia as in
effect from time to time, or indebtedness evidenced by bonds, debentures, notes
or other similar instruments, whether existing as of the date of the indenture
or subsequently incurred by TXU Australia. (Indenture 101)
An event of default with respect to any Senior Indebtedness may not
necessarily constitute an Event of Default with respect to the JUMPS.
The indenture does not limit the aggregate amount of Senior
Indebtedness that TXU Australia may issue. As of December 31, 1999, outstanding
Senior Indebtedness of TXU Australia and its subsidiaries aggregated
approximately A$2,800 million (US$ 1,697 million).
EFFECTIVE PRIORITY OF SUBSIDIARY OBLIGATIONS
TXU Australia is a holding partnership that derives substantially all
of its income from the Group companies. Substantially all of TXU Australia's
consolidated assets are held by the Group companies. Accordingly, the ability of
TXU Australia to service its debt is largely dependent on the earnings of the
Group companies and the payment of those earnings to TXU Australia in the form
of dividends, loans, or advances, and through repayment of loans or advances
from TXU Australia to those Group companies. The Group companies have no
obligation to pay any amounts due on the JUMPS.
ADDITIONAL AMOUNTS
All payments made on the JUMPS will be made without withholding or
deduction for any taxes or other governmental charges imposed by a jurisdiction
in which TXU Australia is organized or is managed or has a place of business, or
any political subdivision or taxing authority of that jurisdiction (each, a
Taxing Jurisdiction), unless the withholding or deduction is required by law. If
any required withholding or deduction is made (Gross-Up Taxes), TXU Australia
will pay to each holder of JUMPS any additional amounts as shall be necessary so
that the net amount received by each holder of JUMPS after the withholding or
deduction equals the amount that the holder would have received absent that
withholding or deduction (Additional Amounts), except that no Additional Amounts
will be payable:
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o on account of any tax, duty, assessment or other governmental
charge that would not have been imposed but for the existence of
any present or former connection between the holder (or between a
fiduciary, settlor, beneficiary, member, shareholder or affiliate
of, or possessor of a power over, such holder) and a Taxing
Jurisdiction, including, without limitation, such holder (or such
fiduciary, settlor, beneficiary, member, shareholder, affiliate
or possessor) being or having been a citizen, national or
resident or being or having been present or engaging or having
engaged in trade or business or having or having had a permanent
establishment in such Taxing Jurisdiction;
o on account of any estate, inheritance, gift, sales, transfer,
franchise, wealth, personal property or similar tax, duty,
assessment or other governmental charge;
o on account of any tax, duty, assessment or other governmental
charge that is payable otherwise than by withholding or
deduction; and
o on account of any tax, duty, assessment or other governmental
charge that is imposed or withheld by reason of the failure by
the holder or the beneficial owner of a JUMPS (a) to provide
information concerning the nationality, residence or identity of
such holder or such beneficial owner or (b) to make any
declaration or other similar claim or satisfy any information or
reporting requirement, which, in the case of (a) or (b), is
required or imposed by a statute, treaty, rule, regulation or
administrative practice of the taxing jurisdiction as a
precondition to exemption from all or part of such tax, duty,
assessment or other governmental charge;
No Additional Amounts will be payable with respect to any JUMPS if the
beneficial owner would not have been entitled to that payment if that beneficial
owner had been a holder. See "-- CERTIFICATED JUMPS" for additional limitations
on payment of Additional Amounts for JUMPs held in certificated form.
BOOK-ENTRY ONLY ISSUANCE - THE DEPOSITORY TRUST COMPANY
The JUMPS will be book-entry securities. Upon issuance, all book-entry
securities will be represented by one or more fully registered global JUMPS,
without coupons. Each global JUMPS will be deposited with, or on behalf of, DTC,
a securities depositary, and will be registered in the name of DTC or a nominee
of DTC. DTC will thus be the only registered holder of the JUMPS and will be
considered the sole owner of the JUMPS for purposes of the indenture. A
beneficial holder of book-entry JUMPS will be entitled to receive JUMPS in
certificated form only in the circumstances described in "- CERTIFICATED JUMPS."
Purchasers of JUMPS may only hold interests in the global JUMPS
through DTC if they are participants in the DTC system. Purchasers may also hold
interests through a securities intermediary - banks, brokerage houses and other
institutions that maintain securities accounts for customers - that has an
account with DTC or its nominee or another securities intermediary. DTC will
maintain accounts showing the JUMPS holdings of its participants, and these
participants will in turn maintain accounts showing the JUMPS holdings of their
customers. Some of these customers may themselves be securities intermediaries
holding JUMPS for their customers. Thus, each beneficial owner of a book-entry
JUMPS will hold that JUMPS indirectly through a hierarchy of intermediaries,
with DTC at the "top" and the beneficial owner's own securities intermediary at
the "bottom".
The JUMPS of each beneficial owner of a book-entry security will be
evidenced solely by entries on the books of the beneficial owner's securities
intermediary. The actual purchaser of the JUMPS will generally not be entitled
to have the JUMPS represented by the global JUMPS registered in its name and
will not be considered the owner under the indenture. In most cases, a
beneficial owner will also not be able to obtain a paper certificate evidencing
the holder's ownership of JUMPS. The book-entry system for holding JUMPS
eliminates the need for physical movement of certificates and is the system
through which most publicly traded common stock is held in the United States.
However, the laws of some jurisdictions require some purchasers of securities to
take physical delivery of their securities in definitive form. These laws may
impair the ability to transfer book-entry securities.
In this prospectus, for book-entry JUMPS, references to actions taken
by JUMPS holders will mean actions taken by DTC upon instructions from its
participants, and references to payments and notices of redemption to JUMPS
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holders will mean payments and notices of redemption to DTC as the registered
holder of the JUMPS for distribution to participants in accordance with DTC's
procedures.
DTC is a New York clearing corporation and a clearing agency
registered under Section 17A of the Securities Exchange Act of 1934. DTC holds
securities for its participants. DTC facilitates settlement transactions among
its participants through electronic computerized book-entry changes in
participants' accounts. This eliminates the need for physical movement of
securities certificates. The participants include securities brokers and
dealers, banks, trust companies and clearing corporations. DTC is owned by a
number of its participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Others who maintain a custodial relationship with a participant
can use the DTC system. The rules applicable to DTC and its participants are on
file with the SEC.
All transfers of beneficial interests in the global JUMPS will be
recorded on the book-entry system maintained by DTC, will be effected in
accordance with DTC's procedures, and will be settled in same-day funds.
Payments on the global JUMPS will be made by TXU Australia through the trustee
or other paying agent to DTC. DTC will immediately credit participants' accounts
with those payments in amounts proportionate to their interests in the JUMPS as
shown on the records of DTC. Payments by participants to owners of beneficial
interests will be made according to standing customer instructions and customary
practices. DTC will have no responsibility for payments by its participants. If
any global JUMPS are redeemed, the trustee or paying agent will deliver the
amount received by it to DTC. In the event of a partial redemption, selection of
interests in the JUMPS to be redeemed will be made by DTC proportionally or on
any other basis that DTC deems fair and appropriate.
TXU Australia understands that DTC, under its current practices, would
authorize its participants owning interests in the JUMPS to take any action
holders are entitled to take under the indenture. Those participants would
authorize indirect participants to take that action or would otherwise act upon
the instructions of owners of beneficial interests holding through them.
According to DTC, the foregoing information with respect to DTC has
been provided to the industry for informational purposes only and is not
intended to serve as a representation, warranty, or contract modification of any
kind.
TXU Australia, the trustee and the agents will not have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, or authorizations to the owners of, beneficial
ownership interests in the book-entry securities or for maintaining, supervising
or reviewing any records relating to the beneficial ownership interests.
DTC may discontinue providing its services as securities depositary
with respect to the JUMPS at any time by giving reasonable notice to TXU
Australia. Under such circumstances, in the event that a successor securities
depositary is not obtained within 90 days, JUMPS certificates are required to be
printed and delivered. Additionally, TXU Australia may decide to discontinue use
of the system of book-entry transfers through DTC or any successor depositary
with respect to the JUMPS. In that event, certificates for the JUMPS will be
printed and delivered based on instructions and information received from DTC.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that TXU Australia believes to be
reliable, but TXU Australia takes no responsibility for the accuracy of this
information.
CERTIFICATED JUMPS
A beneficial owner of book-entry JUMPS may exchange them for JUMPS in
certificated form only if:
o DTC is unwilling or unable to continue as depositary for the
global JUMPS and TXU Australia is unable to find a qualified
replacement for DTC within 90 days;
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o DTC at any time ceases to be a clearing agency registered under
the Securities Exchange Act of 1934; or
o TXU Australia in its sole discretion decides to allow the
book-entry JUMPS to be exchangeable for certificated JUMPS in
registered form.
In that case, global JUMPS will be exchangeable in whole for
certificated JUMPS in registered form, with the same terms and of an equal
aggregate principal amount, in denominations of US$25 and whole multiples of
US$25. Certificated JUMPS will be registered in the name or names of the
person or persons specified by DTC in a written instruction to the registrar
of the JUMPS. DTC may base its written instruction upon directions it
receives from its participants.
RECORD DATES. The record date for payment of distributions on JUMPS in
certificated form will be the fifteenth day of the calendar month before the
relevant distribution payment date, whether or not it is a business day in The
City of New York.
REDEMPTION NOTICES. TXU Australia will mail notice to each holder of
JUMPS in certificated form to be redeemed 30 days to 60 days before such
redemption date.
ADDITIONAL AMOUNTS. No Additional Amounts will be payable:
o to or for a holder of JUMPS in certificated form who presents a
JUMPS required to be presented for payment more than 30 days
after the date on which payment first becomes due, unless that
holder would have been entitled to those Additional Amounts by
presenting a JUMPS on the last day of the 30 day period; or
o to or for a holder of JUMPS in certificated form who presents a
JUMPS, when presentation is required, at any place other than (a)
the corporate trust office of the trustee in The City of New York
or (b) a paying agent location for the JUMPS designated by TXU
Australia for that purpose.
FORM, EXCHANGE, AND TRANSFER
The JUMPS will be issuable only in fully registered form without
coupons and in denominations of US$25 and any integral multiple of US$25.
At the option of the holder, JUMPS will be exchangeable for other
JUMPS of the same series of any authorized denomination and with the same terms
and aggregate principal amount.
Certificated JUMPS may be presented for exchange or for registration
of transfer (duly endorsed or accompanied by a duly executed instrument of
transfer) at the office of the security registrar or at the office of any
transfer agent designated by TXU Australia for such purpose. TXU Australia may
designate itself the security registrar. No service charge will be made for any
registration of transfer or exchange of JUMPS, but TXU Australia may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. Such transfer or exchange will be effected upon
the security registrar or such transfer agent, as the case may be, being
satisfied with the documents of title and identity of the person making the
request. TXU Australia may at any time designate additional transfer agents or
rescind the designation of any transfer agent or approve a change in the office
through which any transfer agent acts, except that TXU Australia will be
required to maintain a transfer agent in each place of payment for the JUMPS.
TXU Australia will not be required to execute or to provide for the
registration of transfer of, or the exchange of:
o Any JUMPS during a period 15 days before giving notice of
redemption; or
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o Any JUMPS selected for redemption in whole or in part, except the
unredeemed portion of any JUMPS being redeemed in part.
(Indenture, Section 305)
PAYING AGENTS
The Bank of New York will initially act as paying agent for the JUMPS.
Principal of and distributions and any Additional Amounts on the JUMPS will be
payable at the office of this paying agent or paying agents that TXU Australia
may designate for this purpose from time to time. TXU Australia may at any time
designate additional paying agents or rescind the designation of any paying
agent or approve a change in the office through which any paying agent acts,
except that TXU Australia will be required to maintain a paying agent in each
place of payment for the debt securities of a particular series.
TXU Business Services Company will initially act as registrar and
transfer agent for the JUMPS.
All moneys paid by TXU Australia to a paying agent for the payment of
the principal of or distributions or any Additional Amounts on the JUMPS which
remain unclaimed at the end of two years after the principal, distribution or
Additional Amount has become due and payable will be repaid to TXU Australia or
to the appropriate governmental agency for unclaimed funds, and the holder of
the affected JUMPS may look only to TXU Australia or the appropriate
governmental agency for payment.
CONSOLIDATION, MERGER, AND SALE OF ASSETS
Under the terms of the indenture, TXU Australia or its general partner
may not consolidate with or merge into any other entity or convey, transfer or
lease its properties and assets substantially as an entirety to any person or
entity, unless
o the entity formed by such consolidation or into which TXU
Australia or its general partner, as the case may be, is merged
or the person or entity which acquires by conveyance or transfer,
or which leases, the property and assets of TXU Australia or its
general partner, as the case may be, substantially as an entirety
shall expressly assume TXU Australia's obligations on the JUMPS
and under the indenture, or its general partner's obligations
under the partnership deed, as the case may be,
o immediately after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have occurred and
be continuing, and
o TXU Australia shall have delivered to the trustee an officer's
certificate of its general partner and an opinion of counsel as
provided in the indenture. (Indenture, Section 1101)
The indenture does not prevent or restrict:
o TXU Australia or its general partner from entering into a merger
in which that entity is the surviving entity; and
o any consolidation or merger of any Group company other than TXU
Australia's general partner or the conveyance or other transfer,
or lease, of any part of the assets of TXU Australia Group other
than the assets of TXU Australia itself or its general partner,
or any conveyance, transfer or lease, which does not constitute
the entirety, or substantially the entirety, of the direct assets
of TXU Australia, which are primarily the common shares of
Holdings, or its general partner. (Section 1103).
In the event that any successor entity is organized under the laws of
a jurisdiction other than a Taxing Jurisdiction and withholding or deduction is
required by law for or on account of any present or future taxes, duties,
assessments or governmental charges of whatever nature imposed, levied,
collected, withheld or assessed by or within the jurisdiction in which the
successor entity is organized, or is managed or has a place of business, or by
or within any political subdivision of that jurisdiction or any authority in or
of that jurisdiction having power to tax, the successor entity will pay to the
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relevant holders of JUMPS, under the same circumstances and subject to the same
limitations, such Additional Amounts, as would be payable as set forth under
"--ADDITIONAL AMOUNTS" above, but substituting for the applicable Taxing
Jurisdiction in each place the name of the jurisdiction under the laws of which
the successor entity is organized, is managed or has a place of business and
controlled, or has a place of business.
EVENTS OF DEFAULT
"Event of Default", when used in the indenture with respect to the
debt securities of any series including the JUMPS, means any of the following
has occurred:
o Failure to pay any distributions on the debt securities of that
series within 30 days after they are due; however, any valid
deferral of distributions is not considered a failure to pay
distributions for this purpose;
o Failure to pay principal or premium, if any, on the debt
securities of that series when due;
o Failure to perform, or breach of, any other covenant or warranty
of TXU Australia in the indenture (other than a covenant or
warranty of TXU Australia in the indenture solely for the benefit
of one or more series of debt securities other than that series)
for 60 days after written notice to TXU Australia by the trustee,
or to TXU Australia and the trustee by the holders of at least
33% in principal amount of the debt securities of that series
outstanding under the indenture as provided in the indenture;
o 90 days after the occurrence of an Insolvency Event (as defined
in the Partnership Deed) of a limited partner of TXU Australia,
unless, within 90 days of such Insolvency Event, TXU Australia's
general partner has given notice to the other partners of TXU
Australia of its continuation and TXU Australia, at all times
from and after such Insolvency Event, is in fact continued as a
limited partnership under the laws of the state of Victoria,
Australia;
o An order is made by a court of competent jurisdiction that TXU
Australia or the general partner of TXU Australia be wound up or
dissolved, or an order is made appointing a liquidator or
provisional liquidator in respect of TXU Australia or the general
partner of TXU Australia, or a liquidator or provisional
liquidator is appointed in respect of TXU Australia or the
general partner of TXU Australia (whether or not by order) and
that order is not vacated or such liquidator is not removed
within 90 days;
o TXU Australia resolves to wind itself up, or otherwise dissolve
itself, or gives notice of its intention to do so;
o The general partner of TXU Australia resolves to wind itself up
or to wind up TXU Australia, or otherwise dissolve itself or TXU
Australia, or gives notice of its intention to do so;
o TXU Australia or its general partner enters into, or resolves to
enter into, a scheme of arrangement, partnership deed or
composition with, or assignment for the benefit of, all or any
class of TXU Australia's or TXU Australia's general partner's
creditors or proposes a reorganization, moratorium or other
administration, in each case under any applicable bankruptcy,
insolvency or other similar law, involving any of them;
o TXU Australia or its general partner takes any step to obtain
protection (including, without limitation, summoning a creditors'
meeting to consider a proposal for voluntary arrangement) or TXU
Australia or its general partner (as the case may be) is granted
protection from its creditors under any applicable legislation
and such step is not reversed within 90 days;
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o A receiver, receiver and manager or similar officer is appointed
in respect of all or any substantial part of the property of TXU
Australia and that officer is not removed within 90 days if that
officer was not voluntarily appointed by TXU Australia;
o An administrator or controller (as those terms are defined in the
Corporations Law of the State of Victoria, Australia) is
appointed to the general partner of TXU Australia or in respect
of all or any substantial part of its property, as the case may
be, and that officer is not removed within 90 days;
o TXU Australia, or its general partner, is or states that it is
unable to pay its debts as and when they fall due or is
adjudicated by a court of competent jurisdiction to be insolvent;
o The general partner of TXU Australia is insolvent or is deemed by
any applicable law to be insolvent;
o The general partner of TXU Australia, or its board of directors,
resolves to appoint an administrator (as that term is defined in
the Corporations Law of the State of Victoria, Australia) to the
general partner;
o Anything analogous or having a substantially similar effect to
any of the events specified in the preceding ten bullet points
above happens under the laws of any applicable jurisdiction but
only if (a) TXU Australia or its general partner is no longer
formed or incorporated under the laws of the State of Victoria,
Australia and (b) any such event is not cured within the
applicable cure period, if any, specified in such paragraph;
o Failure to pay any Additional Amounts on that series within 30
days after they are due; or
o Any other event of default specified with regard to debt
securities of that series; (Indenture, Section 801)
provided, however, that the merger, consolidation or dissolution of TXU
- -------- -------
Australia or the conveyance, lease or transfer of substantially all of its
properties or assets as permitted under the terms of Article 11 of the indenture
is not considered an Event of Default for the purposes of any of paragraphs four
through eleven above.
An Event of Default for a particular series of debt securities does
not necessarily constitute an Event of Default for any other series of debt
securities issued under the indenture. The trustee will give notice to the
holders of debt securities of the relevant series of any default known to the
trustee in the manner and to the extent required by the Trust Indenture Act,
unless cured or waived, in respect to payment of the JUMPS or bankruptcy,
dissolution or insolvency of TXU Australia or AGP. The trustee will not give
notice to the holders of debt securities of any other default known to the
trustee until at least 45 days after the occurrence of the default. (Indenture,
Section 902)
REMEDIES
If an event of default with respect to any series of debt securities
occurs and is continuing, then either the trustee or the holders of not less
than 33% in principal amount of the outstanding debt securities of that series
may declare the principal amount of all of the debt securities of that series to
be due and payable immediately; provided, however, that if an Event of Default
occurs and is continuing with respect to more than one series of debt securities
under the indenture, the trustee or the holders of not less than 33% in
aggregate principal amount of the outstanding debt securities of all those
series, considered as one class (and not the holders of the debt securities of
any one of those series), may make the declaration of acceleration.
At any time after the declaration of acceleration with respect to the
debt securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained, the event of default giving rise to
the declaration of acceleration will, be considered waived, and the declaration
and its consequences will be considered rescinded and annulled:
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o if TXU Australia has paid or deposited with the trustee a sum
sufficient to pay:
o all distributions due on all debt securities of any series,
o the principal of and premium, if any, on any debt securities of
the series which have become due otherwise than by declaration of
acceleration, and interest on such amounts as applicable,
o to the extent permitted by law, interest and distributions upon
overdue interest and distributions and
o all amounts due to the trustee under the indenture. (Indenture,
Section 802)
There is no automatic acceleration, even in the event of bankruptcy,
dissolution or insolvency of TXU Australia.
Other than its duties in case of an event of default, the trustee is
not obligated to exercise any of its rights or powers under the indenture at the
request or direction of any of the holders, unless the holders offer the trustee
a reasonable indemnity. If they provide this reasonable indemnity, the holders
of a majority in principal amount of the outstanding debt securities of any
series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the trustee, or exercising any trust
or power conferred on the trustee. However, if the Event of Default relates to
more than one series, only the holders of a majority in aggregate principal
amount of all affected series will have the right to give this direction. The
trustee is not obligated to comply with directions that conflict with law or
other provisions of the indenture. (Indenture, Section 812)
No holder of debt securities of any series will have any right to
institute any proceeding with respect to the indenture, or for the appointment
of a receiver or a trustee, or for any other remedy thereunder, unless:
o the holder has previously given to the trustee written notice of
a continuing Event of Default;
o the holders of a majority in aggregate principal amount of the
outstanding debt securities of all series in respect of which an
Event of Default has occurred and is continuing have made written
request to the trustee, and have offered reasonable indemnity to
the trustee, to institute proceedings;
o the trustee has failed to institute any proceeding for 60 days
after notice; and
o the holders of a majority in aggregate principal amount of all
series in respect of which an Event of Default has occurred and
is continuing have not given the trustee direction inconsistent
with the written request within that 60 day period.
o the institution of any such proceeding, appointment of any such
receiver or trustee or pursuit of any such remedy is not
prohibited under the DCT, as described below. (Indenture, Section
807)
TXU Australia will provide to the trustee an annual statement by an
appropriate officer of its general partner as to compliance with all conditions
and covenants under the indenture. (Indenture, Section 606)
MODIFICATION AND WAIVER
Without the consent of any holder of debt securities of any series,
TXU Australia and the trustee may enter into one or more supplemental indentures
for any of the following purposes:
o to evidence the assumption by any permitted successor to TXU
Australia of the covenants of TXU Australia in the indenture and
in the debt securities issued under the indenture;
o to add one or more covenants of TXU Australia or to surrender any
right or power of TXU Australia under the indenture;
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o to add any additional Events of Default;
o to change or eliminate any provision of the indenture; provided,
however, if the change, elimination or addition will adversely
affect the interests of the holders of debt securities of any
series in any material respect, that change, elimination or
addition will become effective only:
(1) when the consent of the holders of debt securities of
that series has been obtained in accordance with the
indenture, or
(2) when no debt securities of the affected series remain
outstanding under the indenture;
o to provide collateral security for all but not part of the debt
securities;
o to establish the form or terms of debt securities of any other
series as permitted by the indenture;
o to provide for the issuance of bearer securities and related
coupons, if any;
o to evidence and provide for the acceptance of appointment of a
successor trustee;
o to provide for the procedures required for use of a
noncertificated system of registration for the debt securities of
all or any series;
o to change any place where principal, premium, if any, and
distributions, if any, will be payable, debt securities may be
surrendered for registration of transfer or exchange and notices
to TXU Australia may be served; or
o to cure any ambiguity or inconsistency or to make any other
provisions with respect to matters and questions arising under
the indenture; provided that the action will not adversely affect
the interests of the holders of debt securities of any series in
any material respect. (Indenture, Section 1201)
The holders of a majority in aggregate principal amount of the debt
securities of all series then outstanding may waive compliance by TXU Australia
with some restrictive provisions of the indenture. (Indenture, Section 607) The
holders of a majority in aggregate principal amount of the debt securities of
one or more but less than all series or tranches then outstanding may waive
compliance by TXU Australia with some restrictive provisions of the indenture
with respect to those series or tranches. (Indenture, Section 607) The holders
of a majority in aggregate of principal amount of the outstanding debt
securities of any series may waive any past default under the indenture, except
a default in the payment of principal, premium, interest, distributions or
Additional Amounts or a default in covenants and provisions of the indenture
that cannot be modified or amended without the consent of the holder of each
outstanding debt security of the series affected. (Indenture, Section 813)
If the Trust Indenture Act of 1939 is amended after the date of the
indenture to require changes to the indenture, the indenture will be deemed to
be amended so as to conform to that amendment of the Act. TXU Australia and the
trustee may, without the consent of any holders, enter into one or more
supplemental indentures to evidence or effect the amendment. (Indenture, Section
1201)
The consent of the holders of a majority in aggregate principal amount
of the debt securities of all series then outstanding, is required for all other
modifications to the indenture. However, if less than all of the series of debt
securities outstanding are affected by a proposed supplemental indenture, then
the consent only of the holders of a majority in aggregate principal amount of
all series that are affected will be required. No amendment or modification may:
o change the stated maturity, if any, of the principal of, or any
installment of principal of or interest or distribution on, any
debt security, or reduce the principal amount of any debt
security or the rate of interest or distribution on any debt
security (or the amount of any installment of interest or
distribution on any debt security) or change the method of
calculating the rate, or impair the right to institute suit for
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the enforcement of any payment on or after the stated maturity of
any debt security without the consent of the holder;
o reduce the percentage in principal amount of the outstanding debt
security of any series, whose consent is required for any
supplemental indenture, any waiver of compliance with a provision
of the indenture or any default under the indenture and its
consequences, or reduce the requirements for quorum or voting,
without the consent of all the holders of the series; or
o modify some of the provisions of the indenture relating to
supplemental indentures, waivers of specific covenants and
waivers of past defaults with respect to the debt securities of
any series, without the consent of the holder of each outstanding
debt security affected by the modification or waiver. (Indenture,
Section 1202)
A supplemental indenture which changes the indenture solely for the
benefit of one or more particular series of debt securities, or modifies the
rights of the holders of debt securities of one or more series, will not be
deemed to affect the rights under the indenture of the holders of the debt
securities of any other series. (Indenture, Section 1202)
The indenture provides that debt securities owned by TXU Australia or
any affiliate or anyone else required to make payment on the debt securities
shall be disregarded and considered not to be outstanding in determining whether
the required holders have given a request, demand, authorization, direction,
notice, waiver or consent under the indenture.
TXU Australia may fix in advance a record date to determine the
holders entitled to give any request, demand, authorization, direction, notice,
consent, election, waiver or other act of the holders, but TXU Australia will
have no obligation to do so. If a record date is fixed for that purpose, the
request, demand, authorization, direction, notice, consent, election, waiver or
other act of the holders may be given before or after the record date, but only
the holders of record at the close of business on that record date will be
considered to be holders for the purposes of determining whether holders of the
requisite percentage of the outstanding debt securities have authorized or
agreed or consented to that request, demand, authorization, direction, notice,
consent, waiver or other act of the holders. For that purpose, the outstanding
debt securities will be computed as of the record date. Any request, demand,
authorization, direction, notice, consent, election, waiver or other act of a
holder will bind every future holder of the same debt security and the holder of
every debt security issued upon the registration of transfer of or in exchange
of these debt securities. A transferee will be bound by acts of the trustee or
TXU Australia taken in reliance on those requests or directions, whether or not
notation of that action is made upon the debt security. (Indenture, Section 104)
DEFEASANCE
TXU Australia will be discharged from its obligations under the
indenture and on the JUMPS or any other series of debt securities issued under
the indenture when it deposits with the trustee cash or government securities
sufficient to pay the principal, interest or distributions, any premium and any
other sums when due before the stated maturity date, if any, or a redemption
date for that series of debt securities, provided that TXU Australia will remain
obligated to make any additional deposits that may be necessary to pay those
amounts or will deliver to the trustee an opinion of counsel to the effect that
the discharge will not be a taxable disposition of the JUMPS under US tax laws.
(Indenture, Section 701)
RESIGNATION OF TRUSTEE
A trustee may resign at any time by giving written notice to TXU
Australia or may be removed at any time by act of the holders of a majority in
principal amount of all series of debt securities upon notice of that act having
been delivered to the trustee and TXU Australia. No resignation or removal of a
trustee and no appointment of a successor trustee will become effective until
the acceptance of appointment by a successor trustee. So long as no Event of
Default or event which, after notice or lapse of time, or both, would become an
Event of Default has occurred and is continuing and except with respect to a
trustee appointed by act of the holders, if TXU Australia delivers to the
trustee a resolution of its general partner's Board of Directors appointing a
successor trustee and that successor has accepted that appointment in accordance
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with the terms of the indenture, the trustee will be deemed to have resigned and
the successor will be deemed to have been appointed as trustee in accordance
with the indenture. (Indenture, Section 910)
NOTICES
Notices to holders of JUMPS will be given by mail to the addresses of
the holders as they may appear in the security register. (Indenture, Section
106)
TITLE
TXU Australia, the trustee, and any agent of TXU Australia or the
trustee, will treat the person or entity in whose name JUMPS are registered as
the absolute owner of those JUMPS (whether or not the JUMPS may be overdue) for
the purpose of making payments and for all other purposes irrespective of notice
to the contrary. (Indenture, Section 308)
GOVERNING LAW
The indenture and the JUMPS will be governed by, and construed in
accordance with, the law of the State of New York. (Indenture, Section 112)
REGARDING THE TRUSTEE
The trustee under the indenture is The Bank of New York. In addition
to acting as trustee, The Bank of New York also maintains various banking and
trust relationships with TXU Australia and some of its affiliates.
MATERIAL INCOME TAX CONSIDERATIONS
MATERIAL AUSTRALIAN INCOME TAX CONSIDERATIONS
The following summary describes material Australian income tax
consequences of the acquisition, ownership and disposition of the JUMPS and
represents the opinion of Baker & McKenzie, Melbourne, Australia, counsel to TXU
Australia.
INTEREST WITHHOLDING TAX
Australia imposes a withholding tax of 10% on interest and amounts
deemed to be interest derived by and paid to a non-resident of Australia, unless
the interest or other amount is paid by a company that is a resident of
Australia on debentures that at the time of issuance satisfied the requirements
of the public offer test in section 128F of the Income Tax Assessment Act 1936
of Australia (the Tax Act). For purposes of the Tax Act, the JUMPS are
debentures.
The issue of a debenture, prima facie, satisfies the public offer test
if the issue of the debenture resulted from the debenture being offered for
issue as a result of being accepted for listing on a stock exchange outside
Australia where the company has previously entered into an agreement with a
dealer, manager or underwriter in relation to the placement of debentures,
requiring the company to seek such a listing. Additionally, the issue of a
global bond to a clearing house such as DTC and the offering of interests in the
global bond may also satisfy the public offer test.
For Australian tax purposes, TXU Australia is treated as a company.
The arrangements relating to the issue of the JUMPS are such that at the time of
their issue they are intended to satisfy the requirements of the public offer
test, so that as long as TXU Australia remains a tax resident of Australia, the
interest paid on the JUMPS will be exempt from Australian withholding tax
80
<PAGE>
(except if the holder of the JUMPS is a known "associate" of TXU Australia at
the time interest is paid or there are reasonable grounds for suspecting that
the holder is an "associate").
A non-resident who is carrying on business in Australia and who holds
the JUMPS through a permanent establishment (as defined in the Tax Act) in
Australia will be taxable on any interest derived that has an Australian source.
Tax is assessed at the applicable rate (currently 36% for corporations) on that
interest after allowing for appropriate deductions. The fact that the issue of
the JUMPS satisfied the public offer test will not alter this outcome.
If TXU Australia should at any time be compelled by law to deduct or
withhold an amount in respect of any withholding taxes, it shall, subject to
certain exceptions, pay such additional amounts as may be necessary in order to
ensure that the net amounts received by the holders of the JUMPS after deduction
or withholding will equal the respective amounts which would have been
receivable had no deduction or withholding been required. SEE DESCRIPTION OF THE
JUMPS - "ADDITIONAL AMOUNTS."
DISPOSAL OR REDEMPTION
A holder of the JUMPS, who is a non-resident of Australia and who
during the taxable year has not engaged in trade or business at or through a
permanent establishment in Australia, will not be subject to Australian income
tax on gains realized during that year on sale or redemption of the JUMPS,
provided such gains do not have an Australian source. A gain arising on the sale
of JUMPS by a non-Australian resident holder to another non-Australian resident
where the JUMPS are sold outside Australia and all negotiations are conducted,
and documentation executed, outside Australia would not be regarded as having an
Australian source.
OTHER TAX MATTERS
No JUMPS will be subject to death, estate or succession duties imposed
by Australia, or by any political subdivision or authority therein having power
to tax, if held at the time of death.
No ad valorem stamp, issue, registration or similar taxes are payable
in Australia on the issue of any JUMPS or the transfer of any JUMPS, except in
certain circumstances where the transfer occurs in Australia otherwise than for
full market value.
No goods and services tax is payable in respect of either the issue of
the JUMPS or the payment of the principal or any interest.
Repayments of the principal should be free of Australian tax.
MATERIAL US INCOME TAX CONSIDERATIONS
The following summary describes the material US federal income tax
consequences of the acquisition, ownership and disposition of the JUMPS and
represents the opinion of Thelen Reid & Priest LLP, counsel to TXU Australia.
Except where noted, this summary deals only with JUMPS held as capital assets
within the meaning of section 1221 of the US Internal Revenue Code of 1986, as
amended (the Code), and does not deal with special situations, such as those of
dealers in securities or currencies, financial institutions, tax-exempt
organizations, life insurance companies, individual retirement and tax-deferred
accounts, persons holding the JUMPS as part of a hedging or conversion
transaction or a straddle, persons who have a functional currency other than the
US dollar or persons who are not US holders (as defined below). In addition,
this discussion does not address the tax consequences to persons who purchase
the JUMPS other than pursuant to their initial issuance and distribution and at
their original issue price. Furthermore, the discussion below is based upon the
Code, existing and proposed Treasury regulations promulgated thereunder, and
applicable administrative rulings and judicial decisions now in effect, all of
which are subject to change, possibly on a retroactive basis, so as to result in
US federal income tax consequences different from those discussed below.
81
<PAGE>
As used herein, a "US holder" means a beneficial owner of a JUMPS that
is (i) an individual citizen or resident of the US, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the US
or any political subdivision thereof, (iii) an estate the income of which is
subject to US federal income taxation regardless of its source or (iv) a trust
if (a) a court within the US is able to exercise primary supervision over the
administration of the trust and (b) one or more US persons have the authority to
control all substantial decisions of the trust.
Prospective holders of the JUMPS are advised to consult with their tax
advisors as to the US federal income tax consequences of the acquisition,
ownership and disposition of the JUMPS in light of their particular
circumstances, as well as the effect of any state, local or other tax laws.
DISTRIBUTIONS
The JUMPS will be treated as debt for US federal income tax purposes.
Except as set forth below, distributions on the JUMPS will generally be taxable
to a US holder as ordinary income at the time they are paid or accrued in
accordance with the US holder's own method of accounting.
No amount included in the income of corporate US holders with respect
to the JUMPS will be eligible for the dividends-received deduction.
Based on the above discussion of the Australian withholding tax, it
appears that no Australian withholding tax will be imposed upon distributions
made on the JUMPS. Should withholding tax be imposed in the future or if a US
holder can credit foreign taxes paid from other sources, the amount of the
credit will be limited by the foreign tax credit limitation. In determining the
amount of the foreign tax credit limitation, income accrued on the JUMPS will
generally be treated as foreign source income and, in general, passive income or
financial services income, or if subject to a withholding tax of 5% or more,
high withholding tax income.
ORIGINAL ISSUE DISCOUNT
Under applicable US federal Treasury regulations, TXU Australia
believes that the JUMPS will not be treated as issued with original issue
discount (OID). It should be noted that these Treasury regulations have not yet
been addressed in any rulings or other interpretations by the Internal Revenue
Service (IRS). Accordingly it is possible that the IRS could take a position
contrary to the interpretations described herein.
The terms of the JUMPS permit TXU Australia to defer distributions on
the JUMPS at any time and from time to time for up to 20 consecutive quarters.
If TXU Australia exercises the option to defer distributions, the JUMPS will be
treated as having been reissued with OID at that time and all distributions on
the JUMPS thereafter will be treated as OID for as long as the JUMPS remain
outstanding. As a result, all US holders will be required to accrue interest
income as OID even if they use the cash method of accounting, and actual
distributions will not be included in taxable income. Consequently, a US holder
will be required to include OID in income on an economic accrual basis,
notwithstanding the fact that TXU Australia does not make any distributions on
the JUMPS during a deferral period.
SALE, EXCHANGE OR REDEMPTION OF THE JUMPS
Upon the sale, exchange, redemption or other taxable disposition of
the JUMPS, a US holder generally will recognize gain or loss equal to the
difference between (i) the amount of cash and the fair market value of any other
property received (excluding any accrued and unpaid distributions not previously
included in income) and (ii) the US holder's adjusted tax basis in the JUMPS. A
US holder's adjusted tax basis in the JUMPS generally will be its initial
purchase price, increased by OID previously included in the US holder's gross
income, and decreased by subsequent distributions received on the JUMPS. Such
gain or loss generally will be capital gain or loss and will be long-term
capital gain or loss if, at the time of sale, exchange or redemption, the JUMPS
have been held for more than one year. Under current law, the deductibility of
capital losses is subject to limitations. The net capital gains of individuals
generally are taxed at lower rates than ordinary income.
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<PAGE>
Any gain or loss realized by a US holder on the sale, exchange or
redemption of the JUMPS generally will be treated as from sources within the US
for purposes of computing the US foreign tax credit limitation.
INFORMATION REPORTING AND BACKUP WITHHOLDING.
To the extent required by law, income on the JUMPS will be reported to
US holders on IRS Form 1099, which should be mailed by January 31 following each
calendar year in which the income arises.
Payment of the proceeds from the disposition of the JUMPS to or
through the US office of a broker is subject to information reporting unless the
US holder establishes an exemption from information reporting.
Payments made in respect of, and proceeds from the sale of the JUMPS
may be subject to a "backup withholding" tax of 31% if the US holder fails to
comply with certain identification requirements, or has previously failed to
report in full dividend and interest income, or does not otherwise establish its
entitlement to an exemption. Any withheld amounts will be refunded or allowed as
a credit against such US holder's US federal income tax liability, provided that
certain required information is furnished to the IRS.
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<PAGE>
UNDERWRITING
Under the terms and subject to the conditions of the underwriting
agreement dated , 2000, each underwriter named below, for whom Salomon Smith
Barney Inc. and are acting as representatives, has severally agreed to purchase
from TXU Australia, and TXU Australia has agreed to sell to such underwriter,
the principal amount of JUMPS set forth opposite the name of such underwriter
below.
PRINCIPAL AMOUNT
NAME OF JUMPS
---- ----------------
Salomon Smith Barney Inc.....................
Total...............................
The underwriters are obligated to take and pay for all of the JUMPS
offered hereby if any JUMPS are purchased. In the event of default by any
underwriter, the underwriting agreement provides that, in certain circumstances,
purchase commitments of the non-defaulting underwriters may be increased or the
underwriting agreement may be terminated.
The underwriting agreement provides that TXU Australia will indemnify
the several underwriters against liabilities, including liabilities under the
Securities Act of 1933, as amended.
TXU Australia's expenses associated with the offer and sale of the
JUMPS are estimated to be US$2 million.
The underwriters propose to offer the JUMPS, in part, directly to the
public at the initial public offering price set forth on the cover page of this
prospectus, and to certain dealers at that price less a concession of % of the
principal amount of the JUMPS. The underwriters may allow, and such dealers may
reallow, a concession not to exceed % of the principal amount of the JUMPS.
After the JUMPS are released for sale to the public, the offering price and
other selling terms may from time to time be varied by the representatives of
the underwriters.
Application will be made to list the JUMPS on the New York Stock
Exchange (NYSE). If approved, trading of the JUMPS on the NYSE is expected to
commence within a 30-day period after the initial delivery of the JUMPS. Prior
to this offering, there has been no public market for the JUMPS. In order to
meet one of the requirements for listing the JUMPS on the NYSE, the underwriters
will undertake to sell lots of 100 or more JUMPS to a minimum of 400 beneficial
holders.
TXU Australia has agreed, during the period of 30 days from the date
of the underwriting agreement, not to sell, offer to sell, grant any option for
the sale of, or otherwise dispose of any JUMPS, any security convertible into or
exchangeable into or exercisable for JUMPS or any debt or equity securities
substantially similar to the JUMPS, without the prior written consent of the
representatives.
In order to facilitate the offering of the JUMPS, the underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the JUMPS. Specifically, the underwriters may overallot in connection with the
offering, creating a short position in the JUMPS for their own account. In
addition, to cover overallotments or to stabilize the price of the JUMPS, the
underwriters may bid for, and purchase, the JUMPS in the open market. Finally,
the underwriting syndicate may reclaim selling concessions allowed to an
underwriter or a dealer for distributing the JUMPS to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the JUMPS above independent market
levels. The underwriters are not required to engage in these activities, and if
such activities are commenced, the underwriters may end any of these activities
at any time.
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Certain of the underwriters and their affiliates have in the past
provided, and may in the future provide, investment and/or commercial banking
services to TXU Australia and its affiliates in the ordinary course of business.
EXPERTS
The consolidated financial statements of TXU Australia Group as of
December 31, 1999 and 1998 and for each of the three years in the period ended
December 31, 1999 included in this prospectus have been audited by Deloitte
Touche Tohmatsu, independent auditors, as stated in their report appearing
herein. Such financial statements are included herein in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
The consolidated financial statements of Gascor Holdings No. 2 Pty Ltd
(Gascor) as of June 30, 1998 and for the year then ended included in this
prospectus have been audited by Deloitte Touche Tohmatsu, independent auditors,
as stated in their report appearing herein (which report expresses a qualified
opinion and includes an explanatory paragraph relating to the July 1, 1997
valuation of the property, plant and equipment of Gascor). Such financial
statements are included herein in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The statements made as to matters of law and legal conclusions in this
prospectus under MATERIAL INCOME TAX CONSIDERATIONS -- "MATERIAL AUSTRALIAN TAX
CONSIDERATIONS" have been reviewed by Baker & McKenzie, Melbourne, Australia,
and are included in this prospectus in reliance upon the opinion of that firm
given upon their authority as experts. The statements made as to matters of law
and legal conclusions in this prospectus under MATERIAL INCOME TAX
CONSIDERATIONS -- "MATERIAL US INCOME TAX CONSIDERATIONS" have been reviewed by
Thelen Reid & Priest LLP, New York, New York, and are included in this
prospectus in reliance upon the opinion of that firm given upon their authority
as experts.
LEGALITY
The validity of the JUMPS is being passed upon for TXU Australia by
Worsham Forsythe Wooldridge LLP, Dallas, Texas, by Thelen Reid & Priest LLP,
New York, New York and by Baker & McKenzie, Melbourne, Australia and for the
underwriters by Winthrop, Stimson, Putnam & Roberts, New York, New York.
However, all matters pertaining to the formation of TXU Australia and all other
matters of Australian and Victorian law relating to TXU Australia will be passed
upon only by Baker & McKenzie. At December 31, 1999, members of the firm of
Worsham Forsythe Wooldridge LLP owned approximately 42,000 shares of the common
stock of TXU Corp.
WHERE YOU CAN FIND MORE INFORMATION
TXU Australia will be required to file reports with the SEC under the
Securities Exchange Act of 1934. These SEC filings will be available to the
public over the Internet at the SEC's website at http://www.sec.gov. You will
also be able to read and copy any of these SEC filings at the SEC's public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms.
Copies of the indenture will be available at the offices of the paying
agent for the JUMPS.
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following are the estimated expenses payable by TXU Australia in
connection with the issuance and distribution of the JUMPS, excluding
underwriting discounts and commissions. All costs are to be borne by the
registrant.
US$
---
Filing fee - Securities and Exchange Commission 79,200
Fees of Trustee 30,000*
Legal Fees 950,000*
Accountant's Fees 660,000*
Rating Agencies Fees 100,000*
Printing, including Registration, prospectuses,
exhibits, etc 100,000*
Miscellaneous 80,000*
-------------
Total US$2,000,000*
=============
*Estimated
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under section 199A(1) of the Corporations Law of Victoria, a company
and its related bodies corporate are prohibited from exempting a person from
a liability to the company incurred as an officer of the company. However,
under section 199A(2), a company and its related body corporate will be
permitted to indemnify an officer of a company for a liability incurred,
other than for legal costs, except in circumstances where liability:
o is owed to the company or its related body corporate;
o is a pecuniary penalty ordered under the Corporations Law; or
o arises out of conduct which is not in good faith.
If a provision of a company's constitution seeks to indemnify the
company's officers in breach of the prohibition in section 199A of the
Corporations Law, that provision is void.
Under section 199A(3), a company will be allowed to indemnify its
officers against legal costs except in circumstances where:
o the proceedings relate to a liability which the company cannot indemnify
against and liability is established;
o the officer is found guilty in criminal proceedings;
o the Australian Securities and Investments Commission or a liquidator
brought the proceedings for a court order and the grounds for making
the order are established; or
o the officer undertakes the proceedings for relief under the Corporations
Law and relief is not granted.
Since indemnification depends on the final outcome of proceedings,
indemnification money should not be paid until the outcome is known. Under
section 212 of the Corporations Law of Victoria, the company is permitted to
give the officer a loan for legal costs. If the outcome means the office
was not entitled to an indemnity, the officer must repay the loan.
Under section 199B of the Corporations Law, a company and its related
bodies corporate are prohibited from paying a premium for a policy for a
present or former officer which insures such a person against a liability
(other than for legal costs) arising out of conduct involving a wilful breach
of duty in relation to the company, or breach of the duty to make proper use
of position and information.
Clause 35 of the constitution of Holdings provides as follows:
"35.1 The Company indemnifies every person who is or has been an
officer (as defined in section 241(4) of the Corporations
Law) of the Company or of a wholly-owned subsidiary of the
Company (the "Officer") against the following:
<PAGE>
(a) any liability for costs and expenses incurred by the Officer in
his or her capacity as an officer of the Company or of a
wholly-owned subsidiary of the Company, in defending any
proceedings, whether civil or criminal, in which judgment is
given in the Officer's favour, or in which the Officer is
acquitted, or in connection with an application in relation to
any such proceedings in which relief under the Law is granted to
the Officer by a Court; and
(b) any liability incurred by the Officer in his or her capacity as
an officer of the Company or of a wholly-owned subsidiary of the
Company, to a person other than the Company or a Related Body
Corporate, unless the liability arises out of conduct by the
Officer involving a lack of good faith.
35.2 Insurance
Subject to the Corporations Law, the Company may pay premiums for
an insurance policy in favour of any Officer for any type of
liability."
Although section 241(4) of the Corporation Law, which contained a
definition of "officer" and which was referred to in clause 35 of the
constitution of Holdings, has been repealed, an equivalent definition appears
in section 9 of the Corporations Law and would be applicable in this context.
An insurance policy provides cover to a prudent limit for directors
and officers against liability they may incur in performing their duties, except
where conduct involves:
o willful breach of duty to the company, or
o improper use of company information or property, or
o improper use of their position as directors or officers of the
company.
Clause 169 of the constitution of TXU APL provides as follows:
"Every director, manager or officer of the Company or any person
employed by the Company as auditor shall be indemnified out of the
property of the Company against all liability incurred by him in his
capacity as director, manager, officer or auditor in defending any
proceedings, whether civil or criminal, in which judgment is given in
his favour or in which he is acquitted or in connection with any
application under the law in which relief is given to him by a Court."
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
PREVIOUSLY FILED
----------------
WITH FILE AS
EXHIBIT NUMBER EXHIBIT DESCRIPTION
- --------- ------ --------- -----------
1 Form of Underwriting Agreement.
3(a) Limited Partnership Deed, dated
January 27, 1999, between TXU Australia
Holdings (AGP) Pty Limited, TXU
Australia (LP) No.1 Limited and TXU
Australia (LP) No.2 Limited.
3(b) Deed of Amendment to the Partnership
Deed, dated February 23, 1999 between
TXU Australia Holdings (AGP) Pty
Limited, TXU Australia (LP) No.1 Limited
and TXU Australia (LP) No.2 Limited.
3(c) Deed of Amendment to the Partnership
Deed, dated _________, 2000 between TXU
Australia Holdings (AGP) Pty Limited,
TXU Australia (LP) No.1 Limited and TXU
Australia (LP) No.2 Limited.**
4(a) Form of Indenture between TXU
Australia and Trustee.
4(b) Form of Officer's Certificate of TXU
Australia, establishing the terms of the
JUMPS.
4(c) Deed of Common Terms, dated February
24, 1999, among TXU Australia, certain
of its affiliates and the Senior
Lenders.
4(d) Indenture, dated as of December 1,
1996 between Eastern Energy and The Bank
of New York as Trustee.
5(a) Opinion of Worsham Forsythe Wooldridge
LLP.
5(b) Opinion of Thelen Reid & Priest LLP.
5(c) Opinion of Baker & McKenzie, Melbourne,
Australia.
8(a) Tax opinion of Thelen Reid & Priest
(included in the opinion filed as
Exhibit 5(b)).
8(b) Tax opinion of Baker & McKenzie,
Melbourne, Australia (included in the
opinion filed on Exhibit 5(c)).
10(a) Master Agreement, dated December 23,
1998, between Gascor, Energy 21 Pty Ltd,
Ikon Energy Pty Ltd, Kinetik Energy Pty
Ltd and Gas Release Co. Pty Ltd.**
10(b) Agency Agreement, dated August 14, 1998,
between Gascor and Kinetik Energy Pty
Ltd.**
10(c) Sub-Sales Agreement, dated August 14,
1998, between Gascor and Kinetik Energy
Pty Ltd.**
12 Computation of ratio of earnings to
fixed charges.
II-3
<PAGE>
21 TXU Australia Group companies.
23(a) Consent of Deloitte Touche Tohmatsu,
independent auditors.
23(b) Consents of Worsham Forsythe Wooldridge
LLP, Thelen Reid & Priest LLP and Baker
& McKenzie (included in the Opinions
filed as Exhibits 5(a), 5(b), 5(c) and
8, hereto).
24 Powers of Attorney (included on page
II-6 hereof).
25 Statement of Eligibility of Trustee.
27 Financial Data Schedule.
** To be filed by amendment.
II-4
<PAGE>
ITEM 17. UNDERTAKINGS.
a. The undersigned registrant hereby undertakes:
(1) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions
described under Item 14 above, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange commission
such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(2) For purpose of determining liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule
424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed
to be part of this registration statement as of the time it was
declared effective.
(3) That, for purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
II-5
<PAGE>
POWER OF ATTORNEY
EACH DIRECTOR AND/OR OFFICER OF THE REGISTRANT WHOSE SIGNATURE APPEARS
BELOW HEREBY APPOINTS THE AGENTS FOR SERVICE NAMED IN THIS REGISTRATION
STATEMENT, AND EACH OF THEM SEVERALLY, AS HIS ATTORNEY-IN-FACT TO SIGN IN HIS
NAME AND BEHALF, IN ANY AND ALL CAPACITIES STATED BELOW, AND TO FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION, ANY AND ALL AMENDMENTS, INCLUDING
POST-EFFECTIVE AMENDMENTS, TO THIS REGISTRATION STATEMENT, AND THE REGISTRANT
HEREBY ALSO APPOINTS EACH SUCH AGENT FOR SERVICE AS ITS ATTORNEY-IN-FACT WITH
LIKE AUTHORITY TO SIGN AND FILE ANY SUCH AMENDMENTS IN ITS NAME AND BEHALF.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF MELBOURNE,
STATE OF VICTORIA, AUSTRALIA ON MAY 5, 2000.
TXU AUSTRALIA HOLDINGS (PARTNERSHIP)
LIMITED PARTNERSHIP
BY: TXU AUSTRALIA HOLDINGS (AGP) PTY LTD,
ITS GENERAL PARTNER
BY /s/ Robert S. Shapard
---------------------------------------
NAME: ROBERT S. SHAPARD
TITLE: CHAIRMAN OF THE BOARD OF DIRECTORS
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
---------- ----- ----
/s/ Robert S. Shapard PRINCIPAL EXECUTIVE OFFICER May 5, 2000
- ------------------------------------ AND DIRECTOR
ROBERT S. SHAPARD
/s/ Paul O'Malley PRINCIPAL FINANCIAL OFFICER, May 5, 2000
- ------------------------------------ PRINCIPAL ACCOUNTING OFFICER
PAUL O'MALLEY AND DIRECTOR
/s/ Robert J. Reger, Jr. AUTHORIZED REPRESENTATIVE IN May 5, 2000
- ------------------------------------ THE UNITED STATES
ROBERT J. REGER, JR.
II-6
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
INDEX TO FINANCIAL STATEMENTS
TXU AUSTRALIA HOLDINGS (PARTNERSHIP) LIMITED PARTNERSHIP
FINANCIAL STATEMENTS
Page No.
Annual
Report of Independent Auditors.......................................... F-3
Financial Statements:
Statements of Consolidated Operations for the years ended
December 31, 1999, 1998 and 1997..................................... F-4
Consolidated Balance Sheets as of December 31, 1999 and 1998.......... F-5
Statements of Consolidated Cash Flows for the years ended
December 31, 1999, 1998 and 1997..................................... F-7
Statements of Consolidated Owners' Equity for the years
ended December 31, 1999, 1998 and 1997............................... F-9
Notes to Consolidated Financial Statements............................ F-10
Financial Statement Schedules
The financial statement schedules are omitted because of the absence of the
conditions under which they are required or because the information is included
in the consolidated financial statements or the notes thereto.
F-1
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
INDEX TO FINANCIAL STATEMENTS
GASCOR HOLDINGS NO. 2 PTY LTD AND SUBSIDIARIES
FINANCIAL STATEMENTS
Page No.
Annual
Report of Independent Auditors.......................................... F-35
Financial Statements:
Statement of Consolidated Operations for the year ended
June 30, 1998........................................................ F-36
Consolidated Balance Sheet as of June 30, 1998........................ F-37
Statement of Consolidated Cash Flows for the year
ended June 30, 1998.................................................. F-39
Statement of Consolidated Shareholder's Equity for the year
ended June 30, 1998.................................................. F-40
Notes to Consolidated Financial Statements............................ F-41
Interim
Financial Statements:
Condensed Statements of Consolidated Operations for the six-month
periods ended December 31, 1998, and 1997............................ F-55
Condensed Consolidated Balance Sheet as of December 31,
1998, and June 30, 1998.............................................. F-56
Condensed Statements of Consolidated Cash Flows for the
six-month periods ended December 31, 1998 and 1997................... F-58
Condensed Statements of Consolidated Shareholder's Equity for
the six-month periods ended December 31, 1998 and 1997............... F-59
Notes to Condensed Consolidated Financial Statements.................. F-60
F-2
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
Report of Independent Auditors
------------------------------
To: TXU Australia Holdings (Partnership) Limited Partnership:
We have audited the accompanying consolidated balance sheets of TXU Australia
Holdings (Partnership) Limited Partnership as of December 31, 1999 and 1998, and
the related consolidated statements of operations, owners' equity and cash flows
for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of TXU Australia Holdings
(Partnership) Limited Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of TXU Australia
Holdings (Partnership) Limited Partnership as of December 31, 1999 and 1998 and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States of America.
/s/ DELOITTE TOUCHE TOHMATSU
Melbourne, Australia
April 28, 2000
F-3
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
STATEMENTS OF CONSOLIDATED OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1999 1998 1997
---- ---- ----
Thousands of Australian Dollars
<S> <C> <C> <C>
OPERATING REVENUES .............................................. $ 887,670 $ 646,777 $ 621,173
--------- --------- ---------
OPERATING EXPENSES
Purchased energy and distribution costs ...................... 414,968 269,822 293,881
Operation and maintenance .................................... 174,252 136,590 109,704
Depreciation and other amortization .......................... 98,993 52,558 49,869
Goodwill amortization ........................................ 31,620 15,791 15,646
--------- --------- ---------
Total operating expenses ................................... 719,833 474,761 469,100
--------- --------- ---------
OPERATING INCOME ................................................ 167,837 172,016 152,073
OTHER INCOME/(EXPENSE) - NET .................................... (2,789) 466 216
--------- --------- ---------
INCOME BEFORE INTEREST AND INCOME TAXES ......................... 165,048 172,482 152,289
--------- --------- ---------
INTEREST INCOME ................................................. 2,080 449 223
INTEREST EXPENSE ................................................ (192,786) (91,123) (95,385)
--------- --------- ---------
INCOME/(LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES .... (25,658) 81,808 57,127
INCOME TAX EXPENSE/(BENEFIT) .................................... (19,807) 35,627 31,051
--------- --------- ---------
INCOME/(LOSS) FROM CONTINUING OPERATIONS ........................ (5,851) 46,181 26,076
INCOME/(LOSS) FROM DISCONTINUED OPERATIONS - NET OF TAX (NOTE 4) (8,540) (1,121) 1,149
--------- --------- ---------
NET INCOME /(LOSS) .............................................. $ (14,391) $ 45,060 $ 27,225
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31,
-------------------------
1999 1998
---- ----
Thousands of Australian Dollars
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT
Electricity network ..................................... $1,620,391 $1,549,674
Gas network ............................................. 987,050 --
Gas processing and storage facility ..................... 133,406 --
Computer equipment and software ......................... 69,089 20,556
Vehicles and machinery .................................. 14,014 10,599
Land .................................................... 30,718 30,785
Other ................................................... 13,579 12,892
---------- ----------
Total ................................................. 2,868,247 1,624,506
Less accumulated depreciation ........................... 229,535 146,650
---------- ----------
Net of accumulated depreciation ....................... 2,638,712 1,477,856
Construction work in progress ........................... 58,328 73,936
---------- ----------
Net property, plant and equipment ..................... 2,697,040 1,551,792
---------- ----------
INVESTMENTS
Goodwill (net of accumulated amortization: 1999 - $80,656
1998 - $49,036) ....................................... 1,297,102 581,996
Investments in unconsolidated affiliates ................ 3,488 1,690
---------- ----------
Total investments ..................................... 1,300,590 583,686
---------- ----------
CURRENT ASSETS
Cash and cash equivalents ............................... 70,505 1,252
Accounts receivable - net ............................... 240,182 141,601
Inventories - at average cost:
Materials and supplies ................................ 8,405 6,980
Gas stored underground ................................ 18,643 19,820
Net assets of discontinued operations (Note 4) .......... 21,656 13,080
Other ................................................... 11,774 3,655
---------- ----------
Total current assets .................................. 371,165 186,388
---------- ----------
OTHER NONCURRENT ASSETS
Unamortized debt issuance costs ......................... 24,719 8,088
Energy risk management asset ............................ 200,837 --
Other ................................................... 5,835 4,861
---------- ----------
Total other noncurrent assets ......................... 231,391 12,949
---------- ----------
TOTAL ASSETS ................................................. $4,600,186 $2,334,815
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
December 31,
-------------------------
1999 1998
---- ----
Thousands of Australian Dollars
CAPITALIZATION
Owners' equity ..................... $ 947,607 $ 925,998
Long-term debt ..................... 1,933,394 966,394
---------- ----------
Total capitalization ............. 2,881,001 1,892,392
---------- ----------
CURRENT LIABILITIES
Short-term debt .................... 1,280,484 201,461
Accounts payable ................... 128,246 77,619
Payable to parent company .......... 23,473 5,279
Interest accrued ................... 57,261 26,288
Customer deposits .................. 14,983 15,889
Deferred income taxes .............. 27,321 23,281
Employee benefits .................. 14,861 9,615
Other .............................. 12,736 7,064
---------- ----------
Total current liabilities ........ 1,559,365 366,496
---------- ----------
OTHER NONCURRENT LIABILITIES
Deferred income taxes .............. 92,864 41,882
Employee benefits .................. 9,065 10,530
Provision for loss on contracts .... 42,062 14,627
Other .............................. 15,829 8,888
---------- ----------
Total other noncurrent liabilities 159,820 75,927
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 15)
TOTAL CAPITALIZATION AND LIABILITIES .... $4,600,186 $2,334,815
========== ==========
See Notes to Consolidated Financial Statements.
F-6
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------
1999 1998 1997
---- ---- ----
Thousands of Australian Dollars
<S> <C> <C> <C>
CASH FLOWS - OPERATING ACTIVITIES
Income/(loss) from continuing operations ............... $ (5,851) $ 46,181 $ 26,076
Adjustments to reconcile income/(loss) from continuing
operations to cash provided by (used in) operating
activities:
Depreciation and amortization ........................ 130,613 68,349 65,515
Deferred income taxes - net .......................... (19,807) 35,627 31,051
Loss on sale of property, plant and equipment ........ 1,997 2,148 134
Gain on sale of investments .......................... -- (2,939) --
Loss on equity investments ........................... 803 76 --
Changes in operating assets and liabilities:
Accounts receivable .................................. (51,800) (33,465) 1,156
Inventories .......................................... 54,086 5,987 2,359
Accounts payable ..................................... (9,479) 2,494 23,501
Interest accrued ..................................... 30,973 8,464 10,692
Other working capital - net .......................... 1,727 5,886 (7,373)
Payable to parent company ............................ 18,194 4,224 180
Energy risk management asset ......................... (200,837) -- --
Other - net .......................................... (14,730) (6,976) (4,259)
----------- ----------- -----------
Cash provided by (used in) operating activities from
continuing operations .............................. (64,111) 136,056 149,032
Cash used in operating activities from discontinued
operations ......................................... (54,303) (4,475) (6,322)
----------- ----------- -----------
Cash flows provided by (used in) operating
activities ......................................... (118,414) 131,581 142,710
----------- ----------- -----------
CASH FLOWS - FINANCING ACTIVITIES
Proceeds from borrowings ............................... 1,866,500 76,295 --
Repayment of borrowings ................................ (11,500) -- (242,000)
Short-term borrowings - net ............................ 191,023 (51,065) 177,497
Capital contributions .................................. 36,000 -- --
Debt issuance costs .................................... (29,997) -- --
----------- ----------- -----------
Cash provided by (used in) financing activities from
continuing operations .............................. $ 2,052,026 $ 25,230 $ (64,503)
----------- ----------- -----------
</TABLE>
See Notes to Consolidated Financial Statements.
F-7
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
STATEMENTS OF CONSOLIDATED CASH FLOWS (CONT'D)
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------
1999 1998 1997
---- ---- ----
Thousands of Australian Dollars
<S> <C> <C> <C>
CASH FLOWS - INVESTING ACTIVITIES
Purchase of business, net of cash acquired .......... $(1,603,543) $ (52,722) $ (7,680)
Investments in unconsolidated affiliates ............ -- (1,766) --
Other - net ......................................... (906) (389) (322)
Purchase of investments ............................. -- (31,741) --
Proceeds from sale of investments ................... -- 34,680 --
Proceeds from sale of property, plant and equipment . 2,108 1,533 2,970
Capital expenditures ................................ (260,015) (103,537) (61,844)
----------- ----------- -----------
Cash used in investing activities from continuing
operations ........................................ (1,862,356) (153,942) (66,876)
Cash used in investing activities from discontinued
operations ........................................ (2,003) (4,035) (11,953)
----------- ----------- -----------
Cash used in investing activities ................. (1,864,359) (157,977) (78,829)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ..... 69,253 (1,166) (622)
CASH AND CASH EQUIVALENTS - BEGINNING BALANCE ............ 1,252 2,418 3,040
----------- ----------- -----------
CASH AND CASH EQUIVALENTS - ENDING BALANCE ............... $ 70,505 $ 1,252 $ 2,418
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
CASH PAYMENTS - Interest (net of amounts capitalized) .... $ 159,739 $ 82,659 $ 84,693
NON-CASH INVESTING ACTIVITIES:
Fair value of assets acquired ....................... $ 1,077,477 $ 52,263 $ 2,355
Goodwill ............................................ 746,726 459 5,542
Liabilities assumed ................................. (188,826) -- (217)
Cash acquired ....................................... (31,834) -- --
----------- ----------- -----------
Net cash used ................................... $ 1,603,543 $ 52,722 $ 7,680
=========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
F-8
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
STATEMENTS OF CONSOLIDATED OWNERS' EQUITY
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1999 1998 1997
---- ---- ----
Thousands of Australian Dollars
<S> <C> <C> <C>
PARTNERS' CAPITAL
Balance at beginning of year $ 848,000 $ 848,000 $ 848,000
Capital contributions ...... 36,000 -- --
--------- --------- ---------
Balance at end of year ..... 884,000 848,000 848,000
--------- --------- ---------
UNDISTRIBUTED EARNINGS
Balance at beginning of year 77,998 32,938 5,713
Net income (loss) .......... (14,391) 45,060 27,225
--------- --------- ---------
Balance at end of year ... 63,607 77,998 32,938
--------- --------- ---------
OWNERS' EQUITY .................. $ 947,607 $ 925,998 $ 880,938
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
F-9
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
In January 1999, Texas Utilities Company, doing business as TXU Corp.,
through a series of subsidiaries created TXU Australia Holdings
(Partnership) Limited Partnership (TXU Australia) to hold, either directly
or indirectly, all of its Australian investments. The partners and their
respective ownership interests in TXU Australia are TXU Australia Holdings
(AGP) Pty Ltd (0.5% general partner), TXU Australia (LP) No. 1 Limited
(49.75% limited partner), and TXU Australia (LP) No. 2 Limited (49.75%
limited partner). All such entities are ultimately controlled by TXU Corp.
Prior to January 1999, TXU Corp. principally conducted business in
Australia through TXU Australia Pty Ltd (formerly known as Texas Utilities
Australia Pty Ltd) and its wholly-owned subsidiaries. TXU Australia,
through a series of transactions, acquired all of TXU Corp.'s interests in
Australia. TXU Australia owns 100% of the share capital of TXU Australia
Holdings Pty Ltd which in turn owns 100% of the share capital of TXU
Australia Pty Ltd. TXU Australia and all of the holding companies and
operating companies directly or indirectly owned by TXU Australia are
collectively referred to as "TXU Australia Group". Companies in TXU
Australia Group other than TXU Australia are sometimes referred to
individually as a "Group company" and collectively as the "Group
companies". The consolidated financial statements of TXU Australia Group
presented herein give retroactive effect to the above transactions which
have been accounted for at historical cost in a manner similar to that in
pooling-of-interests accounting.
TXU Australia Group's principal operations are conducted through three
operating Group companies: TXU Electricity Limited, formerly Eastern Energy
Limited (Eastern Energy), TXU Networks (Gas) Pty Ltd, formerly Westar Pty
Ltd (Westar) and TXU Pty Ltd, formerly Kinetik Energy Pty Ltd (Kinetik
Energy). Through these companies, TXU Australia Group engages in the
purchase, distribution, trading and retailing of electricity and gas,
mainly in the State of Victoria, Australia. In addition, TXU Australia
Group's other operations are conducted through Western Underground Gas
Storage Pty Ltd (Western Underground Gas Storage) and Global Customer
Solutions Pty Ltd (Global Customer Solutions), which provide underground
gas storage and call center management.
TXU Australia Group is a limited partnership organized under the laws of
the State of Victoria, Australia. It is taxed as a separate entity under
Australian income tax law.
2. SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements of TXU Australia Group have been
prepared in conformity with accounting principles generally accepted in the
United States of America. All intercompany items and transactions have been
eliminated in consolidation. Investments in unconsolidated affiliates in
which TXU Australia Group has between a 20% and 50% interest are accounted
for by the equity method. All dollar amounts in the consolidated financial
statements and notes to the consolidated financial statements are stated in
thousands of Australian dollars unless otherwise indicated.
Use of Estimates
The preparation of the consolidated financial statements requires
management to make estimates and assumptions about future events that
affect the reporting and disclosure of assets and liabilities at the
balance sheet dates and the reported amounts of revenue and expense during
the periods. In the event estimates and/or assumptions prove to be
different from actual amounts, adjustments are made in subsequent periods
to reflect more current information. No material adjustments were made to
previous estimates during the current year.
F-10
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Comprehensive Income
Comprehensive income for TXU Australia Group is the same as net income
reported in the statements of consolidated operations.
Revenue Recognition
Sales revenue represents revenue earned (net of discounts and allowances)
from the sale of electricity, gas and related services. Revenue is
recognized when services are provided to customers on the basis of periodic
cycle meter readings and includes an estimated accrual for the value of
electricity and gas provided from the last meter reading date to the end of
the period.
Agency fee income, included in operating revenues, represents commissions
earned from GASCOR, a public authority created under the Gas Industry Act
1994 (as amended from time to time), for the sale of gas to customers by
TXU Australia Group as an agent on behalf of GASCOR. Agency fee revenues
are recognized when gas is delivered to customers and includes an estimated
accrual for gas consumed by customers between the last meter reading date
to the end of the period.
Distribution use of system revenue, included in operating revenues in the
Statement of Consolidated Operations, represents revenue earned for
distribution of gas and electricity on behalf of external retailers.
Gas Supply
Approximately 95 percent of the natural gas shipped through Westar's
distribution network is supplied from the Esso Australia Resources Limited
(Esso) / BHP Petroleum (Bass Strait) Pty Ltd gas fields in the Bass Strait
of Australia.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost. Expenditures incurred on
distribution assets are capitalized where the expenditure increases the
service potential of the assets. The cost of assets constructed includes
labor and materials, applicable overhead and interest on funds borrowed to
finance construction. Capitalized interest was $1.0 million, $1.0 million
and $0.9 million during 1999, 1998 and 1997, respectively.
Customer contributions for the construction of distribution system assets
are amortized to income over the life of the constructed asset. The
unamortized amount of these contributions is deducted from property, plant
and equipment.
Depreciation of plant and equipment generally is determined by the
straight-line method over the estimated useful life of the asset. The
weighted average useful lives of each class of asset are as follows:
Buildings........................................... 32 years
Distribution network (gas and electricity).......... 47 years
Computer equipment and software..................... 5 years
Motor vehicles and heavy machinery.................. 6 years
Other............................................... 9 years
F-11
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Inventories
Materials and supplies and gas stored underground are stated at the lower
of cost or market value. Cost is based on weighted average costs.
Goodwill
Goodwill represents the excess of the purchase consideration plus
acquisition costs over the estimated fair value of the assets acquired and
liabilities assumed for each business acquired. Goodwill is amortized by
systematic charges on a straight line basis against income over the period
in which the benefits are expected to arise, which is from periods of 20 to
40 years.
Valuation of Long-Lived Assets
TXU Australia Group evaluates the carrying value of goodwill and long-lived
assets to be held and used when events and circumstances warrant such a
review. The carrying value of goodwill and long-lived assets is considered
impaired when the projected undiscounted cash flows are less than the
carrying value. In that event, a loss will be recognized based on the
amount by which the carrying value exceeds the fair market value. Fair
market value is determined primarily by available market valuations or, if
applicable, discounted cash flows.
Derivative Instruments
TXU Australia Group's participation in derivative transactions, except for
certain energy marketing activities, has been designated primarily for
hedging purposes and instruments are not held or issued for trading
purposes. Amounts paid or received under interest rate swap agreements are
accrued as interest rates change and are recognized over the life of the
agreements as adjustments to interest expense. The impact of changes in the
market value of the derivative instruments, or other contractual agreements
in connection with the wholesale purchases of energy, which serve as
hedges, are deferred until the related transaction is completed.
Energy Marketing Activities
TXU Australia Group enters into a variety of transactions, involving
physical commodity and derivative instruments. TXU Australia Group uses the
mark-to-market method of accounting for trading activities. (See Note 10).
F-12
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Income Taxes
TXU Australia Group accounts for income taxes under the liability method.
Deferred income taxes represent liabilities to be paid or assets to be
received in the future, and reflect the expected future tax consequences of
the differences between the financial statement carrying amounts of assets
and liabilities and their respective tax bases. Future tax rate changes
would affect the deferred tax assets or liabilities in the period when the
tax rate change is enacted. Future tax benefits, such as carry-forward tax
losses, are recognized to the extent that realization of such benefits is
more likely than not.
Changes in Accounting Standards
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities", as extended, is effective
for TXU Australia Group beginning January 1, 2001. SFAS No. 133 establishes
accounting and reporting standards for derivative financial instruments,
including certain derivative instruments embedded in other contracts, and
for hedging activities. It requires the recognition of derivatives as
either assets or liabilities in the statement of financial position and the
measurement of those instruments at fair value. The TXU Australia Group is
currently evaluating the impact the adoption of the Standard will have on
its statement of financial position and results of operations.
Consolidated Cash Flows
For the purposes of reporting cash and cash equivalents, temporary cash
investments purchased with a remaining maturity of three months or less are
considered to be cash equivalents.
F-13
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. ACQUISITIONS
On February 24, 1999, TXU Australia Group acquired from Gascor Holdings No.
2 Pty Ltd, a controlled entity of the Government of Victoria, the gas
retail business of Kinetik Energy, the gas distribution operations of
Westar and the assets of Westar (Assets) Pty Ltd. The purchase price was
$1.6 billion, which has been financed principally through bank borrowings
by TXU Australia Group. The acquisition was accounted for as a purchase
business combination. The excess of the purchase consideration plus
acquisition costs over the fair value of tangible and identifiable
intangible assets acquired and liabilities assumed resulted in goodwill of
$747 million, which is being amortized over 40 years. The cost of the
acquisition was allocated to the assets acquired and liabilities assumed,
based on their fair values, as follows:
Thousands of
Australian Dollars
Current assets .............. $ 75,682
Property, plant and equipment 976,073
Goodwill .................... 746,726
Other non-current assets .... 6,619
Deferred tax asset .......... 19,103
Current liabilities ......... (46,206)
Deferred tax liability ...... (99,367)
Non-current liabilities ..... (43,253)
-----------
1,635,377
Less: Cash acquired ......... 31,834
-----------
$ 1,603,543
===========
In connection with the acquisition of Westar and Kinetik Energy, TXU
Australia Group developed a plan to terminate 90 employees of the acquired
entities and recorded a liability for employee termination costs of $4.6
million. At December 31, 1999, 45 employees had been terminated at a cost
of $2 million. The remaining employee termination costs of approximately
$2.6 million are expected to be paid by June 30, 2000.
Unaudited consolidated pro forma income (loss) for the years ended December
31, 1999 and 1998, assuming the acquisition of Westar and Kinetik Energy
had occurred at the beginning of the respective periods, is as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1999 December 31, 1998
--------------------------- ----------------------------
As Pro Forma As Pro Forma
Reported Reported
--------------------------- ----------------------------
Thousands of Australian Thousands of Australian
Dollars Dollars
<S> <C> <C> <C> <C>
Revenues ................. $ 887,670 $ 907,627 $ 646,777 $ 921,629
Operating income ......... 167,837 160,136 172,016 219,400
Income (loss) from
continuing operations (5,851) (21,811) 46,181 4,476
</TABLE>
F-14
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. ACQUISITIONS (CONT'D)
The above proforma results are not necessarily indicative of what the
actual results would have been had the acquisition occurred at the
beginning of these periods. Further, the proforma results are not intended
to be a projection of the future results of the combined companies.
In November 1998, TXU Australia Group acquired Western Underground Gas
Storage Pty Ltd, an underground gas storage facility, for $53 million. This
acquisition was accounted for as a purchase business combination. The
excess of the purchase consideration plus acquisition costs over the fair
value of tangible and identifiable intangible assets acquired and
liabilities assumed resulted in goodwill of $0.5 million, which is being
amortized over 25 years. The cost of the acquisition was allocated to the
assets acquired and liabilities assumed based on their fair values as
follows:
Thousands of
Australian Dollars
Current assets .................. $19,955
Property, plant and equipment ... 32,308
Goodwill ........................ 459
-------
$52,722
=======
In December 1997, TXU Australia Group acquired certain assets and
liabilities of the Victorian Power Exchange's metering business for $7.7
million. This acquisition was accounted for as a purchase business
combination. The excess of the purchase consideration plus acquisition
costs over the fair value of tangible and identifiable intangible assets
acquired and liabilities assumed resulted in goodwill of $5.5 million,
which is being amortized over 20 years. The cost of the acquisition was
allocated to the assets acquired and liabilities assumed based on their
fair values as follows:
Thousands of
Australian Dollars
Current assets .................. $ 2,355
Current liabilities ............. (217)
Goodwill ........................ 5,542
-------
$ 7,680
=======
Consolidated pro forma income for the years ended December 31, 1998 and
1997, assuming the acquisitions discussed above had occurred at the
beginning of the periods, would not have differed significantly from the
reported results.
F-15
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. DISCONTINUED OPERATIONS
In July 1999, TXU Australia Group determined that it would sell Enetech,
its construction and maintenance subsidiary. In January 2000, the TXU
Australia Group completed the sale of certain assets and liabilities of
Enetech to Tenix Pty Ltd (Tenix), a major Australian technology contractor.
Under the terms of the Purchase Agreement, TXU Australia Group received
cash consideration of $48.6 million, subject to the finalization of any
post closing adjustments. TXU Australia Group entered into a ten year
contract with Tenix to perform engineering and maintenance services for the
Group's gas and electricity networks throughout Victoria.
The results of Enetech for periods through July 31, 1999 (with the
measurement date being August 1, 1999) have been reported separately as
discontinued operations in the Statement of Consolidated Operations. Net
losses of $5.8 million for Enetech from the measurement date to December
31, 1999 have been deferred and will be recognized upon realization of the
ultimate gain from the sale in the first quarter of 2000. The net gain on
the sale of discontinued operations is expected to be $10.7 million after
income taxes of $8.5 million. The Consolidated Financial Statements of TXU
Australia Group for 1998 and 1997 reflect Enetech as a discontinued
operation.
In May 1998, TXU Australia Group acquired certain assets of J W Lanham, an
electrical contracting business, for $0.9 million. In June 1997, TXU
Australia Group, via Enetech, acquired certain assets and liabilities of
Streamline, the former construction and maintenance division of Melbourne
Water Corporation, for $10.6 million and certain assets and liabilities of
a vegetation management company for $0.8 million. The assets and
liabilities of these acquired business were sold with Enetech and have been
included in the financial information for discontinued operations.
Components of amounts related to TXU Australia Group's discontinued
operations reflected in the Consolidated Financial Statements are presented
below:
Income Statement Information:
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------
1999 1998 1997
Thousands of Australian Dollars
<S> <C> <C> <C>
Operating revenues ............................ $ 69,034 $ 56,293 $ 33,494
Income tax expense/(benefit) .................. (3,978) 286 (1,175)
Income/(loss) from discontinued operations .... (8,540) (1,121) 1,149
</TABLE>
F-16
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. DISCONTINUED OPERATIONS (CONT'D)
<TABLE>
<CAPTION>
Net Assets of Discontinued Operations:
Year Ended December 31
-------------------------------
1999 1998
Thousands of Australian Dollars
<S> <C> <C>
Property, plant and equipment ..................... $ 16,113 $ 11,299
Goodwill .......................................... 4,655 5,274
Employee benefits ................................. (4,924) (3,493)
-------- --------
15,844 13,080
Deferred loss for the period from August 1, 1999 to
December 31, 1999 ................................. 5,812 --
-------- --------
Net assets of discontinued operations ............. $ 21,656 $ 13,080
======== ========
</TABLE>
5. RELATED PARTY TRANSACTIONS
TXU Australia Group engages TXU Corp. to provide, or procure from other
affiliated companies services such as management, technical, financial,
regulatory, engineering, information technology and other services as may
be agreed from time to time. TXU Australia Group reimburses TXU Corp. all
costs and expenses incurred.
At December 31, 1999 and 1998, TXU Australia Group owed to TXU Corp. and
affiliates $23.5 million and $5.3 million, respectively. Charges for the
years ended December 31, 1999, 1998, and 1997 were $18.9 million, $5.5
million, and $2.8 million, respectively.
6. ACCOUNTS RECEIVABLE
December 31,
----------------------
1999 1998
--------- ---------
Thousands of Australian
Dollars
Unbilled revenue ........................... $ 171,249 $ 101,922
Customer accounts receivable ............... 46,344 28,569
Other accounts receivable .................. 24,569 12,346
--------- ---------
242,162 142,837
Less: Allowances for uncollectable accounts (1,980) (1,236)
--------- ---------
$ 240,182 $ 141,601
========= =========
A provision for uncollectable accounts of $2.3 million and $1.5 million
was recorded during the years ended December 31, 1999 and 1998,
respectively. TXU Australia Group did not realize any material
recoveries during these periods. TXU Australia Group wrote-off
accounts receivable of $1.6 million and $1.7 million recorded
during the years ended December 31, 1999 and 1998, respectively.
F-17
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. SHORT-TERM DEBT
Short-term debt at December 31, 1999 and 1998 is summarized as follows:
December 31,
-----------------------------
1999 1998
---------- ----------
Thousands of Australian
Dollars
Lines of credit .......................... $ 72,000 $ 4,000
Syndicated Acquisition Facilities
Tranche A ............................ 275,000 --
Subordinated Acquisition Facility .... 413,000 --
Syndicated Loan Facility ................. 200,000 --
Commercial Paper ......................... 320,484 197,461
---------- ----------
Total short-term debt .................... $1,280,484 $ 201,461
========== ==========
Lines of Credit
At December 31, 1999, Eastern Energy had three working capital facilities
totaling $100 million. For drawings under the facilities, the interest rate
is set at a given margin over the bank bill rate (a generally accepted
floating rate benchmark used in Australia). At December 31, 1999 and 1998,
Eastern Energy had $72 million and $4 million, respectively, outstanding
under these facilities. Interest and principal are due on maturity. At
December 31, 1999 and 1998, the weighted average interest rates on
outstanding lines of credit were 5.55% and 4.98%, respectively. The working
capital facilities expired on February 24, 2000, and were renegotiated.
Refer to Restructuring of Debts below.
Syndicated Acquisition Facilities Agreement
In February 1999, TXU Australia Group obtained a $1.1 billion acquisition
facility (Syndicated Acquisition Facilities Agreement) with a group of
banking institutions and a $413 million subordinated acquisition facility
(Subordinated Acquisition Facility Agreement) with a banking institution.
Borrowings under these facilities provided financing to acquire the assets
and liabilities of Westar and Kinetik Energy.
The Syndicated Acquisition Facilities Agreement is composed of a $275
million term facility due February 24, 2000 (Tranche A); a $220 million
revolving cash facility due February 24, 2002 (Tranche B) (classified as
long term debt); and a $605 million term facility due February 24, 2002
(Tranche C) (classified as long term debt). At December 31, 1999, $275
million, $220 million and $605 million were outstanding under Tranches A, B
and C, respectively. At December 31, 1999, the weighted average interest
rates on Tranches A, B and C were 6.075%, 6.275% and 6.275%, respectively.
At February 24, 2000, the Syndicated Acquisition Facilities Agreement was
renegotiated. Refer to Restructuring of Debts below.
At December 31, 1999, $413 million was outstanding under the Subordinated
Acquisition Facility Agreement. The facility is due June 30, 2000. At
December 31, 1999, the interest rate was 7.035%.
Syndicated Loan Facility
In April 1999, TXU Australia Group obtained a syndicated loan facility for
the amount of $200 million with a banking institution. The interest rate on
any advance under this facility is set at a margin over the bank bill rate.
At December 31, 1999, the interest rate was 6.775%. The facility is due
June 30, 2000. At February 24, 2000, the Syndicated Loan Facility was
renegotiated. Refer to Restructuring of Debts below.
F-18
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. SHORT-TERM DEBT (CONT'D)
Commercial Paper Program
At December 31, 1999 and 1998, Eastern Energy had total face values of $325
million and $200 million, respectively, outstanding under an Australian
dollar denominated commercial paper program. The program allows for up to
$500 million of commercial paper to be issued for general corporate
purposes; however, borrowings under the program are restricted to the
unused amount of the Australian dollar denominated commercial paper
liquidity support facilities discussed below and qualifying unused debt
facilities. The interest rate on issued commercial paper is set at a
negotiated margin over the bank bill rate for the applicable term of the
commercial paper. At December 31, 1999 and 1998, the weighted average
interest rates on outstanding commercial paper were 5.58% and 5.06%,
respectively. Principal and interest are due on maturity.
In addition, at December 31, 1999 and 1998, TXU Australia Group had
Australian dollar denominated commercial paper liquidity support facilities
totaling $395 million and $200 million, respectively. The facilities allow
for funds to be drawn in the event of a disruption to the market for
commercial paper. A line fee is payable quarterly on the liquidity support
facilities at an annual rate of 0.171% and 0.075% for 1999 and 1998,
respectively. There were no amounts outstanding under this facility at
December 31, 1999 and 1998.
Letters of Credit
Several of the TXU Australia Group companies are required to provide
letters of credit in connection with their electricity and gas purchasing
and construction activities. Such letters of credit in effect at December
31, 1999 and 1998 totaled $49.8 million and $48.8 million, respectively. At
December 31, 1999 and 1998, no amounts had been drawn under these letters
of credit.
Restructuring of Debts
On February 24, 2000 the TXU Australia Group restructured its senior bank
debt. All bank debt previously borrowed by Eastern Energy was repaid and
replaced with bank debt borrowed by TXU Australia and the maturity dates of
certain TXU Australia debt were extended. The terms of all bank debt
previously borrowed by TXU Australia were renegotiated, so that all bank
debt, aggregating approximately $2 billion, now ranks equally as senior
corporate debt of TXU Australia.
The following table summarizes the changes to the bank debt:
<TABLE>
<CAPTION>
Principal Interest rate
Old Facility New A$ after restructure
(refer Notes 7 & 8) Facility million % per annum New Maturity Date
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Syndicated Acquisition Facility Facility A $ 825 6.88 February 24, 2002
(Tranches B & C)
Eastern Energy Syndicated Facility Facility B 625 6.43 October 31, 2001
Working Capital Facilities Facility C 100 6.36 February 23, 2001
Syndicated Loan Facility Facility D 200 6.78 June 30, 2000
Syndicated Acquisition Facility Facility E 275 6.29 December 29, 2000
(Tranche A)
------
Total $2,025
======
</TABLE>
F-19
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. SHORT-TERM DEBT (CONT'D)
All debt ranks equally (other than specifically subordinated debt) and is
governed by common terms set forth under a separate Deed of Common Terms
dated February 24, 1999 as amended on February 22, 2000 ("DCT"). The key
representations, warranties, covenants, undertakings, events of default and
related provisions in respect of the facilities with each Senior Lender are
contained in the DCT.
Under the DCT, there are no restrictions on TXU Australia raising further
debt from alternative sources and independent of the terms of the DCT,
provided that certain financial ratio tests are met. Operating companies
within TXU Australia Group are restricted under the terms of the DCT from
raising further debt, except for transactional banking purposes.
The DCT precludes TXU Australia Group from making any distributions to TXU
Corp. before January 1, 2001. Thereafter it is permitted to make such
distributions only if it is in compliance with more stringent financial
ratio tests. Similar restrictions apply to repayment of principal on
subordinated debt.
On March 21, 2000, TXU Australia Group entered into a new short-term note
program to replace the commercial paper previously issued by Eastern
Energy. It is a requirement of the DCT that all commercial paper issued by
Eastern Energy be repaid by May 24, 2000.
8. LONG-TERM DEBT
Long-term debt as of December 31, 1999 and 1998 is summarized as follows:
<TABLE>
<CAPTION>
December 31,
---------------------------
1999 1998
---------- ----------
Thousands of Australian
Dollars
<S> <C> <C>
Senior notes:
Eastern Energy maturing 2006 (US $250 million) ................... $ 359,937 $ 359,937
Eastern Energy maturing 2016 (US $100 million) ................... 123,457 123,457
Syndicated Acquisition Facilities
Tranche B ........................................................ 220,000 --
Tranche C ........................................................ 605,000 --
Eastern Energy Syndicated Facility Agreement ......................... 625,000 483,000
---------- ----------
Total long-term debt ............................................. $1,933,394 $ 966,394
========== ==========
</TABLE>
F-20
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. LONG-TERM DEBT (CONT'D)
Senior Notes
In December 1996, Eastern Energy issued US $250 million aggregate principal
amount of 6.75% fixed rate senior notes due December 2006 and US $100
million aggregate principal amount of 7.25% fixed rate senior notes due
December 2016. Interest is payable semi-annually. As the functional
currency is the Australian dollar, the debt is remeasured at each balance
sheet date.
At the time the senior notes were issued, Eastern Energy entered into a
number of interest rate and cross-currency swaps. The swaps converted
Eastern Energy's fixed rate US dollar obligations into floating rate
Australian dollar obligations. At the time the cross-currency swaps were
executed, the Australian dollar proceeds from the ten and twenty-year
cross-currency swaps were $309 million and $124 million, respectively. In
December 1998, Eastern Energy negotiated with two of the cross-currency
swap counterparties to settle the outstanding swaps and received
approximately $51 million in cash from the counterparties and entered into
new cross-currency swaps in similar amounts. These transactions had no
impact on net income as the cross-currency swaps are designated as hedges.
Syndicated Acquisition Facilities Agreement
Refer to Short Term Debt above for information in respect of the long-term
tranches of the Syndicated Acquisition Facilities Agreement. At February
24, 2000, the Syndicated Acquisition Facilities Agreement was renegotiated.
Refer to Note 7.
Eastern Energy Syndicated Facility Agreement
In October 1996, Eastern Energy entered into an Australian dollar
denominated revolving credit facility for general corporate purposes. The
facility agreement provides for borrowings aggregating $625 million at any
one time and expires October 31, 2001. The interest rate on any advance
under this agreement is set at a given margin over the bank bill rate. The
weighted average interest rates at December 31, 1999 and 1998 were 5.53%
and 5.42%, respectively. At February 24, 2000, the Syndicated Facility
Agreement was renegotiated. Refer to Note 7.
F-21
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. INCOME TAXES
The components of TXU Australia Group's provisions for income taxes are as
follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1999 1998 1997
-------- -------- --------
Thousands of Australian Dollars
<S> <C> <C> <C>
Current ........................................ $ -- $ -- $ 9
Deferred ....................................... (19,807) 35,627 31,042
-------- -------- --------
Total .......................................... $(19,807) $ 35,627 $ 31,051
======== ======== ========
</TABLE>
Reconciliation of income taxes computed at the federal statutory rate to
provision for income taxes:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1999 1998 1997
-------- -------- --------
Thousands of Australian Dollars
<S> <C> <C> <C>
Income (loss) from continuing operations
before income taxes ......................... $(25,658) $ 81,808 $ 57,127
======== ======== ========
Income taxes at the Australian Federal Statutory
Rate of 36% .................................... $ (9,237) $ 29,451 $ 20,566
Non-deductible franchise fee ................... -- 1,654 6,306
Non-deductible amortization of goodwill ........ 9,147 2,270 2,168
Non-deductible acquisition costs ............... 706 1,804 --
Change in tax rates ............................ (22,176) -- --
Other .......................................... 1,753 448 2,011
-------- -------- --------
Provision for income taxes/(tax benefit) ....... $(19,807) $ 35,627 $ 31,051
======== ======== ========
Effective Tax Rate ............................. (77.20%) 43.55% 54.35%
======== ======== ========
</TABLE>
On December 10, 1999, legislation was enacted that decreases the company
tax rate from 36% to 34% for the year ending December 31, 2000 and to 30%
for the year ending December 31, 2001 and thereafter. Accordingly, TXU
Australia Group's deferred tax assets and liabilities at December 31, 1999
reflect the new tax rates.
F-22
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. INCOME TAXES CONT'D)
Deferred income taxes are provided for significant temporary differences
between the book and tax bases of assets and liabilities based on tax laws
in effect at the balance sheet dates and are as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------------------------
1999 1998
---------------------------------- ----------------------------------
Total Current Non Total Current Non
----- ------- --- ----- ------- ---
Current Current
------- -------
Thousands of Australian Thousands of Australian
Dollars Dollars
<S> <C> <C> <C> <C> <C> <C>
Deferred tax assets
Employee benefits ......................... $ 9,445 $ 6,726 $ 2,719 $ 8,089 $ 3,866 $ 4,223
Net operating loss carryforwards .......... 155,595 -- 155,595 113,566 -- 113,566
Provision for loss on contracts ........... 12,618 -- 12,618 6,066 -- 6,066
Provision for land remediation ............ 3,624 -- 3,624 -- -- --
Other ..................................... 4,626 -- 4,626 3,789 708 3,081
-------- -------- -------- -------- -------- --------
Total deferred tax assets ................. 185,908 6,726 179,182 131,510 4,574 126,936
-------- -------- -------- -------- -------- --------
Deferred tax liabilities
Bases difference in fixed assets .......... 265,852 -- 265,852 166,300 -- 166,300
Unbilled revenue .......................... 34,047 34,047 -- 27,855 27,855 --
Other ..................................... 6,194 -- 6,194 2,518 -- 2,518
-------- -------- -------- -------- -------- --------
Total deferred tax liabilities ............ 306,093 34,047 272,046 196,673 27,855 168,818
-------- -------- -------- -------- -------- --------
Net deferred tax liabilities ............. $120,185 $ 27,321 $ 92,864 $ 65,163 $ 23,281 $ 41,882
======== ======== ======== ======== ======== ========
</TABLE>
At December 31, 1999, TXU Australia Group had $519 million (1998: $315
million) of tax loss carryforwards that can be used to offset future
taxable income. Such tax loss carryforwards do not have expiration dates.
No valuation allowance has been recorded for the tax loss carryforwards as
TXU Australia Group projects future taxable income.
10. DERIVATIVE INSTRUMENTS
TXU Australia Group enters into derivative instruments, including options,
swaps, futures and other contractual commitments for both trading and
non-trading purposes. TXU Australia Group enters into derivative
instruments for non-trading purposes in order to manage market risks
related to changes in interest rates, foreign currency exchange rates and
commodity prices. Gains and losses on non-trading derivative instruments
effective as hedges are deferred and recorded as a component of the
underlying transactions when settled. TXU Australia Group also enters into
derivative instruments and other contractual commitments for trading
purposes. Contracts entered into for trading purposes are recorded on a
mark-to-market basis with gains and losses recognized in earnings in the
period in which such valuation changes occur.
F-23
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. DERIVATIVE INSTRUMENTS (CONT'D)
Non-Trading
Foreign Currency Risk Management
TXU Australia Group enters into currency swaps to manage foreign currency
exposures with the US dollar.
At December 31, 1999, Eastern Energy had cross-currency swaps for its US
dollar denominated debt. The notional amount outstanding on cross-currency
swaps was $483 million. These cross-currency swaps mature in December 2006
and December 2016 for $360 million and $123 million, respectively. The
maturity of these swaps coincides with the maturity of the US dollar
denominated debt.
Interest Rate Risk Management
TXU Australia Group enters into interest rate swaps to manage exposures to
market risks related to interest rate changes.
At December 31, 1999, TXU Australia Group had interest rate swaps and
forward rate agreements outstanding, denominated in Australian dollars,
with an aggregate notional amount of $2.405 billion. Under these
agreements, TXU Australia Group pays a fixed rate on outstanding debt.
These agreements have remaining terms up to approximately 6 years. In
addition, at December 31, 1999, TXU Australia Group had swaps and forward
rate agreements with a constant notional amount of $432 million
outstanding, denominated in Australian dollars, for the purpose of
eliminating basis risk related to differences between swap settlement and
interest payment dates.
At December 31, 1999 TXU Australia Group had interest rate swaps
outstanding, denominated in US dollars, with an aggregate notional amount
of US$350 million. Under these agreements, TXU Australia Group receives a
fixed rate on outstanding debt. These agreements have remaining terms up to
17 years.
The US dollar denominated interest rate and cross currency swaps
effectively translated the fixed rate US dollar obligations arising from
the issue of senior notes in December 1996 to floating rate Australian
dollar obligations. Taking into account these swaps, the effective weighted
average interest rates at December 31, 1999 and 1998 on the senior notes
due 2006, were 6.12% and 5.20%, respectively, and on the senior notes due
2016, were 6.37% and 5.45%, respectively.
The maturity and payment dates of the interest rate swaps coincide with
those of the underlying debts.
Energy Price Risk Management
Electricity prices are established through a power pool, which is
controlled by a statutory, independent corporation. Substantially all power
must be sold into and purchased from the pool. In order to manage the
exposure to fluctuations in electricity pool prices, TXU Australia Group
enters into both short- and long-term derivative instruments whereby the
pool price is fixed for an agreed-upon quantity and duration by reference
to an agreed-upon strike price.
TXU Australia Group has entered into wholesale market contracts to cover
most of its forecasted franchise load through the end of 2000. At December
31, 1999, these contracts cover a notional volume of approximately 3.5
million MWh. The Group has also entered into wholesale market contracts to
cover a portion of its contestable load for the period from January 2000
through December 2001. At December 31, 1999, these contracts covered a
notional load of approximately 0.8 million MWh. The net loss deferred under
these contracts at December 31, 1999, was $56 million.
F-24
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. DERIVATIVE INSTRUMENTS (CONT'D)
Trading
The trading activities at TXU Australia Group commenced in May 1999, when
TXU Australia Group entered into a twenty year option agreement with AES
Ecogen which owns 966MW of gas-fired generation facilities that are
typically used during peak periods of demand for electricity in Victoria.
The agreement provides TXU Australia Group with the ability to enter into
contracts with AES Ecogen, at the Group's option, which would require an
exchange of cash for the difference between the amounts specified in the
contracts and the spot price of electricity. TXU Australia Group also has
an agreement to supply gas to AES Ecogen to run the facilities for twenty
years. TXU Australia Group made an initial option premium payment of $201
million and is required to make further future payments. The option is
marked to market and had a fair value of $201 million at December 31, 1999.
TXU Australia Group manages the market risk on a portfolio basis within
limitations imposed by the Board of Directors and in accordance with its
overall risk management policies. Market risks are monitored daily,
utilizing appropriate risk management methodologies, which value the
portfolio of contracts and hypothetical effect on this value from changes
in market conditions. TXU Australia Group uses techniques and methodologies
that simulate forward price curves in the energy market to estimate the
size and probability of changes in market value resulting from price
movements.
TXU Australia Group is subjected to a number of risks and costs associated
with the future contractual commitments, including price risk, credit risk
associated with counter-parties and market liquidity. TXU Australia Group
continuously monitors the valuation of identified risks and adjusts the
portfolio valuation based on present market conditions. To manage its
exposure to price risk, TXU Australia Group has established corporate
strategies, policies and limits, including the adoption of Value At Risk.
The Value At Risk governs the size of the maximum short or long exposure
that TXU Australia Group can adopt. It is measured at a 95% confidence
level. The exposures are monitored regularly against these benchmarks.
In 1999, TXU Australia Group began offering price risk management services
to customers through a variety of financial and other instruments,
including swaps, options, caps and swaptions. TXU Australia Group's sale
and purchase commitments for trading purposes amounting to 2.7 million MWh
and 3.1 million MWh, respectively, with terms extending up to 2002, are
included in the electricity portfolio as of December 31, 1999. The trading
derivatives are measured at fair value, and the unrealized gains and losses
from changes in the fair value are included within Operating Revenues on a
net basis. The fair value of the contracts is recorded in other assets or
liabilities, as appropriate. The net fair value of the sale and purchase
contracts was $4.7 million at December 31, 1999. TXU Australia Group
recorded a net trading gain of $3.4 million in 1999. TXU Australia Group
had no trading activity in 1998.
F-25
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. DERIVATIVE INSTRUMENTS (CONT'D)
Credit Risk
Credit risk relates to the risk of loss that TXU Australia Group would
incur as a result of non-performance by counterparties to its respective
derivative instruments. TXU Australia Group maintains credit policies with
regard to its counter-parties that management believes significantly
minimize overall credit risk. TXU Australia Group generally does not obtain
collateral to support the agreements but establishes credit limits and
monitors the financial viability of counterparties. TXU Australia Group
believes the risk of non-performance by counterparties is minimal.
11. Fair Value of Financial Assets and Liabilities
The estimated fair values of TXU Australia Group's significant financial
assets and liabilities at December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------------------
1999 1998
------------------------------ -----------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
Thousands of Australian Dollars
<S> <C> <C> <C> <C>
Non current financial assets and (liabilities):
Long-term debt ....................................... $(1,933,394) $(1,942,302) $ (966,394) $(1,087,526)
Off-balance sheet:
Domestic interest rate swaps ......................... -- 23,322 -- (100,082)
Foreign interest rate swaps .......................... -- (24,544) -- 42,271
Cross currency swaps ................................. -- 46,308 -- 86,274
Forward rate agreements .............................. -- (326) -- 2,128
</TABLE>
Long-term Debt and Other Off-balance Sheet Instruments
The fair value of long-term debt is based upon quoted market prices. Fair
values for off-balance sheet instruments (interest rate, currency swaps and
forward rate agreements) are based on prevailing interest and foreign
exchange rates, or the cost to terminate the agreement.
Other Financial Assets and Liabilities
The fair values of all other financial assets and liabilities approximate
their carrying values.
F-26
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. REGULATION AND RATES
Eastern Energy is subject to regulation by the Office of the Regulator
General (ORG). The ORG has the power to issue licenses for the supply,
distribution and sale of electricity within Victoria and regulates tariffs
for the use of the transmission system, distribution system, and other
ancillary services. The existing tariff under which Eastern Energy operates
is in effect until December 31, 2000.
Eastern Energy holds an exclusive franchise to sell electricity to retail
customers with electricity loads of less than 160 MWh/year within the same
geographic area of Victoria as its distribution license. The maximum prices
to be charged to these franchise customers have been determined by the ORG.
Retail prices for non-franchise customers are not regulated. Eastern
Energy's franchise is in effect until January 1, 2001, when all customers
may purchase from retailers of their choice. While the TXU Australia Group
expects significant competition in the fully contestable retail
marketplace, it cannot predict the outcome of this process.
Westar is also subject to regulation by the ORG. The ORG has the power to
issue licenses for the supply, distribution and sale of gas within Victoria
and regulates tariffs for the use of the transmission system, distribution
system, and other ancillary services. The existing tariff under which
Westar operates is in effect until December 31, 2002. The ORG will then
review the existing tariff to determine if it will be effective for the
period commencing January 1, 2003. All gas retail prices are scheduled to
be unregulated from September 2001. While the TXU Australia Group expects
significant competition in the fully contestable retail marketplace, it
cannot predict the outcome of this process.
13. PROVISION FOR LOSS ON CONTRACTS
The towns of Ararat, Stawell and Horsham, Victoria, Australia (Wimmera
towns) have been converted from tempered liquefied petroleum gas to natural
gas. The first natural gas was supplied to Ararat in May 1998, and all
three towns were fully converted by the end of 1998. To supply the Wimmera
towns, a new transmission pipeline was constructed. Kinetik Energy has a
transmission contract for use of that pipeline which requires it to pay a
defined amount per annum until 2013 and a supply obligation at regulated
prices through 2013. As part of the acquisition of Westar and Kinetik
Energy, TXU Australia Group assumed a provision for the net present value
of estimated losses on unfavorable long-term gas supply arrangements
totaling $27 million. The provision relates to commitments through the year
2013.
In connection with the purchase of Eastern Energy in 1995, TXU Australia
Group recorded a provision for certain unfavorable long-term electricity
purchase contracts that expire in 2013. During the years ended December 31,
1999, 1998 and 1997, $4.5 million, $6.3 million and $5.8 million,
respectively, of the provision was released to offset expenses recognized
on purchases under these contracts.
14. EMPLOYEE BENEFIT PLANS
Defined Contribution Plan
TXU Australia Group sponsors a defined contribution pension plan covering
employees hired after March 31, 1995. Employees may elect to contribute any
percentage of their salary to the plan. In 1999, TXU Australia Group
contribution rates were set at 10% of employee salaries for employees
covered under industry agreements and 7 to 10% for other employees. For
1998 and 1997, the contribution rate was 10%. TXU Australia Group
contributions totaled $1.8 million, $1.2 million and $0.6 million, in 1999,
1998, and 1997, respectively.
F-27
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. EMPLOYEE BENEFIT PLANS (CONT'D)
Defined Benefit Plans
TXU Australia Group sponsors three defined benefit pension plans covering
employees hired prior to March 31, 1995. The plan benefits are based on the
participants' contributions, number of years of service and final average
salaries. Employees may elect to contribute at rates up to 7.5% of their
salaries. TXU Australia Group's contributions range from 0% to 13.5% of
participants' salaries depending upon the funding ratio of the plan as
calculated in accordance with the plan's contribution rules. Based upon
these calculations for 1999, TXU Australia Group contributed to one of the
plans at a rate of 9% and was not required to contribute to the other two
plans.
As a result of the acquisitions of Streamline and Westar and Kinetik
Energy, certain employees were terminated causing settlement gains and
curtailment losses of $0.6 million and zero, respectively, for the year
ended December 31, 1999 and $0.1 million and $0.2 million, respectively for
the year ended December 31, 1998.
December 31,
-------------------------
1999 1998
--------- ---------
Thousands of Australian
Dollars
Change in pension obligation:
-----------------------------
Pension obligation at beginning of year . $ 107,246 $ 103,539
Obligations acquired on acquisition of
Westar and Kinetik Energy ............ 23,216 --
Service cost ............................ 4,692 3,572
Interest cost ........................... 6,379 6,037
Participant contributions ............... 2,477 2,256
Transfers in ............................ 900 --
Actuarial loss .......................... 2,738 7,285
Benefits paid ........................... (1,950) (720)
Tax on contributions .................... (191) (287)
Curtailments ............................ 1,755 175
Settlements ............................. (24,769) (14,611)
--------- ---------
Pension obligation at end of year ....... $ 122,493 $ 107,246
========= =========
December 31,
-------------------------
1999 1998
--------- ---------
Thousands of Australian
Dollars
Change in plan assets:
----------------------
Fair value of assets at beginning of year ... $ 106,567 $ 104,499
Assets acquired on acquisition of Westar
and Kinetik Energy ....................... 27,108 --
Actual return on assets ..................... 14,591 14,448
Employer contributions ...................... 253 982
Participant contributions ................... 2,477 2,256
Transfers in ................................ 900 --
Benefits paid ............................... (1,950) (720)
Tax on contributions ........................ (191) (287)
Settlements ................................. (24,769) (14,611)
--------- ---------
Fair value of assets at end of year ......... $ 124,986 $ 106,567
========= =========
F-28
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. EMPLOYEE BENEFIT PLANS (CONT'D)
Funded status:
--------------
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
------------------------------------ ------------------------------------
Thousands of Australian Dollars Thousands of Australian Dollars
------------------------------------ ------------------------------------
Plans where Plans where Plans where Plans where
Pension Assets Exceed Pension Assets Exceed
Obligation Pension Obligation Pension
Exceeds Assets Obligation Exceeds Assets Obligation
---------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Pension obligation ................. $ (93,867) $ (28,626) $(107,246) $ --
Fair value of assets ............... 91,666 33,320 106,567 --
--------- --------- --------- ------
Funded status ...................... (2,201) 4,694 (679) --
Unrecognized net (gain)/loss ....... (1,299) (787) (1,905) --
--------- --------- --------- ------
Accrued pension cost ............... $ (3,500) $ 3,907 $ (2,584) $ --
========= ========= ========= ======
</TABLE>
1999 1998
---- ----
Weighted average assumptions:
-----------------------------
Discount rate .......................... 5.5% 5.0%
Expected return on plan assets ......... 7.0% 7.0%
Rate of compensation increase .......... 4.5% 4.0%
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
Thousands of Australian dollars
<S> <C> <C> <C>
Components of net periodic pension cost:
----------------------------------------
Service cost ......................... $ 4,692 $ 3,572 $ 3,619
Interest cost ........................ 6,379 6,037 5,554
Expected return on plan assets ....... (9,246) (7,698) (6,575)
Recognized curtailment ............... -- 175 --
Recognized settlements ............... (542) (112) --
------- ------- -------
Net periodic pension cost ............ $ 1,283 $ 1,974 $ 2,598
======= ======= =======
</TABLE>
15. COMMITMENTS AND CONTINGENCIES
Capital Expenditures
The capital expenditures of TXU Australia Group are estimated at $112.1
million for 2000. At December 31, 1999, TXU Australia Group had commitments
of $3.5 million related to these capital expenditures. Approximately 75% of
the estimated capital expenditure will be spent on the electricity and gas
networks, 23% on information technology, and 2% on plant and equipment.
F-29
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. COMMITMENTS AND CONTINGENCIES (CONT'D)
Leases
TXU Australia Group has entered into operating leases for vehicles,
properties and office equipment. Certain of these leases contain renewal
and purchase options and residual value guarantees. Lease costs charged to
operating expense for the years ended December 31, 1999, 1998 and 1997 were
$6.4 million, $2.1 million and $1.6 million, respectively.
Future minimum lease commitments under operating leases that have initial
or remaining non-cancelable lease terms in excess of one year as of
December 31, 1999, were as follows:
Year
----
Thousands of Australian
dollars
2000 ................................................. $ 3,277
2001 ................................................. 2,710
2002 ................................................. 2,629
2003 ................................................. 2,643
2004 ................................................. 2,703
Thereafter ........................................... 9,989
-------
Total future minimum lease payments .................. $23,951
=======
Employment Agreements
TXU Australia Group has entered into employment service agreements (ESA's)
with a number of employees. The agreements set forth compensation and
related terms of their employment. Should TXU Australia Group terminate an
ESA prior to its expiration, other than for illness or acts of dishonesty,
TXU Australia Group would be required to pay the employee's compensation,
as defined in the ESA. As of December 31, 1999, TXU Australia Group would
be required to pay approximately $21.3 million in the event it terminates
the employees covered by all of the ESA's.
Legal Proceedings
Litigation
Actions, suits and claims are brought against TXU Australia and the Group
companies from time to time for damage to property and for personal
injuries sustained in the ordinary course of the business of TXU Australia.
All such actions, suits and claims are dealt with in the ordinary course of
business of TXU Australia or the appropriate Group company and are not
expected to have a material, adverse effect upon the business or financial
condition of TXU Australia.
F-30
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. COMMITMENTS AND CONTINGENCIES (CONT'D)
Potential Successor Liability
Pursuant to Allocation Statements made under the Electricity Industry Act
1993 (Vic.) and the Gas Industry Act 1994 (Vic.), Eastern Energy, Westar,
Kinetik Energy and Western Underground Gas Storage were allocated liability
for all claims arising in respect of certain causes of action accrued
against their predecessors as at September 29, 1994, in the case of Eastern
Energy, October 9, 1998 in the case of Western Underground Gas Storage, and
February 24, 1999 in the case of Westar and Kinetik Energy.
Longford Claim
Esso's gas processing plant at Longford exploded in September 1998 causing
prolonged interruption of gas supplies in Victoria. Subsequently, a class
action was commenced in the Federal Court of Australia against Esso on
behalf of a large number of domestic and commercial consumers claiming
damages for loss of supply. Esso has joined the Victorian Government and
related entities to the action, including those which sold and distributed
Esso gas prior to these businesses being acquired by private operators.
Esso has also joined private operators as well (Esso Cross-Claim),
including Westar, Kinetik Energy and Western Underground Gas Storage,
claiming any such liability passed to them as part of the sale of the
businesses from the government.
As currently pleaded before the Federal Court of Australia, the claims
cover actions in negligence and in misleading and deceptive conduct.
On April 3, 2000, the State of Victoria and the state owned entities who
were vendors of the business and assets to Westar and Kinetik Energy served
a Cross-Claim (State Cross-Claim) on Westar and Kinetik Energy. The State
Cross-Claim seeks orders against Westar and Kinetik Energy that they are
liable for any liability of the state-owned vendors which may be found
against those entities in relation to the Esso Cross-Claim. To the extent
the State Cross-Claim raises issues which are already raised against Westar
and Kinetik Energy in the Esso Cross-Claim, it does not materially affect
the potential liability of Westar and Kinetik Energy in the litigation.
If Esso is found liable and is successful in its cross claims, the
potential liability of Westar, Kinetik Energy and Western Underground Gas
Storage could be significant.
Based on a legal analysis of pleadings filed so far and the likely defenses
available, TXU Australia Group believes that the claims against Westar,
Kinetik Energy and Western Underground Gas Storage (and the proposed State
Cross-Claim) are without merit. However, given the complexity and magnitude
of the claims involved in this litigation, TXU Australia Group cannot
predict the ultimate outcome at this time. TXU Australia Group intends to
vigorously pursue all of its defenses in this litigation.
Gas Take-or-Pay Contracts
TXU Australia Group is party to various types of contracts for the purchase
of gas. These include "take-or-pay" obligations under which the buyer
agrees to pay for a minimum quantity of gas in a year. At December 31,
1999, TXU Australia Group had commitments under long-term gas purchase
contracts of an estimated $1 billion through 2009. Management does not
consider it likely, on the basis of TXU Australia Group's current
expectations of demand from its customers as compared with its take-or-pay
obligations under such purchase contracts, that any material payments will
become due from TXU Australia Group for gas not taken.
F-31
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. COMMITMENTS AND CONTINGENCIES (CONT'D)
Land Reclamation
TXU Australia Group through the Westar and Kinetik Energy acquisition was
allocated certain properties that are contaminated. A provision of $12
million is recorded in the balance sheet for land reclamation in relation
to the contaminated properties. The provision is based on the estimate of
the land reclamation costs following limited site reviews and testing. The
cost of reclamation may increase if the extent of contamination is worse
than testing indicated at the time of the reviews. Under the Environment
Protection Act 1970, the Victorian Environment Protection Authority has the
power to order TXU Australia Group to incur such costs to remedy the
contamination of land.
Gascor Put Option
As a condition of the acquisition of Kinetik Energy, Kinetik Energy granted
to the State of Victoria an option which gives the State the right to put
to Kinetik Energy one third of the issued share capital of Gascor Pty Ltd
(GASCOR) at a price equal to one third of GASCOR's net assets at the time
of exercise. The option can not be exercised until September 1, 2001, and
is expected to expire on or before December 31, 2002. The terms of the
option agreement are such that, by the time the option is exercisable, the
value of GASCOR's net assets are expected to be minimal.
General
In addition to the above, the TXU Australia Group is involved in various
legal and administrative proceedings and has other contingencies that, in
the opinion of management, the ultimate resolution should not have a
material effect upon its financial position, results of operations or cash
flows.
16. SEGMENT INFORMATION
The TXU Australia Group's reportable segments are strategic business units
that offer different products or services. They are managed separately
because each business requires different marketing strategies.
The TXU Australia Group has three main reportable operating segments:
(1) Networks - operations engaged in the distribution of electricity and
gas in the State of Victoria
(2) Retail - operations engaged in the sale of electricity and gas in the
State of Victoria
(3) Energy
Trading - operations engaged in the purchase and trading of
electricity and gas primarily in the State of Victoria
Other - non-segment operations primarily consist of underground gas
storage, call center management and unallocated goodwill.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. TXU Australia Group
evaluates performance based on net income or loss. TXU Australia Group
accounts for inter-segment sales or transfers as if the sales or transfers
were to third parties, that is, at current market prices.
F-32
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. SEGMENT INFORMATION (CONT'D)
Comparative segment information for 1998 and 1997 is not available for Energy
Trading because this activity was not carried out in these years.
<TABLE>
<CAPTION>
Networks Retail Energy Other Discontinued Eliminations Consolidated
Trading Operations
-----------------------------------------------------------------------------------------------
Thousands of Australian Dollars
Trade Revenues -
<S> <C> <C> <C> <C> <C> <C> <C>
1999 .............................. $ 104,235 $ 757,145 $ 16,516 $ 9,774 $ -- $ -- $ 887,670
1998 .............................. 53,235 585,713 -- 7,829 -- -- 646,777
1997 .............................. 40,587 580,586 -- -- -- -- 621,173
Affiliated Revenues -
1999 .............................. 303,279 28,866 -- 549,277 -- (881,422) --
1998 .............................. 256,993 -- -- 70,575 -- (327,568) --
1997 .............................. 256,517 -- -- 4,228 -- (260,745) --
Depreciation and
Amortization-
1999 .............................. 89,704 2,250 73 38,586 -- -- 130,613
1998 .............................. 52,335 223 -- 15,791 -- -- 68,349
1997 .............................. 49,652 160 -- 15,703 -- -- 65,515
Interest Income -
1999 .............................. 15,952 159 47 107,592 -- (121,670) 2,080
1998 .............................. 2,373 -- -- 179 -- (2,103) 449
1997 .............................. 294 -- -- -- -- (71) 223
Equity in Earnings of
Unconsolidated
Subsidiaries -
1999 .............................. -- -- -- (803) -- -- (803)
1998 .............................. -- -- -- (76) -- -- (76)
1997 .............................. -- -- -- -- -- -- --
Interest Expense -
1999 .............................. 173,674 23,138 33 117,611 -- (121,670) 192,786
1998 .............................. 83,872 4,156 -- 5,198 -- (2,103) 91,123
1997 .............................. 89,307 3,379 -- 2,770 -- (71) 95,385
Income Tax
Expense/(Benefit) -
1999 .............................. (15,974) 8,903 (2,235) (10,501) -- -- (19,807)
1998 .............................. 17,326 12,703 -- 5,598 -- -- 35,627
1997 .............................. 9,776 16,644 -- 4,631 -- -- 31,051
Net Income/(Loss)-
1999 .............................. 26,286 14,989 4,639 (51,765) (8,540) -- (14,391)
1998 .............................. 37,856 21,167 -- (12,842) (1,121) -- 45,060
1997 .............................. 29,487 16,966 -- (20,377) 1,149 -- 27,225
</TABLE>
F-33
<PAGE>
TXU Australia Holdings (Partnership) Limited Partnership
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. SEGMENT INFORMATION (CONT'D)
<TABLE>
<CAPTION>
Networks Retail Energy Other Discontinued Eliminations Consolidated
Trading Operations
------------------------------------------------------------------------------------------------
Thousands of Australian Dollars
<S> <C> <C> <C> <C> <C> <C> <C>
Investment in Unconsolidated
Affiliates -
1999 ...................... $ -- $ -- $ -- 3,488 $ -- $ -- $ 3,488
1998 ...................... -- -- -- 1,690 -- -- 1,690
1997 ...................... -- -- -- -- -- -- --
Total Assets -
1999 ...................... 3,197,245 170,397 213,133 3,382,437 21,455 (2,384,481) 4,600,186
1998 ...................... 1,572,278 91,307 -- 997,926 13,080 (339,776) 2,334,815
1997 ...................... 1,481,876 59,139 -- 887,276 13,956 (236,478) 2,205,769
Capital Expenditures -
1999 ...................... 133,283 882 439 125,411 2,204 -- 262,219
1998 ...................... 76,472 1,139 -- 25,926 3,228 -- 106,765
1997 ...................... 61,836 -- -- 8 1,351 -- 63,195
</TABLE>
17. DISPOSITION OF BUSINESS
At December 31, 1999, TXU Australia Group held a 26% interest in Eastcoast Power
Pty Ltd (Eastcoast), a company developing a 43 MW power station in eastern
Victoria, Australia. On April 17, 2000, TXU Australia Group sold its interest in
Eastcoast resulting in an $8.7 million gain.
18. SUBSEQUENT EVENT - UNAUDITED
On May 4, 2000 TXU Australia Group was selected by the South Australian
government as the successful bidder for a 100 year lease of the assets of
the South Australian electricity generator, Optima Energy Pty Ltd. The
purchase price, which is payable on financial closing, expected to be on
June 6, 2000, is $295 million.
F-34
<PAGE>
Gascor Holdings No. 2 Pty Ltd and Subsidiaries
Report of Independent Auditors
------------------------------
To: Gascor Holdings No. 2 Pty Ltd:
We have audited the accompanying consolidated balance sheet of Gascor Holdings
No. 2 Pty Ltd and subsidiaries (Gascor Holdings) as of June 30, 1998, and the
related consolidated statements of operations, shareholder's equity and cash
flows for the year ended June 30, 1998. These financial statements are the
responsibility of Gascor Holdings management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
As disclosed in Note 2, the property, plant and equipment of Gascor Holdings was
recorded at fair value as of July 1, 1997, upon allocation of the assets and
liabilities to Gascor Holdings by the Government of Victoria, Australia. This
valuation was used to prepare the beginning balance sheet of Gascor Holdings as
no historical cost basis information was available. In our opinion, generally
accepted accounting principles require that property, plant and equipment be
recorded at historical cost.
In our opinion, except for the use of fair value to record property, plant and
equipment as discussed in the preceding paragraph, such consolidated financial
statements referred to above present fairly, in all material respects, the
financial position of Gascor Holdings as of June 30, 1998, and the results of
their operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
/s/ DELOITTE TOUCHE TOHMATSU
Melbourne, Australia
April 28, 2000
F-35
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
STATEMENT OF CONSOLIDATED OPERATIONS
Year Ended June 30, 1998
-------------------------------
Thousands of Australian Dollars
OPERATING REVENUES ..................................... $ 262,896
---------
OPERATING EXPENSES
Purchased gas and distribution costs ............... 97,321
Operation and maintenance .......................... 64,340
Depreciation and amortization ...................... 11,754
---------
Total operating expenses ......................... 173,415
---------
OPERATING INCOME ....................................... 89,481
OTHER INCOME - NET .................................... 208
---------
INCOME BEFORE INTEREST AND INCOME TAXES ................ 89,689
INTEREST INCOME ........................................ 441
INTEREST EXPENSE ....................................... (23,623)
---------
INCOME BEFORE INCOME TAXES ............................. 66,507
INCOME TAX EXPENSE ..................................... 24,054
---------
NET INCOME ............................................. $ 42,453
=========
See Notes to Consolidated Financial Statements.
F-36
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
CONSOLIDATED BALANCE SHEET
ASSETS
June 30, 1998
-------------------------------
Thousands of Australian Dollars
PROPERTY, PLANT AND EQUIPMENT
Gas network ....................................... $381,772
Land .............................................. 4,427
Buildings ......................................... 6,759
Other ............................................. 4,009
--------
Total ........................................... 396,967
Less accumulated depreciation ..................... 11,754
--------
Net of accumulated depreciation ................. 385,213
Construction work in progress ..................... 900
--------
Net property, plant and equipment ............... 386,113
--------
INVESTMENTS ........................................... 247
--------
CURRENT ASSETS
Cash and cash equivalents ......................... 30,039
Accounts receivable ............................... 65,328
Inventories - at average cost:
Materials and supplies .......................... 902
Fuel stock ...................................... 82
Property held for sale ............................ 324
Other current assets .............................. 2,236
--------
Total current assets ............................ 98,911
--------
OTHER NON-CURRENT ASSETS
Deferred tax assets ............................... 67,557
Prepaid pension cost .............................. 4,158
--------
Total other non-current assets .................. 71,715
--------
TOTAL ASSETS .......................................... $556,986
========
See Notes to Consolidated Financial Statements.
F-37
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
CONSOLIDATED BALANCE SHEET
CAPITALIZATION AND LIABILITIES
<TABLE>
<CAPTION>
June 30, 1998
-------------------------------
Thousands of Australian Dollars
<S> <C>
CAPITALIZATION
Share capital .............................................. $ --
Retained earnings .......................................... 3,953
--------
Total shareholder's equity ................................. 3,953
Long-term debt ............................................. 418,220
--------
Total capitalization ............................... 422,173
--------
CURRENT LIABILITIES
Unearned agency commission ................................. 30,000
Accounts payable ........................................... 28,530
Dividends payable .......................................... 32,000
Interest accrued ........................................... 1,183
Other current liabilities .................................. 3,429
--------
Total current liabilities .......................... 95,142
--------
OTHER NONCURRENT LIABILITIES
Provision for losses on contracts .......................... 26,761
Provision for land reclamation ............................. 10,645
Other ...................................................... 2,265
--------
Total other non-current liabilities ............... 39,671
--------
COMMITMENTS AND CONTINGENCIES (Note 12)
--------
TOTAL CAPITALIZATION AND LIABILITIES ........................... $556,986
========
</TABLE>
See Notes to Consolidated Financial Statements.
F-38
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
STATEMENT OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
Year Ended June 30, 1998
-------------------------------
Thousands of Australian Dollars
<S> <C>
CASH FLOWS - OPERATING ACTIVITIES
Net income .................................................. $ 42,453
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization ............................. 11,754
Deferred income taxes - net ............................... 24,054
Equity share in profits of associate ...................... (247)
Loss on sale of fixed assets .............................. 39
Changes in operating assets and liabilities:
Accounts receivable ....................................... (65,305)
Inventories ............................................... (207)
Other working capital - net ............................... (4,681)
Accounts payable .......................................... 21,541
Accrued interest .......................................... 1,183
Unearned agency commission ................................ 30,000
Other - net ............................................... 44
---------
Cash provided by operating activities .............. 60,628
---------
CASH FLOWS - FINANCING ACTIVITIES
Dividends paid .............................................. (6,500)
Proceeds from borrowings .................................... 13,100
Repayment of borrowings ..................................... (13,280)
---------
Cash used in financing activities .................. (6,680)
---------
CASH FLOWS - INVESTING ACTIVITIES
Construction expenditures ................................... (23,923)
Proceeds on sale of property, plant and equipment ........... 14
---------
Cash used in investing activities .................. (23,909)
---------
NET INCREASE IN CASH AND CASH EQUIVALENTS ....................... 30,039
CASH AND CASH EQUIVALENTS - BEGINNING BALANCE ................... --
---------
CASH AND CASH EQUIVALENTS - ENDING BALANCE ...................... $ 30,039
=========
SUPPLEMENTAL CASH FLOW INFORMATION:
CASH PAYMENTS - Interest ........................................ $ 22,440
NON-CASH INVESTING ACTIVITIES:
Assets acquired ............................................ 473,333
Liabilities assumed ........................................ (473,333)
</TABLE>
See Notes to Consolidated Financial Statements.
F-39
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
STATEMENT OF CONSOLIDATED SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
Year Ended June 30, 1998
-------------------------------
Thousands of Australian Dollars
<S> <C>
SHARE CAPITAL
Ordinary shares (100,000,000 authorized,
12 issued and outstanding) $ --
RETAINED EARNINGS
Balance at beginning of year .......................... --
Net income .......................................... 42,453
Dividends declared .................................. (38,500)
--------
Balance at end of year ................................ 3,953
--------
SHAREHOLDER'S EQUITY ...................................... $ 3,953
========
</TABLE>
See Notes to Consolidated Financial Statements.
F-40
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND FORMATION
On December 11, 1997, pursuant to the Gas Industry Act 1994, as amended
from time to time, (the GIA), the gas industry in Victoria was restructured
by the Victorian government transferring certain property, rights and
liabilities of GASCOR (trading as Gas and Fuel) to Gascor Holdings No. 2
Pty Ltd and its subsidiaries Westar Pty Ltd (Westar), Westar (Assets) Pty
Ltd (Westar Assets), and Kinetik Energy Pty Ltd (Kinetik Energy)
(collectively "Gascor Holdings") (see Allocation of Assets, Note 3).
As a result of the internal restructuring of GASCOR, Gascor Holdings No. 2
Pty Ltd, including Westar and Kinetik Energy, functioned as a discrete
group from July 1, 1997. However, the group did not carry on business in
its own right prior to December 11, 1997. All group companies commenced
operations on that date, when the specified assets and liabilities of
GASCOR were vested in the companies pursuant to Allocation Statements made
under the GIA. The GIA requires that the results for the year ended June
30, 1998 include the operations of the companies from July 1, 1997
notwithstanding that the formal disaggregation did not occur until December
11, 1997. These financial statements have been prepared on this basis.
The principal activities of Gascor Holdings are the distribution and sale
of natural gas and tempered liquefied petroleum gas, primarily in the State
of Victoria, Australia.
Westar Assets owns distribution assets including approximately 4,850 miles
of pipelines over approximately 1,190 square miles in western Victoria and
leases them to Westar. Westar is responsible for the distribution of
natural gas and tempered liquefied petroleum gas. Westar currently
distributes gas for two retailers - Kinetik Energy and Ikon Energy Pty Ltd
- who have retail franchise customers in areas served by Westar. Westar
also distributes gas for GASCOR, where the gas is used by affiliates of gas
producers Esso Australia Resources Limited (Esso) and/or BHP Petroleum Pty
Ltd.
Kinetik Energy is a Victorian-based energy retailer that sells natural gas
and tempered liquefied petroleum gas as an agent for GASCOR. Gascor
Holdings' gas franchise customers are situated in western Victoria. Kinetik
Energy's gas is delivered by two distributors - Westar and Stratus Networks
Pty Ltd - and by two transmission companies - Transmission Pipelines
Australia Pty Ltd and Coastal Gas Pipelines Victoria Pty Ltd.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements include the accounts of Gascor
Holdings and its majority owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Investments in unconsolidated affiliates are accounted for by the equity
method. The consolidated financial statements were prepared in accordance
with accounting principles generally accepted in the United States of
America except for the valuation of property, plant and equipment at July
1, 1997 as discussed under "Property, Plant and Equipment". All dollar
amounts in the consolidated financial statements and notes to the
consolidated financial statements are stated in thousands of Australian
dollars unless otherwise indicated.
F-41
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Use of Estimates
The preparation of the consolidated financial statements requires
management to make estimates and assumptions about future events that
affect the reporting and disclosure of assets and liabilities at the
balance sheet dates and the reported amounts of revenues and expenses
during the reporting periods. In the event estimates and/or assumptions
prove to be different than actual amounts, adjustments are made in the
subsequent periods to reflect more current information. No material
adjustments were made to previous estimates during the current year.
Property, Plant and Equipment
Property, plant and equipment as of July 1, 1997, was recorded at fair
value as determined by the Government of Victoria. Expenditures incurred on
distribution assets are capitalized where the expenditure increases the
service potential of the assets. Additions to property, plant and equipment
are recorded at cost. The cost of assets constructed includes labor and
materials, applicable overhead and interest on funds borrowed to finance
construction. Capitalized interest during 1998 was insignificant.
Customer contributions for the construction of gas distribution system
assets are amortized to income over the life of the constructed assets. The
unamortized amount of these contributions is deducted from property, plant
and equipment.
Depreciation of plant and equipment generally is determined by the
straight-line method over the estimated useful life of the asset. Leasehold
improvements are depreciated over their estimated useful life or the life
of the lease, whichever is shorter. The useful lives used to depreciate
each class of asset are as follows:
Buildings ............................. 40 years
Building fixtures on leasehold land ... 40 years
Gas network ........................... 40 years
Machinery, plant and equipment ........ 10 years
Office furniture and equipment ........ 10 years
Motor vehicles and heavy machinery .... 12.5 years
Property Held for Sale
Properties which have been identified as surplus to the continuing
requirements of Gascor Holdings and are designated for sale, are shown in
the Consolidated Balance Sheet as Property Held for Sale. These properties
have been valued at the lower of carrying amount or fair value less cost to
sell.
Inventory
Materials and supplies and fuel stock are stated at the lower of cost or
market value. Cost is based on weighted average costs.
F-42
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Income Taxes
Gascor Holdings is exempt from Federal income tax under Division 1 AB of
the Income Tax Assessment Act 1936 (1936 Act). However, Gascor Holdings is
subject to the Victorian State Equivalent Tax ("SET") system that
effectively replicates the 1936 Act. The enacted corporate tax rate per SET
is 36%.
Gascor Holdings accounts for income taxes under the liability method.
Deferred income taxes represent liabilities to be paid or assets to be
received in the future, and reflect the expected future tax consequences of
the differences between the financial statement carrying amounts of assets
and liabilities and their respective tax bases. Future tax rate changes
would affect the deferred tax assets or liabilities in the period when the
tax rate change is enacted. Future tax benefits, such as carryforward tax
losses, are recognized to the extent that realization of such benefits is
more likely than not.
Revenue Recognition
Agency fee income, included in operating revenues, represents commissions
earned from GASCOR, for the sale of gas to customers by Gascor Holdings as
agent on behalf of GASCOR. Agency fee revenues are recognized when gas is
delivered to customers and includes an estimated accrual for gas consumed
by customers between the last meter reading date to the end of the period.
Distribution use of system revenue, included in operating revenues,
represents amounts earned for the distribution of gas on behalf of
retailers.
Gas Supply
Approximately 95 percent of the natural gas shipped through Westar's
distribution network is supplied from the Esso Australia Resources Limited
(Esso)/BHP Petroleum (Bass Strait) Pty Ltd gas fields in the Bass Strait of
Australia.
Comprehensive Income
Comprehensive income for Gascor Holdings is the same as net income reported
in the statement of consolidated operations.
Consolidated Cash Flows
For the purposes of reporting cash and cash equivalents, temporary cash
investments purchased with a remaining maturity of three months or less are
considered to be cash equivalents.
F-43
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. ALLOCATION OF ASSETS
On December 11, 1997, at the direction of the Treasurer of Victoria, Gascor
Holdings entered into disaggregation contracts with other entities in the
restructured gas industry whereby certain specified assets and liabilities
of GASCOR were vested in Gascor Holdings pursuant to the Allocation
Statements made under the Gas Industry Act 1994. Pursuant to the Allocation
Statements, Westar and Kinetik Energy were also allocated liability for all
claims arising in respect of certain causes of action accrued against
GASCOR and its successors prior to Westar and Kinetik Energy.
The Allocation Statements were prepared by the Government from the
accounting records of GASCOR as at July 1, 1997 after having made various
adjustments to asset and liability values considered appropriate by the
Government. These adjustments approximate fair value based on market
appraisals prepared for the Government. A subsequent amendment to the
Westar Assets Allocation Statement, also with effect from July 1, 1997, has
been incorporated into the consolidated financial statements. The GIA
requires that the results for the year ended June 30, 1998 include the
operations of the entities from July 1, 1997 notwithstanding that the
formal disaggregation did not occur until December 11, 1997. The allocation
of assets and liabilities to Gascor Holdings was as follows:
Current assets .................................... $ 3,190
Property, plant and equipment ..................... 373,997
Deferred tax assets ............................... 91,554
Prepaid pension cost .............................. 4,592
Current liabilities ............................... (14,872)
Long-term debt .................................... (418,400)
Provision for losses on contracts ................. (26,761)
Provision for land reclamation .................... (10,645)
Other liabilities ................................. (2,655)
4. RELATED PARTY TRANSACTIONS
Transactions with related parties under common ownership by the Government
of Victoria are entered into in the normal course of business in accordance
with disaggregation service contracts. All amounts due/receivable are
non-interest bearing, except for Treasury Corporation of Victoria (TCV)
transactions.
The nature of significant related party transactions include:
- GASCOR for 100% of Gascor Holdings' agency commission revenue and for
95% of its natural gas supply.
- Transmission Pipelines Australia Pty Ltd (TPA) for transmitting all of
Gascor Holdings' natural gas through the transmission network and for
delivering natural gas to Gascor Holdings' distribution network.
- Stratus Networks for distribution of approximately 50% of Gascor
Holdings' natural gas through its distribution network.
- Ikon Energy which sells approximately 50% of the natural gas which is
distributed through Gascor Holdings' distribution network.
- VENCorp for control of the transmission and distribution networks.
- Gas Services Business for provision of a range of common gas industry
services.
- TCV for supply of funds.
GASCOR, TPA, Stratus Networks, Ikon Energy, VENCorp, Gas Services Business
and TCV were all owned by the Victorian Government at June 30, 1998.
F-44
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. LONG-TERM DEBT
Gascor Holdings' borrowing requirements are all met through loan facilities
with TCV. The borrowings are repayable in full to TCV on privatization of
Gascor Holdings. At June 30, 1998, the borrowings of $418 million had
varying maturities ranging from July 1998 to June 1999. Under the
facilities, Gascor Holdings has the option to roll over its debt as it
matures on an ongoing basis without limitation, including to dates beyond
June 30, 1999.
As indicated, the terms of the debt with TCV required payment in full upon
privatization. On February 24, 1999, Gascor Holdings was purchased by TXU
Australia Group and the balance of the debt was paid in full. The debt has
been reflected in this balance sheet according to the original terms with
TCV as it more appropriately reflects the nature of the borrowings.
Gascor Holdings' borrowings from TCV were unsecured, but had the benefit of
a guarantee of the Treasurer of the State of Victoria in favor of TCV.
June 30, 1998
-------------
5.45 % Fixed Interest Loan due June 15, 1999 ............. $334,720
5.00 % Fixed Interest Loan due July 31, 1998 .............. 25,000
5.26 % Fixed Interest Loan due August 31, 1998 ............ 25,000
Variable Rate Revolving Credit Facility
(Interest rate based upon Bank Bill rate)
(The weighted average interest rate was 4.8 % per annum) .. 33,500
--------
Total long-term debt ...................................... $418,220
========
F-45
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. INCOME TAXES
The components of Gascor Holdings' provision for income taxes are as
follows:
Year Ended June 30,
1998
-------------------
Deferred income tax expense ........................ $24,054
=======
Reconciliation of income taxes computed at the Victorian State Equivalent
Tax rate to the provision for income taxes:
Year Ended June 30,
1998
-------------------
Income before income taxes .......................... $66,507
=======
Income taxes at the Victorian state
equivalent tax rate of 36% ..................... $23,942
Non-deductible expenses ............................. 112
-------
Provision for income taxes .......................... $24,054
=======
Effective tax rate .................................. 36.17%
=======
F-46
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. INCOME TAXES (CONT'D)
Deferred income taxes provided for significant temporary differences between the
book and tax bases of assets and liabilities based on tax laws in effect at June
30, 1998 are as follows:
<TABLE>
<CAPTION>
June 30, 1998
-----------------------------------
Total Current Non-current
----- ------- -----------
<S> <C> <C> <C>
Deferred Tax Assets:
Basis difference in property, plant
and equipment ................................. $46,388 $ -- $46,388
Provision for loss on contracts ................. 9,634 -- 9,634
Net operating loss carryforwards ................ 7,716 -- 7,716
Provision for land remediation .................. 3,832 -- 3,832
Employee benefits ............................... 1,848 -- 1,848
Other ........................................... 118 72 46
------- ------- -------
Total deferred tax assets ................ 69,536 72 69,464
======= ======= =======
Customer contributions .......................... 410 -- 410
Prepayments ..................................... 98 98 --
Prepaid pension costs ........................... 1,497 -- 1,497
Other ........................................... 31 31 --
------- ------- -------
Total deferred tax liabilities .............. 2,036 129 1,907
------- ------- -------
Net deferred asset (liability) .............. $67,500 $ (57) $67,557
======= ======= =======
</TABLE>
At June 30, 1998, Gascor Holdings had approximately $21 million of tax loss
carryforwards that could be used to offset future taxable income. Such tax loss
carryforwards do not have expiration dates. These financial statements were
prepared on the assumption that operations would continue. As a result, no
valuation allowance has been recorded as it is more likely than not that Gascor
Holdings would be able to utilize the tax loss carryforwards. On February 24,
1999, Gascor Holdings was purchased by TXU Australia Holdings (Partnership)
Limited Partnership, at which time Gascor Holdings' deferred tax assets were
realized.
F-47
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. REGULATION AND RATES
Gascor Holdings is subject to regulation by the Office of the Regulator
General (ORG). The ORG has the power to issue licenses for the supply,
distribution and sale of gas within Victoria and regulates tariffs for the
use of the transmission system, distribution system, and other ancillary
services. The existing tariff under which Gascor Holdings operates is in
effect through December 31, 2002. The ORG will review the existing tariff
to determine if it will be effective for the period commencing January 1,
2003. All gas retail prices are scheduled to be unregulated from September
1, 2001. While Gascor Holdings expects significant competition in the fully
competitive retail market it cannot predict the outcome of this process.
8. SHARE CAPITAL
Gascor Holdings No. 2 Pty Ltd was incorporated on June 30, 1997 by the
subscription of 12 ordinary shares of $1 each.
9. DIVIDEND REQUIREMENTS
The Gas Industry Act 1994 requires Gascor Holdings to pay to the Victorian
Government dividends as determined by the Victorian Government Treasurer
after consultation with the Board of Directors of Gascor Holdings. Gascor
Holdings is required to pay total dividends equal to 65 per cent of its
pre-tax profits, provided such amounts do not cause debt levels to rise
above those allocated to Gascor Holdings on July 1, 1997. For the period
ended June 30, 1998, Gascor Holdings paid $6.5 million in dividends and, at
June 30, 1998 declared an additional $32.0 million dividend which was paid
in December 1998.
10. FINANCIAL INSTRUMENTS
Interest Rate Risk
Gascor Holdings' revolving credit facility is subject to floating interest
rates. Gascor Holdings does not enter into any interest rate swap
agreements to manage its exposure to fluctuating interest rates.
Accordingly, each 0.25% change in the bank bill lending rate will result in
changes to interest expense of $84 thousand per year.
Concentration of Credit Risk
Credit risk relates to the risk of loss that Gascor Holdings would incur as
a result of non-performance by counterparties to their respective
derivative instruments. Gascor Holdings maintains credit policies with
regard to its counterparties that management believes significantly
minimizes the overall credit risk.
Gascor Holdings' financial instruments that are exposed to concentrations
of credit risk consist primarily of accounts receivables, of which 97% are
related to two customers. Gascor Holdings believes the risk of
non-performance by counterparties is minimal.
Fair Value of Financial Assets and Liabilities
The fair values of financial assets and liabilities approximate their
carrying values.
F-48
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. EMPLOYEE BENEFIT PLANS
Defined Contribution Plan
Gascor Holdings sponsors a defined contribution pension plan covering
employees hired after March 31, 1995. Employees can contribute at any level
as a percentage of their salary. Gascor Holdings contributions were
determined at a rate of 6% of each covered employee's salary and totaled
$266 thousand for the year ended June 30, 1998.
Defined Benefit Plan
Gascor Holdings sponsors a defined benefit pension plan covering employees
hired prior to March 31, 1995. The plan benefits are based on participants'
contributions, and number of years of service and final average salaries.
Employees contribute at 5% of their salaries. Gascor Holdings'
contributions range from up to 13% of participants' salaries depending upon
the funding ratio of the plan as calculated in accordance with the plan's
contribution rules. Based upon these calculations, no contributions to the
plan were required during the year ended June 30, 1998.
June 30, 1998
-------------
Change in pension obligation:
-----------------------------
Pension benefit obligation at beginning of year ........ $ 20,074
Service cost ........................................... 956
Interest cost .......................................... 1,255
Participant contributions .............................. 234
Benefits paid .......................................... (1,377)
Tax paid ............................................... (5)
Amounts received from other funds ...................... 211
Actuarial loss ......................................... 98
--------
Pension obligation at end of year ...................... $ 21,446
========
Change in plan assets:
----------------------
Fair value of assets at beginning of year .............. $ 24,666
Actual return on assets ................................ 1,491
Participant contributions .............................. 234
Benefits paid .......................................... (1,377)
Tax paid ............................................... (5)
Amounts received from other funds ...................... 211
--------
Fair value of assets at end of year .................... $ 25,220
========
Funded status:
--------------
Pension obligation ..................................... (21,446)
Fair value of assets ................................... 25,220
Unamortized loss brought forward ....................... 384
--------
Prepaid pension cost ................................... $ 4,158
========
F-49
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11. EMPLOYEE BENEFIT PLANS (CONT'D)
June 30, 1998
-------------
Weighted average assumptions:
-----------------------------
Discount rate ........................................ 6.0%
Expected return on plan assets ....................... 7.0%
Rate of compensation increase ........................ 4.5%
Components of net periodic pension cost:
----------------------------------------
Service cost ......................................... $ 956
Interest cost ........................................ 1,255
Expected return on plan assets ....................... (1,777)
-------
Net periodic pension cost ............................ $ 434
=======
12. COMMITMENTS AND CONTINGENCIES
Operating Expenditures
Gascor Holdings is obligated under non-cancelable service contracts entered
into by Gascor Holdings on disaggregation at July 1, 1997 with various
related parties under common ownership by the Government of Victoria for $8
million through February 2000, and non-cancelable maintenance contracts
with a third party for the maintenance of the gas distribution assets for
$13 million through September 1999.
Land Reclamation
Gascor Holdings was allocated certain properties on December 11, 1997 that
were contaminated. A provision for land reclamation in relation to the
contaminated properties was allocated and is recorded in the balance sheet.
The provision is based on the estimate of the land reclamation costs
following site reviews and limited testing. The cost of reclamation may
increase if the extent of contamination is found to be worse than testing
indicated at the time of the reviews. Under the Environment Protection Act
1970, the Victorian Environment Protection Authority has the power to order
Gascor Holdings to incur such costs to remedy contamination of the land.
F-50
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. COMMITMENTS AND CONTINGENCIES (CONT'D)
Gas Outage
In June 1998, an ice blockage at the gas processing plant at Longford,
Gippsland, prevented it from supplying the usual volume of gas into the
Victorian natural gas network. As a consequence of this emergency, VENCorp
directed all Victorian gas retailers, including Gascor Holdings, to curtail
supply of gas to certain customers. Gascor Holdings carried out those
directions.
Some customers have indicated their intention to make claims against Gascor
Holdings for unspecified damages arising from the curtailment. To date, no
court proceedings have commenced.
Legal Proceedings
Esso's gas processing plant at Longford exploded in September 1998 causing
prolonged interruption of gas supplies in Victoria. Subsequently, a class
action was commenced in the Federal Court of Australia against Esso on
behalf of a large number of domestic and commercial consumers claiming
damages for loss of supply. Esso has joined the Victorian Government and
related entities to the action, including those which sold and distributed
Esso gas prior to these businesses being acquired by private operators.
Esso has also joined private operators as well, (Esso Cross-Claim)
including Westar, Kinetik Energy and Western Underground Gas Storage,
claiming any such liability passed to them as part of the sale of the
businesses from the government.
As currently pleaded before the Federal Court of Australia, the claims
cover actions in negligence and in misleading and deceptive conduct.
On April 3, 2000, the State of Victoria and the state owned entities who
were vendors of the business and assets to Westar and Kinetik Energy served
a Cross-Claim (State Cross-Claim) on Westar and Kinetik Energy. The State
Cross-Claim seeks orders against Westar and Kinetik Energy that they are
liable for any liability of the state owned vendors which may be found
against those entities in relation to the Esso Cross-Claim. To the extent
the State Cross-Claim raises issues which are already raised against Westar
and Kinetik Energy in the Esso Cross-Claim, it does not materially affect
the potential liability of Westar and Kinetik Energy in the litigation. If
Esso is found liable and is successful in its cross claims, the potential
liability of Westar, Kinetik Energy and Western Underground Gas Storage
could be significant.
Based on a legal analysis of pleadings filed so far and the likely defenses
available, TXU Australia Group believes that the claims against Westar,
Kinetik Energy and Western Underground Gas Storage (and the proposed State
Cross-Claim) are without merit. However, given the complexity and magnitude
of the claims involved in this litigation, TXU Australia Group cannot
predict the ultimate outcome at this time. TXU Australia Group intends to
vigorously pursue all of its defenses in this litigation.
F-51
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. COMMITMENTS AND CONTINGENCIES (CONT'D)
Supply of Natural Gas to the Wimmera Region
The towns of Ararat, Stawell and Horsham, Victoria, Australia (Wimmera
towns) were fully converted from tempered liquefied petroleum gas to
natural gas by the end of 1998. The first natural gas was supplied to
Ararat in May 1998. To supply the Wimmera towns, a new transmission
pipeline was constructed. Gascor Holdings has a transmission contract for
use of that pipeline which requires it to pay a defined amount per annum
until 2013 and a supply obligation at regulated prices through 2013.
Gascor Holdings expects to incur losses in the amount of $53 million (in
1998 dollars undiscounted) over the period 2001 to 2013. Gascor Holdings
recorded a provision for the discounted value of the expected losses of $27
million upon disaggregation of GASCOR on July 1, 1997.
Employment Agreements
Gascor Holdings has entered into employment service agreements (ESA's) with
certain employees. The agreements set forth compensation and related terms
of their employment. Should Gascor Holdings terminate an ESA prior to its
expiration, other than for illness or acts of dishonesty, Gascor Holdings
would be required to pay the employee's compensation, as defined in the
ESA. As of June 30, 1998, Gascor Holdings would be required to pay
approximately $1.4 million in the event Gascor Holdings terminates the
employees covered by all of the ESA's.
Gas Take-or-Pay Contracts
Gascor Holdings is party to various types of contracts for the purchase of
gas. These include "take-or-pay" obligations under which the buyer agrees
to pay for a minimum quantity of gas in a year. At June 30, 1998, Gascor
Holdings had commitments under long-term gas purchase contracts of
approximately $1.3 billion through 2009. Management does not consider it
likely that any material payments will be required for gas not taken.
Supply and Sale Arrangements
Gascor Holdings has entered into supply and sale arrangements with related
parties as disclosed in Note 4 to the consolidated financial statements.
General
In addition to the above, Gascor Holdings is involved in various legal and
administrative proceedings and has other contingencies, that, in the
opinion of management, the ultimate resolution should not have a material
effect upon its financial position, results of operations or cash flows.
F-52
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. SEGMENT INFORMATION
Gascor Holdings' reportable segments are strategic business units that
offer different products or services. They are managed separately because
each business requires different marketing strategies.
Gascor Holdings has two reportable operating segments:
(1) Networks- operations engaged in the distribution of natural gas in the
State of Victoria.
(2) Retail- operations engaged in the purchase and sale of natural
gas primarily in the State of Victoria.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. Gascor Holdings evaluates
performance based on net income or loss. Gascor Holdings accounts for
intersegment sales or transfers as if the sales or transfers were to third
parties, that is, at current market prices.
<TABLE>
<CAPTION>
Year Ended June 30, 1998
---------------------------------------------------------
Network Retail Eliminations Consolidated
---------------------------------------------------------
Thousands of Australian Dollars
<S> <C> <C> <C> <C>
Trade Revenues .............. $ 64,952 $197,944 $ -- $262,896
Affiliated Revenues ......... 54,817 -- (54,817) --
Depreciation and
Amortization .............. 11,386 368 -- 11,754
Interest Income ............. 10 431 -- 441
Interest Expense ............ 23,623 -- -- 23,623
Income Tax Expense .......... 16,448 7,606 -- 24,054
Net Income .................. 31,674 10,779 -- 42,453
Investment in Unconsolidated
Affiliates ................ 247 -- -- 247
Total Assets ................ 460,997 95,989 -- 556,986
Capital Expenditures ........ 23,514 409 -- 23,923
</TABLE>
F-53
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. SUBSEQUENT EVENTS
Acquisition of the assets and liabilities of the Westar and Kinetik Energy
businesses of Gascor Holdings No. 2 Pty Ltd by TXU Australia Holdings
(Partnership) Limited Partnership
On February 24, 1999, TXU Australia Holdings (Partnership) Limited
Partnership acquired from Gascor Holdings the gas retail business of
Kinetik Energy Pty Ltd, the gas distribution operations of Westar Pty Ltd
and the assets of Westar (Assets) Pty Ltd. The purchase price was $1.6
billion.
In accordance with the terms of the debt agreement with Treasury
Corporation of Victoria, the outstanding debt was paid in full upon
privatization.
In addition, Gascor Holdings determined its outstanding obligation for
State Equivalent Tax up to the date of acquisition and made final payment
of $275 million to the Government of Victoria.
F-54
<PAGE>
Gascor Holdings No. 2 Pty Ltd and Subsidiaries
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended December 31,
----------------------------------
1998 1997
--------- ---------
Thousands of Australian Dollars
<S> <C> <C>
OPERATING REVENUES ................................................. $ 143,824 $ 131,866
--------- ---------
OPERATING EXPENSES
Purchased gas and distribution costs ........................... 55,678 52,906
Operation and maintenance ...................................... 33,344 33,327
Depreciation and amortization .................................. 6,151 5,552
Loss from interruption of gas supply (Note 3) .................. 4,401 --
--------- ---------
Total operating expenses ..................................... 99,574 91,785
--------- ---------
OPERATING INCOME ................................................... 44,250 40,081
OTHER INCOME/(EXPENSE) - NET ....................................... (79) 56
--------- ---------
INCOME BEFORE INTEREST AND INCOME TAXES ............................ 44,171 40,137
INTEREST INCOME .................................................... 925 92
INTEREST EXPENSE ................................................... (11,508) (11,954)
--------- ---------
INCOME BEFORE INCOME TAXES ......................................... 33,588 28,275
INCOME TAX EXPENSE ................................................. 12,105 10,193
--------- ---------
NET INCOME ......................................................... $ 21,483 $ 18,082
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-55
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
December 31, June 30,
-------------------------------
1998 1998
-------- --------
Thousands of Australian Dollars
PROPERTY, PLANT AND EQUIPMENT
Gas distribution and pipeline .......... $390,913 $381,772
Land ................................... 4,427 4,427
Buildings .............................. 6,788 6,759
Other .................................. 4,251 4,009
-------- --------
Total ................................ 406,379 396,967
Less accumulated depreciation .......... 17,858 11,754
-------- --------
Net of accumulated depreciation ...... 388,521 385,213
Construction work in progress .......... 4,399 900
-------- --------
Net property, plant and equipment .... 392,920 386,113
-------- --------
INVESTMENTS ................................ 194 247
-------- --------
CURRENT ASSETS
Cash and cash equivalents .............. 31,908 30,039
Accounts receivable .................... 35,219 65,328
Inventories - at average cost:
Materials and supplies ............... 778 902
Fuel stock ........................... 46 82
Property held for sale ................. -- 324
Other current assets ................... 2,084 2,236
-------- --------
Total current assets ....................... 70,035 98,911
-------- --------
OTHER NONCURRENT ASSETS
Deferred tax assets .................... 55,371 67,557
Prepaid pension asset .................. 4,019 4,158
-------- --------
Total other non-current assets ....... 59,390 71,715
-------- --------
TOTAL ASSETS ............................... $522,539 $556,986
======== ========
See Notes to Condensed Consolidated Financial Statements.
F-56
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
CAPITALIZATION AND LIABILITIES
<TABLE>
<CAPTION>
December 31, June 30,
-------------------------------
1998 1998
-------- --------
Thousands of Australian Dollars
<S> <C> <C>
CAPITALIZATION
Share capital ............................ $ -- $ --
Retained earnings ........................ 25,436 3,953
-------- --------
Total shareholder's equity ............. 25,436 3,953
Long-term debt ........................... 400,120 418,220
-------- --------
Total capitalization ................... 425,556 422,173
-------- --------
CURRENT LIABILITIES
Accounts payable ......................... 22,666 28,530
Unearned agency commission ............... 30,000 30,000
Dividend payable ......................... -- 32,000
Interest accrued ......................... 1,109 1,183
Other current liabilities ................ 3,457 3,429
-------- --------
Total current liabilities .............. 57,232 95,142
-------- --------
OTHER NONCURRENT LIABILITIES
Provision for losses on contract ......... 26,761 26,761
Provision for land reclamation ........... 10,521 10,645
Other .................................... 2,469 2,265
-------- --------
Total other non-current liabilities .... 39,751 39,671
-------- --------
COMMITMENTS AND CONTINGENCIES (Note 5)
TOTAL CAPITALIZATION AND LIABILITIES ......... $522,539 $556,986
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-57
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended December 31,
-------------------------------
1998 1997
-------- --------
Thousands of Australian Dollars
<S> <C> <C>
CASH FLOWS - OPERATING ACTIVITIES
Net income ............................................ $ 21,483 $ 18,082
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization ....................... 6,151 5,552
Deferred income taxes - net ......................... 12,129 10,193
Equity interest in losses (profits) of associate .... 53 (88)
Loss on sale of fixed assets ........................ 26 32
Changes in operating assets and liabilities:
Accounts receivable ................................. 30,109 (4,877)
Inventories ......................................... 160 (434)
Accounts payable .................................... (5,864) 9,826
Interest accrued .................................... (74) 1,311
Other working capital - net ......................... 699 (409)
Other - net ......................................... 81 (286)
-------- --------
Cash provided by operating activities ............... 64,953 38,902
-------- --------
CASH FLOWS - FINANCING ACTIVITIES
Repayment of borrowings ............................... (50,000) (13,280)
Proceeds from borrowings .............................. 31,900 --
Cash dividends paid ................................... (32,000) --
-------- --------
Cash used in financing activities ...... (50,100) (13,280)
-------- --------
CASH FLOWS - INVESTING ACTIVITIES
Construction expenditures ............................. (13,306) (9,614)
Proceeds from sale of fixed assets .................... 322 --
-------- --------
Cash used in investing activities ..... (12,984) (9,614)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS ................. 1,869 16,008
CASH AND EQUIVALENTS - BEGINNING BALANCE .................. 30,039 --
-------- --------
CASH AND EQUIVALENTS - ENDING BALANCE ..................... $ 31,908 $ 16,008
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-58
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
CONDENSED STATEMENTS OF CONSOLIDATED SHAREHOLDER'S EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended December 31,
-------------------------------
1998 1997
-------- --------
Thousands of Australian Dollars
SHARE CAPITAL
<S> <C> <C>
Ordinary shares (100,000,000 authorized,
12 issued and outstanding) ........................ $ -- $ --
RETAINED EARNINGS:
Balance at beginning of the period .................. 3,953 --
Net income .......................................... 21,483 18,082
Dividends declared .................................. -- (6,500)
-------- --------
Balance at end of the period ........................ 25,436 11,582
-------- --------
SHAREHOLDER'S EQUITY .................................... $ 25,436 $ 11,582
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-59
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND FORMATION
Gascor Holdings
Gascor Holdings No. 2 Pty Ltd (Gascor Holdings), through its subsidiaries
Westar Pty Ltd (Westar), Westar (Assets) Pty Ltd (Westar Assets), and
Kinetik Energy Pty Ltd (Kinetik Energy) (collectively Gascor Holdings),
engages in the distribution and sale of natural gas and tempered liquefied
petroleum gas in the State of Victoria, Australia.
2. BASIS OF PRESENTATION
The condensed consolidated financial statements of Gascor Holdings have
been prepared in conformity with accounting principles generally accepted
in the United States of America (US) except for the valuation of property,
plant and equipment, which is stated at fair value, consistent with the
June 30, 1998 consolidated financial statements.
In the opinion of management, all adjustments (constituting only normal
recurring accruals) necessary for a fair presentation of the results of
operations and financial position have been included therein. Certain
information and footnote disclosures normally included in annual
consolidated financial statements prepared in accordance with US generally
accepted accounting principles have been omitted pursuant to the rules and
regulations of the Securities and Exchange Commission.
All dollar amounts in the condensed consolidated financial statements and
tables in the notes are stated in thousands of Australian dollars unless
otherwise indicated.
3. LOSS FROM INTERRUPTION OF GAS SUPPLY
In September 1998, an explosion occurred at Esso Australia Resources
Limited's (Esso) processing plant at Longford, Victoria and caused a
significant interruption to gas supply. As a result, Gascor Holdings
incurred costs relating to the restoration of gas supplies, resulting in a
loss of $4.4 million.
4. LONG-TERM DEBT
In October 1998, Gascor Holdings borrowed $15 million from the Treasury
Corporation of Victoria (TCV) at a fixed interest rate of 4.77% and a
maturity date of February 26, 1999. The terms of the debt with TCV required
payment in full upon privatization. On February 24, 1999, Gascor Holdings
was purchased by TXU Australia Holdings (Partnership) Limited Partnership
(TXU Australia Group) and the debt was paid in full. The debt has been
reflected in this balance sheet according to the original terms of the
facility under which such debt could be rolled over upon the maturity on an
ongoing basis without limitation, including dates beyond December 31, 1999.
F-60
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. COMMITMENTS AND CONTINGENCIES
Gas Outage
In June 1998, an ice blockage at the gas processing plant at Longford,
Gippsland, prevented it from supplying the usual volume of gas into the
Victorian natural gas network. As a consequence of this emergency, VENCorp
directed all Victorian gas retailers, including Gascor Holdings, to curtail
supply of gas to certain customers. Gascor Holdings carried out those
directions.
Some customers have indicated their intention to make claims against Gascor
Holdings for unspecified damages arising from the curtailment. To date, no
court proceedings have commenced.
Legal Proceedings
Esso's gas processing plant at Longford exploded in September 1998 causing
prolonged interruption of gas supplies in Victoria. Subsequently, a class
action was commenced in the Federal Court of Australia against Esso on
behalf of a large number of domestic and commercial consumers claiming
damages for loss of supply. Esso has joined the Victorian Government and
related entities to the action, including those which sold and distributed
Esso gas prior to these businesses being acquired by private operators.
Esso has also joined private operators as well, (Esso Cross-Claim)
including Westar, Kinetik Energy and Western Underground Gas Storage,
claiming any such liability passed to them as part of the sale of the
businesses from the government.
As currently pleaded before the Federal Court of Australia, the claims
cover actions in negligence and in misleading and deceptive conduct.
On April 3, 2000, the State of Victoria and the state owned entities who
were vendors of the business and assets to Westar and Kinetik Energy served
a Cross-Claim (State Cross-Claim) on Westar and Kinetik Energy. The State
Cross-Claim seeks orders against Westar and Kinetik Energy that they are
liable for any liability of the state owned vendors which may be found
against those entities in relation to the Esso Cross-Claim. To the extent
the State Cross-Claim raises issues which are already raised against Westar
and Kinetik Energy in the Esso Cross-Claim, it does not materially affect
the potential liability of Westar and Kinetik Energy in the litigation
If Esso is found liable and is successful in its cross claims, the
potential liability of Westar, Kinetik Energy and Western Underground Gas
Storage could be significant.
Based on a legal analysis of pleadings filed so far and the likely defenses
available, TXU Australia Group believes that the claims against Westar,
Kinetik Energy and Western Underground Gas Storage (and the proposed State
Cross-Claim) are without merit. However, given the complexity and magnitude
of the claims involved in this litigation, TXU Australia Group cannot
predict the ultimate outcome at this time. TXU Australia Group intends to
vigorously pursue all of its defenses in this litigation
General
In addition to the above, Gascor Holdings is involved in various legal and
administrative proceedings and has other contingencies, the ultimate
resolution of which, in the opinion of management, should not have a
material effect upon its financial position, results of operations or cash
flows.
F-61
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6. SEGMENT INFORMATION
Gascor Holdings' reportable segments are strategic business units that
offer different products or services. They are managed separately because
each business requires different marketing strategies.
Gascor Holdings has two reportable operating segments:
(1) Network- operations engaged in the distribution of natural gas in the
State of Victoria.
(2) Retail- operations engaged in the purchase and sale of natural
gas primarily in the State of Victoria.
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. Gascor Holdings evaluates
performance based on net income or loss. Gascor Holdings accounts for
intersegment sales or transfers as if the sales or transfers were to third
parties, that is, at current market prices.
<TABLE>
<CAPTION>
Six Months Ended December 31,
Network Retail Other Eliminations Consolidated
- ------------------------------------------------------------------------------------------------------------------------------------
Thousands of Australian Dollars
<S> <C> <C> <C> <C> <C>
Trade Revenues -
1998 ....................... $ 35,124 $108,700 $ -- $ -- $143,824
1997 ....................... 33,676 98,190 -- -- 131,866
Affiliated Revenues -
1998 ....................... 29,163 44 -- (29,207) --
1997 ....................... 29,638 -- -- (29,638) --
Net Income -
1998 ....................... 16,771 4,712 -- -- 21,483
1997 ....................... 16,254 1,828 -- -- 18,082
</TABLE>
F-62
<PAGE>
Gasco Holdings No. 2 Pty Ltd and Subsidiaries
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. SUBSEQUENT EVENTS
Acquisition of the assets and liabilities of the Westar and Kinetik Energy
businesses of Gascor Holdings No. 2 Pty Ltd by TXU Australia Holdings
(Partnership) Limited Partnership
On February 24, 1999, TXU Australia Holdings (Partnership) Limited
Partnership acquired from Gascor Holdings the gas retail business of
Kinetik Energy Pty Ltd, the gas distribution operations of Westar Pty Ltd
and the assets of Westar (Assets) Pty Ltd. The purchase price was $1.6
billion.
In accordance with the terms of the debt agreement with Treasury
Corporation of Victoria, the outstanding debt was paid in full upon
privatization.
In addition, Gascor Holdings determined its outstanding obligation for
State Equivalent Tax up to the date of acquisition and made final payment
of $275 million to the Government of Victoria.
F-63
<PAGE>
<PAGE>
EXHIBIT INDEX
PREVIOUSLY FILED
----------------
WITH FILE AS
EXHIBIT NUMBER EXHIBIT DESCRIPTION
- --------- ------ --------- -----------
1 Form of Underwriting Agreement.
3(a) Limited Partnership Deed, dated
January 27, 1999, between TXU Australia
Holdings (AGP) Pty Limited, TXU
Australia (LP) No.1 Limited and TXU
Australia (LP) No.2 Limited.
3(b) Deed of Amendment to the Partnership
Deed, dated February 23, 1999 between
TXU Australia Holdings (AGP) Pty
Limited, TXU Australia (LP) No.1 Limited
and TXU Australia (LP) No.2 Limited.
3(c) Deed of Amendment to the Partnership
Deed, dated _________, 2000 between TXU
Australia Holdings (AGP) Pty Limited,
TXU Australia (LP) No.1 Limited and TXU
Australia (LP) No.2 Limited.**
4(a) Form of Indenture between TXU
Australia and Trustee.
4(b) Form of Officer's Certificate of TXU
Australia, establishing the terms of the
JUMPS.
4(c) Deed of Common Terms, dated February
24, 1999, among TXU Australia, certain
of its affiliates and the Senior
Lenders.
4(d) Indenture, dated as of December 1,
1996 between Eastern Energy and The Bank
of New York as Trustee.
5(a) Opinion of Worsham Forsythe Wooldridge
LLP.
5(b) Opinion of Thelen Reid & Priest LLP.
5(c) Opinion of Baker & McKenzie, Melbourne,
Australia.
8(a) Tax opinion of Thelen Reid & Priest
(included in the opinion filed as
Exhibit 5(b)).
8(b) Tax opinion of Baker & McKenzie,
Melbourne, Australia (included in the
opinion filed on Exhibit 5(c)).
10(a) Master Agreement, dated December 23,
1998, between Gascor, Energy 21 Pty Ltd,
Ikon Energy Pty Ltd, Kinetik Energy Pty
Ltd and Gas Release Co. Pty Ltd.**
10(b) Agency Agreement, dated August 14, 1998,
between Gascor and Kinetik Energy Pty
Ltd.**
10(c) Sub-Sales Agreement, dated August 14,
1998, between Gascor and Kinetik Energy
Pty Ltd.**
12 Computation of ratio of earnings to
fixed charges.
21 TXU Australia Group companies.
23(a) Consent of Deloitte Touche Tohmatsu,
independent auditors.
23(b) Consents of Worsham Forsythe Wooldridge
LLP, Thelen Reid & Priest LLP and Baker
& McKenzie (included in the Opinions
filed as Exhibits 5(a), 5(b), 5(c) and
8, hereto).
24 Powers of Attorney (included on page
II-6 hereof).
25 Statement of Eligibility of Trustee.
27 Financial Data Schedule.
** To be filed by amendment.
EXHIBIT 1
TXU AUSTRALIA HOLDINGS (PARTNERSHIP) LIMITED PARTNERSHIP
$300,000,000
___% Junior Maturing Principal Securities Due ___
UNDERWRITING AGREEMENT
___________, 2000
Salomon Smith Barney Inc.
as representatives of the several Underwriters
named in Schedule II hereto (the "Representatives")
c/o Salomon Smith Barney Inc.
New York, New York 10281
Ladies and Gentlemen:
1. Introduction. TXU Australia Holdings (Partnership) Limited
------------
Partnership, a limited partnership formed under the laws of Victoria, Australia
(the "Company") and the Company's general partner, TXU Australia Holdings (AGP)
Pty Ltd (Australian Company Number 086 014 931), a limited liability company
incorporated under the laws of Victoria, Australia ("AGP" and hereinafter,
together with the Company, the "TXUA Companies"), confirm their agreement with
respect to the issue and sale by the Company and the purchase by the
underwriters named in Schedule II hereto (the "Underwriters"), acting severally
and not jointly, for whom you are acting as Representatives, of the principal
amount of ___% Junior Maturing Principal Securities Due ___ (the "Securities"),
as set forth next to each Underwriter's name in such Schedule II.
2. Description of the Securities. The Securities will be issued
-----------------------------
pursuant to an Indenture, dated as of , 2000, between The Bank of
-------------
New York, as trustee, and the Company, as it will be supplemented by a
certificate of an officer of the Company relating to the Securities (as so
supplemented, the "Indenture").
3. Representations and Warranties of the TXUA Companies. The TXUA
----------------------------------------------------
Companies, jointly and severally, represent and warrant to the several
Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1,
including a prospectus, on , 2000 (Registration No. 333-
--------------
) for the registration under the Securities Act of 1933, as amended
<PAGE>
(the "Securities Act") of the Securities. Such registration statement
was declared effective by the Commission on , 2000 and no
-----------
stop order suspending the effectiveness of such registration statement
has been issued and no proceeding for that purpose has been initiated
or, to the best knowledge of the TXUA Companies, threatened by the
Commission. Such registration statement, as amended at the time it (or
the most recent post-effective amendment thereto) became effective
(the "Effective Date"), including the financial statements, the
exhibits thereto and the information deemed to be a part thereof
pursuant to Rule 430A(b) of the rules and regulations of the
Commission under the Securities Act, shall be referred to herein as
the "Registration Statement", any preliminary prospectus relating to
the Securities included in the Registration Statement prior to the
Effective Date or filed with the Commission pursuant to paragraph (a)
of Rule 424 (as defined herein) prior to the Effective Date or
pursuant to paragraph (b) of Rule 424 after the Effective Date shall
be referred to herein as the "Preliminary Prospectus," and the
prospectus dated the date hereof containing the final terms of the
Securities filed with the Commission in accordance with Rule 430A and
Rule 424 shall be referred to herein as the "Prospectus."
(b) The Registration Statement and the Indenture, at the
Effective Date, and the Preliminary Prospectus, when delivered to the
Underwriters for their use in marketing the Securities, complied, and
the Prospectus, at the time it is filed pursuant to Rule 424 and at
the Closing Date, as hereinafter defined, will comply as to form in
all material respects with the applicable provisions of the Securities
Act, the Trust Indenture Act of 1939, as amended ("Trust Indenture
Act"), and the applicable rules and regulations of the Commission
thereunder; at the Effective Date, the Registration Statement did not,
and at the Closing Date, the Registration Statement will not, contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading; at the time that it was delivered to the
Underwriters, the Preliminary Prospectus did not, and on the date it
is filed with the Commission pursuant to Rule 424 of the rules and
regulations of the Commission under the Securities Act ("Rule 424")
and at the Closing Date, the Prospectus will not, contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided
that the foregoing representations and warranties in this Section 3(b)
shall not apply to statements or omissions made in reliance upon and
in conformity with information furnished in writing to any of the TXUA
Companies by, or on behalf of, any Underwriter through the
Representatives or Counsel for the Underwriters, expressly for use in
the Registration Statement, the Preliminary Prospectus or the
Prospectus or to any statements in or omissions from the Statements of
Eligibility and Qualification under the Trust Indenture Act, or
amendments thereto, filed as exhibits to the Registration Statement.
(c) The execution and delivery of this Agreement by each of
the TXUA Companies, and the consummation of the transactions
contemplated herein and in the Prospectus by each of the TXUA
Companies and the fulfillment of the terms hereof by each of the TXUA
-2-
<PAGE>
Companies will not (i) result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, charter, partnership agreement, limited liability
company agreement, by-laws or other organizational documents or any
other agreement or instrument to which any of the TXUA Companies is
now a party, which default or breach is material to the respective
TXUA Company and the respective subsidiaries of each of them, taken as
a whole or (ii) conflict with or result in a breach or violation of
any statute, law, rule, regulation, judgment, order or decree
applicable to any of the TXUA Companies of any court, regulatory body,
administrative agency, governmental body, arbitrator or other
authority having jurisdiction over any of the TXUA Companies.
(d) Each of the TXUA Companies and each direct and indirect
material subsidiary of the TXUA Companies has been created, formed or
incorporated, as the case may be, and, in the case of any Victorian
limited partnership, registered, and is validly existing and, where
applicable, in good standing under the laws of the jurisdiction of its
creation, formation or incorporation, as the case may be, has the
power and authority to own, lease and operate its properties, to
conduct its business as currently conducted and as set forth in or
contemplated by the Prospectus and to consummate the transactions
contemplated herein and in the Prospectus, and is qualified to
transact business and is in good standing in each jurisdiction in
which such qualification and good standing is requ)red, whe4`%2 by
reason of the ownership or leasing of property or the conduct of
business, except, with respect to each direct and indirect material
subsidiary of the TXUA Companies, where the failure to so qualify or
be in good standing would not have a material adverse effect on the
business, property or financial condition of the TXUA Companies and
mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a)
are described in the Prospectus or (b) do not, singly or in the
aggregate, materially adversely affect the value of such property and
do not materially interfere with the use made and proposed to be made
of such property; and all of the leases and subleases material to the
business of the TXUA Companies and their subsidiaries, taken as a
whole, and under which the TXUA Companies or any of their material
subsidiaries holds properties described in the Prospectus, are in full
force and effect, and neither of the TXUA Companies has notice of any
material claim of any sort that has been asserted by anyone adverse to
the rights of either of the TXUA Companies or any material subsidiary
of the TXUA Companies under any of the leases or subleases mentioned
above, o
respective businesses and (iii) is in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
singly or in the aggregate, have a material adverse effect on the TXUA
Companies and their subsidiaries, taken as a whole.
-3-
<PAGE>
(g) Each of the TXUA Companies and each of their material
subsidiaries has good title to all real property and other properties
owned by it (other than properties which are not material to the
financial condition or the conduct of the business of the TXUA
Companies and their subsidiaries, taken as a whole), in each case,
free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a)
are described in the Prospectus or (b) do not, singly or in the
aggregate, materially adversely affect the value of such property and
do not materially interfere with the use made and proposed to be made
of such property; and all of the leases and subleases material to the
business of the TXUA Companies and their subsidiaries, taken as a
whole, and under which the TXUA Companies or any of their material
subsidiaries holds properties described in the Prospectus, are in full
force and effect, and neither of the TXUA Companies has notice of any
material claim of any sort that has been asserted by anyone adverse to
the rights of either of the TXUA Companies or any material subsidiary
of the TXUA Companies under any of the leases or subleases mentioned
above, or affecting or questioning the rights of either of the TXUA
Companies or any material subsidiary of the TXUA Companies to the
continued possession of the leased or subleased properties under any
such lease or sublease.
(h) Each of the TXUA Companies and each of their material
subsidiaries has filed all national, state, local and foreign tax
returns which have been required to be filed and has paid all taxes
shown thereon and all assessments received by them or any of them to
the extent that such taxes have become due and are not being contested
in good faith, except where the failure to have made such filings or
to have paid such taxes and assessments would not have a material
adverse effect on the TXUA Companies and their subsidiaries, taken as
a whole; and there is no tax deficiency which has been asserted or, to
the knowledge of the TXUA Companies, threatened against either of the
TXUA Companies or any of their material subsidiaries which would be
expected to have a material adverse effect on the TXUA Companies and
their subsidiaries, taken as a whole.
(i) Each of the TXUA Companies and each of their material
subsidiaries own, possess or have obtained all licenses, permits,
certificates, consents, orders, approvals and other authorizations
(collectively "Authorizations") from all national, state, local and
other governmental authorities (including foreign regulatory
agencies), all self-regulatory organizations and all courts and other
tribunals, domestic or foreign, necessary to own or lease, as the case
may be, and to operate their respective properties and to carry on
their respective businesses as conducted as of the date hereof, except
where the failure to own, possess or obtain such Authorizations or to
have made such declarations and filings would not have a material
adverse effect on the TXUA Companies and their subsidiaries, taken as
a whole; to the knowledge of the TXUA Companies and their material
subsidiaries, each Authorization is in full force and effect, except
-4-
<PAGE>
where the failure of such Authorization to be in full force and effect
would not be reasonably expected to have a material adverse effect on
the TXUA Companies and their subsidiaries, taken as a whole; neither
of the TXUA Companies or their material subsidiaries has received any
actual notice of any proceeding relating to revocation or modification
of any such Authorization, except as described in the Prospectus and
except as would not, if the subject of an unfavorable decision, be
reasonably expected to have a material adverse effect on the TXUA
Companies and their subsidiaries, taken as a whole.
(j) No stamp or other issuance or transfer taxes or duties
are payable by or on behalf of the Underwriters in Australia or any
political subdivision or taxing authority thereof or therein on (i)
the authorization, issue, delivery or performance of the Securities,
or (ii) assuming all of the following transactions take place outside
Australia, the purchase by the Underwriters of the Securities from the
Company, the resale and delivery by the Underwriters of the
Securities, the execution, delivery and performance of this Agreement
and the Indenture or the consummation of the transactions contemplated
by this Agreement or the Prospectus.
(k) No exchange control authorization or any other
authorization, approval, consent or license of any governmental
authority or agency of or in Australia is required for the payment by
the Company of any amounts in United States dollars pursuant to the
terms of the Securities.
(l) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the
performance by the TXUA Companies of their respective obligations
hereunder, in connection with the offering, issuance or sale of the
Securities or the consummation of the transactions contemplated by
this Agreement or by the Prospectus except (i) such as have been
obtained under the Securities Act, the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the Trust Indenture Act or the
applicable rules and regulations thereunder and (ii) such as may be
required under United States securities or "blue sky" laws.
(m) The TXUA Companies and their respective obligations
under this Agreement, the Securities and the Indenture are subject to
civil and commercial law and to suit and none of them nor any of their
respective properties, assets or revenues has, in Australia or any
political subdivision thereof or in the United States or any political
subdivision thereof, any right of immunity from any legal action, suit
or proceeding, from the giving of any relief in any such legal action,
suit or proceeding, from setoff or counterclaim, from the jurisdiction
of any court, from service of process, attachment upon or prior to
judgment, or attachment in aid of execution of judgment, or from
execution of a judgment, or other legal process or proceeding for the
giving of any relief or for the enforcement of a judgment, in any such
jurisdiction, with respect to its obligations, liabilities or any
other matter under or arising out of or in connection with the
issuance of the Securities; and, to the extent that either of the TXUA
Companies or any of their respective properties, assets or revenues
may have or may hereafter become entitled to any such right of
immunity in any jurisdiction, each of the TXUA Companies has
effectively waived such right and consented to such relief and
enforcement pursuant to Section 14 of this Agreement; nothing in this
Section 3(m) shall be deemed to waive any defense (other than any such
immunity) available to any TXUA Company.
-5-
<PAGE>
(n) The Indenture has been duly qualified under the Trust
Indenture Act.
(o) The Indenture has been duly authorized by the Company,
and at the Closing Date the Indenture will have been duly executed and
delivered by the Company, and, when duly executed and delivered by the
trustee thereof, will constitute a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization,
fraudulent conveyance, receivership, moratorium and other laws
affecting the rights and remedies of creditors generally and of
general principles of equity.
(p) The Securities have been duly authorized by the Company
for issuance and sale to the Underwriters and, at the Closing Date,
the Securities will have been duly executed by the Company and, when
authenticated, issued and delivered in the manner provided in the
Indenture and delivered against payment of the purchase price therefor
as contemplated by this Agreement, will constitute valid and legally
binding obligations of the Company enforceable in accordance with
their terms, subject to the effect of bankruptcy, insolvency,
reorganization, fraudulent conveyance, receivership, moratorium and
other laws affecting the rights and remedies of creditors generally
and of general principles of equity, and the Securities will be
entitled to the benefits of the Indenture.
(q) This Agreement has been duly authorized, executed and
delivered by each of the TXUA Companies, each of which has the
necessary power and authority to execute and deliver and perform its
obligations under this Agreement.
(r) The Indenture and the Securities will conform in all
material respects to the respective statements relating thereto
contained in the Prospectus.
(s) Other than as set forth or contemplated in the
Registration Statement and the Prospectus, there are no legal or
governmental proceedings pending or, to the knowledge of the TXUA
Companies, threatened (i) to which either of the TXUA Companies or any
of their material subsidiaries is a party or to which any property of
either of the TXUA Companies or any of their material subsidiaries is
the subject that is reasonably expected to have a material adverse
effect on the TXUA Companies and their subsidiaries, taken as a whole
or (ii) which, if determined adversely to any of the TXUA Companies or
their material subsidiaries, could reasonably be expected to have a
material adverse effect on the ability of the TXUA Companies to
consummate the transactions contemplated by this Agreement and the
Prospectus.
(t) AGP is the sole general partner of the Company; AGP has
the power to enter into the Indenture, the Agreement and the other
documents (including without limitation under the Company's
partnership deed) contemplated by the transactions described in the
Prospectus on behalf of the Company and to bind the Company under, and
as contemplated by, all such documents; AGP has, in full force and
effect, all authorizations (including without limitation under the
Company's partnership deed) necessary to enter into all such documents
-6-
<PAGE>
on behalf of the Company and to bind the Company under, and as
contemplated by, such documents.
The TXUA Companies acknowledge that the Underwriters, and, for
purposes of the opinions to be delivered to the Underwriters pursuant to Section
8(c) hereof, each counsel to any of the TXUA Companies and counsel to the
Underwriters, will rely upon the accuracy and truth of the foregoing
representations. The TXUA Companies hereby consent to such reliance.
4. Representations and Warranties of the Underwriters. Each of the
--------------------------------------------------
Underwriters severally represents and agrees that it has not and will not,
directly or indirectly, offer for subscription or purchase, issue invitations to
subscribe for or purchase or sell any of the Securities in Australia or to any
residents of Australia (including corporations and other entities organized
under the laws of Australia, but not including a permanent establishment of
those corporations or other entities located outside of Australia).
5. Purchase and Sale.
-----------------
(a) On the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set
forth, the Company shall issue and sell to each of the Underwriters,
and each Underwriter shall purchase from the Company, at the time and
place herein specified, severally and not jointly, the respective
principal amount of Securities set forth opposite the name of such
Underwriter in Schedule II attached hereto, at the purchase price set
forth in Schedule I hereto.
(b) The Company shall pay on the Closing Date to Salomon
Smith Barney Inc., for the accounts of the several Underwriters, a
commission equal to $_____.
6. Time and Place of Closing. Delivery of the Securities against
-------------------------
payment of the aggregate purchase price therefor by wire transfer in federal
funds shall be made at the office of Thelen Reid & Priest LLP, 40 West 57th
Street, New York, New York 10019, at 10:00 A.M., New York Time, on
---------
2000, or at such other place, time and date as shall be agreed upon in writing
by the Company and the Representatives, or established in accordance with the
following paragraph. The hour and date of such delivery and payment are herein
called the "Closing Date". The Securities shall be delivered to The Depository
Trust Company or to The Bank of New York, as custodian for The Depository Trust
Company, in fully registered global form registered in the name of Cede & Co.
for the respective accounts of the Underwriters not later than the close of
business on the business day preceding the Closing Date. The Company agrees to
make the Securities available to the Representatives for checking purposes not
later than 10:00 A.M., New York Time, on the last business day preceding the
Closing Date at the office of Thelen Reid & Priest LLP, 40 West 57th Street, New
York, New York 10019 or at such other place as the Company may specify.
If any Underwriter shall fail or refuse (otherwise than for some
reason sufficient to justify, in accordance with the terms hereof, the
cancellation or termination of its obligations hereunder) to purchase and pay
for the principal amount of Securities that such Underwriter has agreed to
purchase and pay for hereunder, the Company shall immediately give notice to the
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<PAGE>
other Underwriters of the default of such Underwriter, and the other
Underwriters shall have the right within 24 hours after the receipt of such
notice to determine to purchase, or to procure one or more others, who are
members of the National Association of Securities Dealers, Inc. ("NASD") (or, if
not members of the NASD, who are not eligible for membership in the NASD and who
agree (i) to make no sales within the United States, its territories or its
possessions or to persons who are citizens thereof or residents therein and (ii)
in making sales to comply with the NASD's Conduct Rules) and satisfactory to the
Company, to purchase, upon the terms herein set forth, the principal amount of
Securities that the defaulting Underwriter had agreed to purchase. If any
non-defaulting Underwriter or Underwriters shall determine to exercise such
right, such Underwriter or Underwriters shall give written notice to the Company
of the determination in that regard within 24 hours after receipt of notice of
any such default, and thereupon the Closing Date shall be postponed for such
period, not exceeding three business days, as the Company shall determine. If in
the event of such a default no non-defaulting Underwriter shall give such
notice, then this Agreement may be terminated by the Company, upon like notice
given to the non-defaulting Underwriters, within a further period of 24 hours.
If in such case the Company shall not elect to terminate this Agreement it shall
have the right, irrespective of such default:
(a) to require each non-defaulting Underwriter to purchase
and pay for the respective principal amount of Securities that it had
agreed to purchase hereunder as hereinabove provided and, in addition,
the principal amount of Securities that the defaulting Underwriter
shall have so failed to purchase up to a principal amount thereof
equal to one-ninth (1/9) of the principal amount of Securities that
such non-defaulting Underwriter has otherwise agreed to purchase
hereunder, and/or
(b) to procure one or more persons, reasonably acceptable to
the Representatives, who are members of the NASD (or, if not members
of the NASD, who are not eligible for membership in the NASD and who
agree (i) to make no sales within the United States, its territories
or its possessions or to persons who are citizens thereof or residents
therein and (ii) in making sales to comply with the NASD's Conduct
Rules), to purchase, upon the terms herein set forth, either all or a
part of the principal amount of Securities that such defaulting
Underwriter had agreed to purchase or that portion thereof that the
remaining Underwriters shall not be obligated to purchase pursuant to
the foregoing clause (a).
In the event the Company shall exercise its rights under (a) and/or (b) above,
the Company shall give written notice thereof to the non-defaulting Underwriters
within such further period of 24 hours, and thereupon the Closing Date shall be
postponed for such period, not exceeding three business days, as the Company
shall determine.
In the computation of any period of 24 hours referred to in this
Section 6, there shall be excluded a period of 24 hours in respect of each
Saturday, Sunday or legal holiday that would otherwise be included in such
period of time.
Any action taken by the Company under this Section 6 shall not relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement. Termination by the Company under this Section
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<PAGE>
6 shall be without any liability on the part of the Company or any
non-defaulting Underwriter, except as otherwise provided in Sections 7(g) and 10
hereof.
7. Covenants of the Company. The Company agrees that:
------------------------
(a) It will promptly deliver to each of you a signed copy of
the Registration Statement as originally filed or, to the extent a
signed copy is not available, a conformed copy, certified by an
officer of the Company to be in the form as originally filed,
including all exhibits, and of all amendments thereto.
(b) It will deliver to you, as soon as practicable after the
date hereof, as many copies of the Prospectus or any supplement or
amendment thereto as of such date as you may reasonably request.
(c) It will cause the Prospectus to be filed with the
Commission pursuant to Rule 424 as soon as practicable after the date
hereof and advise you of (i) the issuance of any stop order under the
Securities Act with respect to the Registration Statement or the
institution of any proceedings therefor of which any of the TXUA
Companies shall have received notice and (ii) any request by the
Commission for amendments or supplements to the Registration Statement
or the Prospectus or for additional information relating thereto. The
Company will use its best efforts to prevent the issuance of any such
stop order and to secure the prompt removal thereof if issued.
(d) If, during such period of time (not exceeding nine
months) after the Prospectus has been filed with the Commission
pursuant to Rule 424 as in the opinion of Counsel for the Underwriters
a prospectus covering the Securities is required by law to be
delivered in connection with sales of Securities by an Underwriter or
dealer, any event relating to or affecting either of the TXUA
Companies, as to which the Company shall give you and Counsel for the
Underwriters prompt notice after the Company becomes aware of such
event, or of which the Company shall be advised in writing by you
shall occur that in the Company's reasonable opinion after
consultation with Counsel for the Underwriters should be set forth in
a supplement to, or an amendment of, the Prospectus in order to make
the Prospectus not misleading in the light of the circumstances when
it is delivered to a purchaser, the Company will, at its expense,
amend or supplement the Prospectus by either (i) preparing and
furnishing to you at the Company's expense a reasonable number of
copies of a supplement or supplements or an amendment or amendments to
the Prospectus or (ii) making an appropriate filing pursuant to
Section 13 of the Exchange Act, which will supplement or amend the
Prospectus so that, as supplemented or amended, it will not contain
any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light
of the circumstances when the Prospectus is delivered to a purchaser,
not misleading; provided that should such event relate solely to the
activities of any of the Underwriters, then the Underwriters shall
assume the expense of preparing and furnishing any such amendment or
supplement. In case any Underwriter is required to deliver a
prospectus after the expiration of nine months from the date the
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<PAGE>
Prospectus is filed with the Commission pursuant to Rule 424, the
Company, upon such Underwriter's request, will furnish to such
Underwriter, at the expense of such Underwriter, a reasonable quantity
of a supplemental prospectus or supplements to the Prospectus
complying with Section 10(a) of the Securities Act. The Company will
not file any amendment to the Registration Statement or amendment or
supplement to the Prospectus on or after the date of this Agreement
and prior to the expiration of the period specified in the first
sentence of this Section 7(d), without prior notice to the
Underwriters, or to which Counsel for the Underwriters shall
reasonably object in writing.
(e) It will make generally available to its security holders
and the holders of the Securities, as soon as practicable, an earning
statement of the Company (which need not be audited) covering a period
of at least twelve months beginning not earlier than the first day of
the month next succeeding the month in which occurred the effective
date of the Registration Statement as defined in Rule 158 of the rules
and regulations of the Commission under the Securities Act.
(f) It will furnish such proper information as may be
lawfully required and otherwise cooperate in qualifying the Securities
for offer and sale under the blue-sky laws of such jurisdictions as
you may designate, provided that the neither of the TXUA Companies
shall be required to qualify to do business in any jurisdiction, to
qualify as a dealer in securities, to file any consents to service of
process under the laws of any jurisdiction, or to meet any other
requirements deemed by the TXUA Companies to be unduly burdensome.
(g) It will, except as herein provided, pay all expenses and
taxes (except transfer taxes) in connection with (i) the preparation
and filing by it of the Registration Statement, (ii) the issuance and
delivery of the Securities as provided in Section 6 hereof, (iii) the
qualification of the Securities under blue-sky laws (including counsel
fees not to exceed $7,500), (iv) the printing and delivery to the
Underwriters of reasonable quantities of the Registration Statement
and, except as provided in Section 7(d) hereof, of the Preliminary
Prospectus, the Prospectus and of any supplements or amendments
thereto, (v) the rating of the Securities by securities rating
organizations selected by the Company, and (vi) the listing of the
Securities on The New York Stock Exchange, Inc. ("NYSE"). The Company
shall not, however, be required to pay any amount for any expenses of
yours or any of the Underwriters, except that, if this Agreement shall
be terminated in accordance with the provisions of Section 6, 8 or 11
hereof, the Company will reimburse you for the fees and disbursements
of Counsel for the Underwriters, whose fees and disbursements the
Underwriters agree to pay in any other event, and will reimburse the
Underwriters for their reasonable out-of-pocket expenses, in an
aggregate amount not exceeding $5,000, incurred in contemplation of
the performance of this Agreement. The Company shall not in any event
be liable to any of the several Underwriters for damages on account of
loss of anticipated profits.
(h) During the period from the date of this Agreement to the
Closing Date, neither of the TXUA Companies will, without the prior
written consent of the Representatives, directly or indirectly,
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<PAGE>
publicly issue, sell, offer or contract to sell, in the market in
which the Securities are being offered and sold, any securities of the
TXUA Companies or any of their subsidiaries that are similar to, or of
the same class as, the Securities.
(i) It will use, or cause to be used, reasonable best
efforts to list, subject to notice of issuance, the Securities on the
New York Stock Exchange, subject to the Underwriters making the
required distribution of the Securities, and to register the
Securities under the Exchange Act.
8. Conditions of Underwriters' Obligations. The several obligations
---------------------------------------
of the Underwriters to purchase and pay for the Securities to be issued on the
Closing Date shall be subject to the accuracy of the representations and
warranties made herein on the part of each of the TXUA Companies at the date
hereof and on the Closing Date, to the performance by each of the TXUA Companies
of its obligations to be performed hereunder prior to the Closing Date, and to
the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424 prior to 5:30 P.M., New York Time, on the second
business day after the date of this Agreement, or such other time and
date as may be approved by you.
(b) No stop order suspending the effectiveness of the
Registration Statement shall be in effect, and no proceedings for that
purpose shall be pending before, or threatened by, the Commission on
the Closing Date; and you shall have received a certificate, dated the
Closing Date and signed by an officer of the Company, to the effect
that (A) no such stop order is in effect and that no proceedings for
such purpose are pending before, or to the knowledge of the Company
threatened by, the Commission and (B) the representations and
warranties of the TXUA Companies in Section 3 hereof are true and
correct with the same force and effect as if made on the Closing Date.
(c) On the Closing Date, you shall have received from Baker
& McKenzie, Austalian Counsel for the TXUA Companies, and the material
subsidiaries of the TXUA Companies, Worsham Forsythe Wooldridge LLP,
United States counsel for the TXUA Companies, Thelen Reid & Priest
LLP, special United States counsel for the TXUA Companies, Winthrop,
Stimson, Putnam & Roberts, Counsel for the Underwriters, opinions in
substantially the form and substance prescribed in Schedules III, IV,
V, and VI hereto (i) with such changes therein as may be agreed upon
by the Company and you, with the approval of Counsel for the
Underwriters, and (ii) if the Prospectus relating to the Securities
shall be supplemented or amended after the Prospectus shall have been
filed with the Commission pursuant to Rule 424, with any changes
therein necessary to reflect such supplement or amendment.
(d) On and as of each of the date hereof and the Closing
Date, you shall have received from Deloitte Touche Tohmatsu LLP,
independent auditors, a letter in form and substance reasonably
satisfactory to Counsel to the Underwriters, containing statements and
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<PAGE>
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Prospectus; provided
that each such letter shall use a "cut-off date" not earlier than
[five] days preceeding the date of delivery of each such letter.
(e) Since the most recent dates as of which information is
given in the Registration Statement or the Prospectus there shall not
have been any material adverse change in the business, property or
financial condition of the TXUA Companies and their subsidiaries,
considered as a whole, whether or not in the ordinary course of
business, and, since such dates, there shall not have been any
material transaction entered into by the TXUA Companies, other than
transactions in the ordinary course of business and transactions
contemplated by the Registration Statement or the Prospectus, and at
the Closing Date the Representatives shall have received a certificate
to such effect dated the Closing Date and signed by an officer of the
Company.
(f) All legal proceedings to be taken in connection with the
issuance and sale of the Securities as described in the Prospectus
shall have been satisfactory in form and substance to Counsel for the
Underwriters.
(g) At the Closing Date, (i) the Securities shall be rated
at least by Moody's Investor Services ("Moody's"), and by
---- ----
Standard & Poor's Corporation ("S&P"), respectively, and the Company
shall have delivered to the Representatives a letter from each such
rating agency, or other evidence satisfactory to the Representatives,
confirming that the Securities have such ratings, and (ii) neither
Moody's nor S&P shall have downgraded the ratings assigned to, or
publicly announced that it has under surveillance or review, with
possible negative implications, its rating of, the Securities, any
other securities of the Company or a special purpose entity or special
purpose subsidiary of the Company which are of the same class as the
Securities or the financial condition of the Company.
(h) At the Closing Date (i) the Securities shall have been
approved for listing on the NYSE, and (ii) a registration statement on
Form 8-A shall have been filed relating to the Securities with the
Commission under the Exchange Act.
In case any of the conditions specified above in this Section 8 shall
not have been fulfilled as of the Closing Date, this Agreement may be terminated
by the Representatives upon notice thereof to the Company. Any such termination
shall be without liability of any party to any other party except as otherwise
provided in Sections 7(g) and 10 hereof.
9. Conditions of Company's Obligations. The obligation of the
-----------------------------------
Company to deliver the Securities shall be subject to the following conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424 prior to 5:30 P.M., New York Time, on the second
business day after the date of this Agreement or such other time and
date as may be approved by the Company.
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<PAGE>
(b) No stop order suspending the effectiveness of the
Registration Statement shall be in effect at the Closing Date and no
proceedings for that purpose shall be pending before, or threatened
by, the Commission at the Closing Date.
In case any of the conditions specified above in this Section 9 shall
not have been fulfilled as of the Closing Date, this Agreement may be terminated
by the Company upon notice thereof to the Representatives. Any such termination
shall be without liability of any party to any other party except as otherwise
provided in Sections 7(g) and 10 hereof.
10. Indemnification.
---------------
(a) The TXUA Companies shall jointly and severally
indemnify, defend and hold harmless each Underwriter and each person
who controls any Underwriter within the meaning of Section 15 of the
Securities Act from and against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Securities Act or any other statute or common law
and shall reimburse each such Underwriter and controlling person for
any legal or other expenses (including, to the extent hereinafter
provided, reasonable counsel fees) when and as incurred by them in
connection with investigating any such losses, claims, damages or
liabilities or in connection with defending any actions, insofar as
such losses, claims, damages, liabilities, expenses or actions arise
out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement,
the Preliminary Prospectus or the Prospectus, or any amendment or
supplement to any thereof or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein in the light of the circumstances under
which they were made not misleading, except, in the case of the
Preliminary Prospectus, if such untrue statement or alleged untrue
statement or omission or alleged omission was corrected in the
Prospectus; provided, however, that the indemnity agreement contained
in this Section 10 shall not apply to any such losses, claims,
damages, liabilities, expenses or actions arising out of, or based
upon, any such untrue statement or alleged untrue statement, or any
such omission or alleged omission, if such statement or omission was
made in reliance upon and in conformity with information furnished in
writing to either of the TXUA Companies by or on behalf of any
Underwriter, through the Representatives or Counsel for the
Underwriters, expressly for use in the Registration Statement, the
Preliminary Prospectus or the Prospectus, or any amendment or
supplement to any thereof, or arising out of, or based upon,
statements in or omissions from that part of the Registration
Statement that shall constitute the Statements of Eligibility and
Qualification under the Trust Indenture Act of any trustee with
respect to any indenture qualified pursuant to the Registration
Statement; and provided further, that the indemnity agreement
contained in this Section 10 shall not inure to the benefit of any
Underwriter (or of any person controlling such Underwriter) on account
of any such losses, claims, damages, liabilities, expenses or actions
arising from the sale of the Securities to any person if a copy of the
Prospectus, as the same shall be amended or supplemented, shall not
have been given or sent to such person by or on behalf of such
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<PAGE>
Underwriter with or prior to the written confirmation of the sale
involved unless (i) the alleged omission or alleged untrue statement
was not corrected in the Prospectus as amended or supplemented at the
time of such written confirmation or (ii) the Prospectus, as amended
or supplemented, was not timely delivered to the Underwriters by the
Company at the time of the written confirmation of the sale involved.
The indemnity agreement of the TXUA Companies contained in this
Section 10 and the representations and warranties of the TXUA
Companies contained in Section 3 hereof shall remain operative and in
full force and effect regardless of any termination of this Agreement
or of any investigation made by or on behalf of any Underwriter or any
such controlling person, and shall survive the delivery of the
Securities.
(b) Each Underwriter shall indemnify, defend and hold
harmless each of the TXUA Companies, its officers and directors, and
each person who controls either such TXUA Company within the meaning
of Section 15 of the Securities Act, from and against any and all
losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the Securities Act or any
other statute or common law and shall reimburse each of them for any
legal or other expenses (including, to the extent hereinafter
provided, reasonable counsel fees) when and as incurred by them in
connection with investigating any such losses, claims, damages or
liabilities or in connection with defending any actions, insofar as
such losses, claims, damages, liabilities, expenses or actions arise
out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement
or the Prospectus, or any amendment or supplement to either thereof,
or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein in the light of the circumstances under which they were made
not misleading, if such statement or omission was made in reliance
upon and in conformity with information furnished in writing to the
TXUA Companies by or on behalf of such Underwriter, through the
Representatives or Counsel for the Underwriters, for use in connection
with the preparation of the Registration Statement, the Preliminary
Prospectus or the Prospectus, or any amendment or supplement to either
thereof. Each Underwriter hereby furnishes to the TXUA Companies in
writing expressly for use in the Prospectus (i) the statements in the
Prospectus relating to market-making for the Securities on page __ in
the _____ sentence of the paragraph entitled "______________" and (ii)
in the "Underwriting" section of the Prospectus, the list of
underwriters and the principal amount of Securities to be purchased by
each of them, statements in the fifth paragraph, statements in the
last sentence of the sixth paragraph, and statements relating to
stabilization, overallotment, and reclamation of selling concessions
in the eighth paragraph. The indemnity agreement of the respective
Underwriters contained in this Section 10 shall remain operative and
in full force and effect regardless of any termination of this
Agreement or of any investigation made by or on behalf of either TXUA
Company, its directors, officers, partners or trustees, any such
Underwriter, or any such controlling person, and shall survive the
delivery of the Securities.
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<PAGE>
(c) Each of the TXUA Companies and the several Underwriters
each shall, upon the receipt of notice of the commencement of any
action against it or any person controlling it as aforesaid, in
respect of which indemnity may be sought on account of any indemnity
agreement contained herein, promptly give written notice of the
commencement thereof to the party or parties against whom indemnity
shall be sought hereunder, but the failure so to notify such
indemnifying party or parties of any such action shall not relieve
such indemnifying party or parties from any liability hereunder to the
extent it is not materially prejudiced as a result of such failure to
notify and in any event shall not relieve it from any liability that
it or they may have to the indemnified party otherwise than on account
of such indemnity agreement. In case such notice of any such action
shall be so given, such indemnifying party shall be entitled to
participate at its own expense in the defense, or, if it so elects, to
assume (in conjunction with any other indemnifying parties) the
defense of such action, in which event such defense shall be conducted
by counsel chosen by such indemnifying party or parties and
satisfactory to the indemnified party or parties who shall be
defendant or defendants in such action, and such defendant or
defendants shall bear the fees and expenses of any additional counsel
retained by them; but if the indemnifying party shall elect not to
assume the defense of such action, such indemnifying party will
reimburse such indemnified party or parties for the reasonable fees
and expenses of any counsel retained by them; provided, however, if
the defendants in any such action (including impleaded parties)
include both the indemnified party and the indemnifying party and
counsel for the indemnified party shall have reasonably concluded that
there may be a conflict of interest involved in the representation by
a single counsel of both the indemnifying party and the indemnified
party, the indemnified party or parties shall have the right to select
separate counsel, satisfactory to the indemnifying party, whose fees
and expenses shall be paid by such indemnifying party (it being
understood, however, that the indemnifying party shall not be liable
for the fees and expenses of more than one separate counsel (in
addition to local counsel) representing the indemnified parties who
are parties to such action). Each of the TXUA Companies and the
several Underwriters agree that without the other parties' prior
written consent, which consent shall not be unreasonably withheld, it
will not settle, compromise or consent to the entry of any judgment in
any claim in respect of which indemnification may be sought under the
indemnification provision of this Agreement, unless such settlement,
compromise or consent (i) includes an unconditional release of such
other party from all liability arising out of such claim and (ii) does
not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of such other party.
(d) If the indemnification provided for in subparagraph (a)
or (b) above shall be unenforceable under applicable law by an
indemnified party, each indemnifying party agrees to contribute to
such indemnified party with respect to any and all losses, claims,
damages, liabilities and expenses for which each such indemnification
provided for in subparagraph (a) or (b) above shall be unenforceable,
in such proportion as shall be appropriate to reflect (i) the relative
fault of each indemnifying party on the one hand and the indemnified
party on the other in connection with the statements or omissions that
have resulted in such losses, claims, damages, liabilities and
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<PAGE>
expenses, (ii) the relative benefits received by the TXUA Companies on
the one hand and the Underwriters on the other hand from the offering
of the Securities pursuant to this Agreement, and (iii) any other
relevant equitable considerations; provided, however, that no
indemnified party guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any indemnifying party not guilty of such fraudulent
misrepresentation. Relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
a material fact or the omission or alleged omission to state a
material fact relates to information supplied by such indemnifying
party or the indemnified party and each such party's relative intent,
knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The TXUA Companies and each of the
several Underwriters agree that it would not be just and equitable if
contributions pursuant to this subparagraph (d) were to be determined
by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that
does not take account of the equitable considerations referred to
above. Notwithstanding the provisions of this Section 10, no
Underwriter shall be required to contribute in excess of the amount
equal to the excess of (i) the total price at which the Securities
underwritten by it were offered to the public, over (ii) the amount of
any damages which such Underwriter has otherwise been required to pay
by reason of any such untrue or alleged untrue statement or omission
or alleged omission. The obligations of each Underwriter to contribute
pursuant to this Section 10 are several and not joint and shall be in
proportion to the principal amount of Securities set forth opposite
its name in Schedule II hereto.
11. Termination. This Agreement may be terminated at any time at or
-----------
prior to the Closing Date by the Representatives by written notice to the
Company if after the date hereof and at or prior to the Closing Date, (a) there
shall have occurred any general suspension of trading in securities on the NYSE,
the American Stock Exchange, Inc. ("AMEX"), the NASDAQ Stock Market, Inc.
("NASDAQ") or the Australian Stock Exchange ("ASX") or there shall have been
established by the NYSE, the AMEX, the NASDAQ or the ASX or by the Commission or
by any government or governmental agency in the United States or Australia or by
the decision of any court, any general limitation on prices for such trading or
any general restrictions on the distribution of securities, or a general banking
moratorium declared by New York, United States or Australian authorities, (b)
there shall have occurred any suspension of trading on the NYSE, the AMEX, the
NASDAQ or the ASX in any of the securities of the Company or any special purpose
subsidiary of the Company, or (c) there shall have occurred any (i) new material
outbreak of hostilities or (ii) new material other national or international
calamity or crisis, including, but not limited to, an escalation of hostilities
that existed prior to the date of this Agreement or (iii) material adverse
change in the financial markets in the United States or Australia, and the
effect of any such event specified in subparagraph (a), (b) or (c) above on the
financial markets of the United States or Australia shall be such as to make it
impracticable, in the reasonable judgment of the Representatives, for the
Underwriters to enforce contracts for the sale of the Securities. This Agreement
may also be terminated at any time at or prior to the Closing Date by the
Representatives if, in their reasonable judgment, the subject matter of any
amendment or supplement to the Registration Statement or the Prospectus (other
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than an amendment or supplement relating solely to the activity of any
Underwriter or Underwriters) prepared and issued by the Company after the
effectiveness of this Agreement shall have disclosed a material adverse change
in the business, property or financial condition of the TXUA Companies and their
subsidiaries, considered as a whole, whether or not in the ordinary course of
business, that has materially impaired the marketability of the Securities. Any
termination hereof pursuant to this Section 11 shall be without liability of any
party to any other party except as otherwise provided in Sections 7(g) and 10
hereof.
12. Miscellaneous. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT
-------------
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. This Agreement shall
inure to the benefit of the TXUA Companies, the several Underwriters and, with
respect to the provisions of Section 10 hereof, each director, officer and
controlling person referred to in said Section 10, and their respective
successors. Nothing herein is intended or shall be construed to give to any
other person, firm or corporation any legal or equitable right, remedy or claim
under or in respect of any provision in this Agreement. The term "successor" as
used herein shall not include any purchaser, as such purchaser, of any of the
Securities from any of the several Underwriters.
13. Consent to Jurisdiction; Appointment of Agent to Accept Service
----------------------------------------------------------------
of Process. Each of the TXUA Companies irrevocably submits to the non-exclusive
- ----------
jurisdiction of any federal or state court in The City, County and State of New
York, United States of America, in any legal suit, action or proceeding based on
or arising under this Agreement and agrees that all claims in respect of such
suit or proceeding may be determined in any such court. Each of the TXUA
Companies irrevocably waives the defense of an inconvenient forum or objections
to personal jurisdiction with respect to the maintenance of such legal suit,
action or proceeding. To the extent permitted by law, each of the TXUA Companies
hereby waives any objection to the enforcement by any competent court in
Australia of, and, to the relitigation before any competent court in Australia
in connection with, any judgment validly obtained in any such court in New York
on the basis of any such legal suit, action or proceeding. Each of the TXUA
Companies has appointed Thelen Reid & Priest LLP (the "Process Agent") as its
authorized agent upon whom process may be served in any such legal suit, action
or proceeding. Such appointment shall be irrevocable. The Process Agent has
agreed to act as said agent for service of process and each of the TXUA
Companies agrees to take any and all action including the filing of any and all
documents and instruments, that may be necessary to continue such appointment in
full force and effect as aforesaid. Each of the TXUA Companies further agrees
that service of process upon the Process Agent and written notice of said
service to each of the TXUA Companies shall be deemed in every respect effective
service of process upon each of the TXUA Companies in any such legal suit,
action or proceeding. Nothing herein shall affect the right of any Underwriter
or any person controlling any Underwriter to serve process in any other manner
permitted by law. The provisions of this Section 13 shall remain operative and
in full force and effect regardless of any termination of this Agreement, in
whole or in part.
14. Waiver of Immunities. To the extent that the TXUA Companies or
--------------------
any of their respective properties, assets or revenues may have or may hereafter
become entitled to, or have attributed to it, any right of immunity, on the
grounds of sovereignty or otherwise, from any legal action, suit or proceeding,
-17-
<PAGE>
from the giving of any relief in any thereof, from set-off or counterclaim, from
the jurisdiction of any court, from service or process, from attachment upon or
prior to judgment, from attachment in aid of execution of judgment, or from
execution of judgment, or other legal process or proceeding for the giving of
any relief or for the enforcement of any judgment, in any jurisdiction in which
proceedings may at any time be commenced, with respect to its obligations,
liabilities or any other matter under or arising out of or in connection with
the Securities, the Indenture or this Agreement, each of them hereby irrevocably
and unconditionally waives and agrees not to plead or claim, any such immunity
and consents to such relief and enforcement. Nothing in this Section 14 shall be
deemed to waive any defense (other than any such immunity) available to the TXUA
Companies. The provisions of this Section 14 shall remain operative and in full
force and effect regardless of any termination of this Agreement, in whole or in
part.
15. Foreign Taxes.
-------------
(a) All payments by any party to another party hereunder
shall be made free and clear of, and without withholding or deduction
for or on account of, any present or future income, stamp, or other
taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any jurisdiction in which such party is managed or has a
place of business or in which any such party has a branch or office
from which payment is made or deemed to be made (each, a "Taxing
Jurisdiction"), unless such withholding or deduction is required by
law. In the event of any such withholding or deduction ("Foreign
Taxes"), such payor shall pay to the payee such additional amount as
shall be necessary in order that the amount received by such payee
after withholding or deduction shall equal the amount that would
otherwise have been due to such payee in the absence of such
withholding or deduction, except that no such amounts shall be payable
under this Section 15 for:
(i) any such tax imposed by reason of any payee
having some connection with the relevant Taxing Jurisdiction
(including being a citizen or resident or national of, or
carrying on a business or maintaining a permanent
establishment in, such Taxing Jurisdiction) other than its
participation as a party hereunder; and
(ii) any income or franchise tax on the overall
net income of any payee imposed by the United States or by
the State of New York or any political subdivision of the
United States or of the State of New York.
(b) In the event any payee obtains any actual payment of
refund, credit, allowance, remission or other deduction of, against or
from income or taxable income otherwise determined or taxes otherwise
payable to which it may be entitled from the relevant Taxing
Jurisdiction in respect of any Foreign Taxes paid on the payee's
behalf or for which the payee has received reimbursement, the payee
shall, to the extent it can do so without prejudice to the retention
of the amount so realized (after taking into account any net
additional taxes paid in connection with the realization thereof),
-18-
<PAGE>
notify the payor and pay to the payor (to the extent that the same
shall not already have been taken into account in computing any amount
previously paid by the payor or the amount of any reimbursement
previously received by the payee) promptly after the realization
thereof an amount which is equal to the net amount thereof (or, in the
event of a deduction from taxable income, the tax benefit generated
thereby, if less than such deduction) plus any additional tax savings
resulting from the payment pursuant to this sentence, provided that
the aggregate of all such payments shall not exceed the aggregate of
all amounts paid by the payor in respect of such Foreign Taxes.
The provisions of this Section 15 shall remain operative and in full
force and effect regardless of any termination of this Agreement, in whole or in
part.
16. Obligation Currency. The obligation of the parties to make
-------------------
payments hereunder is in U.S. dollars (the "Obligation Currency") and such
obligation shall not be discharged or satisfied by any tender or recovery
pursuant to any judgment expressed in any currency other than the Obligation
Currency or any other realization in such other currency, whether as proceeds of
set-off, security, guarantee, distributions, or otherwise, except to the extent
to which such tender, recovery or realization shall result in the receipt by the
party which is to receive such payment of the full amount of the Obligation
Currency expressed to be payable hereunder. The party liable to make such
payment agrees to indemnify the party which is to receive such payment for the
amount (if any) by which such receipt shall fall short of the full amount of the
Obligation Currency expressed to be payable hereunder and the party which is to
receive such payment agrees to pay to the party liable to make such payment the
amount (if any) by which such receipt shall exceed the full amount of the
Obligation Currency, and, in each case, such obligation shall not be affected by
judgment being obtained for any other sums due under this Agreement. The parties
agree that the rate of exchange which shall be used to determine if such tender,
recovery or realization shall result in the receipt by the party which is to
receive such payment of the full amount of the Obligation Currency expressed to
be payable hereunder shall be the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the Federal
Reserve Bank of New York for the business day preceding that on which the
judgment becomes a final judgment.
17. Notices. All communications hereunder shall be in writing, and,
-------
if to the Underwriters, shall be mailed or delivered to you at the address set
forth above, or, if to any of the TXUA Companies, shall be mailed or delivered
to it, to each of the following addresses: c/o TXU Australia Holdings
(Partnership) Limited Partnership, 452 Flinders Street, Melbourne, Victoria
Australia 3000, Attention: Treasurer; and c/o TXU Corp, Energy Plaza, 1601 Bryan
Street, Dallas, Texas 75201, Attention: Treasurer.
18. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be regarded as an original and all of which
shall constitute one and the same document.
-19-
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter and your acceptance shall constitute a binding
agreement among the TXUA Companies and the several Underwriters in accordance
with its terms.
Very truly yours,
TXU AUSTRALIA HOLDINGS
(PARTNERSHIP) LIMITED PARTNERSHIP
By
--------------------------------------
(Authorized Representative)
TXU AUSTRALIA HOLDINGS (AGP) PTY
LTD
By
--------------------------------------
(Authorized Representative)
Accepted and delivered as of
the date first above written
Salomon Smith Barney Inc.
as representatives of the several
Underwriters named in Schedule II hereto
By: Salomon Smith Barney Inc.
By:
-----------------------------
(TITLE)
-20-
<PAGE>
SCHEDULE I
----------
Underwriting Agreement dated:
Representatives: ------------------------
Salomon Smith Barney Inc.
Designation: % Junior Maturing Principal Securities Due
--- ----------
Distribution Rate: %
---
Purchase Price: %
---
Underwriting Commissions %
---
Public Offering Price: %
---
I-1
<PAGE>
SCHEDULE II
-----------
TXU Australia Holdings (Partnership) Limited Partnership
JUMPS
Principal Amount of
Underwriter JUMPS
- ----------- -----
Salomon Smith Barney Inc.
-------------
Total $300,000,000
=============
II-1
<PAGE>
SCHEDULE III
------------
[LETTERHEAD OF BAKER & McKENZIE]
[Date]
Salomon Smith Barney Inc.
as Representatives of the Underwriters
named in Schedule II to the Underwriting
Agreement, as herein defined
c/o
New York, New York
Ladies and Gentlemen:
1.1 We have acted as Australian legal advisers to TXU Australia Holdings
(Partnership) Limited Partnership, a limited partnership formed under
the laws of Victoria, Australia (the "Company"), and the Company's
general partner, TXU Australia Holdings Pty Ltd, a limited liability
company incorporated under the laws of Victoria, Australia ("AGP" and
hereinafter, together with the Company, the "TXUA Companies"), in
connection with the issuance and sale of the Securities. We refer to:
(a) the US$300,000,000 aggregate principal amount of __% Junior
Maturing Principal Securities of the Company (the "Securities");
(b) the Indenture dated as of ________, 2000 and made among the
Company and The Bank of New York (the "Indenture");
(c) the Underwriting Agreement dated __________, 2000 and made among
the Underwriters named therein, the Company and AGP (the
"Underwriting Agreement").
Expressions defined in the Underwriting Agreement have the same
meanings where used in this opinion. Reference in this opinion to the
III-1
<PAGE>
"Agreements" is a reference to the Indenture and the Underwriting
Agreement and to "Agreement" to any one of them.
1.2 We are delivering this opinion to you at the request of our clients
pursuant to Section 8(c) of the Underwriting Agreement. Our opinion
relates solely to Australian law as applied by the Australian courts
at the date of this opinion. We do not assume any obligation to advise
you (or any other person authorized to rely upon this opinion) of any
subsequent change in Australian law which might affect the contents of
this opinion.
1.3 We have examined originals or copies, certified to our satisfaction,
of the following documents:
(a) the Indenture;
(b) the Underwriting Agreement;
(c) the Prospectus dated_________, 2000 (the "Prospectus") issued in
respect of the offering of the Securities;
(d) the form of the Securities.
2. We have made such other enquiries and examined such other documents as
we have considered appropriate for the purpose of giving the opinion
set out below.
3. For the purposes of this opinion, we have assumed:
[STANDARD B&M OPINION ASSUMPTIONS TO BE REFLECTED]
4. Upon the basis of our familiarity with these transactions and
with the affairs and properties of our clients generally, we are of the
following opinion:
(a) that statements made in the Prospectus under the caption
"Material Income Tax Considerations - Material Australian Income
Tax Considerations", which are expressed to represent a summary
of certain current Australian tax consequences for those holders
of Securities to whom that summary relates are an accurate
summary of the matters dealt therein;
(b) no Australian stamp duty, stamp duty reserve tax, transfer tax or
other similar documentary or registration tax or duty is payable
in connection with the issue and delivery of the Securities at
closing or upon the execution and performance of the Agreements;
(c) under current practice, an Australian court of competent
jurisdiction would give effect to the choice of the internal laws
III-2
<PAGE>
of the State of New York as the proper law of the Agreements if
its application in the circumstances of the case would not (i) be
contrary to public policy and we know of no reason as to why the
same should be contrary to public policy, or (ii) conflict with
any rule of Australian law which is of mandatory application and
we know of no contractual provision which the Australian courts
might decline to enforce on this basis. Under Australian law and
subject to the above qualification, the Company has, pursuant to
Section 13 of the Underwriting Agreement, validly submitted to
the in personam jurisdiction of the state and federal courts
located in the City, County and State of New York in any action,
suit or proceeding arising out of or relating to the Agreements;
(d) each of the TXUA Companies is duly incorporated or formed and
registered, as the case may be, and validly existing under the
laws of Victoria, Australia;
(e) The Underwriting Agreement has been duly authorized, executed and
delivered by each of the TXUA Companies;
(e) The Securities and the Indenture have been duly authorized,
executed and delivered by the Company and the Securities and the
Indenture are legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their terms,
subject to the effect of bankruptcy, insolvency, reorganization,
fraudulent conveyance, receivership, moratorium and other laws
affecting the rights and remedies of creditors generally and of
general principles of equity; and
(f) No approval, authorization, consent or order of any Australian
public board or body is legally required for the consummation by
the TXUA Companies of the transactions contemplated by the
Underwriting Agreement and the Prospectus.
[EITHER B&M OR TXUA IN-HOUSE COUNSEL TO GIVE 10-B(5) OPINION.]
5. The qualifications to which this opinion is subject are as follows:
[STANDARD B&M OPINION QUALIFICATIONS TO BE REFLECTED]
6. This opinion is addressed to you personally. It may not be relied upon
by anyone else without our prior written consent; provided, however,
that Worsham Forsythe Woodridge LLP, Thelen Reid & Priest LLP and
Winthrop, Stimson, Putnam & Roberts may each rely on the opinions
III-3
<PAGE>
expressed in paragraph 4 hereof for purposes of their respective
opinions addressed to you of even date herewith. This opinion:
(a) [may not be disclosed in whole or part by you to anyone other
than persons who in the ordinary course of your business or that
of any other party who is authorised to rely on this opinion have
access to your or such party's papers and records and on the
basis that such persons will similarly make no further
disclosure; and
(b) may not be filed with any governmental agency or authority or
quoted in any public document without, in any such case, our
prior written consent.]
7. This opinion is strictly limited to the matters stated herein and is
not to be read as extending by implication to any other matter in
connection with the Agreements, the issue of the Securities or
otherwise.
Yours faithfully,
Baker & McKenzie
III-4
<PAGE>
SCHEDULE IV
-----------
[LETTERHEAD OF WORSHAM FORSYTHE WOOLDRIDGE LLP]
[Date]
Salomon Smith Barney Inc.
as Representatives of the Underwriters
named in Schedule II to the Underwriting
Agreement, as herein defined
c/o
New York, New York
Ladies and Gentlemen:
We have acted as United States counsel for TXU Australia Holdings
(Partnership) Limited Partnership, a limited partnership formed under the laws
of Victoria, Australia (the "Company") and the Company's general partner, TXU
Australia Holdings Pty Ltd, a limited liability company incorporated under the
laws of Victoria, Australia ("AGP" and hereinafter, together with the Company,
the "TXUA Companies") in connection with transactions contemplated by the
Underwriting Agreement dated , 2000 among the TXUA Companies and you
------------
(the "Underwriting Agreement"), including, among others, (i) the issuance by the
Company of US$300,000,000 principal amount of its % Junior Maturing Principal
--
Securities (the "Securities") pursuant to an Indenture, dated ,
--------
2000,(the "Indenture") among the Company and The Bank of New York, as trustee.
This opinion is being furnished to you at the request of our clients
pursuant to Section 8(c) of the Underwriting Agreement. Terms not otherwise
defined herein are used with the meanings ascribed to them in the Underwriting
Agreement.
In so acting we have participated in or reviewed the corporate
proceedings in connection with the authorization, execution and delivery of the
Underwriting Agreement, the Indenture and the Securities. We have also examined
such other documents and satisfied ourselves as to such other matters as we have
deemed necessary as a basis for the conclusions of law contained in the opinions
expressed below. We have relied as to various questions of fact upon the
representations and warranties of the TXUA Companies contained in the
Underwriting Agreement and, where we deemed appropriate, on certificates of
public officials. We have relied upon certificates of The Bank of New York, as
VII-1
<PAGE>
trustee under the Indenture as to the authentication of the Securities. In our
examination we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all documents submitted to us as photostatic or certified
copies.
Upon the basis of our familiarity with these transactions and with the
affairs and properties of the TXUA Companies generally, we are of the opinion
that:
1. The Underwriting Agreement has been duly authorized, executed and
delivered by each of the TXUA Companies.
2. The Indenture has been duly qualified under the Trust Indenture
Act.
3. The Securities and the Indenture have been duly authorized,
executed and delivered by the Company; the Securities are entitled to the
benefits of the Indenture; and the Securities and the Indenture are legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to the effect of bankruptcy, insolvency,
reorganization, fraudulent conveyance, receivership, moratorium and other laws
affecting the rights and remedies of creditors generally and of general
principles of equity.
4. The statements made in the Prospectus under the captions
"Description of the JUMPS", insofar as such statements constitute summaries of
the legal matters or documents referred to therein, are accurate in all material
respects.
5. None of the Company or AGP is, or after giving effect to the
issuance and sale of the Securities and the application of the proceeds thereof
as described in the Prospectus will be, directly or indirectly controlled by, or
acting on behalf of any person which is, an investment company within the
meaning of the Investment Company Act of 1940, as amended.
6. No approval, authorization, consent or order of any public board
or body (other than (i) such as have been obtained under the Securities Act, the
Exchange Act, the Trust Indenture Act or the applicable rules and regulations
thereunder and (ii) in connection or in compliance with the provisions of the
blue-sky laws of any jurisdiction) is legally required for the consummation by
the TXUA Companies of the transactions contemplated by the Underwriting
Agreement and the Prospectus.
VII-2
<PAGE>
7. The Registration Statement, at the Effective Date, and the
Prospectus, at the time it was filed with the Commission pursuant to Rule 424
under the Securities Act (in each case except for financial statements and
schedules and other financial and statistical data contained therein and except
for that part of the Registration Statement that constitutes the Forms T-1, as
to which we do not express any belief) complied as to form in all material
respects with the Securities Act, the Trust Indenture Act and the applicable
rules and regulations of the Commission thereunder; and the Registration
Statement has been declared effective by the Commission and, to our best
knowledge, no proceedings for a stop order with respect thereto are pending or
threatened under Section 8 of the Securities Act.
In the course of the preparation of the information relating to the
TXUA Companies contained in the Registration Statement and the Prospectus, we
had discussions with certain of the Company's officers and representatives and
certain officers and representatives of certain of its subsidiaries, with other
counsel for the Company, and with Deloitte Touche Tohmatsu, the Company's
independent accountants, but we made no independent verification of the accuracy
or completeness of the representations and statements made to us by the TXUA
Companies or the information included by the TXUA Companies in the Prospectus
and take no responsibility therefor except as set forth in paragraph 4 above.
However, our examination of the information relating to the TXUA Companies
contained in the Registration Statement and the Prospectus and our discussions
did not disclose to us anything which gives us reason to believe that (in each
case, except for financial statements and schedules and financial and
statistical data contained therein and except for that part of the Registration
Statement that constitutes the Forms T-1, as to which we do not express any
belief) (i) the Registration Statement, as of the Effective Date, included an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or (ii) the Prospectus at the time it was filed with the Commission pursuant to
Rule 424, included, or on the date hereof, includes an untrue statement of a
material fact or on such dates omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
We are members of the State Bar of Texas and do not hold ourselves out
as experts on the laws of the State of New York or the laws of Australia. As to
all matters of New York law, we have, with your consent, relied upon the opinion
of Thelen Reid & Priest LLP, New York, New York, special United States counsel
to the TXUA Companies, addressed to you of even date herewith; as to matters of
Australian law, we have, with your consent relied upon the opinion of Baker &
McKenzie, Australian Counsel for the TXUA Companies, addressed to you of even
date herewith.
VII-3
<PAGE>
Very truly yours,
WORSHAM FORSYTHE WOOLDRIDGE LLP
By:
--------------------------
A Partner
VII-4
<PAGE>
SCHEDULE V
----------
[LETTERHEAD OF THELEN REID & PRIEST LLP]
New York, New York
[Date]
Salomon Smith Barney Inc.
as Representatives of the Underwriters
named in Schedule II to the Underwriting
Agreement, as herein defined
c/o
New York, New York
Ladies and Gentlemen:
We have acted as special United States counsel for TXU Australia
Holdings (Partnership) Limited Partnership, a limited partnership formed under
the laws of Victoria, Australia (the "Company") and the Company's general
partner, TXU Australia Holdings Pty Ltd, a limited liability company
incorporated under the laws of Victoria, Australia ("AGP" and hereinafter,
together with the Company, the "TXUA Companies") in connection with transactions
contemplated by the Underwriting Agreement dated , 2000 among the
------------
TXUA Companies and you (the "Underwriting Agreement"), including, among others,
(i) the issuance by the Company of US$300,000,000 principal amount of its %
Junior Maturing Principal Securities (the "Securities") pursuant to an
Indenture, dated , 2000,(the "Indenture") among the Company and The Bank
--------
of New York, as trustee.
This opinion is being furnished to you at the request of our clients
pursuant to Section 8(c) of the Underwriting Agreement. Terms not otherwise
defined herein are used with the meanings ascribed to them in the Underwriting
Agreement.
In so acting we have participated in or reviewed the corporate
proceedings in connection with the authorization, execution and delivery of the
Underwriting Agreement, the Indenture, and the Securities. We have also examined
such other documents and satisfied ourselves as to such other matters as we have
deemed necessary as a basis for the conclusions of law contained in the opinions
VII-5
<PAGE>
expressed below. We have relied as to various questions of fact upon the
representations and warranties of the TXUA Companies contained in the
Underwriting Agreement and, where we deemed appropriate, on certificates of
public officials. We have relied upon certificates of The Bank of New York, as
trustee under the Indenture as to the authentication of the Securities. In our
examination we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all documents submitted to us as photostatic or certified
copies.
Upon the basis of our familiarity with these transactions and with the
affairs and properties of the TXUA Companies generally, we are of the opinion
that:
1. The Underwriting Agreement has been duly authorized, executed and
delivered by each of the Company and AGP.
2. The Indenture has been duly qualified under the Trust Indenture
Act.
3. The Indenture and the Securities have been duly authorized,
executed and delivered by the Company; the Securities are entitled to the
benefits of the Indenture; and the Securities and the Indenture are legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to the effect of bankruptcy, insolvency,
reorganization, fraudulent conveyance, receivership, moratorium and other laws
affecting the rights and remedies of creditors generally and of general
principles of equity.
4. The statements made in the Prospectus under the captions
"Description of the JUMPS", insofar as such statements constitute summaries of
the legal matters or documents referred to therein, are accurate in all material
respects.
5. Neither the Company nor AGP is, or after giving effect to the
issuance and sale of the Securities and the application of the proceeds thereof
as described in the Prospectus will be, directly or indirectly controlled by, or
acting on behalf of any person which is, an investment company within the
meaning of the Investment Company Act of 1940, as amended.
6. The Registration Statement, at the Effective Date, and the
Prospectus, at the time it was filed with the Commission pursuant to Rule 424
under the Securities Act (in each case except for financial statements and
schedules and other financial and statistical data contained therein and except
for that part of the Registration Statement that constitutes the Forms T-1, as
to which we do not express any belief) complied as to form in all material
respects with the Securities Act, the Trust Indenture Act and the applicable
VII-6
<PAGE>
rules and regulations of the Commission thereunder; and the Registration
Statement has been declared effective by the Commission and, to our best
knowledge, no proceedings for a stop order with respect thereto are pending or
threatened under Section 8 of the Securities Act.
7. No approval, authorization, consent or order of any public board
or body (other than (i) such as have been obtained under the Securities Act, the
Exchange Act, the Trust Indenture Act or the applicable rules and regulations
thereunder and (ii) in connection or in compliance with the provisions of the
blue-sky laws of any jurisdiction) is legally required for the consummation by
the TXUA Companies of the transactions contemplated by the Underwriting
Agreement and the Prospectus.
8. We herewith confirm as our opinion the statements under the
caption "Material Tax Considerations--US Income Tax Considerations" in the
Prospectus.
In the course of the preparation of the information relating to the
TXUA Companies contained in the Registration Statement and the Prospectus, we
had discussions with certain of the Company's officers and representatives and
certain officers and representatives of certain of its subsidiaries, with other
counsel for the Company, with Deloitte Touche Tohmatsu, the Company's
independent accountants, but we made no independent verification of the accuracy
or completeness of the representations and statements made to us by the TXUA
Companies or the information included by the TXUA Companies in the Prospectus
and take no responsibility therefor except as set forth in paragraphs 4 and 8
above. However, our examination of the information relating to the TXUA
Companies contained in the Registration Statement and the Prospectus and our
discussions did not disclose to us anything which gives us reason to believe
that (in each case, except for financial statements and schedules and financial
and statistical data contained therein and except for that part of the
Registration Statement that constitutes the Forms T-1, as to which we do not
express any belief) (i) the Registration Statement, as of the Effective Date,
included an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or (ii) the Prospectus at the time it was filed with the
Commission pursuant to Rule 424, included, or on the date hereof, includes an
untrue statement of a material fact or on such dates omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
We are members of the New York Bar and do not hold ourselves out as
experts on the laws of Australia. As to all matters of Australian law, we have,
with your consent, relied upon the opinions of Baker & McKenzie, Australian
Counsel for the Company and AGP, addressed to you of even date herewith.
VII-7
<PAGE>
Very truly yours,
THELEN REID & PRIEST LLP
VII-8
<PAGE>
SCHEDULE VI
-----------
[Letterhead of Winthrop, Stimson, Putnam & Roberts]
[Date]
Salomon Smith Barney Inc.
as Representatives of the Underwriters
named in Schedule II to the Underwriting
Agreement, as herein defined
c/o
New York, New York
Ladies and Gentlemen:
We have acted as counsel to you and the several Underwriters in
connection with the transactions contemplated by the Underwriting Agreement
dated , 2000 among TXU Australia Holdings (Partnership) Limited
------------
Partnership, a limited partnership formed under the laws of Victoria, Australia
(the "Company") and the Company's general partner, TXU Australia Holdings Pty
Ltd, a limited liability company incorporated under the laws of Victoria,
Australia ("AGP" and hereinafter, together with the Company, the "TXUA
Companies") and you (the "Underwriting Agreement"), including, among others, (i)
the issuance by the Company of US$300,000,000 principal amount of its % Junior
Maturing Principal Securities (the "Securities") pursuant to an Indenture, dated
________, 2000,(the "Indenture") among the Company and The Bank of New York, as
trustee.
Terms not otherwise defined herein are used with the meanings ascribed
to them in the Underwriting Agreement.
We are members of the New York Bar and do not hold ourselves out as
experts in the laws of Australia or of any other jurisdiction except New York
and the federal laws of the United States. We have, with your consent, relied
upon opinions of even date herewith addressed to you by Baker & McKenzie,
Australian Counsel for the TXUA Companies as to all matters of Australian law.
We have, in addition, examined the documents described in the list of
closing papers as having been delivered to you at the closing and such other
documents and satisfied ourselves as to such other matters as we have deemed
necessary in order to enable us to express this opinion. As to various questions
X-1
<PAGE>
of fact material to this opinion, we have relied upon representations of the
TXUA Companies and statements in the Prospectus hereinafter mentioned. We have
relied upon a certificate of the Trustee as to the due authentication of the
Securities by the Trustee. In such examination we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us and the
genuineness and conformity to original documents of documents submitted to us as
certified or photostatic copies.
Based upon the foregoing, we are of the opinion that:
1. The Underwriting Agreement has been duly authorized, executed and
delivered by each of the TXUA Companies.
2. The Indenture has been duly qualified under the Trust Indenture
Act.
3. The Securities and the Indenture have been duly authorized,
executed and delivered by the Company; the Securities are entitled to the
benefits of the Indenture; and the Securities and the Indenture are legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to the effect of bankruptcy, insolvency,
reorganization, fraudulent conveyance, receivership, moratorium and other laws
affecting the rights and remedies of creditors generally and of general
principles of equity.
4. The statements made in the Prospectus under the captions
"Description of the JUMPS," insofar as such statements constitute summaries of
the legal matters or documents referred to therein, are accurate in all material
respects.
5. The Registration Statement, at the Effective Date, and the
Prospectus at the time it was filed with the Commission pursuant to Rule 424
under the Securities Act (in each case except for financial statements and
schedules and other financial and statistical data contained therein and except
for that part of the Registration Statement that constitutes the Forms T-1, as
to which we do not express any belief) complied as to form in all material
respects with the Securities Act, the Trust Indenture Act and the applicable
rules and regulations of the Commission thereunder.
In passing upon the form of the Registration Statement and the
Prospectus, we necessarily assume the correctness and completeness of the
statements made by the TXUA Companies and the information included in the
Registration Statement and the Prospectus and take no responsibility therefor,
except insofar as such statements relate to us and as set forth in paragraph 4
above. In the course of the preparation by the TXUA Companies of the
Registration Statement and the Prospectus, we have had discussions with certain
of its officers and representatives, and certain officers and representatives of
certain of its subsidiaries, with counsel for the TXUA Companies, and with
Deloitte Touche Tohmatsu, the TXUA Companies' independent accountants, and with
certain of your representatives. Our examination of the Registration Statement
and the Prospectus and our discussions did not disclose to us any information
which gives us reason to believe that at the Effective Date the Registration
Statement contained an untrue statement of a material fact or omitted to state a
X-2
<PAGE>
material fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus, at the time it was filed with the
Commission pursuant to Rule 424, or at the date hereof, included or includes an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. We do not express any
belief as to the financial statements or other financial or statistical data
contained or incorporated by reference in the Prospectus or as to that part of
the Registration Statement that constitutes the Forms T-1.
This opinion is given to you solely for the use of the several
Underwriters in connection with the Underwriting Agreement and the transactions
contemplated thereunder and may not be relied upon by any other person or for
any other purpose.
Very truly yours,
X-3
EXHIBIT 3(A)
LIMITED PARTNERSHIP DEED
between
TU AUSTRALIA HOLDINGS (AGP) PTY LIMITED
and
TU AUSTRALIA HOLDINGS NO.1 LIMITED
and
TU AUSTRALIA HOLDINGS NO.2 LIMITED
BAKER & MC.KENZIE
Solicitors
Level 26, AMP Centre Level 39, Rialto
50 Bridge Street 525 Collins Street
SYDNEY NSW 2000 MELBOURNE VIC 3000
Tel: (02) 9225-0200 Tel: (03) 9617-4200
Fax: (02) 9223-7711 Fax: (03) 9614-2103
<PAGE>
CONTENTS
CLAUSE
NUMBER HEADING PAGE
1. DEFINITIONS AND INTERPRETATION 2
1.1 Definitions 2
1.2 Interpretation 6
2. REGISTRATION OF THE PARTNERSHIP 8
2.1 Application 8
2.2 Statement Particulars 8
3. LIABILITY OF PARTNERS 8
3.1 Generally 8
3.2 General Partner 9
3.3 Overriding effect 9
3.4 Return of contribution 9
3.5 Liability for business conducted outside the State 9
4. CHANGES TO THE PARTNERSHIP 9
4.1 Changes in registered particulars 9
4.2 Cessation of limited partnership 10
4.3 Change in status of Partners 10
5. PURPOSE OF PARTNERSHIP 10
5.1 Sole purpose 10
5.2 Other matters 10
5.3 Competing activities 10
6. GENERAL PARTNER 10
6.1 Partnership Business 10
6.2 General Partner's business 11
6.3 General Partner's authority 11
6.4 General Partner representative 11
6.5 Accounts 11
6.6 Business plan and Budget 12
6.7 Bank Account 12
6.8 Auditor 13
7. LIMITED PARTNERS 13
7.1 Limited Partners and management 13
7.2 Change of status 13
8. EXPENSES 13
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9. CAPITAL 13
9.1 Capital Account 13
9.2 Capital Contribution 13
9.3 Partnership Property 14
9.4 No separate Partners assets 14
9.5 Withdrawal of capital 14
10. PROFITS AND LOSSES 14
10.1 Allocation 14
10.2 Allocation of profits 14
11. DEALING IN PARTNERSHIP INTERESTS 15
11.1 General Prohibition 15
11.2 New Partners 15
12. DURATION AND DISSOLUTION 15
12.1 Duration 15
12.2 Dissolution 15
12.3 Dissolution not available in certain cases 16
12.4 Winding up 16
13. INDEMNITY 16
14. RESOLUTION OF DISPUTES 16
14.1 Reference to Representatives 16
14.2 Expert 16
14.3 Reference to Courts 17
14.4 Continued Performance Required 17
15. CONFIDENTIALITY 17
15.1 Provisions to Remain Confidential 17
15.2 Permitted Disclosures 17
15.3 Announcements 18
15.4 Survival of Obligation 18
16. NOTICES 18
16.1 Notices 18
16.2 Mode of service 19
17. MISCELLANEOUS 19
17.1 Governing Law 19
17.2 Jurisdiction 19
17.3 Invalidity 19
17.4 Waiver and Exercise of Rights 20
17.5 Survival of indemnities 20
17.6 Amendments 20
17.7 Counterparts 20
17.8 Further Acts 20
17.9 Entire Agreement 21
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SCHEDULE 23
Partner Interests 23
iii
<PAGE>
LIMITED PARTNERSHIP DEED
THIS DEED is made on the 27th day of January, 1999.
BETWEEN
TU Australia Holdings (AGP) Pty Limited (ACN 086 014 931)
of Level 49, 525 Collins Street, Melbourne, Victoria 3000 ("General Partner").
TU Australia Holdings No.1 Limited (No. 3679715) (presently known as Rectrade
Limited) of Kempson House, Camomile Street, London, EC3A 7AN ("Partner 1").
AND
TU Australia Holdings No.2 Limited (No. 3679712) (presently known as Roidtrade
Limited) of Kempson House, Camomile Street, London, EC3A 7AN ("Partner 2").
(collectively the "Partners")
RECITALS
A. The Partners wish to form a limited liability partnership
and to register that limited partnership under Part 3 of the
Partnership Act 1958 (Vic).
B. Each Partner will unconditionally contribute to the Partnership
as and when called upon to do so by the General Partner that amount
set opposite its name in the Schedule.
C. The Limited Partners will unconditionally contribute to the
Partnership on or after the Success Date that amount or the
property set opposite its name in the Schedule.
D. It is intended that the Partnership enter into certain financing
arrangements with the Financiers, Junior Banks (in each case as
defined in the Security Trust Deed) to enable the Partnership to
acquire or subscribe for shares in the Company.
OPERATIVE PROVISIONS
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1. DEFINITIONS AND INTERPRETATION
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1.1 DEFINITIONS
In this Deed, the following words shall have the following meanings:
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"ACCOUNTING STANDARDS" means, in relation to the Partnership, those generally
accepted accounting principles and practices consistently applied in Australia
in respect to limited partnerships;
"ACT" means the Partnership Act 1958 (Vic);
"AUDITORS" means the person or firm appointed as auditor of the Partnership
pursuant to clause 6.8;
"AUTHORISED OFFICER" means, for a Partner, a director or a secretary of the
Partner or any other person nominated by the Partner by notice to the other
Partners to be an Authorised Officer, the notice to be accompanied by a
certified copy of the signature of any person nominated;
"BANK" means a bank authorised under the Banking Act 1959 (Cth), or under the
laws of a State, to carry on banking business in Australia or in that State;
"BANK ACCOUNT" means the Partnership bank account to be opened by the General
Partner and operated in accordance with clause 6.7;
"BUSINESS DAY" means any day, other than a Saturday or Sunday on which Banks are
open for business in Melbourne;
"BUSINESS PLAN" means the business plan to be prepared by the General Partner in
accordance with clause 6.6(c);
"BUDGET" means the budget to be prepared by the General Partner in accordance
with clause 6.6(d);
"CAPITAL ACCOUNT" means each capital account established in accordance with
clause 9.1;
"CAPITAL CONTRIBUTION" means the total of the amounts contributed or to be
contributed to the Partnership by a Partner as required by clause 9.2;
"COMMENCEMENT DATE" means the date on which the Office of Fair Trading registers
the Partnership as a limited partnership;
"COMPANY" means TU Australia Holdings Pty Limited (ACN 086 006 859);
"CONTROLLER" has the same meaning as "controller" in the Corporations Law;
"DISPOSE" means assign, transfer or otherwise dispose of any legal or equitable
interest either in whole or part, whether by sale, lease, declaration or
creation of a trust or otherwise, and "DISPOSAL" has a corresponding meaning;
"ENCUMBER" means to create or allow to exist any Encumbrance;
"ENCUMBRANCE" means:
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<PAGE>
(a) any mortgage, charge, bill of sale, pledge, deposit, lien,
encumbrance, hypothecation, arrangement for the retention of title
and any other right, interest, power or arrangement of any nature
having the purpose or effect of providing security for, or
otherwise protect against default by any person;
(b) any lien, profit a prendre, easement, restrictive covenant, equity
or interest in the nature of an encumbrance, garnishee order, writ
or warrant of execution, right of set-off, lease, licence to use or
occupy, assignment of income or monetary claim; and
(c) any agreement to create any of them or allow any of them to exist;
"ENTITY" includes a trust;
"FINANCIAL YEAR" means the period from the Commencement Date until 31 December
1999 and thereafter the period commencing on 1 January in each year and ending
on the next following 31 December or the date of dissolution of the Partnership,
whichever is the earlier or such other period as the General Partner shall
determine;
"FINANCING DOCUMENTS" means any documents which are "Finance Documents" as
defined in the Security Trust Deed and any other documents entered into by the
General Partner for the purpose of obtaining financial accommodation;
"INSOLVENCY EVENT" means for a Partner, the happening of one or more of the
following events:
(a) except for the purpose of a solvent reconstruction or amalgamation
which has the prior written consent of the other Partners:
(i) process is filed in a court seeking an order that it be
wound up or that a Controller be appointed to it or any
of its assets, unless the application is withdrawn,
struck out or dismissed within 7 days of it being
filed; or
(ii) an order is made that it be wound up or that a
Controller be appointed to it or any of its assets;
or
(iii) a resolution that it be wound up is passed or proposed;
(b) a liquidator, provisional liquidator, Controller or any
similar official is appointed to, or takes possession or control
of, all or any of its assets or undertaking;
(c) an administrator is appointed to it, a resolution that an
administrator be appointed to it is passed or proposed, or any
other steps are taken to appoint an administrator to it;
(d) it enters into, or resolves to enter into, an arrangement,
compromise or composition with any of, or any class of, its
creditors or shareholders, or an assignment for the benefit of any
of, or any class of, its creditors, or process is filed in a court
seeking approval of any such arrangement, compromise or
composition;
4
<PAGE>
(e) a reorganisation, moratorium, deed of company arrangement or
other administration involving one or more of its creditors is
proposed or effected;
(f) any action is taken by the Australian Securities and Investment
Commission with a view to cancelling its registration or to
dissolving it, or an application is made to the Australian
Securities and Investment Commission that any such action be taken;
(g) it is insolvent within the meaning of Section 95A of the
Corporations Law, as disclosed in accounts prepared for the
purposes of this Deed or otherwise states that it is unable to pay
its debts or it is presumed to be insolvent under any applicable
law;
(h) as a result of the operation of section 459F(1) of the
Corporations Law, it is taken to have failed to comply with a
statutory demand;
(i) it stops or suspends or threatens to stop or suspend:
(i) the payment of all or a class of its debts; or
(ii) the conduct of all or a substantial part of its
business or threatens to do so; or
(j) anything having a substantially similar effect to any of the
events specified in the preceding paragraphs happens to it under
the law of any jurisdiction.
"LIMITED PARTNER" means a Partner other than the General Partner;
"OWNERSHIP PERCENTAGE" means in respect of a Partner, that percentage set out
opposite its name in the Schedule, as such percentage may be amended to reflect
any disposal or acquisition of a further interest by that Partner in accordance
with this Deed;
"PARTNERSHIP" means the limited partnership created by registration under the
Act, the terms of which are evidenced by this Deed;
"PARTNERSHIP BUSINESS" means the investment in and ownership of shares and
securities in the Company and any other entity, including:
(a) investing in, subscribing for and holding shares and
securities in the Company or any other entity;
(b) entering into such financial accommodation as may be necessary
or desirable to facilitate the acquisition of shares and
securities in the Company or any other entity;
(c) granting security over some or all of the Partnership
Property including the shares and any securities in the
Company or any other entity;
(d) entering into such other financial instruments, including swaps,
hedges and options, in relation to the Partnership Property and
the liabilities of the Partnership;
(e) entering into such other financial accommodation to be provided to
the Partners for the purposes of repaying or restructuring in whole
or in part the financial accommodation or reimbursement or
5
<PAGE>
indemnity obligations undertaken by the Partners, including those
arising under the Financing Documents;
(f) any such other acts, matters or things as the Partners may
unanimously agree;
"PARTNERSHIP INTEREST" means the undivided interest of a Partner in all rights
and obligations arising under, or in connection with the Partnership by virtue
of this Deed;
"PARTNERSHIP PROPERTY" means all rights, benefits, interest, property and assets
of the Partnership owned legally or beneficially from time to time on behalf of
the Partnership by all or any of the Partners;
"RELATED BODIES CORPORATE" has the meaning given to that term in section 50 of
the Corporations Law;
"REPRESENTATIVE" means a person appointed by the General Partner as a
representative pursuant to clause 6.4;
"SECURITY TRUSTEE" means the Security Trustee as defined in the Security Trust
Deed;
"SECURITY TRUST DEED" means the Security Trust Deed to be dated on or about 29
January 1999 between General Partner, TU Australia Holdings Pty Ltd, TUA (No. 8)
Pty Ltd, TUA (No. 9) Pty Ltd, Texas Utilities Australia Pty Ltd, TUA (No. 10)
Pty Ltd and TUA (No. 11) Pty Ltd, Eastern Energy Limited, Texas Utilities
Company, certain financiers specified therein as Junior Banks, National
Australia Bank Limited as Agent and Security Trustee;
"STATE" means the State of Victoria; and
"SUCCESS DATE" means the date determined by the General Partner being not later
than the date for completion by TUA (No. 10) Pty Ltd and TUA (No. 11) Pty Ltd or
a Related Body Corporate of the acquisition of the assets and businesses of
Westar Pty Ltd, Westar (Assets) Pty Ltd and Kinetik Energy Pty Ltd.
1.2 INTERPRETATION
In this Deed, unless the context requires another meaning:
(a) a reference:
(i) to the singular includes the plural and vice versa;
(ii) to a gender includes all genders;
(iii) to a document (including this Deed) is a reference to
that document (including any Schedules) as amended,
consolidated, supplemented, novated or replaced;
6
<PAGE>
(iv) to an agreement includes any undertaking,
representation, deed, agreement or legally enforceable
arrangement or understanding whether written or not;
(v) to a party means a party to this Deed;
(vi) to an item, Recital, clause, Schedule is to an item,
Recital, clause or Schedule of or to this Deed;
(vii) to a notice means a notice, approval, demand, request,
nomination or other communication given by one party to
another under or in connection with this Deed;
(viii) to a person (including a party) includes:
(A) an individual, company, other body corporate,
association, partnership, firm, joint
venture, trust or Government Agency; and
(B) the person's successors, permitted assigns,
substitutes, executors and administrators;
(ix) to a law:
(A) includes a reference to any legislation,
treaty, , judgment, rule of common law or
equity or rule of any applicable stock
exchange; and
(B) is a reference to that law as amended,
consolidated, supplemented or replaced; and
(C) includes a reference to any regulation,
rule, statutory instrument, by-law or other
subordinate legislation made under that
law;
(x) to an accounting term is to be interpreted according
to the Accounting Standards;
(xi) the word including or includes means including, but not
limited to, or includes, without limitation,.
(b) Where a word or phrase is defined, its other grammatical forms have
a corresponding meaning.
(c) Headings are for convenience only and do not affect interpretation.
(d) If a payment or other act must (but for this clause) be made or
done on a day that is not a Business Day, then it must be made or
done on the next Business Day.
(e) If a period occurs from, after or before a day or the day of an
act or event, it excludes that day.
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<PAGE>
(f) This Deed may not be construed adversely to a party only because
that party was responsible for preparing it.
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2. REGISTRATION OF THE PARTNERSHIP
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2.1 APPLICATION
The Partners shall cause an application for registration of the Partnership as a
limited partnership to be lodged with the Office of Fair Trading in Victoria in
accordance with Part 3 of the Act. Each Partner must sign the statement to be
lodged for this purpose.
2.2 STATEMENT PARTICULARS
The statement to be lodged pursuant to clause 2.1 must be in a form approved by
the Office of Fair Trading and must contain the following particulars:
(a) the name of the Partnership, being "TU Australia Holdings Limited
Partnership";
(b) the full address in Victoria of the office of the Partnership;
(c) the full name of each Partner;
(d) the full address of each Partner, being its registered office or
principal place of business;
(e) a statement in relation to each Partner in as to whether that
Partner is a general partner or a limited partner;
(f) a statement in relation to each limited partner to the effect that
it is a limited partner whose liability to contribute is limited to
the extent of the amount specified in the statement (being the
amount of any capital, or the value of any property, that the
limited partner has agreed to contribute to the Partnership);
(g) a statement, in relation to each limited partner of the amount of
any capital and the value of any property that the Partner has
agreed to contribute to the Partnership, showing separately the
amount or value actually contributed and the amount or value
outstanding;
(h) such other particulars as are required by the regulations or the
approved form of statement.
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3. LIABILITY OF PARTNERS
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3.1 GENERALLY
Subject to the Act, the liability of each of the Limited Partners in connection
with, arising out of or in any way related to this Deed or any act matter or
thing contemplated or done pursuant to this Deed is limited to such Partner's
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<PAGE>
Partnership Interest together with the amount (if any) of any Capital
Contribution remaining to be paid by such Partner.
3.2 GENERAL PARTNER
Subject to the Act, the liability of the General Partner to any other Partner in
connection with, arising out of or in any way related to this Deed or any act
matter or thing contemplated or done pursuant to this Deed is limited to the
General Partner's Partnership Interest together with the amount (if any) of any
Capital Contribution remaining to be paid by the General Partner.
3.3 OVERRIDING EFFECT
The provisions of clauses 3.1 and 3.2 apply notwithstanding any other provision
of this Deed, including any indemnity.
3.4 RETURN OF CONTRIBUTION
If the whole or any part of a contribution made by any Limited Partner is
received back by it, the liability of that Limited Partner is restored
accordingly.
3.5 LIABILITY FOR BUSINESS CONDUCTED OUTSIDE THE STATE
The limitation on the liability of each Limited Partner provided in this Deed
shall extend to any debt or obligation incurred in connection with the conduct
of the Partnership Business outside the State.
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4. CHANGES TO THE PARTNERSHIP
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4.1 CHANGES IN REGISTERED PARTICULARS
(a) If any change occurs in relation to the registered particulars of
the Partnership, a statement setting out the changed particulars
must be lodged with the Office of Fair Trading by the General
Partner within 7 days after the change has occurred.
(b) The statement must be signed:
(i) by the General Partner;
(ii) if the change relates to the admission of new partner
or a change in the liability of a Limited Partner to
contribute, by the Limited Partner concerned.
(c) The statement must be in a form approved by the Office of Fair
Trading and contain the particulars required by the regulations or
the approved form of statement.
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4.2 CESSATION OF LIMITED PARTNERSHIP
The Partnership ceases to be a limited partnership if:
(a) none of the Partners is a limited partner within the meaning of the
Act; or
(b) the Partners agree that they will carry on the Partnership Business
otherwise than as a limited partnership.
4.3 CHANGE IN STATUS OF PARTNERS
If, without the consent of all Limited Partners, the Partnership ceases to be a
limited partnership but continues to carry on business, the General Partner to
the extent permitted by law indemnifies each Partner which did not consent to
the cessation of the limited partnership for any loss, cost or expense suffered
by that Partner in excess of that Partner's Partnership Interest and unpaid
Capital Contribution.
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5. PURPOSE OF PARTNERSHIP
- --------------------------------------------------------------------------------
5.1 SOLE PURPOSE
The Partnership is formed for the sole purpose of enabling the Partners to carry
on the Partnership Business.
5.2 OTHER MATTERS
Nothing in this Deed shall constitute the parties to this Deed partners in
respect of any other matters or business.
5.3 COMPETING ACTIVITIES
Each of the Partners acknowledges and agrees that it and its Related Bodies
Corporate and the other Partners and their Related Bodies Corporate will carry
on and may carry on business and activities which relate directly or indirectly
to the Partnership Business and any similar business. No Partner shall be
required to declare its interest in those businesses or activities or shall be
required to limit its activity or involvement in the Partnership Business or any
potential Partnership Business because of those other businesses or activities.
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6. GENERAL PARTNER
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6.1 PARTNERSHIP BUSINESS
The General Partner will be solely responsible for the management and direction
of the Partnership Business.
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6.2 GENERAL PARTNER'S BUSINESS
The General Partner must engage only in the conduct of the Partnership Business.
6.3 GENERAL PARTNER'S AUTHORITY
The General Partner may in accordance with the power conferred on it under
clause 6.1 exercise such powers and discretions and is authorised to enter into
such contracts binding on the Partners and the Partnership Property as it in its
reasonably held opinion considers may be necessary in carrying on the
Partnership Business.
6.4 GENERAL PARTNER REPRESENTATIVE
The General Partner may, by written notice to the other Partners appoint one or
more Representatives to carry out its functions and obligations under this Deed
including, without limitation, to confer on those Representatives the power to
execute on behalf of the General Partner such instruments as may be considered
necessary or desirable in relation to the conduct of the Partnership Business.
6.5 ACCOUNTS
(a) The General Partner shall keep comprehensive, true and accurate
records and accounts of the affairs of the Partnership, including
all income and expenses of the Partnership and shall procure the
preparation of all Partnership taxation returns.
(b) The General Partner shall maintain the Partnership accounts and all
other records and statements in relation to the Partnership
Business in accordance with Accounting Standards.
(c) The General Partner shall retain records required to be
retained by law in the manner (if any) and for the period
prescribed by law.
(d) The General Partner shall prepare:
(i) as soon as practicable, but in any event no later than
28 days after the end of each calendar quarter, a
detailed profit and loss account, balance sheet and
cashflow statement, analysis of Capital Contributions
and revenue, a review of the Budget together with
a reconciliation of results with the Budget for the
corresponding period, and if considered necessary a
statement of the source and application of funds for
such period; and
(ii) as soon as practicable but in any event no later than
45 days after the end of each period of 12 months (or
such shorter periods as is appropriate in respect of
the relevant Financial Year) ending on the last day of
each Financial Year, accounts reflecting the results
for that Financial Year of all transactions on behalf
of the Partners during and at the end of the relevant
Financial Year, including:
(A) a balance sheet and statement of income and
expenditure for the Financial Year;
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(B) a statement of the source and application of
funds for the Financial Year; and
(C) a statement of each Partner's Capital
Accounts,
and shall arrange for such accounts to be audited by the Auditors.
6.6 BUSINESS PLAN AND BUDGET
(a) The General Partner shall prepare a Business Plan and Budget to
apply to the Partnership Business for the period from the
Commencement Date and ending on 31 December 1999, no later than 90
days after the Commencement Date.
(b) The General Partner shall prepare a Business Plan and Budget for
each subsequent Financial Year by no later than the end of March in
the calendar year in which the Financial Year begins.
(c) Each proposed Business Plan shall contain:
(i) the business plan for the Partnership in the Financial
Year;
(ii) details of any proposed new agreements to be entered
into; and
(iii) proposals for any other activities in connection with
the Partnership Business.
(d) Each proposed Budget shall contain:
(i) a budget divided into months showing revenues and
expenses for the Partnership;
(ii) forecast of cashflow for the Financial Year; and
(iii) a projected balance sheet for the Partnership at the
commencement and end of the Financial Year.
6.7 BANK ACCOUNT
(a) The General Partner must if requested to do so by the Security
Trustee open and maintain a Partnership bank account with the
Security Trustee or a Related Body Corporate of the Security
Trustee while the Financing Documents remain binding on the
Partnership.
(b) Subject to the Financing Documents, the General Partner must cause
all Partnership Property comprising money and negotiable
instruments to be deposited into a bank account.
(c) All cheques drawn on a bank account must be signed by the General
Partner or its Representative.
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6.8 AUDITOR
(a) The General Partner shall appoint an internationally recognised
firm of Chartered Accountants or a partner of such a firm to act
as auditor of the Partnership;
(b) The auditor shall not be removed from the office of auditor without
the consent of the Partners;
(c) If the office of auditor becomes vacant then the General Partner
must as soon as possible thereafter appoint another person or firm
as auditor.
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7. LIMITED PARTNERS
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7.1 LIMITED PARTNERS AND MANAGEMENT
No Limited Partner shall take part in the management of the Partnership
Business.
7.2 CHANGE OF STATUS
A Limited Partner which becomes liable under the Act as if it were a general
partner under the Act, shall not become a General Partner for the purposes of
this Deed and shall not be entitled to exercise any of the management or voting
or approval or access to the information rights of the General Partner under
this Deed but shall be subject to all of the obligations and liabilities of a
general partner under the Act and such Partner shall only have the rights of a
Limited Partner under this Deed.
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8. EXPENSES
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The General Partner shall be reimbursed for all reasonable costs and expenses
properly incurred on Partnership Business including the reasonable costs and
expenses actually incurred by the General Partner in carrying out its management
functions and reporting duties under this Deed.
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9. CAPITAL
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9.1 CAPITAL ACCOUNT
A Capital Account shall be established and maintained for each Partner during
the term of the Partnership. Any Capital Contribution of a Partner shall be
credited to the Capital Account of that Partner. Any withdrawal or repayment of
capital shall be debited to the Capital Account.
9.2 CAPITAL CONTRIBUTION
(a) Each Partner must on the Commencement Date contribute the amount
appearing opposite that Partner's name in the Schedule as its
capital contribution on that date.
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(b) Each Partner shall on or as soon as practicable after the Success
Date contribute the amount or the property appearing opposite that
Partner's name in the Schedule as its capital contribution on that
date.
9.3 PARTNERSHIP PROPERTY
All Partnership Property shall belong to the Partners jointly in proportion to
their respective Ownership Percentages from time to time.
9.4 NO SEPARATE PARTNERS ASSETS
To the extent permitted by law, and otherwise in equity, all Partnership
Property is and shall be held by the Partners as partnership property. If the
ownership of any Partnership Property is registered or recorded in the name of
less than all the Partners, then each Partner in whose name ownership is
registered or recorded holds the property for the benefit of all the Partners as
Partnership Property.
9.5 WITHDRAWAL OF CAPITAL
Subject to the terms of the Financing Documents and except as expressly provided
in this Deed, no Partner may withdraw capital from the Partnership.
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10. PROFITS AND LOSSES
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10.1 ALLOCATION
(a) The net profit of the Partnership as determined at the end of each
Financial Year shall be divided between the Partners in proportion
to their respective Ownership Percentages from time to time.
(b) Any losses of the Partnership as determined at the end of each
Financial Year shall be borne by the Partners in the same
proportion as those in which they would have been entitled to share
in the net profits for a Financial Year.
(c) Any adjustments to take account to alterations to profit
entitlements occurring during any Financial Year shall be effected
on the basis that an equal amount of net profit (or loss as the
case may be) is derived on each day of that Financial Year.
10.2 ALLOCATION OF PROFITS
(a) Any amount determined to be the net profits or losses of a
Partner shall be allocated to the Capital Account of that
Partner.
(b) The Partners agree not to take any action to enforce or obtain
payment of any distributions in respect of their Ownership
Percentage in contravention of the provisions of the Financing
Documents and agree that, should they receive any such payment,
they shall promptly pay the same over to the Partnership.
14
<PAGE>
- --------------------------------------------------------------------------------
11. DEALING IN PARTNERSHIP INTERESTS
- --------------------------------------------------------------------------------
11.1 GENERAL PROHIBITION
No Partner may Dispose of or Encumber the whole or any part of its Partnership
Interest without:
(a) the prior written consent of the other Partners; and
(b) in accordance with the Financing Documents.
Before any person acquires an interest in the Partnership or any Partnership
Property in its capacity as a Partner that person must execute a deed in favour
of the Partners in such form as the General Partner may require.
11.2 NEW PARTNERS
No person may be admitted as a partner in the Partnership without the prior
written consent of the Partners.
- --------------------------------------------------------------------------------
12. DURATION AND DISSOLUTION
- --------------------------------------------------------------------------------
12.1 DURATION
(a) Subject to the Act and this clause 12, the Partnership shall
continue for so long as the Partnership Business is carried on or
until the General Partner decides to dissolve the Partnership. The
General Partner cannot dissolve the Partnership while the Financing
Documents remain in place except with the consent of the Security
Trustee.
(b) Except as provided in this clause 12, the Partners agree that the
Partnership will not be dissolved upon the happening of any of the
events set out in the Act.
(c) The Partnership shall dissolve and commence winding up and
liquidating upon an Insolvency Event occurring in respect of a
Partner, provided, however, a dissolution shall not occur, and the
Partnership shall not be required to be wound up, if, within 90
days after such event, the General Partner gives notice in writing
to all Partners of the continuation of the Partnership, at a time
when there is at least one general partner and one limited partner
to continue the Partnership Business.
12.2 DISSOLUTION
(a) On the dissolution of the Partnership, the General Partner shall
use all reasonable endeavours to realise and get in all the
Partnership Property and shall apply the Partnership Property in
meeting the debts and liabilities of the Partnership and then in
repaying the Capital Accounts. If any excess remains after paying
15
<PAGE>
such debts and liabilities and the Capital Accounts, it shall be
divided between the Partners in relation to their respective
Ownership Percentages at the date of dissolution.
(b) The General Partner shall, as soon as practicable, lodge with the
Office of Fair Trading a notice of the dissolution or cessation,
specifying the date on which it took effect.
(c) The notice shall be in the form approved by the Office of Fair
Trading and contain the particulars required by the regulations or
the approved form of notice.
12.3 DISSOLUTION NOT AVAILABLE IN CERTAIN CASES
Under this Deed:
(a) a Limited Partner is not entitled to dissolve the Partnership by
notice; and
(b) the General Partners or the Limited Partners are not entitled to
dissolve the Partnership because a Limited Partner has allowed the
Limited Partner's share of the Partnership Property to be charged
for the Limited Partner's separate debts or obligations.
12.4 WINDING UP
If the affairs of the Partnership are to be wound up by the Partners with a view
to its dissolution, the winding up is to be carried out by the General Partner
unless a Court otherwise orders.
- --------------------------------------------------------------------------------
13. INDEMNITY
- --------------------------------------------------------------------------------
Subject to clause 3, any Partner committing a breach of this Deed indemnifies
the other Partners from and against all losses, damages, actions, proceedings,
costs and expenses arising out of such breach.
- --------------------------------------------------------------------------------
14. RESOLUTION OF DISPUTES
- --------------------------------------------------------------------------------
14.1 REFERENCE TO REPRESENTATIVES
If any dispute arises in connection with this Deed, the dispute shall first be
referred to senior executive officers of the disputing parties to use their best
efforts to arrive at an amicable solution to such dispute as soon as
practicable. The disputing parties agree to provide to each other such
information as they may reasonably require to determine the issues relevant to a
dispute.
14.2 EXPERT
If any dispute is not resolved pursuant to clause 14.1, within 15 days after
notice from one of the disputing parties to the other disputing parties of its
desire to have the same resolved, then such dispute shall, if the disputing
16
<PAGE>
parties can agree on the expert, be referred to or settled by an expert in
accordance with the Rules for Expert Determination of the Australian Commercial
Disputes Centre. The expert shall be an independent person with appropriate
qualifications and experience and will be selected by agreement between the
parties to the dispute. The expert shall act as an expert and not as an
arbitrator. The expert shall have power to request any of the disputing parties
to provide him with such statements (which shall be written unless otherwise
specifically required), documents or information as he may determine. The expert
shall, within 30 days after being requested by any disputing party to do so,
give written notice of his decision to the disputing parties and his decision
which shall be final and binding (save in the case of manifest error) on the
parties to the dispute who will give effect to the decision forthwith. Fees of
the expert shall be payable by such person as the expert may determine or, in
the absence of any such determination, equally by the parties in dispute.
14.3 REFERENCE TO COURTS
(a) If the parties to a dispute have not within 30 days of the
expiration of the 15 day period referred to in clause 14.2 (or such
further period as the parties to the dispute may agree) appointed
an expert to determine the dispute, any party to the dispute shall
be entitled to refer any matter in dispute to the Courts having
jurisdiction in respect of this Deed for determination.
(b) Nothing contained in this clause 14 shall prevent or restrict a
party from seeking urgent interlocutory relief from any court of
competent jurisdiction.
14.4 CONTINUED PERFORMANCE REQUIRED
Each party to a dispute must continue to perform its obligations under this Deed
despite the existence of a dispute.
- --------------------------------------------------------------------------------
15. CONFIDENTIALITY
- --------------------------------------------------------------------------------
15.1 PROVISIONS TO REMAIN CONFIDENTIAL
Subject to clause 15.2 and 15.3 the Partners must not disclose or announce to
any person and must not permit or procure any other person to disclose or
announce to any person the existence or details of negotiations leading to this
Deed, the provisions of this Deed or any matters relating to this Deed.
15.2 PERMITTED DISCLOSURES
A Partner may make or permit or procure another person to make disclosures:
(a) to its employees, officers, professional and financial
advisers and bankers as the Partner reasonably thinks necessary
but only on a strictly confidential basis; and
17
<PAGE>
(b) if disclosure is required by law, in which event the party required
to make the disclosure shall use its best endeavours to ensure that
the form and terms of that disclosure have first been notified to
the other Partners and the other Partners have had a reasonable
opportunity to comment on the form and terms.
15.3 ANNOUNCEMENTS
A Partner may make announcements or statements at any time in the form and on
the terms previously agreed by the Partners in writing.
15.4 SURVIVAL OF OBLIGATION
This clause will survive the termination of this Deed.
- --------------------------------------------------------------------------------
16. NOTICES
- --------------------------------------------------------------------------------
16.1 NOTICES
A notice given under this Deed (including, but not limited to a consent,
approval, nomination, request, demand or other communication):
(a) must be in legible writing and in English;
(b) must be addressed to the recipient at the address or facsimile
number set out below or to any other address or facsimile number as
a party may notify to the other parties:
(i) to the General Partner:
Address: Level 49
525 Collins Street
Melbourne Vic 3000
Attention: The Directors
(ii) to each Limited Partner
Address: Kempson House
Camomile Street
London EC 3A 7AN
Attention: The Directors
(c) may be sent to the recipient by hand, telegram, prepaid post
(airmail if outside Australia) or facsimile; and
(d) must be signed by an Authorised Officer or under the common seal
of a sender.
18
<PAGE>
16.2 MODE OF SERVICE
Without limiting any other means by which a party may be able to prove that a
notice has been received by another party, a notice is deemed to be received:
(a) if sent by hand or telegram, when left at the address of the
recipient;
(b) if sent by pre-paid post, five days (if posted within Australia to
an address in Australia) or 10 days (if posted from one country to
another) after the date of posting; or
(c) if sent by facsimile, on receipt by the sender of an acknowledgment
or transmission report generated by the machine from which the
facsimile was sent indicating that the whole facsimile was sent to
the recipient's facsimile number
but if a notice is served by hand or by telegram, or is sent by the sender's
facsimile on a day which is not a Business Day, or after 5.00 pm on a Business
Day, that notice is deemed to be received by the recipient at 9.00 am on the
first Business Day after that day.
- --------------------------------------------------------------------------------
17. MISCELLANEOUS
- --------------------------------------------------------------------------------
17.1 GOVERNING LAW
This Deed is governed by and is construed in accordance with the laws of the
State of Victoria.
17.2 JURISDICTION
The parties to this Deed irrevocably and unconditionally:
(a) submit to the non-exclusive jurisdiction of the courts of the State
of Victoria;
(b) waive any claim or objection based on absence of jurisdiction or
inconvenient forum; and
(c) agree that a document required to be served in proceedings about
this Deed may be served:
(i) under clause 16; or
(ii) in any other way permitted by law.
17.3 INVALIDITY
If, in a particular jurisdiction, a provision of this Deed is invalid or
unenforceable:
(a) it shall be read down or severed in that jurisdiction only to the
extent of the invalidity or unenforceability; and
19
<PAGE>
(b) it does not affect the validity or enforceability of:
(i) that provision in another jurisdiction; or
(ii) the remaining provisions in another jurisdiction or in
that jurisdiction, if they are self sustaining and
capable of separate enforcement without regard to the
read down or severed portions.
17.4 WAIVER AND EXERCISE OF RIGHTS
(a) A waiver of a provision of or right arising under this Deed
(including this clause) is effective only if it is in writing
signed by an Authorised Officer of the relevant party to this Deed.
(b) A waiver is effective only in the specific instance and for the
specific purpose for which it is
given.
(c) A single or partial exercise of a right by a party to this Deed
does not preclude another or further exercise of that right or the
exercise of another right.
(d) Failure to exercise or delay in exercising a right does not
prevent its exercise or operate as a
waiver.
(e) A party is not liable to any other party for any loss, cost or
expense caused or contributed to by the waiver, exercise, attempted
exercise, failure to exercise or delay in the exercise of a right.
17.5 SURVIVAL OF INDEMNITIES
(a) Each indemnity contained in this Deed is a continuing obligation of
the person making it and will survive termination of this Deed or
dissolution of the Partnership.
(b) It is not necessary for a party to incur expense or make
payment before enforcing a right of indemnity conferred by this
Deed.
17.6 AMENDMENTS
This Deed may be amended only by a written document signed by all of the
parties.
17.7 COUNTERPARTS
This Deed may be signed in two or more counterparts and all counterparts taken
together constitute one document.
17.8 FURTHER ACTS
The parties to this Deed agree to undertake such further acts and execute such
further documents as are reasonably required in order to implement this Deed.
20
<PAGE>
17.9 ENTIRE AGREEMENT
This Deed together with any documents referred to in this Deed or executed
contemporaneously in connection with this Deed comprises the entire agreement
between the parties with respect to the subject matter of this Deed and
supersedes all prior understandings, agreements, representations and
correspondence.
EXECUTED as a Deed:
SIGNED, SEALED AND DELIVERED )
by )
TU AUSTRALIA HOLDINGS (AGP) PTY LIMITED )
)
/s/ Robert S. Shapard /s/ Anthony W. Kelly
- ---------------------------------- -----------------------------------
Signature of Director Signature of Secretary
Robert S. Shapard Anthony W. Kelly
- ---------------------------------- -----------------------------------
Name of Director (please print) Name of Secretary (please print)
SIGNED, SEALED AND DELIVERED )
for and on behalf of )
TU AUSTRALIA HOLDINGS NO 1 LIMITED )
by a duly appointed attorney )
in the presence of: )
/s/ Howard Fraser /s/ Kenneth Gray
- ---------------------------------- -----------------------------------
Signature of Witness Signature of Attorney (I have no
notice of revocation of the power
of attorney under which I sign this
document)
Howard Fraser Kenneth Gray
- ---------------------------------- -----------------------------------
Name of Witness (please print) Name of Attorney (please print)
21
<PAGE>
SIGNED, SEALED AND DELIVERED )
for and on behalf of )
TU AUSTRALIA HOLDINGS NO 2 LIMITED )
by a duly appointed attorney )
in the presence of: )
/s/ Howard Fraser /s/ Kenneth Gray
- ---------------------------------- -----------------------------------
Signature of Witness Signature of Attorney (I have no
notice of revocation of the power
of attorney under which I sign this
document)
Howard Fraser Kenneth Gray
- ---------------------------------- -----------------------------------
Name of Witness (please print) Name of Attorney (please print)
22
<PAGE>
SCHEDULE
PARTNER INTERESTS
PARTNER OWNERSHIP CAPITAL CONTRIBUTION
PERCENTAGE
Commencement Success Date
Date
General Partner 0.5% A$1.00
Partner 1 49.75% A$50.00 A$440 million *
Partner 2 49.75% A$50.00 A$440 million *
Total Ownership Percentage
* or securities issued by TU Australia Holdings Pty Limited or a
Related Body Corporate having a face value of not less than A$440
million, or a combination of such cash and securities.
23
EXHIBIT 3(B)
DEED OF AMENDMENT
between
TU AUSTRALIA HOLDINGS (AGP) PTY LIMITED
(ACN 086 014 931)
TU AUSTRALIA HOLDINGS NO.1 LIMITED
(No. 3679715)
TU AUSTRALIA HOLDINGS NO.2 LIMITED
(No. 3679712)
BAKER & MC.KENZIE
Solicitors
Level 39, Rialto Level 26, AMP Centre
525 Collins Street 50 Bridge Street
MELBOURNE VIC 3000 SYDNEY NSW 2000
Tel: (03) 9617-4200 Tel: (02) 9225-0200
Fax: (03) 9614-2103 Fax: (02) 9223-7711
<PAGE>
DEED OF AMENDMENT
THIS DEED is made/signed on the 23rd day of February , 1999.
BETWEEN
TU AUSTRALIA HOLDINGS (AGP) PTY LIMITED (ACN 086 014 931) of Level 49, 525
Collins Street, Melbourne, Victoria 3000;
TU AUSTRALIA HOLDINGS NO.1 LIMITED (No. 3679715) of Kempson House,
Camomile Street, London, EC3A 7AN;
AND
TU AUSTRALIA HOLDINGS NO.2 LIMITED (No. 3679712) of Kempson House,
Camomile Street, London, EC3A 7AN.
(collectively the "Partners").
RECITALS
A. The Partners have previously entered into a Limited Partnership Deed
("the Deed") dated 27 January 1999.
B. The Partners have agreed to make the following amendments to the Deed.
C. The Partners acknowledge that the reference to the "Junior Banks" in
recital D of the Deed is intended to be a reference to the "Junior
Financier" under the Security Trust Deed and that the Deed should be
construed accordingly.
OPERATIVE PROVISIONS
- --------------------------------------------------------------------------------
1. AMENDMENTS TO DEED
- --------------------------------------------------------------------------------
With effect on and from the date of this Deed, the Deed shall be amended as
follows:
(a) The definition for Security Trust Deed be amended as follows:
"SECURITY TRUST DEED" means the Security Trust Deed to be dated on
or about 23 February 1999 between General Partner, TU Australia
Holdings Pty Ltd, TUA (No. 8) Pty Ltd, TUA (No. 9) Pty Ltd, Texas
Utilities Australia Pty Ltd, TUA (No. 10) Pty Ltd and TUA (No. 11)
Pty Ltd, Eastern Energy Limited, Texas Utilities Company, the
1
<PAGE>
financier specified therein as Junior Financier, National
Australia Bank Limited as Agent and Security Trustee;"
(b) Clause 2.2 (a) is deleted and the following is inserted in its
place:
"(a) the name of the Partnership, being "TU Australia
Holdings (Partnership) Limited Partnership";".
(c) In the Schedule to the Deed, replace the number "A$440 million"
under the heading "Success Date" in each place that it appears with
"A$462.5 million".
(d) In the Schedule to the Deed, replace the number "A$440
million" on the second line of the last paragraph in the schedule
with "A$462.5 million".
EXECUTED as a Deed.
SIGNED, SEALED AND DELIVERED )
for and on behalf of )
TU AUSTRALIA HOLDINGS (AGP) PTY LTD )
)
by a duly appointed attorney )
in the presence of: )
/s/ A. Woods /s/ Christopher Saxon
- ---------------------------------- -----------------------------------
Signature of Witness Signature of Attorney (I have no
notice of revocation of the power
of attorney under which I sign this
document)
Ashley Woods Christopher Saxon
- ---------------------------------- -----------------------------------
Name of Witness (please print) Name of Attorney (please print)
2
<PAGE>
SIGNED, SEALED AND DELIVERED )
for and on behalf of )
TU AUSTRALIA HOLDINGS NO.1 LIMITED )
by a duly appointed attorney )
in the presence of: )
/s/ A. Woods /s/ Michael J. Kunstler
- ---------------------------------- -----------------------------------
Signature of Witness Signature of Attorney (I have no
notice of revocation of the power
of attorney under which I sign this
document)
Ashley Woods Michael J. Kunstler
- ---------------------------------- -----------------------------------
Name of Witness (please print) Name of Attorney (please print)
SIGNED, SEALED AND DELIVERED )
for and on behalf of )
TU AUSTRALIA HOLDINGS NO.2 LIMITED )
by a duly appointed attorney )
in the presence of: )
/s/ A. Woods /s/ Michael J. Kunstler
- ---------------------------------- -----------------------------------
Signature of Witness Signature of Attorney (I have no
notice of revocation of the power
of attorney under which I sign this
document)
Ashley Woods Michael J. Kunstler
- ---------------------------------- -----------------------------------
Name of Witness (please print) Name of Attorney (please print)
3
EXHIBIT 4(A)
------------------------------------------
TXU AUSTRALIA HOLDINGS (PARTNERSHIP) LIMITED PARTNERSHIP
ISSUER
TO
THE BANK OF NEW YORK,
TRUSTEE
---------
INDENTURE
(FOR UNSECURED SUBORDINATED DEBT SECURITIES)
DATED AS OF __________ ___, 2000
------------------------------------------
<PAGE>
TABLE OF CONTENTS
RECITAL OF THE COMPANY........................................................1
ARTICLE ONE Definitions and Other Provisions of General Application........1
SECTION 101. Definitions...............................................1
Act.............................................................2
Additional Amounts..............................................2
Affiliate.......................................................2
Authenticating Agent............................................2
Authorized Officer..............................................2
Board of Directors..............................................2
Board Resolution................................................2
Business Day....................................................2
Commission......................................................2
Company.........................................................3
Company Request" or "Company Order..............................3
Corporate Trust Office..........................................3
corporation.....................................................3
Deed of Common Terms............................................3
Defaulted Interest..............................................3
Dollar" or "$...................................................3
Eligible Obligations............................................3
Event of Default................................................3
General Partner.................................................3
Governmental Authority..........................................3
Government Obligations..........................................3
Holder..........................................................4
Senior Indebtedness.............................................4
Indenture.......................................................4
Insolvency Event................................................4
Interest Payment Date...........................................4
Judgment Currency...............................................4
Jurisdiction of Incorporation...................................4
Maturity........................................................4
Officer's Certificate...........................................4
Opinion of Counsel..............................................4
Outstanding.....................................................5
Partnership Deed................................................6
Paying Agent....................................................6
Person..........................................................6
Place of Payment................................................6
Predecessor Security............................................6
Redemption Date.................................................6
Redemption Price................................................6
Regular Record Date.............................................6
Required Currency...............................................6
Responsible Officer.............................................6
<PAGE>
Securities......................................................6
Security Register" and "Security Registrar......................6
Senior Creditor.................................................6
Senior Debt Trustee.............................................6
Senior Indebtedness.............................................7
Special Record Date.............................................7
Stated Interest Rate............................................7
Stated Maturity.................................................7
Tranche.........................................................7
Trust Indenture Act.............................................7
Trustee.........................................................7
United States...................................................7
SECTION 102. Compliance Certificates and Opinions......................7
SECTION 103. Form of Documents Delivered to Trustee....................8
SECTION 104. Acts of Holders...........................................9
SECTION 105. Notices, Etc. to Trustee and Company.....................10
SECTION 106. Notice to Holders of Securities; Waiver..................11
SECTION 107. Conflict with Trust Indenture Act........................12
SECTION 108. Effect of Headings and Table of Contents.................12
SECTION 109. Successors and Assigns...................................12
SECTION 110. Separability Clause......................................12
SECTION 111. Benefits of Indenture....................................12
SECTION 112. Governing Law............................................12
SECTION 113. Legal Holidays...........................................12
SECTION 114. Consent to Jurisdiction; Appointment of Agent for
Service; Judgment Currency; Waiver of Immunities.........13
SECTION 115. Obligations of Each Partner..............................14
ARTICLE TWO Security Forms...........................................15
SECTION 201. Forms Generally..........................................15
SECTION 202. Form of Trustee's Certificate of Authentication..........15
ARTICLE THREE The Securities...........................................15
SECTION 301. Amount Unlimited; Issuable in Series.....................15
SECTION 302. Denominations............................................19
SECTION 303. Execution, Authentication, Delivery and Dating...........19
SECTION 304. Temporary Securities.....................................20
SECTION 305. Registration, Registration of Transfer and Exchange......21
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.........22
SECTION 307. Payment of Interest; Interest Rights Preserved...........22
SECTION 308. Persons Deemed Owners....................................23
SECTION 309. Cancellation by Security Registrar.......................24
SECTION 310. Computation of Interest..................................24
SECTION 311. Extension of Interest Payment, Deferral of
Interest Payment.........................................24
SECTION 312. Payment to Be in Proper Currency.........................24
ARTICLE FOUR Redemption of Securities.................................25
SECTION 401. Applicability of Article.................................25
SECTION 402. Election to Redeem; Notice to Trustee....................25
<PAGE>
SECTION 403. Selection of Securities to Be Redeemed...................25
SECTION 404. Notice of Redemption.....................................26
SECTION 405. Securities Payable on Redemption Date....................27
SECTION 406. Securities Redeemed in Part..............................27
ARTICLE FIVE Sinking Funds............................................27
SECTION 501. Applicability of Article.................................27
SECTION 502. Satisfaction of Sinking Fund Payments with Securities....28
SECTION 503. Redemption of Securities for Sinking Fund................28
ARTICLE SIX Covenants................................................29
SECTION 601. Payment of Principal, Premium and Interest...............29
SECTION 602. Maintenance of Office or Agency..........................29
SECTION 603. Money for Securities Payments to Be Held in Trust........29
SECTION 604. Limited Partnership Existence............................31
SECTION 605. Maintenance of Properties................................31
SECTION 606. Annual Officer's Certificate as to Compliance............31
SECTION 607. Waiver of Certain Covenants..............................31
SECTION 608. Restriction on Payment of Dividends......................32
ARTICLE SEVEN Satisfaction and Discharge...............................32
SECTION 701. Satisfaction and Discharge of Securities.................32
SECTION 702. Satisfaction and Discharge of Indenture..................34
SECTION 703. Application of Trust Money...............................34
ARTICLE EIGHT Events of Default; Remedies..............................35
SECTION 801. Events of Default........................................35
SECTION 802. Declaration of Acceleration; Rescission and Annulment....37
SECTION 803. Collection of Indebtedness and Suits for Enforcement
by Trustee...............................................38
SECTION 804. Trustee May File Proofs of Claim.........................38
SECTION 805. Trustee May Enforce Claims Without Possession
of Securities............................................39
SECTION 806. Application of Money Collected...........................39
SECTION 807. Limitation on Suits......................................40
SECTION 808. Right of Holders to Receive Principal, Premium
and Interest.............................................40
SECTION 809. Restoration of Rights and Remedies.......................40
SECTION 810. Rights and Remedies Cumulative...........................41
SECTION 811. Delay or Omission Not Waiver.............................41
SECTION 812. Control by Holders of Securities.........................41
SECTION 813. Waiver of Past Defaults..................................41
SECTION 814. Undertaking for Costs....................................42
SECTION 815. Waiver of Stay or Extension Laws.........................42
ARTICLE NINE The Trustee..............................................42
SECTION 901. Certain Duties and Responsibilities......................42
SECTION 902. Notice of Defaults.......................................43
SECTION 903. Certain Rights of Trustee................................43
SECTION 904. Not Responsible for Recitals or Issuance of Securities...44
SECTION 905. May Hold Securities......................................44
SECTION 906. Money Held in Trust......................................44
<PAGE>
SECTION 907. Compensation and Reimbursement...........................45
SECTION 908. Disqualification; Conflicting Interests..................45
SECTION 909. Corporate Trustee Required; Eligibility..................46
SECTION 910. Resignation and Removal; Appointment of Successor........46
SECTION 911. Acceptance of Appointment by Successor...................48
SECTION 912. Merger, Conversion, Consolidation or Succession to
Business.................................................49
SECTION 913. Preferential Collection of Claims Against Company........49
SECTION 914. Co-trustees and Separate Trustees........................49
SECTION 915. Appointment of Authenticating Agent......................50
ARTICLE TEN Holders' Lists and Reports by Trustee and Company........52
SECTION 1001. Lists of Holders.........................................52
SECTION 1002. Reports by Trustee and Company...........................52
ARTICLE ELEVEN Consolidation, Merger, Conveyance or Other Transfer......53
SECTION 1101. Company May Consolidate, Etc., Only on Certain Terms.....53
SECTION 1102. Successor Corporation Substituted........................54
SECTION 1103. Merger into Company or Guarantor; Certain Transfers......54
SECTION 1104. Consolidation Defined....................................54
ARTICLE TWELVE Supplemental Indentures..................................54
SECTION 1201. Supplemental Indentures Without Consent of Holders.......54
SECTION 1202. Supplemental Indentures With Consent of Holders..........56
SECTION 1203. Execution of Supplemental Indentures.....................57
SECTION 1204. Effect of Supplemental Indentures........................57
SECTION 1205. Conformity With Trust Indenture Act......................57
SECTION 1206. Reference in Securities to Supplemental Indentures.......57
SECTION 1207. Modification Without Supplemental Indenture..............58
ARTICLE THIRTEEN Meetings of Holders; Action Without Meeting..............58
SECTION 1301. Purposes for Which Meetings May Be Called................58
SECTION 1302. Call, Notice and Place of Meetings.......................58
SECTION 1303. Persons Entitled to Vote at Meetings.....................59
SECTION 1304. Quorum; Action...........................................59
SECTION 1305. Attendance at Meetings; Determination of Voting
Rights; Conduct and Adjournment of Meetings..............60
SECTION 1306. Counting Votes and Recording Action of Meetings..........61
SECTION 1307. Action Without Meeting...................................61
ARTICLE FOURTEEN Immunity of Stockholders, Officers and Directors
of the General Partner...................................61
SECTION 1401. No of Individuals or Stockholders........................61
ARTICLE FIFTEEN Subordination of Securities..............................62
SECTION 1501. Securities Subordinate to Senior Indebtedness............62
SECTION 1502. Payment Over of Proceeds of Securities...................63
SECTION 1503. Disputes with Holders of Certain Senior Indebtedness.....65
SECTION 1504. Subrogation..............................................65
SECTION 1505. Obligation of the Company Unconditional..................65
<PAGE>
SECTION 1506. Priority of Senior Indebtedness Upon Maturity............66
SECTION 1507. Trustee as Holder of Senior Indebtedness.................66
SECTION 1508. Notice to Trustee to Effectuate Subordination............66
SECTION 1509. Modification, Extension, etc. of Senior Indebtedness.....67
SECTION 1510. Trustee Has No Fiduciary Duty to Holders of
Senior Indebtedness......................................67
SECTION 1511. Paying Agents Other Than the Trustee.....................67
SECTION 1512. Rights of Holders of Senior Indebtedness Not Impaired....67
SECTION 1513. Effect of Subordination Provisions; Termination..........67
Testimonium..................................................................
Signatures and Seals.........................................................
Acknowledgements.............................................................
<PAGE>
TXU AUSTRALIA HOLDINGS (PARTNERSHIP) LIMITED PARTNERSHIP
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939
AND INDENTURE, DATED AS OF ________, 2000.
TRUST INDENTURE ACT SECTION INDENTURE SECTION
ss.310 (a)(1)........................................... 909
(a)(2)........................................... 909
(a)(3)........................................... 914(b)
(a)(4)........................................... Not Applicable
(b).............................................. 908
................................................. 910
ss.311 (a) ............................................ 913
(b).............................................. 913
(c).............................................. 913
ss.312 (a) ............................................ 1001
(b).............................................. 1001
(c).............................................. 1001
ss.313 (a) ............................................ 1002
(b).............................................. 1002
(c).............................................. 1002
(d).............................................. 1002
ss.314 (a) ............................................ 1002
(a)(4)........................................... 606
(b).............................................. Not Applicable
(c)(1)........................................... 102
(c)(2)........................................... 102
(c)(3)........................................... Not Applicable
(d).............................................. Not Applicable
(e).............................................. 102
ss.315 (a) ............................................ 901
................................................. 903
(b).............................................. 902
(c).............................................. 901
(d).............................................. 901
(e).............................................. 814
ss.316 (a) ............................................ 812
................................................. 813
(a)(1)(A)........................................ 802
................................................. 812
(a)(1)(B)........................................ 813
(a)(2)........................................... Not Applicable
(b).............................................. 808
ss.317 (a)(1)........................................... 803
(a)(2)........................................... 804
(b).............................................. 603
ss.318 (a) ............................................ 107
<PAGE>
INDENTURE, dated as of ___________ __, 2000 BETWEEN TXU AUSTRALIA
HOLDINGS (PARTNERSHIP) LIMITED PARTNERSHIP, a limited partnership duly formed
and existing under the laws of the State of Victoria, Commonwealth of Australia
(herein called the "Company"), having its principal office at Level 17, 452
Flinders Street, Melbourne, Victoria 3000, Australia and THE BANK OF NEW YORK, a
banking corporation of the State of New York, having its principal corporate
trust office at 101 Barclay Street, Floor 21 West, New York, New York 10286, as
Trustee (herein called the "Trustee").
RECITAL OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
subordinated debentures, notes or other evidences of indebtedness (herein called
the "Securities") in an unlimited aggregate principal amount, to be issued from
time to time in one or more series as contemplated herein; and all acts
necessary to make this Indenture a valid agreement of the Company, in accordance
with its terms, have been performed.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires, capitalized terms used herein
shall have the meanings assigned to them in Article One of this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities or of any
series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all terms used herein without definition which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect
to any computation required or permitted hereunder shall mean such
accounting principles as are generally accepted in the United States at the
date of such computation or, at the election of the Company from time to
time, at the date of the execution and delivery of this Indenture;
provided, however, that in determining generally accepted accounting
<PAGE>
2
principles applicable to the Company, the Company shall, to the extent
required, conform to any order, rule or regulation of any administrative
agency, regulatory authority or other governmental body having jurisdiction
over the Company; and
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Nine, are defined in that
Article.
"ACT", when used with respect to any Holder of a Security, has the
meaning specified in Section 104.
"ADDITIONAL AMOUNTS" means amounts that may be payable with respect to
Securities of one or more series or Tranches as may be provided pursuant to
Section 301.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"CONTROL" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or through one or
more intermediaries, whether through the ownership of voting securities, by
contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.
"AUTHENTICATING AGENT" means any Person (other than the Company or an
Affiliate of the Company) authorized by the Trustee pursuant to Section 915 to
act on behalf of the Trustee to authenticate one or more series of Securities or
Tranche thereof.
"AUTHORIZED OFFICER" means the Chairman of the Board, any director,
any managing director, the President, any Vice President, the Treasurer, any
Assistant Treasurer, any authorized attorney or any other officer or agent of
the General Partner or the Company, duly authorized by a Board Resolution of the
General Partner to act on behalf of the Company in respect of matters relating
to this Indenture.
"BOARD OF DIRECTORS" means the board of directors of the General
Partner of the Company, or any committee of that board duly authorized to act in
respect of matters relating to this Indenture or its equivalent if the General
Partner of the Company has no board of directors.
"BOARD RESOLUTION" means a copy of a resolution certified by an
Authorized Officer to have been duly adopted by the Board of Directors and to be
in full force and effect on the date of such certification, and delivered to the
Trustee.
"BUSINESS DAY", when used with respect to a Place of Payment or any
other particular location specified in the Securities or this Indenture, means
any day, other than a Saturday or Sunday, which is not a day on which banking
institutions or trust companies in such Place of Payment or other location are
generally authorized or required by law, regulation or executive order to remain
closed, except as may be otherwise specified as contemplated by Section 301.
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the date of execution and delivery of this
Indenture such Commission is not existing and performing the duties now assigned
to it under the Trust Indenture Act, then the body, if any, performing such
duties at such time.
<PAGE>
3
"COMPANY" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"COMPANY REQUEST" or "COMPANY ORDER" means a written request or order
signed in the name of the Company by an Authorized Officer and delivered to the
Trustee.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution and delivery of this
instrument is located on the Floor 21W at 101 Barclay Street, New York, New York
10286.
"CORPORATION" means a corporation, association, company, partnership,
limited liability company, joint stock company or business trust.
"DEED OF COMMON TERMS" means the deed of common terms dated February
24, 1999, between the Company, National Australia Bank Limited and others, as
amended and in effect as on the date as of which this instrument was executed.
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"DOLLAR" or "$" means a dollar or other equivalent unit in such coin
or currency of the United States as at the time shall be legal tender for the
payment of public and private debts.
"ELIGIBLE OBLIGATIONS" means:
(a) with respect to Securities denominated in Dollars, Government
Obligations; or
(b) with respect to Securities denominated in a currency other than
Dollars or in a composite currency, such other obligations or instruments
as shall be specified with respect to such Securities, as contemplated by
Section 301.
"EVENT OF DEFAULT" has the meaning specified in Section 801.
"GENERAL PARTNER" means TXU Australia Holdings (AGP) Pty Ltd
(Australian Company Number 086014931), the general partner of the Company, or
any permitted successor general partner of the Company.
"GOVERNMENTAL AUTHORITY" means the government of any country or state
or of any county, municipality or other political subdivision of any of the
foregoing, or any department, agency, authority or other instrumentality of any
of the foregoing.
"GOVERNMENT OBLIGATIONS" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States and
entitled to the benefit of the full faith and credit thereof; and
(b) certificates, depositary receipts or other instruments which
evidence a direct ownership interest in obligations described in clause (a)
above or in any specific interest or principal payments due in respect
thereof; provided, however, that the custodian of such obligations or
specific interest or principal payments shall be a bank or trust company
<PAGE>
4
(which may include the Trustee or any Paying Agent) subject to Federal or
state supervision or examination with a combined capital and surplus of at
least $50,000,000; and provided, further, that except as may be otherwise
required by law, such custodian shall be obligated to pay to the holders of
such certificates, depositary receipts or other instruments the full amount
received by such custodian in respect of such obligations or specific
payments and shall not be permitted to make any deduction therefrom.
"HOLDER" means a Person in whose name a Security is registered in the
Security Register.
"INDEBTEDNESS" means all obligations of, or guaranteed or assumed by,
the Company for borrowed money, including both senior and subordinated
indebtedness for borrowed money, or for the payment of money relating to any
lease which is capitalized on the consolidated balance sheet of the Company and
its holding and operating companies in accordance with generally accepted
accounting principles as in effect from time to time, or indebtedness evidenced
by bonds, debentures, notes or other similar instruments, and in each case,
amendments, renewals, extensions, modifications and refundings of any such
indebtedness or obligations, whether existing as of the date of this Indenture
or subsequently incurred by the Company.
"INDENTURE" means this instrument as originally executed and delivered
and as it may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable
provisions hereof and shall include the terms of a particular series of
Securities established as contemplated by Section 301.
"INSOLVENCY EVENT", when used with respect to any limited partner of
the Company, has the meaning specified in the Partnership Deed.
"INTEREST PAYMENT DATE", when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"JUDGMENT CURRENCY" has the meaning specified in Section 114(c).
"JURISDICTION OF INCORPORATION" shall mean each jurisdiction in which
the Company or General Partner of the Company, as the case requires, is
incorporated, organized, formed or established.
"MATURITY", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as provided in such Security or in this Indenture, whether at the
Stated Maturity, by declaration of acceleration, upon call for redemption or
otherwise.
"OFFICER'S CERTIFICATE" means a certificate signed by an Authorized
Officer and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel for the Company, or the General Partner or other counsel acceptable to
the Trustee.
<PAGE>
5
"OUTSTANDING", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(a) Securities theretofore canceled or delivered to the Security
Registrar for cancellation;
(b) Securities deemed to have been paid in accordance with Section
701; and
(c) Securities which have been paid pursuant to Section 306 or in
exchange for or in lieu of which other Securities have been authenticated
and delivered pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the Trustee proof
satisfactory to it and the Company that such Securities are held by a bona
fide purchaser or purchasers in whose hands such Securities are valid
obligations of the Company;
provided, however, that in determining whether or not the Holders of the
- --------
requisite principal amount of the Securities Outstanding under this Indenture,
or the Outstanding Securities of any series or Tranche, have given any request,
demand, authorization, direction, notice, consent or waiver hereunder or whether
or not a quorum is present at a meeting of Holders of Securities,
(x) Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor (unless
the Company, any such obligors and any such Affiliates own all Securities
Outstanding under this Indenture, or (except for the purposes of actions to
be taken by Holders of (i) more than one series voting as a class under
Section 812 or (ii) more than one series or more than one Tranche, as the
case may be, voting as a class under Section 1202) all Outstanding
Securities of each series and each Tranche with respect to which such
request, demand, authorization, direction, notice, consent or waiver is
required, as the case may be), shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver or upon any such determination as to
the presence of a quorum, only Securities which the Trustee knows to be so
owned shall be so disregarded; provided, however, that Securities so owned
which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor; and
(y) the principal amount of any Security which is denominated in a
currency other than Dollars or in a composite currency that shall be deemed
to be Outstanding for such purposes shall be the amount of Dollars which
could have been purchased by the principal amount of such currency or
composite currency evidenced by such Security, in each case certified to
the Trustee in an Officer's Certificate, based (i) on the average of the
mean of the buying and selling spot rates quoted by three banks which are
members of the New York Clearing House Association selected by the Company
in effect at 11:00 a.m. (New York time) in The City of New York on the
fifth Business Day preceding any such determination or (ii) if on such
fifth Business Day it shall not be possible or practicable to obtain such
quotations from three such banks, on such other quotations or alternative
methods of determination which shall be as consistent as practicable with
the method set forth in (i) above;
provided, further, that, in the case of any Security the principal of which is
payable from time to time without presentment or surrender, the principal amount
of such Security that shall be deemed to be Outstanding at any time for all
<PAGE>
6
purposes of this Indenture shall be the original principal amount thereof less
the aggregate amount of principal thereof theretofore paid.
"PARTNERSHIP DEED" means the Limited Partnership Deed, dated January
27, 1999, between TXU Australia Holdings (AGP) Pty Limited, TXU Australia (LP)
No.1 Limited and TXU Australia (LP) No.2 Limited, as amended from time to time.
"PAYING AGENT" means any Person, including the Company, authorized by
the Company to pay the principal of and premium, if any, or interest, if any, on
any Securities on behalf of the Company.
"PERSON" means any individual, corporation, joint venture, trust,
limited liability partnership or other unincorporated organization or any
Governmental Authority.
"PLACE OF PAYMENT", when used with respect to the Securities of any
series, or Tranche thereof, means the place or places, specified as contemplated
by Section 301, at which, subject to Section 602, principal of and premium, if
any, and interest, if any, and Additional Amounts, if any, on the Securities of
such series or Tranche are payable.
"PREDECESSOR SECURITY" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed (to the extent
lawful) to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
"REDEMPTION DATE", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"REDEMPTION PRICE", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"REGULAR RECORD DATE" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.
"REQUIRED CURRENCY" has the meaning specified in Section 312.
"RESPONSIBLE OFFICER", when used with respect to the Trustee, means
any Vice President, Assistant Vice President, Trust Officer or other officer of
the Trustee assigned by the Trustee to the Corporation Trust Administration
Division of the Trustee (or any successor division or department of the
Trustee).
"SECURITIES" has the meaning stated in the first recital of this
Indenture and more particularly means any securities authenticated and delivered
under this Indenture.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 305.
"SENIOR CREDITOR"shall mean any holder of Senior Indebtedness.
"SENIOR DEBT TRUSTEE" means the trustee under the Deed of Common
Terms, National Australia Bank Limited (CAN 004 044 937), or any successor
trustee.
<PAGE>
7
"SENIOR INDEBTEDNESS" means all obligations (other than the
indebtedness issued under this Indenture and other equally ranking indebtedness)
of, or guaranteed or assumed by, the Company for borrowed money, including both
senior and subordinated indebtedness for borrowed money (other than the
Securities and other equally ranking indebtedness), or for the payment of money
relating to any lease which is capitalized on the consolidated balance sheet of
the Company and its holding and operating companies in accordance with generally
accepted accounting principles as in effect from time to time, or indebtedness
evidenced by bonds, debentures, notes or other similar instruments, and in each
case, amendments, renewals, extensions, modifications and refundings of any such
indebtedness or obligations, whether existing as of the date of this Indenture
or subsequently incurred by the Company unless, in the case of any particular
indebtedness, amendment, renewal, extension, modification or refunding, the
instrument creating or evidencing the same or the assumption or guarantee of the
same expressly provides that such indebtedness, amendment, renewal, extension,
modification or refunding is not superior in right of payment to or is pari
passu with the Securities. "Senior Indebtedness" shall include, without
limitation, the Indebtedness held by the Senior Creditors party to the Deed of
Common Terms.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest on the
Securities of any series means a date fixed by the Trustee pursuant to Section
307.
"STATED INTEREST RATE" means a rate (whether fixed or variable) at
which an obligation by its terms is stated to bear simple interest. Any
calculation or other determination to be made under this Indenture by reference
to the Stated Interest Rate on a Security shall be made without regard to the
effective interest cost to the Company of such Security and without regard to
the Stated Interest Rate on, or the effective cost to the Company of, any other
indebtedness in respect of which the Company's obligations are evidenced or
secured in whole or in part by such Security.
"STATED MATURITY", when used with respect to any obligation or any
installment of principal thereof or interest thereon, means the date on which
the principal of such obligation or such installment of principal or interest is
stated to be due and payable (without regard to any provisions for redemption,
prepayment, acceleration, purchase or extension); provided that, with regard to
any installment of interest, Stated Maturity shall not include any date as to
which the Company shall have elected to extend the interest payment periods or
defer the payment of interest in accordance with Section 311.
"TRANCHE" means a group of Securities which (a) are of the same series
and (b) have identical terms except as to principal amount and/or date of
issuance.
"TRUST INDENTURE ACT" means, as of any time, the Trust Indenture Act
of 1939, as amended, or any successor statute, as in effect at such time.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
with respect to one or more series of Securities pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean or include
each Person who is then a Trustee hereunder, and if at any time there is more
than one such Person, "Trustee" as used with respect to the Securities of any
series shall mean the Trustee with respect to Securities of that series.
"UNITED STATES" means the United States of America, its Territories,
its possessions and other areas subject to its political jurisdiction.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
<PAGE>
8
Except as otherwise expressly provided in this Indenture, upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall, if requested by the Trustee,
furnish to the Trustee an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action (including any covenants compliance with which constitutes a condition
precedent) have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each Person signing such certificate or opinion
has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such Person, such Person
has made such examination or investigation as is necessary to enable such
Person to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such Person,
such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
Any certificate or opinion of an officer of the General Partner of the
Company may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion are based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by any officer, employee or agent
of the Company or General Partner of the Company stating that the information
with respect to such factual matters is in the possession of the Company or
General Partner, unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous. In addition, any Opinion of Counsel may
be based (without further examination or investigation), insofar as it relates
to or is dependent upon matters covered in an Opinion of Counsel rendered by
other counsel, upon such other Opinion of Counsel, unless such counsel has
actual knowledge that the Opinion of Counsel rendered by such other counsel with
respect to the matters upon which his Opinion of Counsel may be based as
aforesaid are erroneous. If, in order to render any Opinion of Counsel provided
for herein, the signer thereof shall deem it necessary that additional facts or
matters be stated in any Officer's Certificate provided for herein, then such
certificate may state all such additional facts or matters as the signer of such
Opinion of Counsel may request.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
<PAGE>
9
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever, subsequent to the receipt by the Trustee of any Board
Resolution, Officer's Certificate, Opinion of Counsel or other document or
instrument, a clerical, typographical or other inadvertent or unintentional
error or omission shall be discovered therein, a new document or instrument may
be substituted therefor in corrected form with the same force and effect as if
originally filed in the corrected form and, irrespective of the date or dates of
the actual execution and/or delivery thereof, such substitute document or
instrument shall be deemed to have been executed and/or delivered as of the date
or dates required with respect to the document or instrument for which it is
substituted. Anything in this Indenture to the contrary notwithstanding, if any
such corrective document or instrument indicates that action has been taken by
or at the request of the Company which could not have been taken had the
original document or instrument not contained such error or omission, the action
so taken shall not be invalidated or otherwise rendered ineffective but shall be
and remain in full force and effect, except to the extent that such action was a
result of willful misconduct or bad faith. Without limiting the generality of
the foregoing, any Securities issued under the authority of such defective
document or instrument shall nevertheless be the valid obligations of the
Company entitled to the benefits of this Indenture equally and ratably with all
other Outstanding Securities, except as aforesaid.
SECTION 104. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
election, waiver or other action provided by this Indenture to be made,
given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person
or by an agent duly appointed in writing or, alternatively, may be embodied
in and evidenced by the record of Holders voting in favor thereof, either
in person or by proxies duly appointed in writing, at any meeting of
Holders duly called and held in accordance with the provisions of Article
Thirteen, or a combination of such instruments and any such record. Except
as herein otherwise expressly provided, such action shall become effective
when such instrument or instruments or record or both are delivered to the
Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments and any such record (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments and so voting
at any such meeting. Proof of execution of any such instrument or of a
writing appointing any such agent, or of the holding by any Person of a
Security, shall be sufficient for any purpose of this Indenture and
(subject to Section 901) conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section. The record of any
meeting of Holders shall be proved in the manner provided in Section 1306.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof or may be proved in any other manner which the Trustee
and the Company deem sufficient. Where such execution is by a signer acting
in a capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority.
<PAGE>
10
(c) The principal amount and serial numbers of Securities in
registered form held by any Person, and the ownership and date of holding
the same, shall be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice, consent,
election, waiver or other Act of a Holder shall bind every future Holder of
the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee
or the Company in reliance thereon, whether or not notation of such action
is made upon such Security.
(e) Until such time as written instruments shall have been delivered
to the Trustee with respect to the requisite percentage of principal amount
of Securities for the action contemplated by such instruments, any such
instrument executed and delivered by or on behalf of a Holder may be
revoked with respect to any or all of such Securities by written notice by
such Holder or any subsequent Holder, proven in the manner in which such
instrument was proven.
(f) Securities of any series, or any Tranche thereof, authenticated
and delivered after any Act of Holders may, and shall if required by the
Trustee, bear a notation in form approved by the Trustee as to any action
taken by such Act of Holders. If the Company shall so determine, new
Securities of any series, or any Tranche thereof, so modified as to
conform, in the opinion of the Trustee and the Company, to such action may
be prepared and executed by the Company and authenticated and delivered by
the Trustee in exchange for Outstanding Securities of such series or
Tranche.
(g) If the Company shall solicit from Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company
may, at its option, fix in advance a record date for the determination of
Holders entitled to give such request, demand, authorization, direction,
notice, consent, waiver or other Act, but the Company shall have no
obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the
close of business on the record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of the
Outstanding Securities have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities shall be computed as
of the record date.
SECTION 105. NOTICES, ETC. TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent,
election, waiver or other Act of Holders or other document provided or permitted
by this Indenture to be made upon, given or furnished to, or filed with, the
Trustee by any Holder or by the Company, or the Company by the Trustee or by any
Holder, shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and delivered personally to an officer or
other responsible employee of the addressee at the applicable location set forth
below or at such other location as such party may from time to time designate by
written notice, or transmitted by facsimile transmission or other direct written
electronic means to such telephone number or other electronic communications
address as the parties hereto shall from time to time designate by written
notice, or transmitted by certified or registered mail, charges prepaid, to the
applicable address set forth below or to such other address as such party may
from time to time designate by written notice:
<PAGE>
11
If to the Trustee, to:
The Bank of New York
Corporate Trust Administration, Floor 21W
101 Barclay Street
New York, New York 10286
Attention: Vice President, Corporate Trust Administration;
re TXU Australia
Telephone: (212) 815-5375
Telecopy: (212) 815-5915
If to the Company, to:
TXU Australia Holdings (Partnership) Limited Partnership
Level 17
452 Flinders Street
Melbourne, Victoria 3000 Australia
Attention: Treasurer
Telephone: 011-61-39-229-6000
Telecopy: 011-61-39-229-6112
Any communication contemplated herein shall be deemed to have been
made, given, furnished and filed if personally delivered, on the date of
delivery, if transmitted by facsimile transmission or other direct written
electronic means, on the date of receipt, and if transmitted by certified or
registered mail, on the date of receipt.
SECTION 106. NOTICE TO HOLDERS OF SECURITIES; WAIVER.
Except as otherwise expressly provided herein or as contemplated in
Section 301 with respect to the Securities of any series, where this Indenture
provides for notice to Holders of any event, such notice shall be sufficiently
given, and shall be deemed given, to Holders if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at the
address of such Holder as it appears in the Security Register, not later than
the latest date, if any, and not earlier than the earliest date, if any,
prescribed for the giving of such notice.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice to
Holders by mail, then such notification as shall be made with the approval of
the Trustee shall constitute a sufficient notification for every purpose
hereunder. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders.
Any notice required by this Indenture may be waived in writing by the
Person entitled to receive such notice, either before or after the event
otherwise to be specified therein, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
<PAGE>
12
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision of this Indenture limits, qualifies or conflicts with
another provision hereof which is required or deemed to be included in this
Indenture by, or is otherwise governed by, any of the provisions of the Trust
Indenture Act, such other provision shall control; and if any provision hereof
otherwise conflicts with the Trust Indenture Act, the Trust Indenture Act shall
control unless otherwise provided as contemplated by Section 301 with respect to
any series of Securities.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings in this Indenture and the Table of
Contents are for convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company and
Trustee shall bind their respective successors and assigns, whether so expressed
or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or the Securities shall be
held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Unless otherwise provided as contemplated by Section 301 with respect
to any series of Securities, nothing in this Indenture or the Securities,
express or implied, shall give to any Person, other than the parties hereto,
their successors hereunder, the Holders, and so long as the notice described in
Section 1513 hereof has not been given, the holders of Senior Indebtedness, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 112. GOVERNING LAW.
This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
principles of conflict of laws, except to the extent that the law of any other
jurisdiction shall be mandatorily applicable; provided however that all matters
governing the authorization by the Company of this Indenture and the Securities,
the authorization of the General Partner of the Company's actions with respect
to this Indenture and the Securities and the limited partnership and corporate
existence of the Company and the General Partner, as the case may be, will be
governed by, and construed in accordance with, the laws of the jurisdiction in
which the Company or the General Partner, as the case may be, is incorporated or
formed.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the Securities
other than a provision in the Securities of any series, or any Tranche thereof,
or the Officer's Certificate which establishes the terms of the Securities of
such series or Tranche, which specifically states that such provision shall
apply in lieu of this Section) payment of interest and Additional Amounts, if
any, or principal and premium, if any, need not be made at such Place of Payment
<PAGE>
13
on such date, but may be made on the next succeeding Business Day at such Place
of Payment, except that if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect, and in the same amount, as if made on
the Interest Payment Date or Redemption Date, or at the Stated Maturity, as the
case may be, and, if such payment is made or duly provided for on such Business
Day, no interest shall accrue on the amount so payable for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be, to such Business Day.
SECTION 114. CONSENT TO JURISDICTION; APPOINTMENT OF AGENT FOR SERVICE;
JUDGMENT CURRENCY; WAIVER OF IMMUNITIES.
(a) Consent to Jurisdiction. The Company and the General Partner each
-----------------------
irrevocably consents to the nonexclusive jurisdiction of any court of the State
of New York or any United States Federal court sitting, in each case, in the
Borough of Manhattan, The City of New York, New York, United States of America,
and any appellate court from any thereof in any suit, action or proceeding that
may be brought in connection with this Indenture or the Securities, and waives
any immunity from the jurisdiction of such courts. The Company and the General
Partner each irrevocably waives, to the fullest extent permitted by law, any
objection to any such suit, action or proceeding that may be brought in such
courts whether on the grounds of venue, residence or domicile or on the ground
that any such suit, action or proceeding has been brought in an inconvenient
forum. The Company and the General Partner each agrees, to the fullest extent
that it lawfully may do so, that final judgment in any such suit, action or
proceeding brought in such a court shall be conclusive and binding upon the
Company, and waives, to the fullest extent permitted by law, any objection to
the enforcement by any competent court in the Jurisdiction of Incorporation of
judgments validly obtained in any such court in New York on the basis of such
suit, action or proceeding; provided, however, that the Company or the General
Partner does not waive, and the foregoing provisions of this sentence shall not
constitute or be deemed to constitute a waiver of, (i) any right to appeal any
such judgment, to seek any stay or otherwise to seek reconsideration or review
of any such judgment, (ii) any stay of execution or levy pending an appeal from,
or a suit, action or proceeding for reconsideration of, any such judgment, or
(iii) any other right or remedy of the Company or the General Partner to the
extent not expressly waived in accordance with this Section 114.
(b) Appointment of Agent for Service. The Company and the General
--------------------------------
Partner each has designated and appointed Thelen Reid & Priest LLP, 40 West 57th
Street, New York, New York 10019, as its authorized agent upon which process may
be served in any suit or proceeding in any Federal or State court in the Borough
of Manhattan, The City of New York arising out of or relating to the Securities
or this Indenture, but for that purpose only, and agrees that service of process
upon said agent shall be deemed in every respect effective service of process
upon it in any such suit or proceeding in any Federal or State court in the
Borough of Manhattan, The City of New York. Such appointment shall be
irrevocable so long as any of the Securities remain Outstanding until the
appointment of a successor by the Company and the General Partner and such
successor's acceptance of such appointment. Upon such acceptance, the Company
and the General Partner shall notify the Trustee of the name and address of such
successor. The Company and the General Partner further agree to take any and all
action, including the execution and filing of any and all such documents and
instruments, as may be necessary to continue such designation and appointment of
said agent in full force and effect so long as any of the Securities shall be
Outstanding. The Trustee shall not be obligated and shall have no responsibility
with respect to any failure by the Company or the General Partner to take any
such action.
Nothing in this Section shall affect the right of the Trustee or any
Holder of any Security to serve process in any manner permitted by applicable
law or limit the right of the Trustee or any Holder of any Security to bring
proceedings against the Company in the courts of any other jurisdiction or
jurisdictions.
<PAGE>
14
(c) Judgment Currency. The Company agrees, to the fullest extent that
-----------------
it may effectively do so under applicable law, that (a) if for the purpose of
obtaining judgment in any court it is necessary to convert the sum due in
respect of the principal of, or premium or interest, if any, on the Securities
of any series from the Required Currency into a currency in which a judgment
will be rendered (the "Judgment Currency"), the rate of exchange used shall be
the rate at which, in accordance with normal banking procedures, the Trustee
could purchase the Required Currency with the Judgment Currency and (b) its
obligations under this Indenture to make payments in the Required Currency (i)
shall not be discharged or satisfied by any tender, or any recovery pursuant to
any judgment (whether or not entered in accordance with subsection (a)), in any
currency other than the Required Currency, except to the extent that such tender
or recovery shall result in the actual receipt, by the payee, of the full amount
of the Required Currency expressed to be payable in respect of such payments,
(ii) shall be enforceable as an alternative or additional cause of action for
the purpose of recovering the amount, if any by which actual receipt shall fall
short of the full amount of the Required Currency so expressed to be payable and
(iii) shall not be affected by judgment being obtained for any other sum due
under this Indenture.
(d) Waiver of Immunities. To the extent that the Company, the General
--------------------
Partner or any of their respective properties, assets or revenues may have or
may hereafter become entitled to, or have attributed to it, any right of
immunity, on the grounds of sovereignty or otherwise, from legal action, suit or
proceeding, from the giving of any relief in any thereof, from set-off or
counterclaim, from the jurisdiction of any court, from service of process, from
attachment upon or prior to judgment, from attachment in aid of execution of
judgment, or from execution of judgment, or other legal process or proceeding
for the giving of any relief or for the enforcement of any judgment, in any
jurisdiction in which proceedings may at any time be commenced, with respect to
its obligations, liabilities or any other matter under or arising out of or in
connection with this Indenture or the Securities issued hereunder, each of the
Company and the General Partner hereby irrevocably and unconditionally waives
and agrees not to plead or claim, any such immunity and consents to such relief
and enforcement. Nothing in this paragraph shall be deemed to waive any defense
(other than such immunity) available to either the Company or the General
Partner.
SECTION 115. OBLIGATIONS OF EACH PARTNER.
(a) This Indenture and the Securities are entered into and executed in
the name of the Company and are intended to bind the Partners (as defined below)
in partnership.
(b) Subject to Article Eleven, this Indenture and the Securities will
continue to bind the Partners despite the dissolution, or any change at any time
in the constitution of the Company. Notwithstanding anything contained herein to
the contrary and to the extent permitted by applicable law, the liability of TXU
Australia (LP) No. 1 Limited and TXU Australia (LP) No. 2 Limited to contribute
to the debts and obligations of the Company is subject to the Partnership Act
1958 of Victoria, Australia ("Victoria Partnership Act 1958") and is limited to
the amount shown in relation to it in the Register (as defined in the Victoria
Partnership Act 1958) as to the extent to which it is liable to contribute.
(c) The Trustee may conclusively rely on any conduct or document of,
or signed by, an Authorized Officer of the General Partner as being authorized
by and binding on each other Partner (as defined below) and the Company without
the need for any further enquiry. Any notice issued by the Trustee under and in
accordance with this Indenture or a Security to the General Partner binds each
Partner and the Company.
(d) In this Section 115, "Partner" means the General Partner, TXU
Australia (LP) No. 1 Limited or TXU Australia (LP) No. 2 Limited (and "Partners"
means all of them).
<PAGE>
15
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY.
The definitive Securities of each series shall be in substantially the
form or forms thereof established in the indenture supplemental hereto
establishing such series or in an Officer's Certificate in each case with such
appropriate terms, insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any securities exchange or as
may, consistently herewith, be determined by the Person executing such
Securities, as evidenced by their execution thereof. If the form or forms of
Securities of any series are established in an Officer's Certificate as
described above, such Officer's Certificate, if any, shall be delivered to the
Trustee at or prior to the delivery of the Company Order contemplated by Section
303 for the authentication and delivery of such Securities.
Unless otherwise specified as contemplated by Section 301 or clause
(g) of Section 1201, the Securities of each series shall be issuable in
registered form without coupons. The definitive Securities shall be produced in
such manner as shall be determined by the Person executing such Securities, as
evidenced by their execution thereof.
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication shall be in substantially
the form set forth below:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
The Bank of New York
as Trustee
By:
-------------------------------------
Authorized Officer
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
<PAGE>
16
The Securities may be issued in one or more series. Prior to the
authentication and delivery of Securities of any series there shall be
established by specification in a supplemental indenture or in an Officer's
Certificate of the General Partner of the Company:
(a) the title of the Securities of such series (which shall
distinguish the Securities of such series from Securities of all other
series);
(b) any limit upon the aggregate principal amount of the Securities of
such series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of such
series pursuant to Section 304, 305, 306, 406 or 1206 and, except for any
Securities which, pursuant to Section 303, are deemed never to have been
authenticated and delivered hereunder);
(c) the Person or Persons (without specific identification) to whom
interest on Securities of such series, or any Tranche thereof, shall be
payable on any Interest Payment Date, if other than the Persons in whose
names such Securities (or one or more Predecessor Securities) are
registered at the close of business on the Regular Record Date for such
interest;
(d) the date or dates on which the principal of the Securities of such
series, or any Tranche thereof, is payable or any formulary or other method
or other means by which such date or dates shall be determined, by
reference to an index or other fact or event ascertainable outside of this
Indenture or otherwise (without regard to any provisions for redemption,
prepayment, declaration of acceleration, purchase or extension);
(e) the rate or rates at which the Securities of such series, or any
Tranche thereof, shall bear interest, if any (including the rate or rates
at which overdue principal shall bear interest, if different from the rate
or rates at which such Securities shall bear interest prior to Maturity,
and, if applicable, the rate or rates at which overdue premium or interest
shall bear interest, if any), or any formulary or other method or other
means by which such rate or rates shall be determined, by reference to an
index or other fact or event ascertainable outside of this Indenture or
otherwise; the date or dates from which such interest shall accrue; the
Interest Payment Dates on which such interest shall be payable and the
Regular Record Date, if any, for the interest payable on such Securities on
any Interest Payment Date; the right of the Company, if any, to extend the
interest payment periods and the duration of any such extension as
contemplated by Section 311; and the basis of computation of interest, if
other than as provided in Section 310;
(f) the place or places at which or methods by which (1) the principal
of and premium, if any, and interest, if any, on Securities of such series,
or any Tranche thereof, shall be payable, (2) registration of transfer of
Securities of such series, or any Tranche thereof, may be effected, (3)
exchanges of Securities of such series, or any Tranche thereof, may be
effected and (4) notices and demands to or upon the Company in respect of
the Securities of such series, or any Tranche thereof, and this Indenture
may be served; the Security Registrar and any Paying Agent or Agents for
such series or Tranche; and if such is the case, that the principal of such
Securities shall be payable without presentment or surrender thereof;
(g) the period or periods within which, or the date or dates on which,
the price or prices at which and the terms and conditions upon which the
Securities of such series, or any Tranche thereof, may be redeemed, in
whole or in part, at the option of the Company and any restrictions on such
redemptions, including but not limited to a restriction on a partial
<PAGE>
17
redemption by the Company of the Securities of any series, or any Tranche
thereof, resulting in delisting of such Securities from any national
exchange;
(h) the obligation or obligations, if any, of the Company to redeem or
purchase or repay the Securities of such series, or any Tranche thereof,
pursuant to any sinking fund or other mandatory redemption provisions or at
the option of a Holder thereof and the period or periods within which or
the date or dates on which, the price or prices at which and the terms and
conditions upon which such Securities shall be redeemed or purchased or
repaid, in whole or in part, pursuant to such obligation, and applicable
exceptions to the requirements of Section 404 in the case of mandatory
redemption or redemption or repayment at the option of the Holder;
(i) the denominations in which Securities of such series, or any
Tranche thereof, shall be issuable if other than denominations of $25 and
any integral multiple thereof;
(j) the currency or currencies, including composite currencies, in
which payment of the principal of and premium, if any, and interest, if
any, on the Securities of such series, or any Tranche thereof, shall be
payable (if other than in Dollars);
(k) if the principal of or premium, if any, or interest, if any, on
the Securities of such series, or any Tranche thereof, are to be payable,
at the election of the Company or a Holder thereof, in a coin or currency
other than that in which the Securities are stated to be payable, the
period or periods within which, and the terms and conditions upon which,
such election may be made;
(l) if the principal of or premium, if any, or interest, if any, on
the Securities of such series, or any Tranche thereof, are to be payable,
or are to be payable at the election of the Company or a Holder thereof, in
securities or other property, the type and amount of such securities or
other property, or the formulary or other method or other means by which
such amount shall be determined, and the period or periods within which,
and the terms and conditions upon which, any such election may be made;
(m) if the amount payable in respect of principal of or premium, if
any, or interest, if any, on the Securities of such series, or any Tranche
thereof, may be determined with reference to an index or other fact or
event ascertainable outside of this Indenture, the manner in which such
amounts shall be determined to the extent not established pursuant to
clause (e) of this paragraph;
(n) if other than the principal amount thereof, the portion of the
principal amount of Securities of such series, or any Tranche thereof,
which shall be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 802;
(o) any Events of Default, in addition to those specified in Section
801, with respect to the Securities of such series, and any covenants of
the Company for the benefit of the Holders of the Securities of such
series, or any Tranche thereof, in addition to those set forth in Article
Six or any exceptions to those set forth in Article Six;
(p) the terms, if any, pursuant to which the Securities of such
series, or any Tranche thereof, may be converted into or exchanged for
shares of capital stock or other securities of the Company or any other
Person;
(q) the obligations or instruments, if any, which shall be considered
to be Eligible Obligations in respect of the Securities of such series, or
any Tranche thereof, denominated in a currency other than Dollars or in a
<PAGE>
18
composite currency, and any additional or alternative provisions for the
reinstatement of the Company's indebtedness in respect of such Securities
after the satisfaction and discharge thereof as provided in Section 701;
(r) if the Securities of such series, or any Tranche thereof, are to
be issued in global form, (i) any limitations on the rights of the Holder
or Holders of such Securities to transfer or exchange the same or to obtain
the registration of transfer thereof, (ii) any limitations on the rights of
the Holder or Holders thereof to obtain certificates therefor in definitive
form in lieu of temporary form and (iii) any and all other matters
incidental to such Securities;
(s) if the Securities of such series, or any Tranche thereof, are to
be issuable as bearer securities, any and all matters incidental thereto
which are not specifically addressed in a supplemental indenture as
contemplated by clause (g) of Section 1201;
(t) to the extent not established pursuant to clause (r) of this
paragraph, any limitations on the rights of the Holders of the Securities
of such Series, or any Tranche thereof, to transfer or exchange such
Securities or to obtain the registration of transfer thereof; and if a
service charge will be made for the registration of transfer or exchange of
Securities of such series, or any Tranche thereof, the amount or terms
thereof;
(u) any exceptions to Section 113, or variation in the definition of
Business Day, with respect to the Securities of such series or any Tranche
thereof;
(v) any collateral security, insurance or guarantee or assurance for
the Securities of such series;
(w) any rights or duties of another Person to assume the obligations
of the Company with respect to the Securities of such series (whether as
joint obligor, primary obligor, secondary obligor or substitute obligor)
and any rights or duties to discharge and release any obligor with respect
to the Securities of such series or the Indenture to the extent related to
such series;
(x) any rights to change or eliminate any provision of this Indenture
or to add any new provision to this Indenture (by supplemental indenture or
otherwise) without the consent of the Holders of the Securities of such
series, or with the consent of the Holders of the Securities of such series
as specified for such series or any Tranche thereof;
(y) the agent of the Company to receive service of process in the
State of New York, if other than Thelen Reid & Priest LLP in New York City;
(z) the terms relating to any Additional Amounts that may be payable
in certain circumstances with respect to the Securities of such series or
any Tranche thereof; and
(aa) any other terms of the Securities of such series, or any Tranche
thereof, not inconsistent with the provisions of this Indenture.
The Securities of each series, or any Tranche thereof, shall be
subordinated in right of payment to Senior Indebtedness as provided in Article
Fifteen.
<PAGE>
19
SECTION 302. DENOMINATIONS.
Unless otherwise provided as contemplated by Section 301 with respect
to any series of Securities, or any Tranche thereof, the Securities of each
series shall be issuable in denominations of $25 and any integral multiple
thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
Unless otherwise provided as contemplated by Section 301 with respect
to any series of Securities, or any Tranche thereof, the Securities shall be
executed on behalf of the Company by an Authorized Officer. The signature of any
or all of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at the time of execution Authorized Officers shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
The Trustee shall authenticate and deliver Securities of a series, for
original issue, at one time or from time to time in accordance with the Company
Order referred to below, upon receipt by the Trustee of:
(a) the instrument or instruments establishing the form or forms and
terms of such series, as provided in Sections 201 and 301;
(b) a Company Order requesting the authentication and delivery of such
Securities, and to the extent that the terms of such Securities shall not
have been established in an indenture supplemental hereto or in an
Officer's Certificate, all as contemplated by Sections 201 and 301,
establishing such terms;
(c) the Securities of such series, each executed on behalf of the
Company by an Authorized Officer;
(d) Opinion or Opinions of Counsel to the effect that:
(i) the form or forms of such Securities have been duly
authorized by the General Partner of the Company and have been
established in conformity with the provisions of this Indenture;
(ii) the terms of such Securities have been duly authorized on
behalf of the Company by the General Partner and have been established
in conformity with the provisions of this Indenture; and
(iii) such Securities, when authenticated and delivered by the
Trustee and issued and delivered by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
have been duly issued under this Indenture and will constitute valid
and legally binding obligations of the Company, entitled to the
benefits provided by this Indenture, and enforceable in accordance
with their terms, subject to laws relating to or affecting generally
the enforcement of creditors' rights, including, without limitation,
bankruptcy and insolvency laws and to general principles of equity
(regardless of whether considered in a proceeding in equity or at
law);
<PAGE>
20
If the form or terms of the Securities of any series have been
established by an Officer's Certificate as permitted by Sections 201 or 301, the
Trustee shall not be required to authenticate such Securities if the issuance of
such Securities pursuant to this Indenture will materially or adversely affect
the Trustee's own rights, duties or immunities under the Securities and this
Indenture or otherwise in a manner which is not reasonably acceptable to the
Trustee.
Unless otherwise specified as contemplated by Section 301 with respect
to any series of Securities, or any Tranche thereof, each Security shall be
dated the date of its authentication.
Unless otherwise specified as contemplated by Section 301 with respect
to any series of Securities, or any Tranche thereof, no Security shall be
entitled to any benefit under this Indenture or be valid or obligatory for any
purpose unless there appears on such Security a certificate of authentication
substantially in the form provided for herein executed by the Trustee or an
Authenticating Agent by manual signature, and such certificate upon any Security
shall be conclusive evidence, and the only evidence, that such Security has been
duly authenticated and delivered hereunder and is entitled to the benefits of
this Indenture. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder to the Company, or any Person acting on
its behalf, but shall never have been issued and sold by the Company, and the
Company shall deliver such Security to the Security Registrar for cancellation
as provided in Section 309 together with a written statement (which need not
comply with Section 102 and need not be accompanied by an Officer's Certificate
and an Opinion of Counsel) stating that such Security has never been issued and
sold by the Company, for all purposes of this Indenture such Security shall be
deemed never to have been authenticated and delivered hereunder and shall never
be entitled to the benefits hereof.
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any series or any
Tranche thereof, the Company may execute, and upon a Company Order the Trustee
shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued, with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities may
determine, as evidenced by their execution of such Securities; provided,
however, that temporary Securities need not recite specific redemption, sinking
fund, conversion or exchange provisions.
Unless otherwise specified as contemplated by Section 301 with respect
to the Securities of any series, or any Tranche thereof, after the preparation
of definitive Securities of such series or Tranche, the temporary Securities of
such series or Tranche shall be exchangeable, without charge to the Holder
thereof, for definitive Securities of such series or Tranche upon surrender of
such temporary Securities at the office or agency of the Company maintained
pursuant to Section 602 in a Place of Payment for such Securities. Upon such
surrender of temporary Securities for such exchange, the Company shall, except
as aforesaid, execute and the Trustee shall authenticate and deliver in exchange
therefor definitive Securities of the same series and Tranche of authorized
denominations and of like tenor and aggregate principal amount.
Until exchanged in full as hereinabove provided, temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as
definitive Securities of the same series and Tranche and of like tenor
authenticated and delivered hereunder.
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SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
Unless otherwise specified as contemplated by Section 301 with respect
to any series of Securities, the Company shall cause to be kept in one of the
offices designated pursuant to Section 602, with respect to the Securities of
each series, or any Tranche thereof, a register (the register kept in accordance
with this Section being referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities of such series or Tranche and the
registration of transfer thereof. The Company shall designate one Person to
maintain the Security Register for the Securities of each series on a
consolidated basis, and such Person is referred to herein, with respect to such
series, as the "Security Registrar." Anything herein to the contrary
notwithstanding, the Company may designate one or more of its offices or an
office of any Affiliate (including the General Partner) as an office in which a
register with respect to the Securities of one or more series, or any Tranche or
Tranches thereof, shall be maintained, and the Company may designate itself or
any Affiliate (including the General Partner) the Security Registrar with
respect to one or more of such series. The Security Register shall be open for
inspection by the Trustee and the Company at all reasonable times.
Except as otherwise specified as contemplated by Section 301 with
respect to the Securities of any series, or any Tranche thereof, upon surrender
for registration of transfer of any Security of such series or Tranche at the
office or agency of the Company maintained pursuant to Section 602 in a Place of
Payment for such series or Tranche, the Company shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of the same series and Tranche, of
authorized denominations and of like tenor and aggregate principal amount.
Except as otherwise specified as contemplated by Section 301 with
respect to the Securities of any series, or any Tranche thereof, any Security of
such series or Tranche may be exchanged at the option of the Holder, for one or
more new Securities of the same series and Tranche, of authorized denominations
and of like tenor and aggregate principal amount, upon surrender of the
Securities to be exchanged at any such office or agency. Whenever any Securities
are so surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the Securities which the Holder making the
exchange is entitled to receive.
All Securities delivered upon any registration of transfer or exchange
of Securities shall be valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company, the Trustee or the
Security Registrar) be duly endorsed or shall be accompanied by a written
instrument of transfer in form satisfactory to the Company, the Trustee or the
Security Registrar, as the case may be, duly executed by the Holder thereof or
his attorney duly authorized in writing.
Unless otherwise specified as contemplated by Section 301, with
respect to Securities of any series, or any Tranche thereof, no service charge
shall be made for any registration of transfer or exchange of Securities, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to Section
304, 406 or 1206 not involving any transfer.
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Unless otherwise specified as contemplated by Section 301, with
respect to Securities of any series, or any Tranche thereof, the Company shall
not be required to execute or to provide for the registration of transfer of or
the exchange of (a) Securities of any series, or any Tranche thereof, during a
period of 15 days immediately preceding the date notice is to be given
identifying the serial numbers of the Securities of such series or Tranche
called for redemption or (b) any Security so selected for redemption in whole or
in part, except the unredeemed portion of any Security being redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Security Registrar,
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security of the same series and Tranche, and of like
tenor and principal amount and bearing a number not contemporaneously
outstanding.
If there shall be delivered to the Company and the Trustee (a)
evidence to their satisfaction of the ownership of and the destruction, loss or
theft of any Security and (b) such security or indemnity as may be reasonably
required by them to save each of them and any agent of either of them harmless,
then, in the absence of notice to the Company or the Trustee that such Security
is held by a Person purporting to be the owner of such Security, the Company
shall execute and the Trustee shall authenticate and deliver, in lieu of any
such destroyed, lost or stolen Security, a new Security of the same series and
Tranche, and of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
Notwithstanding the foregoing, in case any such mutilated, destroyed,
lost or stolen Security has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a new Security, pay such
Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone other than
the Holder of such new Security, and any such new Security shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Securities of such series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Unless otherwise specified as contemplated by Section 301 with respect
to the Securities of any series, or any Tranche thereof, interest on any
Security which is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest.
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23
Subject to Section 311, any interest on any Security of any series
which is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease
to be payable to the Holder on the related Regular Record Date by virtue of
having been such Holder, and such Defaulted Interest may be paid by the Company,
at its election in each case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on a date (herein called a "Special Record Date") for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security of such series and the date
of the proposed payment, and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall promptly cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder of Securities of such series at the address
of such Holder as it appears in the Security Register, not less than 10
days prior to such Special Record Date. Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names
the Securities of such series (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date.
(b) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section and Section 305,
each Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the absolute owner of
such Security for the purpose of receiving payment of principal of and premium,
if any, and (subject to Sections 305 and 307) interest, if any, on such Security
and for all other purposes whatsoever, whether or not such Security be overdue,
and none of the Company, the Trustee or any agent of the Company or the Trustee
shall be affected by notice to the contrary.
<PAGE>
24
SECTION 309. CANCELLATION BY SECURITY REGISTRAR.
All Securities surrendered for payment, redemption, registration of
transfer or exchange shall, if surrendered to any Person other than the Security
Registrar, be delivered to the Security Registrar and, if not theretofore
canceled, shall be promptly canceled by the Security Registrar. The Company may
at any time deliver to the Security Registrar for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever or which the Company shall not have issued and
sold, and all Securities so delivered shall be promptly canceled by the Security
Registrar. No Securities shall be authenticated in lieu of or in exchange for
any Securities canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Securities held by the Security
Registrar shall be disposed of in accordance with the customary practices of the
Security Registrar at the time in effect, and the Security Registrar shall not
be required to destroy any such certificates. The Security Registrar shall
promptly deliver a certificate of disposition to the Trustee and the Company
unless, by a Company Order, delivered to the Security Registrar and Trustee, the
Company shall direct that canceled Securities be returned to it. The Security
Registrar shall promptly deliver evidence of any cancellation of a Security in
accordance with this Section 309 to the Trustee and the Company.
SECTION 310. COMPUTATION OF INTEREST.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, or any Tranche thereof, interest on the Securities of
each series shall be computed on the basis of a 360-day year consisting of
twelve 30-day months and for any period shorter than a full month on the basis
of the actual number of days elapsed within any such period.
SECTION 311. EXTENSION OF INTEREST PAYMENT, DEFERRAL OF INTEREST PAYMENT.
The Company shall have the right at any time, so long as no Event of
Default shall have occurred and be continuing with respect to the Securities of
any series hereunder, to extend interest payment periods or to defer the payment
of interest on all Securities of one or more series, or Tranches thereof, if so
specified as contemplated by Section 301 with respect to such Securities and
upon such terms as may be specified as contemplated by Section 301 with respect
to such Securities.
SECTION 312. PAYMENT TO BE IN PROPER CURRENCY
In the case of the Securities of any series, or any Tranche thereof,
denominated in any currency or in a composite currency (the "Required
Currency"), except as otherwise specified with respect to such Securities as
contemplated by Section 301, the obligation of the Company to make any payment
of the principal thereof, or the premium or interest thereon, shall not be
discharged or satisfied by any tender by the Company, or recovery by the
Trustee, in any currency other than the Required Currency, except to the extent
that such tender or recovery shall result in the Trustee timely holding the full
amount of the Required Currency then due and payable. If any such tender or
recovery is in a currency other than the Required Currency, the Trustee may take
such actions as it considers appropriate to exchange such currency for the
Required Currency. The costs and risks of any such exchange, including without
limitation the risks of delay and exchange rate fluctuation, shall be borne by
the Company, the Company shall remain fully liable for any shortfall or
delinquency in the full amount of Required Currency then due and payable, and in
no circumstances shall the Trustee be liable therefor except in the case of its
negligence or willful misconduct. The Company hereby waives any defense of
payment based upon any such tender or recovery which is not in the Required
Currency, to the extent such amount, when exchanged for the Required Currency by
the Trustee, is less than the full amount of Required Currency then due and
payable.
<PAGE>
25
ARTICLE FOUR
REDEMPTION OF SECURITIES
SECTION 401. APPLICABILITY OF ARTICLE.
Securities of any series, or any Tranche thereof, which are redeemable
before their Stated Maturity shall be redeemable in accordance with their terms
and (except as otherwise specified as contemplated by Section 301 for Securities
of such series or Tranche) in accordance with this Article.
SECTION 402. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall be
evidenced by an Officer's Certificate. The Company shall, at least 45 days prior
to the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date and of the principal amount of such Securities to be redeemed. In the case
of any redemption of Securities (a) prior to the expiration of any restriction
on such redemption provided in the terms of such Securities or elsewhere in this
Indenture or (b) pursuant to an election of the Company which is subject to a
restriction or condition specified in the terms of such Securities, the Company
shall furnish the Trustee with an Officer's Certificate evidencing compliance
with such restriction or condition.
SECTION 403. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all the Securities of any series, or any Tranche thereof,
are to be redeemed, the particular Securities to be redeemed shall be selected
by the Security Registrar from the Outstanding Securities of such series or
Tranche not previously called for redemption, by such method as shall be
provided for any particular series or Tranche, or, in the absence of any such
provision, by such method of random selection as the Security Registrar shall
deem fair and appropriate and which may, in any case, provide for the selection
for redemption of portions (equal to the minimum authorized denomination for
Securities of such series or Tranche or any integral multiple thereof) of the
principal amount of Securities of such series or Tranche of a denomination
larger than the minimum authorized denomination for Securities of such series or
Tranche; provided, however, that if, as indicated in an Officer's Certificate,
the Company shall have offered to purchase all or any principal amount of the
Securities then Outstanding of any series, or any Tranche thereof, and less than
all of such Securities as to which such offer was made shall have been tendered
to the Company for such purchase, the Security Registrar, if so directed by
Company Order, shall select for redemption all or any principal amount of such
Securities which have not been so tendered.
The Security Registrar shall promptly notify the Company and the
Trustee in writing of the Securities selected for redemption and, in the case of
any Securities selected to be redeemed in part, the principal amount thereof to
be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
<PAGE>
26
SECTION 404. NOTICE OF REDEMPTION.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, notice of redemption shall be given in the manner
provided in Section 106 to the Holders of the Securities to be redeemed not less
than 30 nor more than 60 days prior to the Redemption Date.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, all notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price (if known) or the formula pursuant to which
the Redemption Price is to be determined if the Redemption Price cannot be
determined at the time the notice is given,
(c) if less than all the Securities of any series or Tranche are to be
redeemed, the identification of the particular Securities to be redeemed
and the portion of the principal amount of any Security to be redeemed in
part,
(d) that on the Redemption Date the Redemption Price, together with
accrued interest, if any, and Additional Amounts, if any, to the Redemption
Date, will become due and payable upon each such Security to be redeemed
and, if applicable, that interest and Additional Amounts, if any, thereon
will cease to accrue on and after said date,
(e) the place or places where such Securities are to be surrendered
for payment of the Redemption Price and accrued interest, if any, and
Additional Amounts, if any, unless it shall have been specified as
contemplated by Section 301 with respect to such Securities that such
surrender shall not be required,
(f) that the redemption is for a sinking or other fund, if such is the
case,
(g) the CUSIP or ISIN numbers, if any, assigned to such Securities;
provided, however, that such notice may state that no representation is
made as to the correctness of CUSIP or ISIN numbers, and the redemption of
such Securities shall not be affected by any defect in or omission of such
numbers in which case none of the Company, the Trustee or any agent of the
Company or the Trustee shall have any liability in respect of the use of
any CUSIP or ISIN number or numbers on such notices; and
(h) such other matters as the Company shall deem desirable or
appropriate.
Unless otherwise specified with respect to any Securities in
accordance with Section 301, with respect to any notice of redemption of
Securities at the election of the Company, unless, upon the giving of such
notice, such Securities shall be deemed to have been paid in accordance with
Section 701, such notice may state that such redemption shall be conditional
upon the receipt by the Paying Agent or Agents for such Securities, on or prior
to the date fixed for such redemption, of money sufficient to pay the principal
of and premium, if any, and interest, if any, and Additional Amounts, if any, on
such Securities and that if such money shall not have been so received such
notice shall be of no force or effect and the Company shall not be required to
redeem such Securities. In the event that such notice of redemption contains
such a condition and such money is not so received, the redemption shall not be
made and within a reasonable time thereafter notice shall be given, in the
manner in which the notice of redemption was given, that such money was not so
received and such redemption was not required to be made, and the Paying Agent
<PAGE>
27
or Agents for the Securities otherwise to have been redeemed shall promptly
return to the Holders thereof any of such Securities which had been surrendered
for payment upon such redemption.
Notice of redemption of Securities to be redeemed at the election of
the Company, and any notice of non-satisfaction of a condition for redemption as
aforesaid, shall be given by the Company or, at the Company's request, by the
Security Registrar in the name and at the expense of the Company. Notice of any
mandatory redemption of Securities shall be given by the Security Registrar in
the name and at the expense of the Company.
SECTION 405. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, and the
conditions, if any, set forth in such notice having been satisfied, the
Securities or portions thereof so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified, and from and
after such date (unless, in the case of an unconditional notice of redemption,
the Company shall default in the payment of the Redemption Price and accrued
interest and Additional Amounts, if any) such Securities or portions thereof, if
interest-bearing, shall cease to bear interest. Upon surrender of any such
Security for redemption in accordance with such notice, such Security or portion
thereof shall be paid by the Company at the Redemption Price, together with
accrued interest and Additional Amounts, if any, to the Redemption Date;
provided, however, that no such surrender shall be a condition to such payment
if so specified as contemplated by Section 301 with respect to such Security;
and provided, further, that except as otherwise specified as contemplated by
Section 301 with respect to such Security, any installment of interest on any
Security the Stated Maturity of which installment is on or prior to the
Redemption Date shall be payable to the Holder of such Security, or one or more
Predecessor Securities, registered as such at the close of business on the
related Regular Record Date according to the terms of such Security and subject
to the provisions of Section 307.
SECTION 406. SECURITIES REDEEMED IN PART.
Upon the surrender of any Security which is to be redeemed only in
part at a Place of Payment therefor (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security, without
service charge, a new Security or Securities of the same series and Tranche, of
any authorized denomination requested by such Holder and of like tenor and in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Security so surrendered.
ARTICLE FIVE
SINKING FUNDS
SECTION 501. APPLICABILITY OF ARTICLE.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of the Securities of any series, or any Tranche thereof,
except as otherwise specified as contemplated by Section 301 for Securities of
such series or Tranche.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series, or any Tranche thereof, is herein referred to
as a "mandatory sinking fund payment", and any payment in excess of such minimum
<PAGE>
28
amount provided for by the terms of Securities of any series, or any Tranche
thereof, is herein referred to as an "optional sinking fund payment". If
provided for by the terms of Securities of any series, or any Tranche thereof,
the cash amount of any sinking fund payment may be subject to reduction as
provided in Section 502. Each sinking fund payment shall be applied to the
redemption of Securities of the series or Tranche in respect of which it was
made as provided for by the terms of such Securities.
SECTION 502. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company (a) may deliver to the Trustee Outstanding Securities
(other than any previously called for redemption) of a series or Tranche in
respect of which a mandatory sinking fund payment is to be made and (b) may
apply as a credit Securities of such series or Tranche which have been (i)
redeemed either at the election of the Company pursuant to the terms of such
Securities or through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities or (ii) repurchased by the
Company in the open market, by tender offer, in the open market or by private
agreement, or otherwise, in each case in satisfaction of all or any part of such
mandatory sinking fund payment with respect to the Securities of such series or
Tranche; provided, however, that no Securities shall be applied in satisfaction
of a mandatory sinking fund payment if such Securities shall have been
previously so applied. Securities so applied shall be received and credited for
such purpose by the Trustee at the Redemption Price specified in such Securities
for redemption through operation of the sinking fund and the amount of such
mandatory sinking fund payment shall be reduced accordingly.
SECTION 503. REDEMPTION OF SECURITIES FOR SINKING FUND.
Not less than 45 days prior to each sinking fund payment date for the
Securities of any series, or any Tranche thereof, the Company shall deliver to
the Trustee an Officer's Certificate specifying:
(a) the amount of the next succeeding mandatory sinking fund payment
for such series or Tranche;
(b) the amount, if any, of the optional sinking fund payment to be
made together with such mandatory sinking fund payment;
(c) the aggregate sinking fund payment;
(d) the portion, if any, of such aggregate sinking fund payment which
is to be satisfied by the payment of cash; and
(e) the portion, if any, of such aggregate sinking fund payment which
is to be satisfied by delivering and crediting Securities of such series or
Tranche pursuant to Section 502 and stating the basis for such credit and
that such Securities have not previously been so credited, and the Company
shall also deliver to the Trustee any Securities to be so delivered.
If the Company shall have not delivered such Officer's Certificate
and, to the extent applicable, all such Securities, the next succeeding
sinking fund payment for such series or Tranche shall be made entirely in
cash in the amount of the mandatory sinking fund payment. Not less than 30
days before each such sinking fund payment date the Trustee shall select
the Securities to be redeemed upon such sinking fund payment date in the
manner specified in Section 403 and cause notice of the redemption thereof
to be given in the name of and at the expense of the Company in the manner
provided in Section 404. Such notice having been duly given, the redemption
<PAGE>
29
of such Securities shall be made upon the terms and in the manner stated in
Sections 405 and 406.
ARTICLE SIX
COVENANTS
SECTION 601. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company shall pay the principal of and premium, interest, and
Additional Amounts, if any, on the Securities of each series in accordance with
the terms of such Securities and this Indenture.
SECTION 602. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in each Place of Payment for the Securities
of each series, or any Tranche thereof, an office or agency where payment of
such Securities shall be made, where the registration of transfer or exchange of
such Securities may be effected and where notices and demands to or upon the
Company in respect of such Securities and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of each such office or agency and prompt notice to the
Holders of any such change in the manner specified in Section 106. If at any
time the Company shall fail to maintain any such required office or agency in
respect of Securities of any series, or any Tranche thereof, or shall fail to
furnish the Trustee with the address thereof, payment of such Securities shall
be made, registration of transfer or exchange thereof may be effected and
notices and demands in respect thereof may be served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
for all such purposes in any such event.
The Company may also from time to time designate one or more other
offices or agencies with respect to the Securities of one or more series, or any
Tranche thereof, for any or all of the foregoing purposes and may from time to
time rescind such designations; provided, however, that, unless otherwise
specified as contemplated by Section 301 with respect to the Securities of such
series or Tranche, no such designation or rescission shall in any manner relieve
the Company of its obligation to maintain an office or agency for such purposes
in each Place of Payment for such Securities in accordance with the requirements
set forth above. The Company shall give prompt written notice to the Trustee,
and prompt notice to the Holders in the manner specified in Section 106, of any
such designation or rescission and of any change in the location of any such
other office or agency.
Anything herein to the contrary notwithstanding, unless otherwise
specified as contemplated by Section 301 for the Securities of any series, any
office or agency required by this Section may be maintained at an office of the
Company or any Affiliate, in which event the Company or such Affiliate, as the
case may be, shall perform all functions to be performed at such office or
agency.
SECTION 603. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with
respect to the Securities of any series, or any Tranche thereof, it shall, on or
before each due date of the principal of or premium, interest or Additional
Amounts, if any, on any of such Securities, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal,
premium, interest or Additional Amounts so becoming due until such sums shall be
paid to such Persons or otherwise disposed of as herein provided. The Company
shall promptly notify the Trustee of any failure by the Company (or any other
<PAGE>
30
obligor on such Securities) to make any payment of principal of or premium,
interest, or Additional Amounts, if any, on such Securities.
Whenever the Company shall have one or more Paying Agents for the
Securities of any series, or any Tranche thereof, it shall, on or before each
due date of the principal of or premium, interest, or Additional Amounts, if
any, on such Securities, deposit with such Paying Agents sums sufficient
(without duplication) to pay the principal, premium, interest or Additional
Amounts so becoming due, such sums to be held in trust for the benefit of the
Persons entitled to such principal, premium, interest, or Additional Amounts,
and (unless such Paying Agent is the Trustee) the Company shall promptly notify
the Trustee of any failure by it so to act.
The Company shall cause each Paying Agent for the Securities of any
series, or any Tranche thereof, other than the Company or the Trustee, to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent shall:
(a) hold all sums held by it for the payment of the principal of or
premium, interest, or Additional Amounts, if any, on such Securities in
trust for the benefit of the Persons entitled thereto until such sums shall
be paid to such Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any failure by the Company (or any
other obligor upon such Securities) to make any payment of principal of or
premium, interest, or Additional Amounts, if any, on such Securities; and
(c) at any time during the continuance of any such failure, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent and furnish to the Trustee such
information as it possesses regarding the names and addresses of the
Persons entitled to such sums.
The Company may at any time pay, or by Company Order direct any Paying
Agent to pay, to the Trustee all sums held in trust by the Company or such
Paying Agent, such sums to be held by the Trustee upon the same trusts as those
upon which such sums were held by the Company or such Paying Agent and, if so
stated in a Company Order delivered to the Trustee, in accordance with the
provisions of Article Seven; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of and premium,
interest, or Additional Amounts, if any, on any Security and remaining unclaimed
for two years after such principal or premium, interest, or Additional Amounts,
if any, have become due and payable shall be paid to the Company on Company
Request, or, if then held by the Company, shall be discharged from such trust;
and, upon such payment or discharge, the Holder of such Security shall, as an
unsecured general creditor and not as a Holder of an Outstanding Security, look
only to the Company for payment of the amount so due and payable and remaining
unpaid, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such payment to the Company, may at the
expense of the Company cause to be mailed, on one occasion only, notice to such
Holder that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such mailing, any
unclaimed balance of such money then remaining will be paid to the Company.
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SECTION 604. LIMITED PARTNERSHIP EXISTENCE.
Subject to the rights of the General Partner under Article Eleven, so
long as the Securities of any series remain outstanding, the General Partner of
the Company shall (a) maintain direct or indirect ownership of all general
partnership interests in the Company, provided that certain successors which are
permitted pursuant hereto may succeed to the General Partner's ownership of such
general partnership interests, (b) not voluntarily (to the extent permitted by
law) dissolve, liquidate or wind up except in connection with certain mergers,
conversions, consolidations or amalgamations permitted pursuant hereto, (c)
timely perform in all material respects all of its duties as General Partner
(including the duty to pay all costs and expenses), provided that certain
successors which are permitted pursuant hereto may directly or indirectly
succeed to its duties as General Partner and (d) do or cause to be done all
things necessary to preserve and keep in full force and effect the Company's
limited partnership existence and otherwise continue to cause the Company to be
treated as a company for Australian tax purposes and as a partnership for US
federal income tax purposes.
SECTION 605. MAINTENANCE OF PROPERTIES.
The Company shall cause (or, with respect to property owned in common
with others, make reasonable effort to cause) all of its properties used or
useful in the conduct of its business to be maintained and kept in good
condition, repair and working order and shall cause (or, with respect to
property owned in common with others, make reasonable effort to cause) to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as, in the judgment of the Company, may be necessary so that the
business carried on in connection therewith may be properly conducted; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing, or causing the discontinuance of, the operation and maintenance
of any of its properties if such discontinuance is, in the judgment of the
Company, desirable in the conduct of its business.
SECTION 606. ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.
Not later than June 1 in each year, commencing June 1, 2000, the
Company shall deliver to the Trustee an Officer's Certificate which need not
comply with Section 102, executed by the principal executive officer, the
principal financial officer or the principal accounting officer of the General
Partner, as to such officer's knowledge of the Company's compliance with all
conditions and covenants under this Indenture, such compliance to be determined
without regard to any period of grace or requirement of notice under this
Indenture and making any other statements as may be required by the provisions
of Section 314(a)(4) of the Trust Indenture Act.
SECTION 607. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in (a) Section 602 or any additional
covenant or restriction specified with respect to the Securities of any series,
or any Tranche thereof, as contemplated by Section 301 or by clause (b) of
Section 1201, if before the time for such compliance the Holders of a majority
in aggregate principal amount of the Outstanding Securities of all series and
Tranches with respect to which compliance with Section 602 or such additional
covenant or restriction is to be omitted, considered as one class, shall, by Act
of such Holders, either waive such compliance in such instance or generally
waive compliance with such term, provision or condition and (b) Section 605 or
Article Eleven if before the time for such compliance the Holders of a majority
in aggregate principal amount of Securities Outstanding under this Indenture
shall, by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or condition; but, in the
case of (a) or (b), no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
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waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
SECTION 608. RESTRICTION ON PAYMENT OF DIVIDENDS.
Except as may be provided in a supplemental indenture or an Officer's
Certificate with respect to a series of Securities, the Company shall not
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Company's partnership
interests or any other securities, guarantees or other obligations of the
Company that rank pari passu with or junior in interest to the Securities if at
such time (i) there shall have occurred and be continuing a payment default
pursuant to Section 801(a) or 801(b) (whether before or after expiration of any
period of grace) or an Event of Default hereunder, or (ii) the Company shall
have elected to extend any interest payment period or defer the payment of
interest as provided in Section 311, and, in the case of such an extension, any
such period, or any extension thereof, shall be continuing or, in the case of
such a deferral, payment of all such deferred interest, together with any
interest accrued thereon, shall not have been made.
ARTICLE SEVEN
SATISFACTION AND DISCHARGE
SECTION 701. DEFEASANCE.
Any Security or Securities, or any portion of the principal amount
thereof, shall be deemed to have been paid for all purposes of this Indenture,
and the entire indebtedness of the Company in respect thereof shall be deemed to
have been satisfied and discharged, if there shall have been irrevocably
deposited with the Trustee or any Paying Agent (other than the Company), in
trust:
(a) money in an amount which shall be sufficient, or
(b) in the case of a deposit made prior to the Maturity of such
Securities or portions thereof, Eligible Obligations, which shall not
contain provisions permitting the redemption or other prepayment thereof at
the option of the issuer thereof, the principal of and the interest on
which when due, without any regard to reinvestment thereof, will provide
moneys which, together with the money, if any, deposited with or held by
the Trustee or such Paying Agent, shall be sufficient, or
(c) a combination of (a) or (b) which shall be sufficient,
to pay when due the principal of and premium, interest and Additional Amounts,
if any, due and to become due on such Securities or portions thereof on or prior
to Maturity; provided, however, that in the case of the provision for payment or
redemption of less than all the Securities of any series or Tranche, such
Securities or portions thereof shall have been selected by the Security
Registrar as provided herein and, in the case of a redemption, the notice
requisite to the validity of such redemption shall have been given or
irrevocable authority shall have been given by the Company to the Trustee to
give such notice, under arrangements satisfactory to the Trustee; and provided,
further, that the Company shall have delivered to the Trustee and such Paying
Agent:
(x) if such deposit shall have been made prior to the Maturity of such
Securities, a Company Order stating that the money and Eligible Obligations
deposited in accordance with this Section shall be held in trust, as
provided in Section 703; and
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33
(y) if Eligible Obligations shall have been deposited, an Opinion of
Counsel that the obligations so deposited constitute Eligible Obligations
and do not contain provisions permitting the redemption or other prepayment
at the option of the issuer thereof, and an opinion of an independent
public accountant of nationally recognized standing, selected by the
Company, to the effect that the requirements set forth in clause (b) above
have been satisfied; and
(z) if such deposit shall have been made prior to the Maturity of such
Securities, an Officer's Certificate stating the Company's intention that,
upon delivery of such Officer's Certificate, its indebtedness in respect of
such Securities or portions thereof will have been satisfied and discharged
as contemplated in this Section.
Upon the deposit of money or Eligible Obligations, or both, in
accordance with this Section, together with the documents required by clauses
(x), (y) and (z) above, the Trustee shall, upon receipt of a Company Request,
acknowledge in writing that the Security or Securities or portions thereof with
respect to which such deposit was made are deemed to have been paid for all
purposes of this Indenture and that the entire indebtedness of the Company in
respect thereof has been satisfied and discharged as contemplated in this
Section. In the event that all of the conditions set forth in the preceding
paragraph shall have been satisfied in respect of any Securities or portions
thereof except that, for any reason, the Officer's Certificate specified in
clause (z), shall not have been delivered, such Securities or portions thereof
shall nevertheless be deemed to have been paid for all purposes of this
Indenture, and the Holders of such Securities or portions thereof shall
nevertheless be no longer entitled to the benefits of this Indenture or of any
of the covenants of the Company under Article Six (except the covenants
contained in Sections 602, 603 and 604) or any other covenants made in respect
of such Securities or portions thereof as contemplated by Section 301 or Section
1201(b), but the indebtedness of the Company in respect of such Securities or
portions thereof shall not be deemed to have been satisfied and discharged prior
to Maturity for any other purpose, and the Holders of such Securities or
portions thereof shall continue to be entitled to look to the Company for
payment of the indebtedness represented thereby; and, upon Company Request, the
Trustee shall acknowledge in writing that such Securities or portions thereof
are deemed to have been paid for all purposes of this Indenture.
If payment at Stated Maturity of less than all of the Securities of
any series, or any Tranche thereof, is to be provided for in the manner and with
the effect provided in this Section, the Security Registrar shall select such
Securities, or portions of principal amount thereof, in the manner specified by
Section 403 for selection for redemption of less than all the Securities of a
series or Tranche.
In the event that Securities which shall be deemed to have been paid
for purposes of this Indenture, and, if such is the case, in respect of which
the Company's indebtedness shall have been satisfied and discharged, all as
provided in this Section do not mature and are not to be redeemed within the 60
day period commencing with the date of the deposit of moneys or Eligible
Obligations, as aforesaid, the Company shall, as promptly as practicable, give a
notice, in the same manner as a notice of redemption with respect to such
Securities, to the Holders of such Securities to the effect that such deposit
has been made and the effect thereof.
Notwithstanding that any Securities shall be deemed to have been paid
for purposes of this Indenture, as aforesaid, the obligations of the Company and
the Trustee in respect of such Securities under Sections 304, 305, 306, 404, 503
(as to notice of redemption), 602, 603, 907, 909, 910 and 915 and this Article
Seven shall survive.
The Company shall pay, and shall indemnify the Trustee or any Paying
Agent with which Eligible Obligations shall have been deposited as provided in
this Section against, any tax, fee or other charge imposed on or assessed
<PAGE>
34
against such Eligible Obligations or the principal or interest received in
respect of such Eligible Obligations, including, but not limited to, any such
tax payable by any entity deemed, for tax purposes, to have been created as a
result of such deposit.
Anything herein to the contrary notwithstanding, (a) if, at any time
after a Security would be deemed to have been paid for purposes of this
Indenture, and, if such is the case, the Company's indebtedness in respect
thereof would be deemed to have been satisfied or discharged, pursuant to this
Section (without regard to the provisions of this paragraph), the Trustee or any
Paying Agent, as the case may be, shall be required to return the money or
Eligible Obligations, or combination thereof, deposited with it as aforesaid to
the Company or its representative under any applicable bankruptcy, insolvency or
other similar law, such Security shall thereupon be deemed retroactively not to
have been paid and any satisfaction and discharge of the Company's indebtedness
in respect thereof shall retroactively be deemed not to have been effected, and
such Security shall be deemed to remain Outstanding and (b) any satisfaction and
discharge of the Company's indebtedness in respect of any Security shall be
subject to the provisions of the last paragraph of Section 603.
SECTION 702. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further
effect (except as hereinafter expressly provided), and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) no Securities remain Outstanding hereunder; and
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company;
provided, however, that if, in accordance with the last paragraph of Section
701, any Security, previously deemed to have been paid for purposes of this
Indenture, shall be deemed retroactively not to have been so paid, this
Indenture shall thereupon be deemed retroactively not to have been satisfied and
discharged, as aforesaid, and to remain in full force and effect, and the
Company shall execute and deliver such instruments as the Trustee shall
reasonably request to evidence and acknowledge the same.
Notwithstanding the satisfaction and discharge of this Indenture as
aforesaid, the obligations of the Company and the Trustee under Sections 304,
305, 306, 404, 503 (as to notice of redemption), 602, 603, 907, 909, 910 and 915
and this Article Seven shall survive.
Upon satisfaction and discharge of this Indenture as provided in this
Section, the Trustee shall upon Company Request, assign, transfer and turn over
to the Company, subject to the lien provided by Section 907, any and all money,
securities and other property then held by the Trustee for the benefit of the
Holders of the Securities other than money and Eligible Obligations held by the
Trustee pursuant to Section 703 and shall execute and deliver to the Company and
the Guarantor such instruments as, in the judgment of the Company and the
Guarantor, shall be necessary, desirable or appropriate to effect or evidence
the satisfaction and discharge of this Indenture.
SECTION 703. APPLICATION OF TRUST MONEY.
Neither the Eligible Obligations nor the money deposited pursuant to
Section 701, nor the principal or interest payments on any such Eligible
Obligations, shall be withdrawn or used for any purpose other than, and shall be
held in trust for, the payment of the principal of and premium, interest and
Additional Amounts, if any, on the Securities or portions of principal amount
thereof in respect of which such deposit was made, all subject, however, to the
<PAGE>
35
provisions of Section 603; provided, however, that, so long as there shall not
have occurred and be continuing an Event of Default, any cash received from such
principal or interest payments on such Eligible Obligations, if not then needed
for such purpose, shall, to the extent practicable, and upon Company Request be
invested in Eligible Obligations of the type described in clause (b) in the
first paragraph of Section 701 maturing at such times and in such amounts as
shall be sufficient together with any other moneys and the principal and
interest on any other Eligible Obligations then held by the Trustee to pay when
due the principal of and premium, if any, and interest and Additional Amounts,
if any, due and to become due on such Securities or portions thereof on and
prior to the Maturity thereof, and interest earned from such reinvestment shall
be paid over to the Company as received, free and clear of any trust, lien or
pledge under this Indenture except the lien provided by Section 907; and
provided, further, that, so long as there shall not have occurred and be
continuing an Event of Default, any moneys held in accordance with this Section
on the Maturity of all such Securities in excess of the amount required to pay
the principal of and premium, interest and Additional Amounts, if any, then due
on such Securities shall, upon Company Request, be paid over to the Company free
and clear of any trust, lien or pledge under this Indenture except the lien
provided by Section 907; and provided, further, that if an Event of Default
shall have occurred and be continuing, moneys to be paid over to the Company
pursuant to this Section shall be held until such Event of Default shall have
been waived or cured.
ARTICLE EIGHT
EVENTS OF DEFAULT; REMEDIES
SECTION 801. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to Securities of
any series, means any one or more of the following events which has occurred:
(a) failure to pay interest, if any, on any Security of such series
within 30 days after the same becomes due and payable (whether or not
payment is prohibited by the provisions of Article Fifteen hereof);
provided, however, that a valid extension of the interest payment period or
deferral of payment of interest by the Company as contemplated in Section
311 of this Indenture shall not constitute a failure to pay interest for
this purpose; or
(b) failure to pay the principal of or premium, if any, on any
Security of such series when due and payable (whether or not payment is
prohibited by the provisions of Article Fifteen hereof); or
(c) failure to perform, or breach of, any covenant or warranty of the
Company in this Indenture (other than a covenant or warranty a default in
the performance of which or breach of which is elsewhere in this Section
specifically dealt with or which has expressly been included in this
Indenture solely for the benefit of one or more series of Securities other
than such series) for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee, or to the
Company and the Trustee by the Holders of at least 33% in principal amount
of the Outstanding Securities of such series, a written notice specifying
such default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" hereunder, unless the Trustee, or the
Trustee and the Holders of a principal amount of Securities of such series
not less than the principal amount of Securities the Holders of which gave
such notice, as the case may be, shall agree in writing to an extension of
such period prior to its expiration; or
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36
(d) 90 days after the occurrence of an Insolvency Event of a limited
partner of the Company, unless within 90 days of such Insolvency Event, the
General Partner of the Company has given notice to the other partners of
the Company of the continuation of the Company and the Company, at all
times from and after such Insolvency Event, is in fact continued as a
limited partnership under the laws of the State of Victoria, Australia; or
(e) (i) an order is made by a court of competent jurisdiction that the
Company or the General Partner of the Company be wound up or dissolved, or
an order is made appointing a liquidator or provisional liquidator in
respect of the Company or the General Partner of the Company or a
liquidator, or provisional liquidator is appointed in respect of the
Company or the General Partner of the Company (whether or not by order) and
(ii) such order is not vacated or such liquidator is not removed within 90
days; or
(f) the Company resolves to wind itself up, or otherwise dissolve
itself, or gives notice of its intention to do so; or
(g) the General Partner of the Company resolves to wind itself up or
to wind up the Company, or otherwise dissolve itself or the Company, or
gives notice of its intention to do so; or
(h) the Company or the General Partner of the Company enters into, or
resolves to enter into, a scheme of arrangement, deed of assignment or
composition with, or assignment for the benefit of, all or any class of the
Company's or the general partner's creditors or it proposes a
reorganization, moratorium or other administration, in each case under any
applicable bankruptcy, insolvency or other similar law, involving any of
them; or
(i) the Company or the General Partner of the Company is or states
that it is unable to pay its debts as and when they fall due or is
adjudicated by a court of competent jurisdiction to be insolvent; or
(j) the General Partner of the Company is insolvent or is deemed by
any applicable law to be insolvent; or
(k) the Company or the General Partner of the Company takes any step
to obtain protection (including, without limitation, summoning a creditors'
meeting to consider a proposal for voluntary arrangement) or the Company or
its General Partner is granted protection from its creditors under any
applicable legislation and such step is not reversed within 90 days; or
(l) a receiver, receiver and manager or similar officer is appointed
in respect of all or any substantial part of the property of the Company
and, if such officer was not voluntarily appointed by the Company, such
officer is not removed within 90 days; or
(m) an administrator or controller (as those terms are defined in the
Corporations Law of the State of Victoria, Australia) is appointed to the
General Partner of the Company or in respect of all or any substantial part
of its property (as the case may be) and such officer is not removed within
90 days; or
(n) the General Partner of the Company, or its board of directors,
resolves to appoint an administrator (as that term is defined in the
Corporations Law of the State of Victoria, Australia) to the General
Partner; or
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37
(o) if the Company or its General Partner is no longer formed or
incorporated under the laws of the State of Victoria, Australia, then
anything analogous or having a substantially similar effect to any of the
events specified in any of the paragraphs (d) - (n) inclusive happens under
the laws of any applicable jurisdiction and is not cured within the
applicable cure period, if any, specified in such paragraph; or
(p) any other Event of Default specified in an Officer's Certificate
with respect to Securities of such series.
provided, however, that the merger, consolidation or dissolution of the Company
- -----------------
or the conveyance, lease or transfer of substantially all of its properties or
assets, all as permitted under the terms of Article 11 hereof, is not considered
an Event of Default for the purposes of any of paragraphs (d) - (h) and (k) -
(m) inclusive.
SECTION 802. DECLARATION OF ACCELERATION; RESCISSION AND ANNULMENT.
If an Event of Default due to the default in payment of principal of,
or interest on, any series of Securities or due to the default in the
performance or breach of any other covenant or warranty of the Company
applicable to the Securities of such series but not applicable to all
Outstanding Securities shall have occurred and be continuing, either the Trustee
or the Holders of not less than 33% in principal amount of the Securities of
such series may then declare the principal amount of all of Securities of such
series and interest accrued thereon to be due and payable immediately by a
written notice to the Company (and to the Trustee if given by the Holders)
(provided that the payment of principal and interest on such Securities shall
remain subordinated to the extent provided in Article Fifteen hereof). If an
Event of Default due to default in the performance of any other the covenants or
agreements herein applicable to all Outstanding Securities shall have occurred
and be continuing, either the Trustee or the Holders of not less than 33% in
aggregate principal amount of all Securities then Outstanding, (considered as
one class and not the Holders of the Securities of any one of such series), may
declare the principal of all Securities and interest accrued thereon to be due
and payable immediately by written notice to the Company (and to the Trustee if
given by the Holders) (provided that the payment of principal and interest on
such Securities shall remain subordinated to the extent provided in Article
Fifteen hereof). Upon receipt by the Company of such written notice of such
declaration (herein referred to as a declaration of acceleration) with respect
to Securities of any series, the principal amount of such Securities and
interest accrued thereon shall become due and payable immediately.
At any time after such a declaration of acceleration with respect to
Securities of any series shall have been made and before a judgment or decree
for payment of the money due shall have been obtained by the Trustee as
hereinafter in this Article provided, the Event of Default or Events of Default
giving rise to such declaration of acceleration shall, without further act, be
deemed to have been waived, and such declaration and its consequences shall,
without further act, be deemed to have been rescinded and annulled, if
(a) the Company shall have paid or deposited with the Trustee a sum
sufficient to pay
(1) all overdue interest on all Securities of such series;
(2) the principal of and premium, if any, on any Securities of
such series which have become due otherwise than by such declaration
of acceleration and interest thereon at the rate or rates prescribed
therefor herein or in such Securities;
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38
(3) to the extent that payment of such interest is lawful,
interest upon overdue interest, if any, at the rate or rates
prescribed therefor herein or in such Securities;
(4) all amounts due to the Trustee under Section 907;
and
(b) any other Event of Default or Events of Default with respect to
Securities of such series, other than the nonpayment of the principal of
Securities of such series which shall have become due solely by such
declaration of acceleration, shall have been cured or waived as provided in
Section 813.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 803. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
If an Event of Default described in clause (a) or (b) of Section 801
shall have occurred and be continuing, the Company shall, upon demand of the
Trustee, pay to the Trustee, for the benefit of the Holders of the Securities of
the series with respect to which such Event of Default shall have occurred, the
whole amount then due and payable on such Securities for principal and premium,
interest and Additional Amounts, if any, and, to the extent permitted by law,
interest on any overdue principal, premium, interest, and Additional Amounts, if
any, at the rate or rates prescribed therefor in such Securities, and, in
addition thereto, such further amount as shall be sufficient to cover any
amounts due to the Trustee under Section 907. Unless otherwise specified
pursuant to Section 301 with respect to any series of Securities, the rate or
rates at which Securities shall bear interest on overdue principal, premium,
interest and Additional Amounts shall be, to the extent permitted by law, the
same rate or rates at which such Securities shall bear interest prior to
maturity.
If the Company shall fail to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Securities
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon such
Securities, wherever situated.
If an Event of Default with respect to Securities of any series shall
have occurred and be continuing, the Trustee may in its discretion, proceed to
protect and enforce its rights and the rights of the Holders of Securities of
such series by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 804. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, arrangement, adjustment, composition or other judicial proceeding
relative to the Company or any other obligor upon the Securities or the property
of the Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company for the payment of
<PAGE>
39
overdue principal or interest) shall, in accordance with Article 15 hereof, be
entitled and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal,
premium, if any, and interest and Additional Amounts, if any, owing and
unpaid in respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Trustee (including any claim for amounts due to the Trustee under
Section 907) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amounts due it under Section 907.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
arrangement, adjustment or composition affecting the Securities or the rights of
any Holder thereof or to authorize the Trustee to vote in respect of the claim
of any Holder in any such proceeding.
SECTION 805. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders in respect of which such judgment has been
recovered.
SECTION 806. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be
subject to the provisions of Article 15 hereof and be applied in the following
order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal or premium, if any, or
interest or Additional Amounts, if any, upon presentation of the Securities in
respect of which or for the benefit of which such money shall have been
collected and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
907;
SECOND: To the payment of the amounts then due and unpaid upon the
Securities for principal of and premium, if any, and interest and
Additional Amounts, if any, in respect of which or for the benefit of which
such money has been collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on such Securities for
principal, premium, if any, and interest and Additional Amounts, if any,
respectively; and
THIRD: To the payment of the remainder, if any, to the Company or to
whomsoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
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SECTION 807. LIMITATION ON SUITS.
No Holder shall have any right to institute any proceeding, judicial
or otherwise, with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder shall have previously given written notice to the
Trustee of a continuing Event of Default with respect to the Securities of
such series;
(b) the Holders of a majority in aggregate principal amount of the
Outstanding Securities of all series in respect of which an Event of
Default shall have occurred and be continuing, considered as one class,
shall have made written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders shall have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity shall have failed to institute any such proceeding;
and
(e) no direction inconsistent with such written request shall have
been given to the Trustee during such 60-day period by the Holders of a
majority in aggregate principal amount of the Outstanding Securities of all
series in respect of which an Event of Default shall have occurred and be
continuing, considered as one class;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 808. RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND INTEREST .
The rights of any Holder of any Security to receive payment of the
principal of and interest, if any, and Additional Amounts, if any, on such
Security on or after the respective due dates expressed in such Security (or, in
the case of redemption, on the Redemption Date) and to institute suit for the
enforcement of any such payment, shall not be impaired or affected without the
consent of such Holder.
SECTION 809. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding shall have been
discontinued or abandoned for any reason, or shall have been determined
adversely to the Trustee or to such Holder, then and in every such case, subject
to any determination in such proceeding, the Company, the Trustee and such
Holder shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and such Holder
shall continue as though no such proceeding had been instituted.
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SECTION 810. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided in the last paragraph of Section 306, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 811. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder to exercise any
right or remedy accruing upon any Event of Default shall impair any such right
or remedy or constitute a waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by law to the Trustee
or to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 812. CONTROL BY HOLDERS OF SECURITIES.
If an Event of Default shall have occurred and be continuing in
respect of a series of Securities, the Holders of a majority in principal amount
of the Outstanding Securities of such series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Securities of such series; provided, however, that if an Event of
Default shall have occurred and be continuing with respect to more than one
series of Securities, the Holders of a majority in aggregate principal amount of
the Outstanding Securities of all such series, considered as one class, shall
have the right to make such direction, and not the Holders of the Securities of
any one of such series; and provided, further, that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with any such direction, and
(c) such direction would not subject the Trustee to personal liability
in circumstances where indemnity, in the Trustee's sole discretion, would
not be adequate.
Before proceeding to exercise any right or power hereunder at the
direction of such Holders, the Trustee shall be entitled to receive from such
Holders reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with any such direction.
SECTION 813. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(a) in the payment of the principal of or premium, interest or
Additional Amounts, if any, on any Security of such series, or
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(b) in respect of a covenant or provision hereof which under Section
1202 cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any and
all Events of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 814. UNDERTAKING FOR COSTS.
The Company and the Trustee agree, and each Holder by his acceptance
thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in aggregate
principal amount of the Outstanding Securities of all series in respect of which
such suit may be brought, considered as one class, or to any suit instituted by
any Holder for the enforcement of the payment of the principal of or premium, if
any, or interest or Additional Amounts, if any, on any Security on or after the
Stated Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
SECTION 815. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE NINE
THE TRUSTEE
SECTION 901. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee in the
Trust Indenture Act and no implied covenants or obligations shall be read
into this Indenture against the Trustee. For purposes of Sections 315(a)
and 315(c) of the Trust Indenture Act, the term "default" is hereby defined
as an Event of Default which has occurred and is continuing.
(b) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
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(c) The duties and responsibilities of the Trustee under this
Indenture shall be subject to the protections, exculpations and limitations
on liability afforded to an indenture trustee under the provisions of the
Trust Indenture Act. For the purposes of Sections 315(b)(2) and 315(d)(2)
of the Trust Indenture Act, the term "responsible officer" is hereby
defined as a Responsible Officer and the chairman or vice-chairman of the
board of directors, the chairman or vice-chairman of the executive
committee of the board of directors, the president, any vice president, any
assistant vice president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, the controller and any assistant
controller of the Trustee, or any other officer of the Trustee customarily
performing functions similar to those performed by a Responsible Officer or
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his or her knowledge of and familiarity with the
particular subject.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 902. NOTICE OF DEFAULTS.
The Trustee shall give notice of any default hereunder known to the
Trustee with respect to the Securities of any series to the Holders of
Securities of such series in the manner and to the extent required to do so by
the Trust Indenture Act, unless such default shall have been cured or waived;
provided, however, that in the case of any default of the character specified in
Section 801(c), no such notice to Holders shall be given until at least 45
days after the occurrence thereof. For the purpose of this Section and clause
(h) of Section 903, the term "default" means any event which is, or after notice
or lapse of time, or both, would become, an Event of Default.
SECTION 903. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 901 and to the applicable
provisions of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document reasonably believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order or as
otherwise expressly provided herein;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
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(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any Holder pursuant to this Indenture, unless such Holder shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall (subject to applicable legal requirements) be entitled to examine,
during normal business hours, the books, records and premises of the
Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys, and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder;
(h) the rights, privileges, protections, immunities and benefits given
to the Trustee, including, without limitation, its right to be indemnified,
are extended to, and shall be enforceable by, the Trustee in each of its
capacities hereunder; and
(i) the Trustee shall not be charged with knowledge of any default or
Event of Default with respect to the Securities of any series for which it
is acting as Trustee unless either (1) a Responsible Officer of the Trustee
shall have actual knowledge that such default or Event of Default, as the
case may be, exists and constitutes a default or Event of Default, as the
case may be, under this Indenture, or (2) written notice of such default or
Event of Default shall have been given in the manner provided in Section
105 hereof to the Trustee by the Company or any other obligor on such
Securities or by any Holder of such Securities.
SECTION 904. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities (except the
Trustee's certificates of authentication) shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 905. MAY HOLD SECURITIES.
Each of the Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Sections 908 and 913, may otherwise deal with the Company with the same rights
it would have if it were not the Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other agent.
SECTION 906. MONEY HELD IN TRUST.
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Money held by the Trustee in trust hereunder need not be segregated
from other funds, except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
expressly provided herein or otherwise agreed with, and for the sole benefit of,
the Company.
SECTION 907. COMPENSATION AND REIMBURSEMENT.
The Company shall
(a) pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(b) except as otherwise expressly provided herein, reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except to the extent that any
such expense, disbursement or advance may be attributable to the Trustee's
negligence, willful misconduct or bad faith; and
(c) indemnify the Trustee for, and hold it harmless from and against,
any loss, liability or expense reasonably incurred by it arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder or the performance of its duties hereunder, including the
reasonable costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its
powers or duties hereunder, except to the extent any such loss, liability
or expense may be attributable to its negligence, willful misconduct or bad
faith.
As security for the performance of the obligations of the Company
under this Section, the Trustee shall have a lien prior to the Securities upon
all property and funds held or collected by the Trustee as such other than
property and funds held in trust under Section 703 (except as otherwise provided
in Section 703). "Trustee" for purposes of this Section shall include any
predecessor Trustee; provided, however, that the negligence, willful misconduct
or bad faith of any Trustee hereunder shall not affect the rights of any other
Trustee hereunder.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 801(d) or Section 801(e), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable bankruptcy, insolvency or other similar law.
The provisions of this Section 907 shall survive the termination of
this Indenture.
SECTION 908. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee shall have or acquire any conflicting interest within
the meaning of the Trust Indenture Act, it shall either eliminate such
conflicting interest or resign to the extent, in the manner and with the effect,
and subject to the conditions, provided in the Trust Indenture Act and this
Indenture. For purposes of Section 310(b)(1) of the Trust Indenture Act and to
the extent permitted thereby, the Trustee, in its capacity as trustee in respect
of the Securities of any series, shall not be deemed to have a conflicting
interest arising from its capacity as trustee in respect of the Securities of
any other series.
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SECTION 909. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be
(a) a corporation organized and doing business under the laws of the
United States, any State or Territory thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by Federal, State authority, or other applicable
government authority, or
(b) if and to the extent permitted by the Commission by rule,
regulation or order upon application, a corporation or other Person
organized and doing business under the laws of a foreign government,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000 or the Dollar
equivalent of the applicable foreign currency and subject to supervision or
examination by authority of such foreign government or a political
subdivision thereof substantially equivalent to supervision or examination
applicable to United States institutional trustees,
and, in either case, qualified and eligible under this Article and the Trust
Indenture Act. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of such supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article.
SECTION 910. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 911.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving written notice thereof to the Company. If
the instrument of acceptance by a successor Trustee required by Section 911
shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities of all series
and delivery of such Act to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 908 after
written request therefor by the Company or by any Holder who has been
a bona fide Holder for at least six months, or
(2) the Trustee shall cease to be eligible under Section 909 and
shall fail to resign after written request therefor by the Company or
by any such Holder, or
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(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (x) the General Partner, acting on the Company's behalf,
by Board Resolution may remove the Trustee with respect to all Securities or (y)
subject to Section 814, any Holder who has been a bona fide Holder for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Trustee with respect
to all Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause
(other than as contemplated in clause (y) in subsection (d) of this
Section), with respect to the Securities of one or more series, the General
Partner, acting on the Company's behalf, by Board Resolutions, shall
promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one
Trustee with respect to the Securities of any particular series) and shall
comply with the applicable requirements of Section 911. If, within one year
after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee with respect to the Securities of any series
shall be appointed by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series delivered to the Company and
the retiring Trustee, the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment in accordance with the applicable
requirements of Section 911, become the successor Trustee with respect to
the Securities of such series and to that extent supersede the successor
Trustee appointed by the Company. If no successor Trustee with respect to
the Securities of any series shall have been so appointed by the Company or
the Holders and accepted appointment in the manner required by Section 911,
any Holder who has been a bona fide Holder of a Security of such series for
at least six months may, on behalf of itself and all others similarly
situated, petition any court of competent jurisdiction for the appointment
of a successor Trustee with respect to the Securities of such series.
(f) So long as no event which is, or after notice or lapse of time, or
both, would become, an Event of Default shall have occurred and be
continuing, and except with respect to a Trustee appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
pursuant to subsection (e) of this Section, if the Company shall have
delivered to the Trustee (i) a Board Resolution appointing a successor
Trustee, effective as of a date specified therein, and (ii) an instrument
of acceptance of such appointment, effective as of such date, by such
successor Trustee in accordance with Section 911, the Trustee shall be
deemed to have resigned as contemplated in subsection (b) of this Section,
the successor Trustee shall be deemed to have been appointed by the Company
pursuant to subsection (e) of this Section and such appointment shall be
deemed to have been accepted as contemplated in Section 911, all as of such
date, and all other provisions of this Section and Section 911 shall be
applicable to such resignation, appointment and acceptance except to the
extent inconsistent with this subsection (f).
(g) The Company (or, should the Company fail to act promptly, the
successor trustee at the expense of the Company) shall give notice of each
resignation and each removal of the Trustee with respect to the Securities
of any series and each appointment of a successor Trustee with respect to
the Securities of any series by mailing written notice of such event by
first-class mail, postage prepaid, to all Holders of Securities of such
series as their names and addresses appear in the Security Register. Each
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48
notice shall include the name of the successor Trustee with respect to the
Securities of such series and the address of its corporate trust office.
SECTION 911. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of all series, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and thereupon
the resignation or removal of the retiring Trustee shall become effective
and such successor Trustee, without any further act, deed or conveyance
shall become vested with all the rights, powers, trusts and duties of the
retiring Trustee; but, on the request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of all sums owed to it,
execute and deliver an instrument transferring to such successor Trustee
all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such
provisions as shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series as to which the retiring Trustee
is not retiring shall continue to be vested in the retiring Trustee and (3)
shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein
or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be trustee
of a trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and upon the execution
and delivery of such supplemental indenture the resignation or removal of
the retiring Trustee shall become effective to the extent provided therein
and each such successor Trustee, without any further act, deed or
conveyance shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee relates;
but, on request of the Company or any successor Trustee, such retiring
Trustee, upon payment of all sums owed to it, shall duly assign, transfer
and deliver to such successor Trustee all property and money held by such
retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any instruments which fully vest in and confirm to such successor
Trustee all such rights, powers and trusts referred to in subsection (a) or
(b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
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SECTION 912. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any Person into which the Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such Person
shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as if such
successor Trustee had itself authenticated such Securities.
SECTION 913. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If the Trustee shall be or become a creditor of the Company or any
other obligor upon the Securities (other than by reason of a relationship
described in Section 311(b) of the Trust Indenture Act), the Trustee shall be
subject to any and all applicable provisions of the Trust Indenture Act
regarding the collection of claims against the Company or such other obligor.
For purposes of Section 311(b) of the Trust Indenture Act:
(a) the term "cash transaction" means any transaction in which full
payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand;
(b) the term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company for the purpose of financing the purchase,
processing, manufacturing, shipment, storage or sale of goods, wares or
merchandise and which is secured by documents evidencing title to,
possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security is
received by the Trustee simultaneously with the creation of the creditor
relationship with the Company arising from the making, drawing, negotiating
or incurring of the draft, bill of exchange, acceptance or obligation.
SECTION 914. CO-TRUSTEES AND SEPARATE TRUSTEES.
At any time or times, for the purpose of meeting the legal
requirements of any applicable jurisdiction, the Company and the Trustee shall
have power to appoint, and, upon the written request of the Trustee or of the
Holders of at least 33% in principal amount of the Securities then Outstanding,
the Company shall for such purpose join with the Trustee in the execution and
delivery of all instruments and agreements necessary or proper to appoint, one
or more Persons approved by the Trustee either to act as co-trustee, jointly
with the Trustee, or to act as separate trustee, in either case with such powers
as may be provided in the instrument of appointment, and to vest in such Person
or Persons, in the capacity aforesaid, any property, title, right or power
deemed necessary or desirable, subject to the other provisions of this Section.
If the Company does not join in such appointment within 15 days after the
receipt by it of a request so to do, or if an Event of Default shall have
occurred and be continuing, the Trustee alone shall have power to make such
appointment.
Should any written instrument or instruments from the Company be
required by any co-trustee or separate trustee so appointed to more fully
confirm to such co-trustee or separate trustee such property, title, right or
power, any and all such instruments shall, on request, be executed, acknowledged
and delivered by the Company.
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50
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following conditions:
(a) the Securities shall be authenticated and delivered, and all
rights, powers, duties and obligations hereunder in respect of the custody
of securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised
solely, by the Trustee;
(b) the rights, powers, duties and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed
either by the Trustee or by the Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law of
any jurisdiction in which any particular act is to be performed, the
Trustee shall be incompetent or unqualified to perform such act, in which
event such rights, powers, duties and obligations shall be exercised and
performed by such co-trustee or separate trustee;
(c) the Trustee at any time, by an instrument in writing executed by
it, with the concurrence of the Company, may accept the resignation of or
remove any co-trustee or separate trustee appointed under this Section,
and, if an Event of Default shall have occurred and be continuing, the
Trustee shall have power to accept the resignation of, or remove, any such
co-trustee or separate trustee without the concurrence of the Company. Upon
the written request of the Trustee, the Company shall join with the Trustee
in the execution and delivery of all instruments and agreements necessary
or proper to effectuate such resignation or removal. A successor to any
co-trustee or separate trustee so resigned or removed may be appointed in
the manner provided in this Section;
(d) no co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Trustee, or any other such
trustee hereunder; and
(e) any Act of Holders delivered to the Trustee shall be deemed to
have been delivered to each such co-trustee and separate trustee.
SECTION 915. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents with respect
to the Securities of one or more series, or any Tranche thereof, which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series or Tranche issued upon original issuance, exchange, registration of
transfer or partial redemption thereof or pursuant to Section 306, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States, any State or territory thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to supervision or examination by Federal, State or other applicable government
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
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51
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
the rights, powers and duties of its predecessor hereunder, with like effect as
if originally named as an Authenticating Agent. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, in accordance
with, and subject to the provisions of, Section 907.
The provisions of Sections 308, 904 and 905 shall be applicable to
each Authenticating Agent.
If an appointment with respect to the Securities of one or more series
shall be made pursuant to this Section, the Securities of such series may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication substantially in the following form:
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52
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
Dated: [Name of Trustee]
As Trustee
By
--------------------------------------
As Authenticating
Agent
By
--------------------------------------
As Authenticating
Agent
If all of the Securities of a series may not be originally issued at
one time, and if the Trustee does not have an office capable of authenticating
Securities upon original issuance located in a Place of Payment where the
Company wishes to have Securities of such series authenticated upon original
issuance, the Trustee, if so requested by the Company in writing (which writing
need not comply with Section 102 and need not be accompanied by an Opinion of
Counsel), shall appoint, in accordance with this Section and in accordance with
such procedures as shall be acceptable to the Trustee, an Authenticating Agent
having an office in a Place of Payment designated by the Company with respect to
such series of Securities.
ARTICLE TEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 1001. LISTS OF HOLDERS.
Semiannually, not later than May 1 and November 1 in each year,
commencing May 1, 2000, and at such other times as the Trustee may request in
writing, the Company shall furnish or cause to be furnished to the Trustee
information as to the names and addresses of the Holders, and the Trustee shall
preserve such information and similar information received by it in any other
capacity and afford to the Holders access to information so preserved by it, all
to such extent, if any, and in such manner as shall be required by the Trust
Indenture Act; provided, however, that no such list need be furnished so long as
the Trustee shall be the Security Registrar.
SECTION 1002. REPORTS BY TRUSTEE AND COMPANY.
Not later than May 1 in each year, commencing May 1, 2000, the
Trustee shall transmit to the Holders, the Commission and each securities
exchange upon which any Securities are listed, a report, dated as of the next
preceding March 1, with respect to any events and other matters described in
Section 313(a) of the Trust Indenture Act, in such manner and to the extent
required by the Trust Indenture Act. The Trustee shall transmit to the Holders,
the Commission and each securities exchange upon which any Securities are
listed, and the Company shall file with the Trustee (within 30 days after filing
with the Commission in the case of reports which pursuant to the Trust Indenture
Act must be filed with the Commission and furnished to the Trustee) and transmit
to the Holders, such other information, reports and other documents, if any, at
such times and in such manner, as shall be required by the Trust Indenture Act.
<PAGE>
53
The Company shall notify the Trustee of the listing or delisting of any
Securities on any securities exchange.
To the extent required by the Trust Indenture Act, the Company shall
file with the Trustee the following documents and reports within 30 days after
such documents or reports (or consolidated documents or reports containing such
documents or reports) are filed with the Commission:
(a) The Company's annual reports on Form 10-K;
(b) The Company's quarterly reports on Form 10-Q;
(c) The Company's current reports on Form 8-K; and
(d) Any other documents filed with the Commission which are filed with
or incorporated by reference in the foregoing reports, related to the
Company, and have not previously been filed with the Trustee.
To the extent that any of the foregoing documents or reports are
consolidated with similar documents or reports filed by an affiliate, the
Company may file such consolidated document or report with the Trustee in lieu
of the separate document or report.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer's Certificates).
ARTICLE ELEVEN
CONSOLIDATION, MERGER, CONVEYANCE OR OTHER TRANSFER
SECTION 1101. COMPANY OR GENERAL PARTNER MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
TERMS.
Neither the Company nor the General Partner shall consolidate with or
merge into any other corporation or other entity, or convey or otherwise
transfer or lease its properties and assets substantially as an entirety to any
Person, unless
(a) the corporation or other entity formed by such consolidation or
into which the Company or the General Partner, as the case may be, is
merged or the Person which acquires by conveyance or transfer, or which
leases, the properties and assets of the Company or General Partner, as the
case may be, substantially as an entirety shall be a Person organized under
any jurisdiction and validly existing under the laws of such jurisdiction,
and shall expressly assume, (i) by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee,
the due and punctual payment of the principal of and premium, if any, and
interest, if any, on all Outstanding Securities and the performance of
every covenant of this Indenture on the part of the Company or the General
Partner, as the case may be, to be performed or observed, or (ii) the
General Partner's obligations under the Partnership Deed, as the case may
be;
<PAGE>
54
(b) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have occurred and be continuing; and
(c) the General Partner shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, or other transfer or lease and such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transactions have been
complied with.
SECTION 1102. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation by the Company or the General Partner with or
merger by the Company or the General Partner into any other corporation or other
entity or any conveyance, or other transfer or lease of the properties and
assets of the Company or the General Partner substantially as an entirety in
accordance with Section 1101, the successor corporation or other entity formed
by such consolidation or into which the Company is merged or the Person to which
such conveyance, transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company or the General
Partner, as the case may be, under this Indenture with the same effect as if
such successor Person had been named as the Company or the General Partner, as
the case may be, herein, and thereafter, except in the case of a lease, the
predecessor Person shall be relieved of all obligations and covenants under this
Indenture and the Securities Outstanding hereunder.
SECTION 1103. MERGER INTO COMPANY OR GENERAL PARTNER; CERTAIN TRANSFERS.
Nothing in this Indenture shall be deemed to prevent or restrict any
consolidation or merger after the consummation of which the Company or General
Partner, as the case may be, would be the surviving or resulting entity or any
conveyance or other transfer, or lease of any part of the properties of the
Company or General Partner, as the case may be, which does not constitute the
entirety, or substantially the entirety, of the direct assets of the Company or
the General Partner, as the case may be. Nothing in this Indenture shall be
deemed to prevent or restrict (i) any consolidation or merger of any Affiliate
of the Company with any other person or entity (other than with the Company
itself or the General Partner in a merger or consolidation not permitted under
this Article Eleven), or (ii) any conveyance or other transfer, or lease, of any
part of the assets of any Affiliate of the Company (other than the assets of the
Company itself or the General Partner.)
SECTION 1104. CONSOLIDATION DEFINED.
The term "consolidation" as used in this Article shall include similar
transactions such as amalgamations and reorganizations.
ARTICLE TWELVE
SUPPLEMENTAL INDENTURES
SECTION 1201. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company and the Trustee, at
any time and from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
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55
(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities, all as provided in Article Eleven; or
(b) to add one or more covenants of the Company or other provisions
for the benefit of all Holders or for the benefit of the Holders of, or to
remain in effect only so long as there shall be Outstanding, Securities of
one or more specified series, or one or more specified Tranches thereof, or
to surrender any right or power herein conferred upon the Company; or
(c) to add any additional Events of Default with respect to all or any
series of Securities Outstanding hereunder; or
(d) to change or eliminate any provision of this Indenture or to add
any new provision to this Indenture; provided, however, that if such
change, elimination or addition shall adversely affect the interests of the
Holders of Securities of any series or Tranche (other than any series the
terms of which permit such change, elimination or addition) Outstanding on
the date of such indenture supplemental hereto in any material respect,
such change, elimination or addition shall become effective (i) with
respect to such series or Tranche only pursuant to the provisions of
Section 1202 hereof or (ii) when no Security of such series or Tranche
remains Outstanding; or
(e) to provide collateral security for all but not part of the
Securities; or
(f) to establish the form or terms of Securities of any series or
Tranche as contemplated by Sections 201 and 301; or
(g) to the extent not provided herein or pursuant to Section 301, to
provide for the authentication, delivery and issuance of bearer securities
and coupons appertaining thereto representing interest, if any, thereon and
for the procedures for the exchange and replacement thereof and for the
giving of notice to, and the solicitation of the vote or consent of, the
holders thereof, and for any and all other matters incidental thereto; or
(h) to evidence and provide for the acceptance of appointment
hereunder by a separate or successor Trustee or co-trustee with respect to
the Securities of one or more series and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee, pursuant to the requirements of Section 911(b); or
(i) to provide for the procedures required to permit the Company to
utilize, at its option, a noncertificated system of registration for all,
or any series or Tranche of, the Securities; or
(j) to change any place or places where (1) the principal of and
premium, interest and Additional Amounts, if any, on all or any series of
Securities, or any Tranche thereof, shall be payable, (2) all or any series
of Securities, or any Tranche thereof, may be surrendered for registration
of transfer, (3) all or any series of Securities, or any Tranche thereof,
may be surrendered for exchange and (4) notices and demands to or upon the
Company in respect of all or any series of Securities, or any Tranche
thereof, and this Indenture may be served; or
(k) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein, or to make provisions with respect to matters or questions arising
<PAGE>
56
under this Indenture, provided that such action shall not adversely affect
the interests of the Holders of Securities of any series or Tranche in any
material respect.
Without limiting the generality of the foregoing, if the Trust
Indenture Act as in effect at the date of the execution and delivery of this
Indenture or at any time thereafter shall be amended and
(x) if any such amendment shall require one or more changes to any
provisions hereof or the inclusion herein of any additional provisions, or
shall by operation of law be deemed to effect such changes or incorporate
such provisions by reference or otherwise, this Indenture shall be deemed
to have been amended so as to conform to such amendment to the Trust
Indenture Act, and the Company and the Trustee may, without the consent of
any Holders, enter into an indenture supplemental hereto to effect or
evidence such changes or additional provisions; or
(y) if any such amendment shall permit one or more changes to, or the
elimination of, any provisions hereof which, at the date of the execution
and delivery hereof or at any time thereafter, are required by the Trust
Indenture Act to be contained herein, this Indenture shall be deemed to
have been amended to effect such changes or elimination, and the Company
and the Trustee may, without the consent of any Holders, enter into an
indenture supplemental hereto to evidence such amendment hereof.
SECTION 1202. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of a majority in aggregate principal
amount of the Securities of all series then Outstanding under this Indenture,
considered as one class, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by Board Resolutions, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or modifying in any manner the rights of the
Holders of Securities of such series under the Indenture; provided, however,
that if there shall be Securities of more than one series Outstanding hereunder
and if a proposed supplemental indenture shall directly affect the rights of the
Holders of Securities of one or more, but less than all, of such series, then
the consent only of the Holders of a majority in aggregate principal amount of
the Outstanding Securities of all series so directly affected, considered as one
class, shall be required; and provided, further, that if the Securities of any
series shall have been issued in more than one Tranche and if the proposed
supplemental indenture shall directly affect the rights of the Holders of
Securities of one or more, but less than all, of such Tranches, then the consent
only of the Holders of a majority in aggregate principal amount of the
Outstanding Securities of all Tranches so directly affected, considered as one
class, shall be required; and provided, further, that no such supplemental
indenture shall:
(a) change the Stated Maturity of the principal of, or any installment
of principal of or interest on any Security, or reduce the principal amount
thereof or the rate of interest thereon (or the amount of any installment
of interest thereon) or change the method of calculating such rate or
reduce any premium payable upon the redemption thereof, or change the coin
or currency (or other property), in which any Security or any premium or
the interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the Stated Maturity of any
Security (or, in the case of redemption, on or after the Redemption Date),
without, in any such case, the consent of the Holder of such Security, or
(b) reduce the percentage in principal amount of the Outstanding
Securities of any series or any Tranche thereof, the consent of the Holders
of which is required for any such supplemental indenture, or the consent of
<PAGE>
57
the Holders of which is required for any waiver of compliance with any
provision of this Indenture or of any default hereunder and its
consequences, or reduce the requirements of Section 1304 for quorum or
voting, without, in any such case, the consent of the Holders of each
Outstanding Security of such series or Tranche, or
(c) modify any of the provisions of this Section, Section 607 or
Section 813 with respect to the Securities of any series, or any Tranche
thereof, except to increase the percentages in principal amount referred to
in this Section or such other Sections or to provide that other provisions
of this Indenture cannot be modified or waived without the consent of the
Holder of each Outstanding Security affected thereby; provided, however,
that this clause shall not be deemed to require the consent of any Holder
with respect to changes in the references to "the Trustee" and concomitant
changes in this Section, or the deletion of this proviso, in accordance
with the requirements of Sections 911(b), 914 and 1201(h).
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or of one or more
Tranches thereof, or which modifies the rights of the Holders of Securities of
such series with respect to such covenant or other provision, shall be deemed
not to affect the rights under this Indenture of the Holders of Securities of
any other series or Tranche.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof. A
waiver by a Holder of such Holder's right to consent under this Section shall be
deemed to be a consent of such Holder.
SECTION 1203. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 901) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties, immunities or liabilities under this Indenture or
otherwise.
SECTION 1204. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby. Any supplemental indenture permitted by this Article may
restate this Indenture in its entirety, and, upon the execution and delivery
thereof, any such restatement shall supersede this Indenture as theretofore in
effect for all purposes.
SECTION 1205. CONFORMITY WITH TRUST INDENTURE ACT.
Unless otherwise provided as contemplated by Section 301 with respect
to any series of Securities, every supplemental indenture executed pursuant to
this Article shall conform to the requirements of the Trust Indenture Act as
then in effect.
SECTION 1206. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
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58
Securities of any series, or any Tranche thereof, authenticated and
delivered after the execution of any supplemental indenture pursuant to this
Article may, and shall if required by the Trustee, bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Securities of any series, or
any Tranche thereof, so modified as to conform, in the opinion of the Trustee
and the Company, to any such supplemental indenture may be prepared and executed
by the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series or Tranche.
SECTION 1207. MODIFICATION WITHOUT SUPPLEMENTAL INDENTURE.
If the terms of any particular series of Securities shall have been
established in an Officer's Certificate as contemplated by Section 301, and not
in an indenture supplemental hereto, additions to, changes in or the elimination
of any of such terms may be effected by means of a supplemental Officer's
Certificate, as the case may be, delivered to, and accepted by, the Trustee;
provided, however, that such supplemental Officer's Certificate shall not be
accepted by the Trustee or otherwise be effective unless all conditions set
forth in this Indenture which would be required to be satisfied if such
additions, changes or elimination were contained in a supplemental indenture
shall have been appropriately satisfied. Upon the acceptance thereof by the
Trustee, any such supplemental Officer's Certificate shall be deemed to be a
"supplemental indenture" for purposes of Section 1204 and 1206.
ARTICLE THIRTEEN
MEETINGS OF HOLDERS; ACTION WITHOUT MEETING
SECTION 1301. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Holders of Securities of one or more, or all, series, or
any Tranche or Tranches thereof, may be called at any time and from time to time
pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series or Tranches.
SECTION 1302. CALL, NOTICE AND PLACE OF MEETINGS.
(a) The Trustee may at any time call a meeting of Holders of
Securities of one or more, or all, series, or any Tranche or Tranches
thereof, for any purpose specified in Section 1301, to be held at such time
and at such place in the Borough of Manhattan, The City of New York, as the
Trustee shall determine, or, with the approval of the Company, at any other
place. Notice of every such meeting, setting forth the time and the place
of such meeting and in general terms the action proposed to be taken at
such meeting, shall be given, in the manner provided in Section 106, not
less than 21 nor more than 180 days prior to the date fixed for the
meeting.
(b) If the Trustee shall have been requested to call a meeting of the
Holders of Securities of one or more, or all, series, or any Tranche or
Tranches thereof, by the Company or by the Holders of 33% in aggregate
principal amount of all of such series and Tranches, considered as one
class, for any purpose specified in Section 1301, by written request
setting forth in reasonable detail the action proposed to be taken at the
meeting, and the Trustee shall not have given the notice of such meeting
within 21 days after receipt of such request or shall not thereafter
proceed to cause the meeting to be held as provided herein, then the
Company or the Holders of Securities of such series and Tranches in the
amount above specified, as the case may be, may determine the time and the
place in the Borough of Manhattan, The City of New York, or in such other
<PAGE>
59
place as shall be determined or approved by the Company, for such meeting
and may call such meeting for such purposes by giving notice thereof as
provided in subsection (a) of this Section.
(c) Any meeting of Holders of Securities of one or more, or all,
series, or any Tranche or Tranches thereof, shall be valid without notice
if the Holders of all Outstanding Securities of such series or Tranches are
present in person or by proxy and if representatives of the Company and the
Trustee are present, or if notice is waived in writing before or after the
meeting by the Holders of all Outstanding Securities of such series, or any
Tranche or Tranches thereof, or by such of them as are not present at the
meeting in person or by proxy, and by the Company and the Trustee.
SECTION 1303. PERSONS ENTITLED TO VOTE AT MEETINGS.
To be entitled to vote at any meeting of Holders of Securities of one
or more, or all, series, or any Tranche or Tranches thereof, a Person shall be
(a) a Holder of one or more Outstanding Securities of such series or Tranches,
or (b) a Person appointed by an instrument in writing as proxy for a Holder or
Holders of one or more Outstanding Securities of such series or Tranches by such
Holder or Holders. The only Persons who shall be entitled to attend any meeting
of Holders of Securities of any series or Tranche shall be the Persons entitled
to vote at such meeting and their counsel, any representatives of the Trustee
and its counsel and any representatives of the Company and its counsel.
SECTION 1304. QUORUM; ACTION.
The Persons entitled to vote a majority in aggregate principal amount
of the Outstanding Securities of the series and Tranches with respect to which a
meeting shall have been called as hereinbefore provided, considered as one
class, shall constitute a quorum for a meeting of Holders of Securities of such
series and Tranches; provided, however, that if any action is to be taken at
such meeting which this Indenture expressly provides may be taken by the Holders
of a specified percentage, which is less than a majority, in principal amount of
the Outstanding Securities of such series and Tranches, considered as one class,
the Persons entitled to vote such specified percentage in principal amount of
the Outstanding Securities of such series and Tranches, considered as one class,
shall constitute a quorum. In the absence of a quorum within one hour of the
time appointed for any such meeting, the meeting shall, if convened at the
request of Holders of Securities of such series and Tranches, be dissolved. In
any other case the meeting may be adjourned for such period as may be determined
by the chairman of the meeting prior to the adjournment of such meeting. In the
absence of a quorum at any such adjourned meeting, such adjourned meeting may be
further adjourned for such period as may be determined by the chairman of the
meeting prior to the adjournment of such adjourned meeting. Except as provided
by Section 1305(e), notice of the reconvening of any meeting adjourned for more
than 30 days shall be given as provided in Section 1302(a) not less than 10 days
prior to the date on which the meeting is scheduled to be reconvened. Notice of
the reconvening of an adjourned meeting shall state expressly the percentage, as
provided above, of the principal amount of the Outstanding Securities of such
series and Tranches which shall constitute a quorum.
Except as limited by Section 1202, any resolution presented to a
meeting or adjourned meeting duly reconvened at which a quorum is present as
aforesaid may be adopted only by the affirmative vote of the Holders of a
majority in aggregate principal amount of the Outstanding Securities of the
series and Tranches with respect to which such meeting shall have been called,
considered as one class; provided, however, that, except as so limited, any
resolution with respect to any action which this Indenture expressly provides
may be taken by the Holders of a specified percentage, which is less than a
majority, in principal amount of the Outstanding Securities of such series and
Tranches, considered as one class, may be adopted at a meeting or an adjourned
<PAGE>
60
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of such specified percentage in principal amount
of the Outstanding Securities of such series and Tranches, considered as one
class.
Any resolution passed or decision taken at any meeting of Holders of
Securities duly held in accordance with this Section shall be binding on all the
Holders of Securities of the series and Tranches with respect to which such
meeting shall have been held, whether or not present or represented at the
meeting.
SECTION 1305. ATTENDANCE AT MEETINGS; DETERMINATION OF VOTING RIGHTS; CONDUCT
AND ADJOURNMENT OF MEETINGS.
(a) Attendance at meetings of Holders of Securities may be in person
or if the Securities are in registered form by proxy; and, to the extent
permitted by law, any such proxy shall remain in effect and be binding upon
any future Holder of the Securities with respect to which it was given
unless and until specifically revoked by the Holder or future Holder of
such Securities before being voted.
(b) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for
any meeting of Holders of Securities in regard to proof of the holding of
such Securities and of the appointment of proxies and in regard to the
appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to
vote, and such other matters concerning the conduct of the meeting as it
shall deem appropriate. Except as otherwise permitted or required by any
such regulations, the holding of Securities shall be proved in the manner
specified in Section 104 and the appointment of any proxy shall be proved
in the manner specified in Section 104. Such regulations may provide that
written instruments appointing proxies, regular on their face, may be
presumed valid and genuine without the proof specified in Section 104 or
other proof.
(c) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Holders as provided in Section 1302(b), in
which case the Company or the Holders of Securities of the series and
Tranches calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Persons entitled
to vote a majority in aggregate principal amount of the Outstanding
Securities of all series and Tranches represented at the meeting,
considered as one class.
(d) At any meeting each Holder or proxy shall be entitled to one vote
for each $1 principal amount of Securities held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Security challenged as not Outstanding and ruled by the
chairman of the meeting to be not Outstanding. The chairman of the meeting
shall have no right to vote, except as a Holder of a Security or proxy.
(e) Any meeting duly called pursuant to Section 1302 at which a quorum
is present may be adjourned from time to time by Persons entitled to vote a
majority in aggregate principal amount of the Outstanding Securities of all
series and Tranches represented at the meeting, considered as one class;
and the meeting may be held as so adjourned without further notice.
<PAGE>
61
SECTION 1306. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of Holders shall
be by written ballots on which shall be subscribed the signatures of the Holders
or of their representatives by proxy and the principal amounts and serial
numbers of the Outstanding Securities, of the series and Tranches with respect
to which the meeting shall have been called, held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports of all votes cast at the meeting. A record of the proceedings of each
meeting of Holders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the inspectors of votes
on any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1302 and, if
applicable, Section 1304. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
SECTION 1307. ACTION WITHOUT MEETING.
In lieu of a vote of Holders at a meeting as hereinbefore contemplated
in this Article, any request, demand, authorization, direction, notice, consent,
waiver or other action may be made, given or taken by Holders by written
instruments as provided in Section 104.
ARTICLE FOURTEEN
IMMUNITY OF STOCKHOLDERS, OFFICERS AND DIRECTORS OF THE GENERAL PARTNER
SECTION 1401. NO LIABILITY OF INDIVIDUALS OR STOCKHOLDERS.
No recourse shall be had for the payment of the principal of or
premium, if any, or interest or Additional Amounts, if any, on any Securities,
or any part thereof, or for any claim based thereon or otherwise in respect
thereof, or of the indebtedness represented thereby, or upon any obligation,
covenant or agreement under this Indenture, against any past, present or future
incorporator, stockholder, officer, director of the General Partner or of any
predecessor or successor of the General Partner, or any individual performing
similar functions with respect to the Company or any predecessor or successor of
the Company, either directly or indirectly, whether by virtue of any
constitutional provision, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly agreed and understood
that this Indenture and all the Securities are solely obligations of the
Company, and that no personal liability whatsoever shall attach to, or be
incurred by, any past, present or future incorporator, stockholder, officer,
director of the General Partner or of any predecessor or successor of the
General Partner, or any individual performing similar functions with respect to
the Company or any predecessor or successor of the Company, either directly or
indirectly, because of the indebtedness hereby authorized or under or by reason
of any of the obligations, covenants or agreements contained in this Indenture
or in any of the Securities or to be implied herefrom or therefrom, and that any
such personal liability is hereby expressly waived and released as a condition
of, and as part of the consideration for, the execution of this Indenture and
the issuance of the Securities.
<PAGE>
62
ARTICLE FIFTEEN
SUBORDINATION OF SECURITIES
SECTION 1501. SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company, for itself, its successors and assigns, covenants and
agrees, and each Holder of the Securities of each series, by its acceptance
thereof, likewise covenants and agrees, that the payment of the principal of and
premium, if any, and interest, if any, and Additional Amounts, if any, on each
and all of the Securities is hereby expressly subordinated and junior, to the
extent and in the manner set forth in this Article, in right of payment to the
prior payment in full of all Senior Indebtedness. The subordination provisions
set forth in this Article 15 are continuing, and shall remain in full force and
effect until the payment in full of all Senior Indebtedness outstanding.
Each Holder of the Securities of each series, by its acceptance
thereof, authorizes and directs the Trustee on its behalf to take such action as
may be necessary or appropriate to effectuate the subordination as provided in
this Article, and appoints the Trustee its attorney-in-fact for any and all such
purposes.
So long as the Company has Senior Indebtedness outstanding and to the
extent permitted by the Trust Indenture Act and other applicable law, each
Holder of the Securities of each series, by its acceptance thereof, and the
Trustee (on behalf of all Holders) and the Company agree (for the benefit of the
Company's Senior Creditors) that all amounts owing under the Securities are
subordinated to the Senior Indebtedness as follows:
(a) if an event of a nature specified in or contemplated by clauses (d)
through (o) of Section 801 hereof (any such event, a "Bankruptcy Event")
occurs, then the Securities of each series shall become due and payable
immediately and the Holders and the Trustee shall act in conformity with
the provisions of any Senior Indebtedness then outstanding, including, but
not limited to, appointing any trustee or other person acting on behalf of
such Senior Indebtedness as such Holder's attorney-in-fact to file,
process, or otherwise deal with any claims to be filed in any proceeding in
connection with such Bankruptcy Event, all in accordance with the terms of
such Senior Indebtedness; provided, however, that nothing contained in this
Section 1501 shall prevent such Holder from otherwise filing, prosecuting
and defending a proof of claim or similar filing in connection with such
proceeding on or after a date (a "Claim Filing Date") if, and only if,
(i) the trustee or other person acting on behalf of such Senior
Indebtedness in connection with such proceeding has failed to file
such proof of claim on behalf of the Holder by such Claim Filing Date,
and (ii) a final deadline for filing such proof of claim will occur
within 10 business days following such Claim Filing Date;
(b) the Holders and the Trustee agree, except as permitted by the terms of
any Senior Indebtedness then outstanding or with the prior written consent
of the trustee or other person acting on behalf of such Senior Indebtedness
or, following the occurrence of an event of default under the Senior
Indebtedness, as directed by the trustee or other person acting on behalf
of such Senior Indebtedness, not to vote for the winding up of the Company,
apply to any court to wind up the Company, or requisition a meeting to
consider (i) a resolution for winding up the Company, (ii) a scheme of
arrangement for the Company, or (iii) a resolution for the appointment of
an administrator to the Company;
(c) the Holders and the Trustee agree not to set off the debt represented
by any Securities against any Indebtedness owing to the Company;
<PAGE>
63
(d) the Holders and the Trustee agree not to accept the benefit of any
guarantee in respect of the Securities except as allowed by the terms of
the Senior Indebtedness then outstanding;
(e) the Holders and the Trustee agree not to suffer to exist or take any
security interest to secure payment of the Securities except as allowed by
the terms of the Senior Indebtedness then outstanding; and
(f) the Holders and the Trustee agree not to amend or vary the Securities
or this Indenture if such variation or amendment would result in the
Securities ceasing to be subordinated to the Senior Indebtedness on the
terms set forth in this Article 15;
provided, however, that nothing in this Section 1501 or in Article
-----------------
Fifteen shall apply to claims of, or payments to, the Trustee under or pursuant
to Section 907 hereof.
In the event that, in a proceeding in connection with a Bankruptcy
Event, any amount due and owing on the Securities is set off against amounts
owing to the Company by a Holder of the Securities, then such Holder hereby
agrees to indemnify the holders of Senior Indebtedness, up to the amount of
such set off,against any amount the holders of such Senior Indebtedness are
unable to recover on such Senior Indebtedness in such proceeding directly as
a result of such set off.
In furtherance of clause (a) above, the Trustee and the Holders of the
Securities hereby appoint the Senior Debt Trustee as their attorney-in-fact to
do anything the Trustee or such Holder may lawfully do to exercise a right of
proof of claim following a Bankruptcy Event (including, without limitation,
executing drawdown notices, repayment notices, executing deeds and instituting,
conducting and defending legal proceedings and receiving any dividend arising
out of such right); provided, however, that no attorney-in-fact acting in such
capacity on behalf of the Holders of Securities may waive or compromise the
Company's obligations with respect to the Securities or any amounts due
thereon. The Senior Debt Trustee, acting as such attorney-in-fact, may delegate
its powers to any person for any period and may revoke a delegation and may
exercise or concur in exercising its powers even if the attorney-in-fact has
a conflict of duty in exercising its powers or has a direct or personal
interest in the means or result of that exercise of powers. Except as
otherwise contemplated in clause (a) above, the Trustee or the Holders of
the Securities may not exercise any such right of proof of claim in any such
proceeding in connection with such Bankruptcy Event independently of the
power-of-attorney granted hereby.
The subordination of the Securities is intended to operate as a "debt
subordination" (as defined in section 563C(2) of the Corporations Law of
Victoria, Australia) by the Trustee (on behalf of all Holders) and be treated as
subordinated debt even in case of the bankruptcy or liquidation of the Company
or the General Partner.
SECTION 1502. PAYMENT OVER OF PROCEEDS OF SECURITIES.
In the event (a) of any insolvency or bankruptcy proceedings or any
receivership, liquidation, reorganization or other similar proceedings in
respect of the Company or a substantial part of its property, or of any
proceedings for liquidation, dissolution or other winding up of the Company,
whether or not involving insolvency or bankruptcy, or (b) subject to the
provisions of Section 1503, that (i) a default shall have occurred with respect
to the payment of principal of or interest on or other monetary amounts due and
payable on any Senior Indebtedness, or (ii) there shall have occurred a default
(other than a default in the payment of principal or interest or other monetary
amounts due and payable) in respect of any Senior Indebtedness, as defined
<PAGE>
64
therein or in the instrument under which the same is outstanding, and such
default shall have continued beyond the period of grace, if any, in respect
thereof, and, in the case of this clause (b), such default shall not have been
cured or waived or shall not have ceased to exist, or (c) that the principal of
and accrued interest on the Securities of any series shall have been declared
due and payable pursuant to Section 801 and such declaration shall not have been
rescinded and annulled as provided in Section 802, then:
(1) the holders of all Senior Indebtedness shall first be
entitled to receive payment of the full amount due thereon, or
provision shall be made for such payment in money or money's worth,
before the Holders of any of the Securities are entitled to receive a
payment on account of the principal of or interest on the indebtedness
evidenced by the Securities, including, without limitation, any
payments made pursuant to Articles Four and Five;
(2) any payment by, or distribution of assets of, the Company of
any kind or character, whether in cash, property or securities, to
which any Holder or the Trustee would be entitled except for the
provisions of this Article, shall be paid or delivered by the person
making such payment or distribution, whether a trustee in bankruptcy,
a receiver or liquidating trustee or otherwise, directly to the
holders of such Senior Indebtedness or their representative or
representatives or to the trustee or trustees under any indenture
under which any instruments evidencing any of such Senior Indebtedness
may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of such Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full
of all Senior Indebtedness remaining unpaid after giving effect to any
concurrent payment or distribution (or provision therefor) to the
holders of such Senior Indebtedness, before any payment or
distribution is made to the Holders of the indebtedness evidenced by
the Securities or to the Trustee under this Indenture; and
(3) in the event that, notwithstanding the foregoing, any payment
by, or distribution of assets of, the Company of any kind or
character, whether in cash, property or securities, in respect of
principal of or interest on the Securities or in connection with any
repurchase by the Company of the Securities, shall be received by the
Trustee or any Holder before all Senior Indebtedness is paid in full,
or provision is made for such payment in money or money's worth, such
payment or distribution in respect of principal of or interest on the
Securities or in connection with any repurchase by the Company of the
Securities shall be paid over to the holders of such Senior
Indebtedness or their representative or representatives or to the
trustee or trustees under any indenture under which any instruments
evidencing any such Senior Indebtedness may have been issued, ratably
as aforesaid, for application to the payment of all Senior
Indebtedness remaining unpaid until all such Senior Indebtedness shall
have been paid in full, after giving effect to any concurrent payment
or distribution (or provision therefor) to the holders of such Senior
Indebtedness.
Notwithstanding the foregoing, at any time after the 123rd day
following the date of deposit of cash or Government Obligations pursuant to
Section 701 (provided all conditions set out in such Section shall have been
satisfied), the funds so deposited and any interest thereon will not be subject
to any rights of holders of Senior Indebtedness including, without limitation,
those arising under this Article Fifteen; provided that no event described in
clauses (d) and (e) of Section 801 with respect to the Company has occurred
during such 123-day period.
<PAGE>
65
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan or reorganization or readjustment which are subordinate
in right of payment to all Senior Indebtedness which may at the time be
outstanding to the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article. The consolidation of the
Company with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided for in Article Eleven hereof
shall not be deemed a dissolution, winding-up, liquidation or reorganization for
the purposes of this Section 1502 if such other corporation shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the conditions
stated in Article Eleven hereof. Nothing in Section 1501 or in this Section 1502
shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 907.
SECTION 1503. DISPUTES WITH HOLDERS OF CERTAIN SENIOR INDEBTEDNESS.
Any failure by the Company to make any payment on or perform any other
obligation in respect of Senior Indebtedness, other than any indebtedness
incurred by the Company or assumed or guaranteed, directly or indirectly, by the
Company for money borrowed (or any deferral, renewal, extension or refunding
thereof) or any other obligation as to which the provisions of this Section
shall have been waived by the Company in the instrument or instruments by which
the Company incurred, assumed, guaranteed or otherwise created such indebtedness
or obligation, shall not be deemed a default under clause (b) of Section 1502 if
(i) the Company shall be disputing its obligation to make such payment or
perform such obligation and (ii) either (A) no final judgment relating to such
dispute shall have been issued against the Company which is in full force and
effect and is not subject to further review, including a judgment that has
become final by reason of the expiration of the time within which a party may
seek further appeal or review, or (B) in the event that a judgment that is
subject to further review or appeal has been issued, the Company shall in good
faith be prosecuting an appeal or other proceeding for review and a stay or
execution shall have been obtained pending such appeal or review.
SECTION 1504. SUBROGATION.
Senior Indebtedness shall not be deemed to have been paid in full
unless the holders thereof shall have received cash (or securities or other
property satisfactory to such holders) in full payment of such Senior
Indebtedness then outstanding. Subject to the prior payment in full of all
Senior Indebtedness, the rights of Holders of the Securities shall be subrogated
to the rights of the holders of Senior Indebtedness to receive any further
payments or distributions of cash, property or securities of the Company
applicable to the holders of the Senior Indebtedness until all amounts owing on
the Securities shall be paid in full; and such payments or distributions of
cash, property or securities received by the Holders of the Securities, by
reason of such subrogation, which otherwise would be paid or distributed to the
holders of such Senior Indebtedness shall, as between the Company, its creditors
other than the holders of Senior Indebtedness, and the Holders, be deemed to be
a payment by the Company to or on account of Senior Indebtedness, it being
understood that the provisions of this Article are and are intended solely for
the purpose of defining the relative rights of the Holders, on the one hand, and
the holders of the Senior Indebtedness, on the other hand.
SECTION 1505. OBLIGATION OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article or elsewhere in this Indenture or in
the Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness and the Holders, the
rights of the Holders to payment of the principal and interest on the Securities
<PAGE>
66
as and when the same shall become due and payable in accordance with their terms
without the consent of the Holders, or is intended to or shall affect the
relative rights of the Holders and creditors of the Company other than the
holders of Senior Indebtedness, nor shall anything herein or therein prevent the
Trustee or any Holder from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article of the holders of Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
Upon any payment or distribution of assets or securities of the
Company referred to in this Article, the Trustee and the Holders shall be
entitled to rely upon any order or decree of a court of competent jurisdiction
in which such dissolution, winding up, liquidation or reorganization proceedings
are pending for the purpose of ascertaining the persons entitled to participate
in such distribution, the holders of the Senior Indebtedness and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon, and all other facts pertinent thereto or
to this Article.
SECTION 1506. PRIORITY OF SENIOR INDEBTEDNESS UPON MATURITY.
Upon the maturity of the principal of any Senior Indebtedness by lapse
of time, acceleration or otherwise, all matured principal of Senior Indebtedness
and interest and premium, if any, thereon shall first be paid in full before any
payment of principal or premium, if any, or interest, if any, is made upon the
Securities or before any Securities can be acquired by the Company or any
sinking fund payment is made with respect to the Securities (except that
required sinking fund payments may be reduced by Securities acquired before such
maturity of such Senior Indebtedness).
SECTION 1507. TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS.
The Trustee shall be entitled to all rights set forth in this Article
with respect to any Senior Indebtedness at any time held by it, to the same
extent as any other holder of Senior Indebtedness. Nothing in this Article shall
deprive the Trustee of any of its rights as such holder. Nothing in this Article
shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 907.
SECTION 1508. NOTICE TO TRUSTEE TO EFFECTUATE SUBORDINATION.
The Trustee shall not be charged with knowledge of the existence of
any facts which would prohibit the making of any payment of moneys to or by the
Trustee unless and until the Trustee shall have received written notice thereof
from the Company, from a Holder or from a holder of any Senior Indebtedness or
from any representative or representatives of such holder and, prior to the
receipt of any such written notice, the Trustee shall be entitled, subject to
Section 901, in all respects to assume that no such facts exist; provided,
however, that, if prior to the fifth Business Day preceding the date upon which
by the terms hereof any such moneys may become payable for any purpose, or in
the event of the execution of an instrument pursuant to Section 702
acknowledging satisfaction and discharge of this Indenture, then if prior to the
second Business Day preceding the date of such execution, the Trustee shall not
have received with respect to such moneys the notice provided for in this
Section, then, the Trustee may, in its discretion, without liability to the
Senior Creditors or other beneficiaries of this Article, make any payment of
money that would be required or permitted by this Indenture in the absence of
such notice if it is not practicable with reasonable efforts for the Trustee to
stop such payment between (a) the time when a Responsible Officer in the
Corporate Trust Administration Division of the New York City office of the
Trustee has actual knowledge that (i) such notice has been received by the
Trustee, (ii) such payment is about to be made by the Trustee and (iii) such
payment is prohibited by such notice and (b) the time when such payment is
made; provided, however, that no such payment shall affect the obligations
under this Article of the persons receiving such moneys from the Trustee.
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67
SECTION 1509. MODIFICATION, EXTENSION, ETC. OF SENIOR INDEBTEDNESS.
The holders of Senior Indebtedness may, without affecting in any
manner the subordination of the payment of the principal of and premium, if any,
and interest, if any, on the Securities, at any time or from time to time and in
their absolute discretion, agree with the Company to change the manner, place or
terms of payment, change or extend the time of payment of, or renew or alter,
any Senior Indebtedness, or amend or supplement any instrument pursuant to which
any Senior Indebtedness is issued, or exercise or refrain from exercising any
other of their rights under the Senior Indebtedness including, without
limitation, the waiver of default thereunder, all without notice to or assent
from the Holders or the Trustee.
SECTION 1510. TRUSTEE HAS NO FIDUCIARY DUTY TO HOLDERS OF SENIOR INDEBTEDNESS.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and objectives as
are specifically set forth in this Indenture, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if it shall mistakenly pay over or deliver to the
Holders or the Company or any other Person, money or assets to which any holders
of Senior Indebtedness shall be entitled by virtue of this Article or otherwise.
SECTION 1511. PAYING AGENTS OTHER THAN THE TRUSTEE.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context shall otherwise
require) be construed as extending to and including such Paying Agent within its
meaning as fully for all intents and purposes as if such Paying Agent were named
in this Article in addition to or in place of the Trustee; provided, however,
that Sections 1507, 1508 and 1510 shall not apply to the Company if it acts as
Paying Agent.
SECTION 1512. RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT IMPAIRED.
No right of any present or future holder of Senior Indebtedness to
enforce the subordination herein shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Company or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
SECTION 1513. EFFECT OF SUBORDINATION PROVISIONS; TERMINATION.
The provisions of this Article Fifteen shall cease to be of further
effect, and the Securities shall no longer be subordinated in right of payment
to the prior payment of Senior Indebtedness, if such action is not prohibited by
the terms of the Senior Indebtedness, the Company elects to take such action,
and the Company shall have delivered to the Trustee a written notice to such
effect. Any such notice delivered by the Company shall not be deemed to be a
supplemental indenture for purposes of Article Twelve.
-------------------------
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68
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
TXU AUSTRALIA HOLDINGS (PARTNERSHIP)
------------------------------------
LIMITED PARTNERSHIP
By:
-------------------------------------
[name]
[title]
<PAGE>
69
[SEAL] THE BANK OF NEW YORK
trustee
By:
--------------------------------------
[NAME]
[TITLE]
ATTEST:
- ----------------------------------
[NAME]
[TITLE]
EXHIBIT 4(B)
TXU AUSTRALIA HOLDINGS (PARTNERSHIP)
LIMITED PARTNERSHIP
OFFICER'S CERTIFICATE
, an authorized officer of TXU AUSTRALIA HOLDINGS
----------------
(AGP) PTY LTD (Australian Company Number 086014931), a limited liability company
duly incorporated and existing under the laws of Victoria, Australia (the
"General Partner"), the general partner of TXU Australia Holdings (Partnership)
Limited Partnership, a limited partnership established and existing under the
laws of Victoria, Australia (the "Company"), pursuant to the authority granted
in the Board Resolutions of the General Partner, dated , 2000, and
------- --
Sections 102, 201 and 301 of the Indenture defined herein, do hereby certify to
The Bank of New York, as Trustee (the "Trustee") under the Indenture of the
Company (For Unsecured Subordinated Debt Securities) dated as of , 2000
------ --
(the "Indenture") that:
1. The securities of the first series to be issued under the Indenture
shall be designated " % Junior Maturing Principal Securities,
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Series A " (the "Debentures of the First Series"). All capitalized
terms used in this certificate which are not defined herein but are
defined in Exhibit A shall have the meanings therein; all capitalized
terms used in this certificate or Exhibit A which are not defined
herein or therein but are defined in the Indenture shall have the
meanings set forth in the Indenture.
2. The Debentures of the First Series shall have such terms and
provisions as are provided herein, in the Indenture and in the form
thereof set forth in Exhibit A hereto, and shall be issued in
substantially such form.
3. The Debentures of the First Series shall mature and the principal
shall be due and payable together with all accrued and unpaid interest
thereon on , 20 .
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4. The Debentures of the First Series shall be issued in the
denominations as provided in Exhibit A.
5. The Debentures of the First Series shall bear interest as provided in
Exhibit A.
6. Each installment of interest on a Debenture of the First Series shall
be payable on the dates specified in Exhibit A.
7. The principal of (and premium, if any, on) and each installment of
interest on, Additional Amounts, if any, and any other amounts payable
on the Debentures of the First Series shall be payable at, and
exchanges in respect of the Debentures of the First Series may be
effected at, the office or agency of the Company in The City of New
York.
8. Notices and demands to or upon the Company in respect of the
Debentures of the First Series and the Indenture may be served at the
office or agency of the Company in The City of New York.
<PAGE>
9. The Bank of New York will initially be the Paying Agent of the Company
in The City of New York with respect to the Debentures of the First
Series and the Company hereby appoints The Bank of New York as its
agent for all such purposes; the Corporate Trust Office of the Trustee
will initially be the agency of the Company in The City of New York
for exchanges and service of notices and demands to or upon the
Company with respect to the Debentures of the First Series and the
Indenture, and the Company hereby appoints The Bank of New York as its
agent for all such purposes; provided, however, that the Company
reserves the right to change, by one or more Officer's Certificates,
any such office or agency and such agent, provided the Company will
always have a paying agent location in The City of New York. TXU
Business Services Company initially will be the Security Registrar and
Transfer Agent for the Debentures of the First Series. No entity
organized under the laws of the United Kingdom shall serve as Paying
Agent for the Debentures of the First Series.
10. All moneys paid by the Company to a paying agent for the payment of
the principal of or distributions or any Additional Amounts on the
Debentures of the First Series which remain unclaimed at the end of
two years after the principal, distribution or Additional Amount has
become due and payable will be repaid to the Company or to the
appropriate governmental agency for unclaimed funds, and the holder of
the affected Debentures of the First Series may look only to the
Company or the appropriate governmental agency for payment.
11. The following constitute additional Events of Default with respect to
the Debentures of the First Series:
Failure of the Company to pay Additional Amounts (as defined
herein) on any Debenture of the First Series within 30 days
after it is due.
12. The Debentures of the First Series will be redeemable as provided in
the form thereof attached hereto as Exhibit A.
13. The Debentures of the First Series shall initially be issued in the
form of a global security to, and registered in the name of, The
Depository Trust Company ("DTC") or its nominee. DTC or such nominee
shall be the Holder of such global security for all purposes under the
Indenture and the Securities, and beneficial owners with respect to
such global security shall hold their interests pursuant to applicable
procedures of DTC. The Company, the Trustee and the Securities
Registrar shall be entitled to deal with DTC for all purposes of the
Indenture relating to such global security (including the payment of
principal, premium, if any, and interest and Additional Amounts, if
any, and the giving of instructions or directions by or to the
beneficial owners of such global security) as the sole Holder of such
global security and shall have no obligations to the beneficial owners
thereof. None of the Company, the Trustee or the Securities Registrar
shall have any liability in respect of any transfers effected by DTC
or by any participant member of DTC or any such beneficial owner. Any
such global security shall bear the legend in substantially the form
appearing on the form of the Debentures of the First Series set forth
in Exhibit A hereto, or such other form as DTC shall require.
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<PAGE>
A beneficial owner of Debentures of the First Series in global form may
exchange them for Debentures of the First Series in certificated form
only if:
(a) DTC is unwilling or unable to continue as depositary for the
global Debenture of the First Series and the Company is unable to
find a qualified replacement for DTC within 90 days;
(b) DTC at any time ceases to be a clearing agency registered under
the Securities Exchange Act of 1934; or
(c) The Company in its sole discretion decides to allow the global
Debentures of the First Series to be exchangeable for
certificated Debentures of the First Series in registered form.
In that case, global Debentures of the First Series will be
exchangeable in whole for certificated Debentures of the First Series
in registered form, with the same terms and of an equal aggregate
principal amount, in denominations of $25 and whole multiples of $25.
14. No service charge shall be made for the transfer or exchange of the
Debentures of the First Series; provided, however, that the Company
may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with the
exchange or transfer.
15. Additional Amounts. All payments made on Debentures of the First
------------------
Series shall be made without withholding or deduction for or on
account of, any present or future taxes, duties, assessments or other
governmental charges of whatever nature imposed, levied, collected,
withheld or assessed by any jurisdiction in which the Company is
organized, managed or controlled or has a place of business or any
political subdivision or taxing authority thereof or therein (each, a
"Taxing Jurisdiction"), unless such withholding or deduction is
required by law. In the event of any such withholding or deduction,
the Company shall pay to each Holder of such Debentures of the First
Series as Additional Amounts under the Indenture such additional
amounts as shall be necessary so that the net amount received by each
Holder after withholding or deduction shall equal the amount that
would otherwise have received in the absence of such withholding or
deduction.
16. No Additional Amounts will be payable:
(a) on account of any tax, duty, assessment or other governmental
charge that would not have been imposed but for the existence of
any present or former connection between the holder (or between a
fiduciary, settlor, beneficiary, member, shareholder or affiliate
of, or possessor of a power over, such holder) and a Taxing
Jurisdiction, including, without limitation, such holder (or such
fiduciary, settlor, beneficiary, member, shareholder, affiliate
or possessor) being or having been a citizen, national or
resident or being or having been present or engaging or having
engaged in trade or business or having or having had a permanent
establishment in such Taxing Jurisdiction;
3
<PAGE>
(b) on account of any estate, inheritance, gift, sales, transfer,
franchise, wealth, personal property or similar tax, duty,
assessment or other governmental charge;
(c) on account of any tax, duty, assessment or other governmental
charge that is payable otherwise than by withholding or
deduction;
(d) on account of any tax, duty, assessment or other governmental
charge that is imposed or withheld by reason of the failure by
the holder or the beneficial owner of a Debentures of the First
Series (a) to provide information concerning the nationality,
residence or identity of such holder or such beneficial owner or
(b) to make any declaration or other similar claim or satisfy any
information or reporting requirement, which, in the case of (a)
or (b), is required or imposed by a statute, treaty, rule,
regulation or administrative practice of the Taxing Jurisdiction
as a precondition to exemption from all or part of such tax,
duty, assessment or other governmental charge;
(e) to or for a holder of Debentures of the First Series in
certificated form who presents a Security required to be
presented for payment more than 30 days after the date on which
payment first becomes due, unless that holder would have been
entitled to those Additional Amounts by presenting a Security on
the last day of the 30 day period; or
(f) to or for a holder of Debentures of the First Series in
certificated form who presents a Security, when presentation is
required, at any place other than (a) the corporate trust office
of the trustee in The City of New York or (b) a paying agent
location for the Debentures of the first Securities designated by
the Company for that purpose.
17. No Additional Amounts will be payable with respect to any Debentures
of the First Series if the beneficial owner would not have been
entitled to that payment if that beneficial owner had been a holder.
18. In the event that any successor entity is organized under the laws of
a jurisdiction other than a Taxing Jurisdiction and withholding or
deduction is required by law for or on account of any present or
future taxes, duties, assessments or governmental charges of whatever
nature imposed, levied, collected, withheld or assessed by or within
the jurisdiction in which the successor entity is organized, managed
or controlled or has a place of business, or by or within any
political subdivision of that jurisdiction or any taxing authority
thereof or therein, the successor entity will pay to the relevant
holders of Debentures of the First Series, under the same
circumstances and subject to the same limitations, such Additional
Amounts, as would be payable as set forth above, but substituting for
the applicable Taxing Jurisdiction in each place the name of the
jurisdiction under the laws of which the successor entity is
organized, is managed or has a place of business and controlled, or
has a place of business.
19. If the Company shall make any deposit of money and/or Eligible
Obligations with respect to any Debentures of the First Series, or any
portion of the principal amount thereof, as contemplated by Section
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<PAGE>
701 of the Indenture, the Company shall not deliver an Officer's
Certificate described in clause (z) in the first paragraph of said
Section 701 unless the Company shall also deliver to the Trustee,
together with such Officer's Certificate:
(a) an instrument wherein the Company, notwithstanding the
satisfaction and discharge of its indebtedness in respect of the
Debentures of the First Series, shall assume the obligation
(which shall be absolute and unconditional) to irrevocably
deposit with the Trustee or Paying Agent such additional sums of
money, if any, or additional Eligible Obligations (meeting the
requirements of Section 701), if any, or any combination thereof,
at such time or times, as shall be necessary, together with the
money and/or Eligible Obligations theretofore so deposited, to
pay when due the principal of and premium, if any, and interest
due and to become due and Additional Amounts, if any, due and
known to become due on such Debentures of the First Series or
portions thereof, all in accordance with and subject to the
provisions of said Section 701; provided, however, that such
instrument may state that the obligation of the Company to make
additional deposits as aforesaid shall be subject to the delivery
to the Company by the Trustee of a notice asserting the
deficiency accompanied by an opinion of an independent public
accountant of nationally recognized standing, selected by the
Trustee, showing the calculation thereof; or
(b) an Opinion of Counsel to the effect that, as a result of a change
in law occurring after the date of this certificate, the Holders
of such Debentures of the First Series, or portions of the
principal amount thereof, will not recognize income, gain or loss
for United States federal income tax purposes as a result of the
satisfaction and discharge of the Company's indebtedness in
respect thereof and will be subject to United States federal
income tax on the same amounts, at the same times and in the same
manner as if such satisfaction and discharge had not been
effected.
17. The Company reserves the right to require legends on Debentures of the
First Series as it may determine are necessary to ensure compliance
with the securities laws of the United States and the states therein
and any other applicable laws.
18. Each of the undersigned has read all of the covenants and conditions
contained in the Indenture, and the definitions in the Indenture
relating thereto, relating to the issuance of the Debentures of the
First Series and in respect of compliance with which this certificate
is made.
19. The statements contained in this certificate are based upon the
familiarity of each of the undersigned with the Indenture, the
documents accompanying this certificate, and upon discussions by each
of the undersigned with officers and employees of the Company and the
General Partner familiar with the matters set forth herein.
20. In the opinion of each of the undersigned, he has made such
examination or investigation as is necessary to enable him to express
an informed opinion whether or not such covenants and conditions have
been complied with.
5
<PAGE>
21. In the opinion of each of the undersigned, such conditions and
covenants, and all conditions precedent (including any covenants
compliance with which constitutes a condition precedent), provided for
in the Indenture to the authentication and delivery of the Debentures
of the First Series requested in the accompanying Company Order, have
been complied with.
IN WITNESS WHEREOF, the undersigned have executed this Officer's
Certificate as of this day of , 2000.
----- ------
By:
------------------------------------
Name:
Title:
6
<PAGE>
EXHIBIT A
No._______________ Cusip No.__________
[FORM OF FACE OF DEBENTURE]
[(SEE LEGEND AT THE END OF THIS SECURITY FOR
RESTRICTIONS ON TRANSFERABILITY AND CHANGE OF FORM)]
TXU AUSTRALIA HOLDINGS (PARTNERSHIP) LIMITED PARTNERSHIP
____% Junior Maturing Principal Securities, Series A
TXU AUSTRALIA HOLDINGS (PARTNERSHIP) LIMITED PARTNERSHIP, a limited
partnership established and existing under the laws of Victoria, Australia
(herein referred to as the "Company", which term includes any successor Person
under the Indenture), for value received, hereby promises to pay to
or registered assigns, the principal sum of $________ Dollars on _______ __,
20__ (the Maturity Date) and to pay interest on said principal sum quarterly in
arrears on [March 31], [June 30], [September 30], and [December 31] of each year
(each an Interest Payment Date) unless the Company defers the payment of
interest as described herein under the paragraph entitled Option to Defer
Interest Payment Period. Interest shall be payable at the rate of ____% per
annum until the principal hereof is paid or made available for payment. Interest
on the Securities of this series shall be computed on the basis of a 360-day
year consisting of twelve 30-day months and for any period shorter than a full
month, on the basis of the actual number of days elapsed in such period.
Interest on the Securities of this series will accrue from ______ __, 2000, to
the first Interest Payment Date (which shall be [June 30, 2000]), and thereafter
will accrue from the last Interest Payment Date to which interest has been paid
or duly provided for. In the event that any Interest Payment Date is not a
Business Day, then payment of interest payable on such date will be made on the
next succeeding day which is a Business Day (and without any interest or other
payment in respect of such delay) with the same force and effect as if made on
the Interest Payment Date; except that, if such Business day is in the next
succeeding calendar year, the payment will be made on the immediately preceding
Business Day (without any reduction of interest or other payment in respect of
such early payment) with the same force and effect as if made on the Interest
Payment Date. [The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture, be paid to
the Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest, which shall be the Business Day in The City of New York immediately
7
<PAGE>
preceding such Interest Payment Date.]* Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in the Indenture referred to on the reverse hereof.
Payments on Securities of this series will be made at the office of
The Bank of New York maintained for that purpose in The City of New York, which
may be changed to an office or agency of the Company or a successor trustee in
The City of New York. Payments on Securities of this series will be made in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. However, at the option of
the Company, payments on Securities of this series may be made:
o by checks mailed by the Trustee or a Paying Agent to the Holders at
their registered addresses, or
o by wire transfers to accounts maintained by the Holders of more than $
principal amount of Securities of this series as specified in the
Register.
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Persons receiving payments or distributions in respect of this
Security may, in certain circumstances described in Article Fifteen and Sections
802 and 808 of the Indenture, be required to pay over such payments or
distributions to or for the benefit of the holders of Senior Indebtedness.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
- ------------------------
* For Securities in certificated form, the following sentence will be
inserted in lieu of the bracketed language: The record date for payment of
distributions on Securities in certificated form will be the fifteenth day
of the calendar month before the relevant distribution payment date,
whether or not it is a business day in The City of New York.
8
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
TXU AUSTRALIA HOLDINGS
(PARTNERSHIP) LIMITED
PARTNERSHIP
By TXU AUSTRALIA HOLDINGS (AGP)
PTY LTD.
Its General Partner
By:
-------------------------------------
9
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
Dated: By:
-------------------------------------
Authorized Signatory
10
<PAGE>
[FORM OF REVERSE OF DEBENTURE]
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture (For Unsecured Subordinated Debt Securities), dated as
of______ __, 2000 (herein, together with any amendments thereto, called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company, and The Bank of New York, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), and reference is hereby made to the Indenture, including the Board
Resolutions and Officer's Certificate filed with the Trustee on _____ __, 2000,
creating the series designated on the face hereof, for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Securities and of the terms upon
which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof.
The Securities of this series will be redeemable at the option of the
Company:
(a) in whole or in part at any time and from time to time on or after
______ __, 2005; and
(b) in whole but not in part if the Company certifies to the Trustee
in an Officer's Certificate delivered to the Trustee prior to the
giving of a notice as provided below that a Tax Event (as defined
below) has occurred;
in each case upon not less than 30 nor more than 60 days' notice given as
provided herein and at a Redemption Price equal to 100% of the principal amount
thereof plus accrued and unpaid interest thereon and accrued and unpaid
Additional Amounts with respect thereto, if any, to the Redemption Date.
The Trustee shall accept, and shall be fully protected in relying
upon, such certificate as sufficient evidence of the condition precedent set out
in (b) above, in which event it shall be conclusive and binding on the Holders.
If the Company elects to redeem less than all the Securities of this
series, the particular Securities of this series to be redeemed will be selected
by lot or by such other method of random selection as the Security Registrar
deems fair and appropriate and the book-entry interests in the Securities of
this series will be redeemed in accordance with the standard procedures of The
Depository Trust Company or its successor (the "Depositary"). Any notice of
redemption may state that redemption is conditional on receipt by the Trustee or
Paying Agent or agents, on or before 11:00 a.m., New York City time, on the
redemption date, of money sufficient to pay the principal of and accrued
distributions, if any, on the Securities of this series and that if the money
has not been so received, the Company will not be required to redeem the
Securities of this series.
The Company may not redeem less than all outstanding Securities of
this series unless all accrued and unpaid distributions have been paid on all
Securities of this series for all quarterly distribution periods terminating on
or prior to the redemption date.
11
<PAGE>
If the Company gives a notice of redemption of any Securities of this
series held by the Depositary and has irrevocably deposited with the Trustee or
a Paying Agent or agents sufficient cash to pay those Securities of this series
on or before the redemption date, then, by 12:00 noon, New York City time, on
the redemption date, the Trustee or the Paying Agent or agents will deposit with
the Depositary sufficient funds to pay the redemption price for those Securities
of this series. The Company will also give the Depositary instructions and
authority to pay the redemption price through its procedures to its participants
for the benefit of the applicable beneficial owners of the Securities of this
series.
If the Company gives a notice of redemption of any Securities of this
series and has irrevocably deposited with the Trustee or the Paying Agent or
agents sufficient cash to pay those Securities of this series on or before the
redemption date, then on the redemption date distributions will cease to accrue
on those Securities of this series and all rights of the Holders of those
Securities of this series will cease, except for the right to receive the
redemption price on those Securities of this series, without any distributions
or other payments after the redemption date. If any redemption date is not a
Business Day in New York City, then payment of the amounts payable on the
redemption date will be made to the Holders on the next succeeding day that is a
Business Day, without any interest or other payment in respect of any delay.
However, if that Business Day falls in the next calendar year, the payment will
be made to the holders on the immediately preceding Business Day.
The term "Tax Event" for Securities of this series means that the
Company (1) has requested, received and delivered to the Trustee an opinion from
a reputable legal counsel or other tax adviser in the US, Australia or the UK,
as appropriate, experienced in these matters to the effect that there has been:
(a) an amendment to, or change (or announced prospective change) in, the laws or
treaties (or related regulations) of any of those jurisdictions or any political
subdivision or taxing authority of any of those jurisdictions, (b) a judicial
decision or an official administrative pronouncement, ruling, regulatory
procedure, notice or announcement, including a notice or announcement of intent
to issue or adopt any administrative pronouncement, ruling, regulatory procedure
or regulation (each, an Administrative Action) or (c) an amendment to, or change
in, the official position or interpretation of an Administrative Action or
judicial decision or an interpretation or pronouncement that provides for a
position with respect to an Administrative Action or judicial decision that
differs from the previously generally accepted position, in each case, by any
legislative body, court, governmental authority or regulatory body, regardless
of when or how the amendment or change is introduced or made known, which
amendment or change is effective or which Administrative Action is taken or
which judicial decision is issued on or after the date of issuance of the
Securities of this series, and which relates to the event described below in
this paragraph (1), and that as a result of the occurrence of any of the above,
there is more than an insubstantial risk that: distributions on Securities of
this series will not be, or are not, fully deductible for UK taxation purposes
or (2) has requested, received and delivered to the Trustee an opinion from a
reputable legal counsel or other tax adviser in the US, Australia or the UK, as
appropriate, experienced in these matters that there has been a tax action,
which means (a) an amendment, change, Administrative Action, judicial decision,
or administrative pronouncement, ruling, regulation, procedure, notice or
announcement as described in paragraph (1) above, or (b) a clarification of the
laws or treaties (or related regulations) of any of those jurisdictions or any
political subdivision or taxing authority of any of those jurisdictions, or (c)
12
<PAGE>
a clarification of the official position or interpretation of an Administrative
Action or judicial decision or any interpretation or pronouncement that provides
for a position with respect to an Administrative Action or judicial decision
that differs from the previously generally accepted position, in each case, by
any legislative body, court, governmental authority or regulatory body,
regardless of when or how the clarification is introduced or made known, which
tax action is effective on or after the date of issuance of the Securities of
this series, which tax action relates to any of the events described below in
this paragraph (2), and that as a result of the occurrence of that tax action
there is more than an insubstantial risk that: (i) distributions on the
Securities of this series will not be, or are not, deductible for Australian
income tax purposes, or (ii) distributions on the Securities of this series will
not be, or are not, fully deductible for US federal income tax purposes, or
(iii) tax losses of, or other amounts in respect of, the Company which, but for
such tax action, would be eligible for surrender by way of group relief for UK
corporation tax purposes against the taxable profits of any company which at the
date of the issue of the Securities of this series is a member of the same group
of companies as the Company for purposes of group relief, as a result of the
taxation, will not be, or are not, so eligible, or (3) has certified to the
Trustees that, as a result of a tax action Additional Amounts (as defined in the
Officer's Certificate described above) are, or will be, payable with respect to
any payments made on the Securities of this series, and has further certified to
the Trustee that it cannot avoid the requirement to pay such Additional Amounts
by using its reasonable efforts.
Upon payment of the Redemption Price, on and after the Redemption Date
interest and any Additional Amounts will cease to accrue on the Securities of
this series or portions thereof called for redemption.
Except as provided herein, Article Four of the Indenture shall apply
to redemptions of the Securities of this series.
Any notice required by the Indenture or this Security to be given to
the Holder of this Security, including but not limited to any notice of
redemption of this Security, shall be sufficiently given, and deemed given, if
given in writing delivered by hand, mail or telefax to the registered owner of
this Security at the last address shown on the records of the Security
Registrar.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinated and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) consents and agrees to and shall be bound
by such provisions, (b) authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes. Each Holder hereof, by his acceptance hereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such Holder upon
said provisions.
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<PAGE>
The Indenture contains provisions for defeasance at any time of the
entire indebtedness of this Security upon compliance with certain conditions set
forth in the Indenture including the Officer's Certificate described above.
If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the Securities at
the time Outstanding of all series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of a majority in aggregate principal
amount of the Securities of all series at the time Outstanding in respect of
which an Event of Default shall have occurred and be continuing shall have made
written request to the Trustee to institute proceedings in respect of such Event
of Default as Trustee and offered the Trustee reasonable indemnity, and the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of Securities of all series at the time Outstanding in respect
of which an Event of Default shall have occurred and be continuing a direction
inconsistent with such request, and shall have failed to institute any such
proceeding, for 60 days after receipt of such notice, request and offer of
indemnity.
The foregoing paragraph shall not apply to any suit instituted by the
holder of this Security for the enforcement of any payment of principal hereof
or any premium or interest hereon on or after the respective due dates expressed
herein.
The rights of any Holder of this Security to receive payment of the
principal of and interest, if any, and Additional Amounts, if any, on this
Security on or after the respective due dates expressed in this Security and to
institute suit for the enforcement of any such payment, shall not be impaired or
affected without the consent of such Holder. Each Holder, by acceptance of this
Security, to the full extent permitted by the Trust Indenture Act and other
applicable law, consents and agrees that, at any time when there has occurred
and is continuing a default with respect to Senior Indebtedness, such Holder
will pay to the Senior Debt Trustee for the benefit of the Senior Creditors any
14
<PAGE>
money recovered or received through the exercise of remedies pursuant to the
provisions of this paragraph, the Indenture or otherwise and any money recovered
or received with respect to this Security that is required to be paid to, or for
the benefit of, the Senior Creditors pursuant to Article Fifteen of the
Indenture, without the need for any demand and in an amount equal to the lesser
of the full amount so received, paid or recovered and the full amount then due
and owing to the Senior Creditors.
Option to Defer Interest Payment Period
- ---------------------------------------
Pursuant to Section 311 of the Indenture, so long as no Event of
Default under the Indenture has occurred and is continuing, the Company shall
have the right, at any time and from time to time during the term of the
Securities of this series, to defer the payment of interest for a period not
exceeding twenty consecutive quarterly periods (a "Deferral Period") during
which period interest (calculated for each period from, and including, an
Interest Payment Date to, but excluding the next succeeding Interest Payment
Date (an "Interest Period"), [except that the first Interest Period shall
commence on ______ __, 2000, in the manner described in the first paragraph of
this Debenture, as if the interest payment period had not been so extended)]
will be compounded quarterly. At the end of the Deferral Period, the Company
shall pay all interest accrued and unpaid hereon (together with interest thereon
at the rate specified for the Securities of this series, compounded quarterly,
to the extent permitted by applicable law) and Additional Interest, if any.
Prior to the termination of any Deferral Period, the Company may further defer
the payment of interest for an additional Deferral Period, provided that such
Deferral Period together with all such previous and further extensions thereof
shall not exceed twenty consecutive quarterly periods at any one time or extend
beyond the Maturity of the Securities of this series. Upon the termination of
any Deferral Period and the payment of all amounts then due, including interest
on deferred interest payments, the Company may elect to begin a new Deferral
Period, subject to the above requirements. No interest shall be due and payable
during a Deferral Period, except at the end thereof. The Company shall give the
Trustee notice of its election to defer interest payments prior to the earlier
of (i) one Business Day prior to the record date for the distribution which
would occur but for such election or (ii) the date the Company is required to
give notice to any securities exchange on which the Securities may be listed or
any other applicable self-regulatory organization of the record date or of the
date those distributions are payable.
The Indenture contains terms, provisions and conditions relating to
the consolidation or merger of the Company with or into, and the conveyance or
other transfer, or lease, of assets to another Person and to the release and
discharge of the Company, as the case may be, in certain circumstances from such
obligations.
The Securities of this series are issuable only in registered form
without coupons in denominations of $25 and in integral multiples of $25 in
excess thereof. As provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor and of
authorized denominations, as requested by the Holder surrendering the same.
15
<PAGE>
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the absolute
owner hereof for all purposes, whether or not this Security may be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by notice
to the contrary. As provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor of a
different authorized denomination, as requested by the Holder surrendering the
same.
The Holder of this Security, by the acceptance hereof, acknowledges
that the liability of the Company's limited partners, TXU Australia (LP) No. 1
Limited and TXU Australia (LP) No. 2 Limited, to contribute to the debts or
obligations of the Company is, subject to the Partnership Act 1958 of Victoria,
Australia, limited to the amount shown in relation to it in the Register (as
defined in the Partnership Act 1958 of Victoria) as to the extent to which it is
liable to contribute. Nothing in this Security or the Indenture or any other
document imposes any liability on the limited partners in excess of the limit
referred to in the immediately preceding sentence, provided that this limitation
does not affect any amount owing under the Indenture or this Security.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture and in the Officer's
Certificate establishing the terms of the Securities of this series.
16
<PAGE>
[LEGEND]*
Unless and until this Security is exchanged in whole or in part for
certificated Securities registered in the names of the various beneficial
holders hereof as then certified to the Trustee by Depositary, this Security may
not be transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
Unless this certificate is presented by an authorized representative
of the Depositary to the Company or its agent for registration of transfer,
exchange or payment, and any certificate to be issued is registered in the name
of Cede & Co., or such other name as requested by an authorized representative
of the Depositary and any amount payable thereunder is made payable to Cede &
Co., or such other name, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.
This Security may be exchanged for certificated Securities registered
in the names of the various beneficial owners hereof if (a) the Depositary is at
any time unwilling or unable to continue as depositary and a successor
depositary is not appointed by the Company within 90 days, (b) the Depositary at
any time ceases to be a clearing agency registered under the Securities Exchange
Act of 1934, or (c) the Company, in its sole discretion, decided to allow this
Security to be exchangeable for certificated Securities of this series in
registered form. Any such exchange shall be made upon receipt by the Trustee of
an Officer's Certificate therefor and certificated Securities of this series
shall be registered in the name or names of the person or persons specified by
the Depositary in a written instruction to the Security Registrar. The
Depositary may base its written instruction upon directions it receives from its
participants.
- ------------------------
* This legend will be deleted from Securities in certificated form.
17
EXHIBIT 4(C)
----------------------------------------------------
DATED 24 FEBRUARY 1999
DEED OF COMMON TERMS
TXU Australia Holdings (AGP) Pty Ltd
TXU Australia (LP) No. 1 Limited
TXU Australia (LP) No. 2 Limited
(as the "CORE BORROWERS" and as "OBLIGORS")
Each of the companies specified in
schedule 1
("OBLIGORS")
Texas Utilities Company
("TEXAS")
Each of the financial institutions specified in
schedule 2
("FINANCIERS")
Each of the financial institutions specified in
schedule 3
("HEDGE COUNTERPARTIES")
Citibank, N.A.
BA Australia Limited
Westpac Banking Corporation
("JUNIOR FINANCIERS")
National Australia Bank Limited
("FACILITY A AGENT")
National Australia Bank Limited
("FACILITY B AGENT")
Chase Securities Australia Limited
("FACILITY D AGENT")
National Australia Bank Limited
("TRUSTEE")
MALLESONS STEPHEN JAQUES
Solicitors
Rialto
525 Collins Street
Melbourne Vic 3000
Telephone (61 3) 9643 4000
Fax (61 3) 9643 5999
DX 101 Melbourne
Ref: JLC
<PAGE>
1
- --------------------------------------------------------------------------------
CONTENTS DEED OF COMMON TERMS
- --------------------------------------------------------------------------------
1 INTERPRETATION 2
2 DECLARATION OF TRUST 26
3 DUTIES, POWERS AND RIGHTS OF TRUSTEE 27
Authority of Trustee 27
Extent of authority and obligations 27
Senior Creditors bound 27
Excluded roles and duties 27
After consultation and instructions 28
Matters requiring instructions from all Senior
Creditors 28
Matters requiring instructions from a Majority of Senior
Creditors 29
Matters requiring instructions from relevant Senior
Creditors 29
Overriding instructions 30
Without consultation or instructions 30
Trustee's actions 30
Senior Creditor's instructions 30
Trustee's obligations 31
Trustee's awareness of certain events 31
Trustee may assume compliance 32
Limit on disclosure obligations 32
No further obligations 32
Individual responsibility of Senior Creditors 32
Exoneration of Trustee 32
Trustee in capacity of a Senior Creditor 33
Trustee dealing in different capacities 33
Restriction on Senior Creditors exercising rights 33
Notice of transfer 34
Senior Creditor to pay over amounts received directly 34
Pro-rata refunds 34
Proceeds of litigation 34
Amendment to Deed 35
Senior Creditors to indemnify against non-payment 35
The Core Borrowers' back-to-back indemnity 35
Funds before acting 36
If a Senior Creditor does not fund 36
Core Borrowers' costs obligation not affected 36
Compliance may be assumed 37
Trustee is not responsible for Senior Creditor's breach 37
Delegation by Trustee 37
Duties when delegating 37
Responsibility for delegates 37
Trustee may rely on communications and opinions 37
Force majeure 37
No responsibility for force majeure 38
Authority to Execute 38
4 SUBORDINATION 38
Subordination 38
Rights and obligations following an Event 38
<PAGE>
2
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Junior Creditor Undertakings 39
Permitted Junior Creditor Payments 39
Obligors 40
Revocation of Approvals 41
Preservation of Senior Creditor's Rights 41
Power of Attorney 43
Application as between Junior Finance Debt and Texas
Indemnity 44
Texas Guarantee 44
Corporations Law 44
Obligors 44
Texas 44
5 REPRESENTATIONS AND WARRANTIES 45
Representations and warranties 45
Continuation of representations and warranties 49
6 UNDERTAKINGS 50
General undertakings 50
Core Borrower's and Eastern's Hedge Undertakings 58
Accession of Hedge Counterparties 59
Undertaking of Hedge Counterparties 59
Notification of Hedge Exposures 60
Negative Undertakings 60
Financial Undertakings 66
Distributions 66
7 [DELETED] 68
8 DEFAULT 68
Events of default 68
Consequences of default 73
9 DISTRIBUTION OF RECOVERED MONEY 74
10 REPLACEMENT OF TRUSTEE 75
Removal of Trustee 75
Retirement 76
11 LIMITATION ON LIABILITY 76
Limitation on liability 77
12 COSTS, CHARGES, EXPENSES AND INDEMNITIES 77
What the Core Borrowers agree to pay 77
Indemnity 78
Items included in loss, liability and Costs 78
Payment of employees' losses 79
Currency conversion on judgment debt 79
Trustee fees 79
13 NOTICES 79
Form 79
Waiver of notice period 80
14 CHANGE IN CREDITORS 80
<PAGE>
3
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New Senior Creditor 80
New Junior Creditor 81
Change in Senior Creditors 81
Change in Junior Creditor 82
Effect of Accession 82
Authority 82
Restriction on Senior Creditors 83
New Junior Creditor - condition precedent 83
Notice of Change 83
15 GENERAL 83
Set-off 83
Certificates 83
Prompt performance 84
Discretion in exercising rights 84
Consents 84
Partial exercising of rights 84
No liability for loss 84
Conflict of interest 84
Remedies cumulative 84
Rights and obligations are unaffected 84
Indemnities 84
Variation and waiver 84
Confidentiality 85
Further steps 85
Inconsistent law 85
Supervening legislation 85
Time of the essence 86
Counterparts 86
Serving documents 86
Consent by Obligors 86
16 GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS 86
1 DEFINITIONS AND INTERPRETATION 100
Definitions 100
Interpretation 100
2 SUBORDINATION 100
3 LAWS 101
<PAGE>
1
- --------------------------------------------------------------------------------
DEED OF COMMON TERMS
DATE: 24 February 1999
PARTIES: TXU AUSTRALIA HOLDINGS (PARTNERSHIP) LIMITED
PARTNERSHIP a limited partnership formed and
registered under the Partnership Act 1958 of
Victoria, the general partner of which is:
TXU AUSTRALIA HOLDINGS (AGP) PTY LTD (ACN 086 014
931) having an office at Level 17, 452 Flinders
Street, Melbourne, Victoria; and the limited
partners of which are:
TXU AUSTRALIA (LP) NO. 1 LIMITED (ARBN 086 406
733), a company incorporated under the laws of
England and Wales and having its registered office
at Kempson House, Camomile Street, London EC3A
7AN; and
TXU AUSTRALIA (LP) NO. 2 LIMITED (ARBN 086 406
724), a company incorporated under the laws of
England and Wales and having its registered office
at Kempson House, Camomile Street, London EC3A 7AN
(as the "CORE BORROWERS" and as "OBLIGORS")
EACH OF THE COMPANIES SPECIFIED IN SCHEDULE 1
("OBLIGORS")
TEXAS UTILITIES COMPANY having an office at Energy
Plaza, 1601 Byran Street, Dallas, Texas 75201,
United States of America ("TEXAS")
EACH OF THE FINANCIAL INSTITUTIONS SPECIFIED IN
SCHEDULE 2 ("FINANCIERS")
EACH OF THE FINANCIAL INSTITUTIONS SPECIFIED IN
SCHEDULE 3 ("HEDGE COUNTERPARTIES")
CITIBANK, N.A. (ARBN 072 814 058) having an office
at Level 26, 101 Collins Street, Melbourne,
Victoria
BA AUSTRALIA LIMITED (ACN 004 617 341) having an
office at Level 37, 525 Collins Street, Melbourne,
Victoria; and
WESTPAC BANKING CORPORATION (ARBN 007 457 141)
having an office at Level 9, 360 Collins Street,
Melbourne, Victoria ("JUNIOR FINANCIERS")
NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937)
having an office at Level 2, 271 Collins Street,
Melbourne, Victoria (in its capacity as facility
agent under the Facility A Syndicated Facilities
Agreement) ("FACILITY A AGENT")
NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937)
having an office at Level 2, 271 Collins Street,
Victoria (in its capacity as facility agent under
the Facility B Syndicated Facilities Agreement)
("FACILITY B AGENT")
CHASE SECURITIES AUSTRALIA LIMITED (ACN 002 888
011) having an office at Level 35, AAP Centre, 250
George Street, Sydney, New South Wales (in its
capacity as agent under the Facility D Facility
Agreement) ("FACILITY D AGENT")
NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937)
having an office at Level 2, 271 Collins Street,
Melbourne, Victoria (in its capacity as "TRUSTEE")
<PAGE>
2
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1 INTERPRETATION
- --------------------------------------------------------------------------------
1.1 The following words have these meanings in this deed unless
the contrary intention appears.
ACCESSION DATE means, in respect of a New Creditor, the date on
which the Trustee executes a New Creditor Accession Deed executed
by that New Creditor in accordance with clause 14.
ACTION means action which may result in an amendment, waiver,
determination, consent, approval, release or discharge.
ALP LOAN AGREEMENT means the loan agreement dated 24 February
1999 between Holdco (as lender) and the Core Borrowers (as
borrowers) as amended by a deed dated on or about the Effective
Date.
AMOUNT OWING means, at any time for or in respect of a Senior
Creditor, the total of all amounts which are then due for
payment, or which will or may become due for payment in
connection with any Senior Finance Document (including
transactions in connection with them) to that Senior Creditor or
to the Trustee for the account of that Senior Creditor and
includes, in respect of a Hedge Counterparty, the Hedge Exposure
of that Hedge Counterparty.
AUSTRALIAN ACCOUNTING STANDARDS means the accounting standards
within the meaning of the Corporations Law and, where not
inconsistent with those accounting standards and the Corporations
Law, generally accepted accounting principles and practices in
Australia consistently applied by a body corporate or as between
bodies corporate.
AUTHORISATION includes:
(a) any consent, authorisation, registration, filing,
agreement, notarisation, certificate, permission,
licence, approval, authority, arrangement, exemption or
similar instrument (whether from, by or with a
Governmental Agency or any other person); or
(b) in relation to anything which will be prohibited or
restricted in whole or in part by law if a Governmental
Agency intervenes or acts in any way within a specified
period after application, lodgement, filing,
registration or notification, the expiry of that period
without the intervention or action.
AUTHORISED OFFICER means:
(a) in the case of a Creditor (other than any Obligor or
Texas), a director, secretary or an officer whose title
contains the word "manager", "director", "president",
"lawyer", "counsel" or a person performing the
functions of any of them; and
(b) in the case of an Obligor or Texas, a person appointed
and notified to the Trustee to act as an Authorised
Officer under the Transaction Documents to which it is
a party and whose specimen signature has been given to
the Trustee.
<PAGE>
3
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BANK BILL RATE means, on any date, the average bid rate for Bills
having a tenor of 30 days as displayed on the "BBSY" page of the
Reuters Monitor System on that day provided that if that rate is
not displayed the Bank Bill Rate means the rate quoted in good
faith by the Trustee as the rate at which the Trustee would bid
for Bills of that tenor on that day.
BILL has the meaning it has in the Bills of Exchange Act 1909
(Cwlth) and a reference to the drawing, acceptance or endorsement
of, or other dealing with, a Bill is to be interpreted in
accordance with that Act.
BUSINESS DAY means a day (not being a Saturday, Sunday or public
holiday) on which banks are open for general banking business in
Melbourne and Sydney.
CALCULATION DATE means 31 March, 30 June, 30 September and 31
December in each year commencing on 30 June 2000.
CALCULATION PERIOD means, in relation to any Calculation Date,
the 12 month period ending on that Calculation Date.
CONSOLIDATED INTEREST COVER RATIO means, on any Calculation Date
in respect of any Calculation Period, the ratio of:
(a) EBITDA:
to:
(b) Debt Service in respect of or in connection with
Consolidated Senior Debt (which includes, without
limitation, all net amounts paid or payable by, or to,
any Hedge Counterparty or other financial institution
in respect of or in connection with any interest rate
Hedge Agreement),
for that Calculation Period.
CONSOLIDATED NET WORTH means the aggregate, on a consolidated
basis, of the paid up capital, retained profits and reserves
(excluding the amount of all asset revaluation reserves after
Financial Close) of the Group:
(a) less:
(i) all minority interests;
(ii) any paid up capital or share premium in respect of
shares or stock capable of being redeemed;
(b) plus the aggregate of Qualifying Subordinated Debt.
CONSOLIDATED SENIOR DEBT means at any time the sum of:
(a) the total Amount Owing to the Senior Creditors; and
(b) the aggregate outstanding principal amount of all other
Indebtedness of the Core Borrowers and Permitted
Indebtedness of the Group (excluding the Core
Borrowers) on a consolidated basis which is not Junior
Debt.
<PAGE>
4
- --------------------------------------------------------------------------------
CONTESTED TAXES means a Tax payable by an Obligor:
(a) that is being diligently contested by it in good faith
and in accordance with proper procedures;
(b) that is not required by applicable law to be paid
before the liability is contested; and
(c) in respect of which it has set aside sufficient
reserves of liquid assets to pay the Tax and any fine,
penalty or interest payable if the contest is
unsuccessful.
CONTROLLER has the meaning it has in the Corporations Law.
CORE BUSINESS means the generation, storage, processing, supply,
transmission, distribution and sale of energy products and any
ancillary activities and other activities which permit the more
efficient utilisation of assets and resources of the Group (so
long as these ancillary or other activities do not represent a
material diversification of the Core Business or a material
diversion of financial resources from the Core Business of the
generation, storage, processing, supply, transmission,
distribution and sale of energy products).
COSTS includes costs, charges and expenses, including those
incurred in connection with advisers.
CP PROGRAMME means the domestic commercial paper programme of
Eastern which is in place as at the Effective Date and which is
governed and supported by the following documents:
(a) the Commercial Paper Dealer Agreement dated 18 April
1997 between Eastern and National Australia Bank
Limited, Australia and New Zealand Banking Group
Limited, Societe Generale Australia Limited,
Commonwealth Bank of Australia and Deutsche Bank AG (as
dealers);
(b) the Issuing and Paying Agency Agreement dated 18 April
1997 between Eastern and National Australia Bank
Limited;
(c) the agreement dated 21 June 1999 between Eastern and
Australia and New Zealand Banking Group Limited
providing for a $50,000,000 Commercial Paper Standby
Line;
(d) the agreement dated 15 September 1999 between Eastern
and Australia and New Zealand Banking Group Limited
providing for a $25,000,000 Commercial Paper Standby
Line;
(e) the agreement dated 24 February 1999 between Eastern
and National Australia Bank Limited providing for a
$25,000,000 short term line of credit;
(f) the agreement dated 3 May 1999 between Eastern and
National Australia Bank Limited providing for a
$100,000,000 Liquidity Support Facility;
<PAGE>
5
- --------------------------------------------------------------------------------
(g) the agreement dated 9 March 1999 between Eastern and
Commonwealth Bank of Australia providing for a
$75,000,000 Cash Advance Facility;
(h) the agreement dated 20 October 1999 between Eastern and
TXU Corporation providing for a $50,000,000 Standby
Facility;
(i) the agreement dated 22 December 1999 between Eastern
and SG Australia Limited providing for a $20,000,000
Option Facility to issue commercial paper; and
(j) the agreement dated 22 December 1999 between Eastern
and Deutsche Bank AG providing for a $50,000,000 Bond
Option Facility.
CREDITOR means each Senior Creditor and each Junior Creditor.
Where the term is used in relation to the obligations of any one
of those persons "to the Creditors" it is a reference to the
obligations of that person to each other person which is a
Creditor.
DEBT SERVICE means, in respect of any Calculation Period and on a
consolidated basis, all Interest (including, but not limited to:
(a) any discount on any Bill, debenture, bond, note or
other security;
(b) any discount in respect of any receipts or receivables
which have been sold by the Group to any person
(including, without limitation, under any
securitisation program or facility);
(c) any line, facility, commitment, acceptance, usage,
discount, guarantee or other fees and amounts incurred
on a regular or recurring basis which are payable in
relation to Indebtedness (which, for the avoidance of
doubt, excludes any establishment, underwriting or
other upfront fees);
(d) any dividend payable on redeemable preference shares or
on any other share or stock the obligations in respect
of which constitute Indebtedness;
(e) capitalised interest;
(f) the portion of rental or hire payments in the nature of
interest under any finance lease, sale and leaseback or
hire purchase agreement to which any member of the
Group is a party;
(g) Interest, premiums, fees, break costs and any other
amounts paid, payable or incurred by any member of the
Group under any Derivative Transaction less Interest,
premiums, fees and any other amounts paid, payable or
incurred to any member of the Group by the counterparty
to the Derivative Transaction),
which, in accordance with Australian Accounting Standards, is or
would be regarded as paid, payable or incurred by the Group in
that Calculation Period.
<PAGE>
6
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DEED OF SUBORDINATION means a deed in or substantially in the
form of schedule 6.
DEED POLL has the meaning given to that term in any Senior
Finance Document.
DERIVATIVE TRANSACTION means a contract, agreement or arrangement
(other than in respect of the price of electricity or gas) which
is:
(a) a futures contract (as defined in the Corporations
Law); or
(b) an interest rate or currency hedge, swap, option, a
swaption, a forward rate agreement or any other
contract, agreement or arrangement similar to or having
in respect of its subject matter a similar effect to
any of the above.
DISTRIBUTION AREA means, as the context may require:
(a) the area in Victoria in which Westar is authorised to
provide services by means of distribution pipelines or
distribute and supply gas, being that area defined as
the "Distribution Area" and described in schedule 2 to
Westar's Distribution Licence; and
(b) the area in Victoria in which Eastern is authorised to
distribute and supply electricity, being that area
defined as the "Distribution Area" and described in
schedule 2 to Eastern's Distribution Licence; and
(c) any other area in which an Obligor is authorised to
distribute or supply energy products.
DISTRIBUTION LICENCE means, as the context may require:
(a) the distribution licence issued by ORG pursuant to the
Gas Industry Act 1994 with effect from 11 December
1997, as amended and transferred to Westar;
(b) the distribution licence issued to Eastern by ORG
pursuant to the Electricity Industry Act 1993 in effect
from 3 October 1994, as amended; and
(c) any other licence issued or transferred to, or held by,
an Obligor to distribute or supply energy products.
DRAWDOWN DATE has the meaning given to that term in any Senior
Finance Document.
DRAWDOWN NOTICE has the meaning given to that term in any Senior
Finance Document.
EASEMENTS means all easements, rights or privileges held by or
vested in or deemed to be held by or vested in an Obligor
(whether under the Gas Industry Act 1994, the Electricity
Industry Act 1993 or otherwise) in, over, appurtenant to or
affecting any real property.
<PAGE>
7
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EASTERN means Eastern Energy Limited (ACN 064 651 118).
EASTERN NOTES means the notes issued by Eastern under the
Indenture dated 1 December 1996 between Eastern and The Bank of
New York, as trustee, comprising US$250,000,000 6.25% Senior
Notes due 2006 and US$100,000,000 7.25% Senior Notes due 2016.
EBITDA means, in respect of any Calculation Period, the earnings
of the Group (including the proceeds of any claim under a
business interruption insurance policy and any interest earnings)
on a consolidated basis and before:
(a) abnormal items (which includes the sale proceeds from
the disposal of assets);
(b) extraordinary items including, without limitation,
costs arising on the termination of any Derivative
Transaction;
(c) Debt Service;
(d) income tax; and
(e) depreciation and amortisation.
EFFECTIVE DATE means the date upon which all of the conditions
precedent set out in clause 2 of the deed amending this deed and
executed on or about 22 February 2000 have been satisfied or
waived by the Trustee.
ENFORCEMENT ACTION means, in relation to an Obligor:
(a) a right arising from a default by an Obligor is
exercised or enforced against the Obligor including,
without limitation, the making of a declaration under
clause 8.2 of this deed or a demand for payment under
the Guarantee;
(b) an application is made for, or a notice is given or
other step is taken with a view to:
(i) insolvency, liquidation, administration,
dissolution or similar proceedings with respect
to the Obligor;
(ii) an administration, arrangement, composition or
assignment for the benefit of creditors, or any
class of creditors, of the Obligor; or
(iii) the appointment of any person as a Controller in
relation to property of an Obligor,
whether by petition, application, convening of a meeting, voting
in favour of a resolution or otherwise.
ENVIRONMENT means all aspects of the surroundings of human
beings, including:
(a) the physical characteristics of those surroundings such
as the land, the waters and the atmosphere; and
<PAGE>
8
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(b) the biological characteristics of those surroundings
such as animal, plants and other forms of life; and
(c) the aesthetic characteristics of those surroundings
such as their appearance, sounds, smells, tastes and
textures.
ENVIRONMENTAL LAW means a law regulating or otherwise relating to
the Environment including, but not limited to, any law relating
to land use, planning, water catchments, pollution of air or
water, noise, smell, contamination, chemicals, waste, pesticides,
use of dangerous goods or hazardous substances, noxious trades or
any other aspect of protection of the Environment.
EVENT means the happening of any of these events:
(a) an order is made that an Obligor be wound up; or
(b) a liquidator is appointed in respect of an Obligor; or
(c) a provisional liquidator is appointed in respect of an
Obligor and the provisional liquidator is ordered or
required to admit all debts to proof or pay all debts
capable of being admitted to proof proportionately; or
(d) an Obligor enters into, or resolves to enter into, a
scheme of arrangement, deed of company arrangement or
composition with, or assignment for the benefit of, all
or any class of its creditors; or
(e) an Obligor resolves to wind itself up or otherwise
dissolve itself.
EVENT OF DEFAULT means an event specified in clause 8.
EXCLUDED SUBSIDIARY means each of:
(a) TXU (No. 3) Pty Ltd (ACN 081 074 188);
(b) TXU (No. 4) Pty Ltd (ACN 081 074 197);
(c) TXU (No. 5) Pty Ltd (ACN 081 074 204);
(d) TXU (No. 6) Pty Ltd (ACN 081 688 913); and
(e) TXU Australia (Queensland) Pty Ltd (ACN 081 754 538),
unless and until any of those bodies corporate become Obligors in
accordance with this deed.
FACILITY A AGENT means National Australia Bank Limited or any
successor agent appointed by the relevant Financiers under the
Facility A Syndicated Facilities Agreement from time to time.
FACILITY A SYNDICATED FACILITIES AGREEMENT means the agreement
dated 24 February 1999 between the Core Borrowers, the WCF
Borrowers (as defined in that agreement), the Joint Lead Banks
(as defined in that agreement), the Working Capital Bank (as
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defined in that agreement), the Hedge Counterparties (as defined
in that agreement), National Australia Bank Limited as the agent
and the offshore paying agent and the Financiers (as defined in
that agreement) as amended by an agreement dated on or about the
Effective Date.
FACILITY B AGENT means National Australia Bank Limited or any
successor agent appointed by the relevant Financiers under the
Facility B Syndicated Facilities Agreement from time to time.
FACILITY B SYNDICATED FACILITIES AGREEMENT means the agreement
dated on or about the Effective Date between the Core Borrowers,
the Financiers named therein and the Facility B Agent.
FACILITY C AGREEMENTS means each of:
(a) the agreement entitled "Working Capital Facility
Agreement" dated on or about the Effective Date between
the Core Borrowers and National Australia Bank Limited;
(b) the agreement entitled "Working Capital Facility
Agreement" dated on or about the Effective Date between
the Core Borrowers and Westpac Banking Corporation; and
(c) the agreement entitled "Working Capital Facility
Agreement" dated on or about the Effective Date between
the Core Borrowers and Australia and New Zealand
Banking Group Limited.
FACILITY D AGENT means Chase Securities Australia Limited or any
successor agent appointed by the relevant Financiers under the
Facility D Facility Agreement from time to time.
FACILITY D FACILITY AGREEMENT means the syndicated loan facility
agreement dated 30 April 1999 between the Core Borrowers, The
Chase Manhattan Bank (as financier), Holdco, TXU (No. 12) Pty
Ltd, Eastern and the Facility D Agent as amended by a deed dated
on or about the Effective Date.
FACILITY E AGREEMENT means the agreement entitled "Facility E
Loan Agreement" dated on or about the Effective Date between the
Core Borrowers and National Australia Bank Limited and Westpac
Banking Corporation.
FINANCE DOCUMENT means any Senior Finance Document, any Junior
Finance Document, any other document which the Core Borrowers and
the Trustee agree in writing is to be a Finance Document and any
other instrument connected with any of them.
FINANCIAL CLOSE means 24 February 1999.
FINANCIAL YEAR means each 12 month period ending on 31 December
in each year.
FINANCIER means each financial institution specified in schedule
2 and any other person who becomes a Financier and Senior
Creditor in accordance with clause 14.
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FINANCIAL STATEMENTS means:
(a) a profit and loss statement; and
(b) a balance sheet; and
(c) a statement of cash flows,
together with any notes to those documents and a directors'
declaration as required under the Corporations Law (in the case
of a body corporate incorporated in Australia) and any other
information necessary to give a true and fair view.
FIXED DATE means the day by which the Trustee determines that it
has been instructed to give a notice under clause 8.2(a).
FRANCHISE AREA means the area in Victoria in which Kinetik is
authorised to sell gas, being that area defined as the "Franchise
Area" and described in schedule 2 to Kinetik's gas Retail
Licence.
GENERATION ASSET means any asset utilised or employed in the
generation of electricity.
GENERATION LICENCE means any licence issued or transferred to, or
held by, an Obligor to generate electricity or other energy
products
GOOD OPERATING PRACTICE means the standard of operating and
engineering practice that would reasonably be expected from a
prudent utility located in Australia (not being owned and
operated by a Governmental Agency) for the generation, supply,
storage, processing, transmission, distribution or sale of energy
products under conditions comparable to those applicable to the
Infrastructure, consistent with applicable laws, regulations,
codes and licences. The determination of comparable conditions
will take into account factors such as the design and
specifications, relative size, age, load characteristics and
technological status of the Infrastructure and assets deployed in
the Core Business.
GOVERNMENTAL AGENCY means any government, any minister of a
government or any governmental or semi-governmental entity,
agency or authority (including, without limitation, the
Australian Competition and Consumer Commission and the ORG).
GROUP means the Core Borrowers and their Subsidiaries.
GUARANTEE means the guarantee and indemnity dated 24 February
1999 between the Core Borrowers, Holdco, TXU8 and TXU9 in favour
of the Trustee as amended by a deed dated on or about the
Effective Date pursuant to which the Core Borrowers and TXU9 were
released from their obligations under the guarantee and indemnity
and by an agreement dated on or about the Effective Date.
GUARANTEED MONEY has the meaning given to that term in the
Guarantee.
GUARANTOR means each of Holdco and TXU8.
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HALF YEAR means each period of six months ending on 30 June and
31 December in each year.
HEDGE AGREEMENT means each interest rate or currency hedging
document (including any restatement of any earlier document) or
transaction entered into between the Core Borrowers or Eastern
and any Hedge Counterparty or other financial institution from
time to time.
HEDGE COUNTERPARTY means each financial institution specified in
schedule 3 and any person (other than the Core Borrowers and
Eastern) who is a party to a Hedge Agreement entered into after
the Effective Date and who becomes a Senior Creditor in
accordance with clause 14.
HEDGE EXPOSURE means in respect of a Hedge Counterparty at the
applicable date the amount which is H in the following formula:
H = M to M + Unpaid Amounts
where:
M TO M is the result of the mark to market
calculation of the obligations under the Hedge
Agreements to which it is a party provided that M
to M will be a positive number if it represents a
liability of the Core Borrowers or Eastern (as the
case may be) to the Hedge Counterparty and a
negative number if it represents a liability of
the Hedge Counterparty to the Core Borrowers or
Eastern (as the case may be).
UNPAID AMOUNTS is any amount due and payable but unpaid under the
Hedge Agreements to which it is a party provided that Unpaid
Amounts will be a positive number if it represents amounts owing
by the Core Borrowers or Eastern (as the case may be) to the
Hedge Counterparty and a negative number if it represents amounts
due and payable but unpaid by the Hedge Counterparty to the Core
Borrowers or Eastern (as the case may be),
provided that if H is a negative number it shall be deemed to be
equal to zero.
HEDGE LIABILITIES means all present and future liabilities
(actual or contingent) payable or owing by the Core Borrowers and
Eastern to a Hedge Counterparty or any of them under or in
connection with the Hedge Agreements, whether or not matured and
whether or not liquidated, together in each case with:
(a) any novation, deferral or extension of any of those
liabilities permitted by the terms of this deed;
(b) any claim for damages or restitution arising out of, by
reference to, or in connection with, any of the Hedge
Agreements;
(c) any claim, flowing from any recovery by the Core
Borrowers or Eastern or a receiver or liquidator
appointed to the Core Borrowers or Eastern or any other
person of a payment or discharge in respect of any of
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those liabilities on grounds of any insolvency
provision or otherwise; and
(d) any amount (such as post-insolvency interest) which
would be included in any of the above but for any
discharge, non-provability, unenforceability or
non-allowability of the same as a result of any
insolvency provisions.
HOLDCO means TXU Australia Holdings Pty Ltd (ACN 086 006 859).
HOLDCO - TXUA LOAN AGREEMENT means the loan agreement dated 24
February 1999 between Holdco (as lender) and TXUA (as borrower)
as amended by a deed dated on or about the Effective Date.
INDEBTEDNESS means any debt or other monetary liability (whether
actual or contingent) in respect of moneys borrowed or raised or
any financial accommodation (including in respect of any moneys
raised from the sale or securitisation of any receipts or
receivables) whatever, or in the case of paragraph (h) below, a
Derivative Transaction, including a debt or liability under or in
respect of any:
(a) Bill, bond, debenture, note or similar instrument;
(b) acceptance, endorsement or discounting arrangement;
(c) guarantee granted by a financial institution
guaranteeing the payment of a debt (the "guaranteed
debt"), in which case the guaranteed debt will not be
included;
(d) finance lease or sale and leaseback (and for the
purposes of clause 6.3(b), operating lease);
(e) deferred purchase price (for more than 180 days) of any
asset or service;
(f) obligation to deliver goods or provide services paid
for in advance by any financier or in relation to any
other financing transaction;
(g) amount of capital and premium payable or in connection
with the reduction of any preference shares or any
amount of purchase price payable for or in connection
with the acquisition of redeemable preference shares;
(h) Derivative Transaction; or
(i) guarantee, indemnity or guarantee and indemnity,
and irrespective of whether the debt or liability is owed or
incurred alone or severally or jointly or both with any other
person. For the purpose of calculating the principal amount of
any Indebtedness under:
(j) any securitisation of receipts or receivables, the
principal amount shall be taken to be the discounted
amount of proceeds paid in exchange for the receipts or
receivables; and
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(k) any finance lease or sale and leaseback, the aggregate
portion of all rental in the nature of principal.
INFRASTRUCTURE means:
(a) all gas transmission and distribution pipes, and all
other plant and equipment used in the reticulation,
transmission or metering of gas 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 Group; and
(b) all electricity transmission and distribution lines,
power poles, underground cables, stations,
sub-stations, 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 Group; and
(c) all Easements.
INFRASTRUCTURE ASSETS means any asset which forms part of the
Infrastructure.
INSOLVENCY EVENT means the happening of any of these events:
(a) an order is made that an entity be wound up; or
(b) an application is made to a court that an entity be
wound up or for an order appointing a liquidator or
provisional liquidator in respect of an entity (and is
not stayed or dismissed within 14 days) unless the
entity satisfies the Trustee (acting on the
instructions of the Majority of Senior Creditors)
within 14 days of it being made that the application is
frivolous or vexatious; or
(c) a liquidator or provisional liquidator is appointed in
respect of an entity, whether or not under a court
order;
(d) except to reconstruct or amalgamate while solvent on
terms approved by the Trustee (acting on the
instructions of the Majority of Senior Creditors), an
entity enters into, or resolves to enter into, a scheme
of arrangement, deed of company arrangement or
composition with, or assignment for the benefit of, all
or any class of its creditors, or it proposes a
reorganisation, moratorium or other administration
involving any class of its creditors; or
(e) an entity resolves to wind itself up, or otherwise
dissolve itself, or gives notice of intention to do so,
except to reconstruct or amalgamate while solvent on
terms approved by the Trustee (acting upon the
instructions of the Majority of Senior Creditors) or is
otherwise wound up or dissolved; or
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(f) a Controller is appointed to or over all or any part of
the assets or undertaking of the entity or the holder
of any Security Interest takes possession of any asset
of the entity; or
(g) an entity is or is deemed by law or a court to be
insolvent; or
(h) an entity takes any steps to obtain protection or is
granted protection from its creditors, under any
applicable legislation or an administrator is appointed
to an entity or steps are taken by the directors of the
entity to make such an appointment; or
(i) anything analogous or having a substantially similar
effect to any of the events specified above happens
under the law of any applicable jurisdiction.
INTERCOMPANY LOAN AGREEMENT means each of:
(a) the ALP Loan Agreement;
(b) the Holdco - TXUA Loan Agreement;
(c) the TXUA - TXU8 Loan Agreement; and
(d) the TXU8 Loan Agreement.
INTERCOMPANY LOAN DEBT means any amount actually or contingently
owing under or in connection with an Intercompany Loan Agreement.
INTEREST includes, in relation to any principal or other amount
of Indebtedness, interest, fees, commissions and charges and any
other amounts in the nature of interest or the payment of which
has a similar effect or purpose to the payment of interest.
INTEREST PAYMENT DATE has the meaning given to that term in any
Senior Finance Document.
JUNIOR CREDITOR means each of:
(a) each Junior Financier;
(b) TXUA;
(c) Texas; and
(d) any other person who is owed Qualifying Subordinated
Debt or Subordinated Guarantee Debt.
JUNIOR DEBT means each of:
(a) the Junior Finance Debt;
(b) the Texas Indemnity;
(c) the Intercompany Loan Debt of TXU8 under the TXUA-TXU8
Loan Agreement;
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(d) any Qualifying Subordinated Debt and any amount
(including, without limitation, Interest) actually or
contingently owing to a Junior Creditor under or in
connection with any Qualifying Subordinated Debt; and
(e) any Subordinated Guarantee Debt.
JUNIOR FINANCE DEBT means any amount actually or contingently
owing to a Junior Financier under or in connection with the
Junior Finance Documents (other than an amount owing or remaining
unpaid by Texas under the Texas Guarantee).
JUNIOR FINANCE DOCUMENT means the Subordinated Facility
Agreement, the Texas Guarantee, this deed, any document which is
nominated as a Junior Finance Document in any New Creditor
Accession Deed or Deed of Subordination, any document which
creates or acknowledges Qualifying Subordinated Debt, any
guarantee and indemnity of any Qualifying Subordinated Debt and
any other instrument connected with any of them.
JUNIOR FINANCIER means each of Citibank, N.A., BA Australia
Limited and Westpac Banking Corporation in their capacity as
financiers under (including, in the case of BA Australia Limited
and Westpac Banking Corporation, as assignees of the "Financier"
under) the Subordinated Facility Agreement and any assignee or
substitute who becomes a Junior Financier in accordance with
clause 14.
KINETIK means Kinetik Energy Pty Ltd (ACN 086 014 968).
LICENCE means the Distribution Licences, the Generation Licences,
the Retail Licences and any other Authorisation granted to any
Obligor to generate, distribute, store, process, supply or sell
energy products.
LICENCE HOLDER means each or all of Eastern, Westar, Kinetik and
any other Obligor that becomes the holder of a Licence.
LOAN NOTE has the meaning given to that term in any Senior
Finance Document.
LOSS includes any consequential loss, and any costs, liability,
claim, suit, proceeding, cause of action, demand or action.
MAJORITY OF SENIOR CREDITORS means at any time:
(a) if no Event of Default subsists, Senior Creditors
(other than Hedge Counterparties), the Amount Owing to
whom exceeds 66% of the total Amount Owing to all
Senior Creditors; and
(b) if an Event of Default subsists, Senior Creditors the
Amount Owing to whom exceeds 66% of the total Amount
Owing to all Senior Creditors.
MATERIAL ADVERSE EFFECT means a material adverse effect on:
(a) the legality, validity or enforceability of a Finance
Document or an Intercompany Loan Agreement; or
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(b) an Obligor's ability to observe its obligations under
any Finance Document or an Intercompany Loan Agreement;
or
(c) the ability of an Obligor to carry on its business as
it is being conducted at the time preceding the event;
or
(d) the rights of a Senior Creditor under a Senior Finance
Document.
MATERIAL CONTRACT means:
(a) the Intercompany Loan Agreements;
(b) the Partnership Deed;
(c) any contract having a term of more than 12 months for
the purchase of energy products by an Obligor (and, for
the avoidance of doubt, does not include any Derivative
Transaction or similar transaction, including energy
trading) and under which the consideration payable by
that Obligor in any 12 month period exceeds
$50,000,000;
(d) any contract entered into by an Obligor relating to
access to or the use of, or maintenance of any
transmission, distribution network or system and under
which the consideration payable by, or received by (as
the case may be) that Obligor in any 12 month period
exceeds $50,000,000;
(e) any contracts governed by the master vesting terms and
conditions relating to Eastern;
(f) the master hedge agreement between Eastern and AES
Transpower Holdings Pty Ltd dated 6 May 1999; and
(g) any other document which an Obligor and the Trustee
agree in writing will be a Material Contract for the
purposes of this deed.
MATERIAL OPERATING SUBSIDIARY means each Subsidiary of the Core
Borrowers which:
(a) contributes or in the current or following Financial
Year is likely to contribute more than 10 % of the
EBITDA of the Group; or
(b) which has total assets having a value of more than
$100,000,000,
unless the subsidiary has been released from its obligations
under this deed in accordance with this deed and, as at the
Effective Date, each of TXUA, Eastern, Kinetik, Westar and WUGS
is a Material Operating Subsidiary.
MATERIAL REGULATORY INSTRUMENT includes:
(a) the MSO Rules;
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(b) the Victorian Gas Industry Tariff Order;
(c) the Wimmera and Colac Tariff Order;
(d) the National Third Party Access Code for Natural Gas
Pipeline Systems and the Victorian Third Party Access
Code for Natural Gas Pipeline Systems;
(e) the Access Arrangements for the distribution system;
(f) the National Electricity Code;
(g) the Victorian Electricity Supply Industry Tariff Order;
(h) the undertaking given to the Australian Competition and
Consumer Commission under section 44ZZA of the Trade
Practices Act (Cth) given by Eastern as contemplated by
the National Electricity Code; and
(i) any guidelines, regulations or determinations issued or
made by the Office of Regulator-General established
under the Office of the Regulator-General Act 1994,
any other regulatory instrument, requirement, Authorisation or
code made under, contemplated by or connected with any of the
above (including without limitation any variation, amendment or
replacement of any of the instruments referred to above) which
has a material impact on an Obligor in any relevant jurisdiction.
MSO RULES has the meaning given in the Gas Industry Act 1994.
NATIONAL ELECTRICITY CODE has the meaning given to the word
"Code" in the National Electricity Law.
NEW CREDITOR means a person who becomes a Senior Creditor or
Junior Creditor by acceding to this deed after the date of this
deed.
NEW CREDITOR ACCESSION DEED means a deed in or substantially in
the form of schedule 4.
NEW OBLIGOR ACCESSION DEED means a deed in or substantially in
the form of schedule 7.
OBLIGOR means:
(a) each Core Borrower;
(b) each company specified in schedule 1; and
(c) any other person which executes a New Obligor Accession
Deed from time to time,
unless the person has been released from its obligations under
this deed in accordance with this deed but does not include
Texas.
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ORG means the Office of the Regulator-General established under
the Office of the Regulator-General Act 1994 or its equivalent
established in any jurisdiction other than Victoria.
PARTNERSHIP means the TXU Australia Holdings (Partnership)
Limited Partnership being a limited partnership formed and
registered under the Partnership Act 1958 of Victoria.
PARTNERSHIP DEED means the deed dated 27 January 1999 between
each Core Borrower establishing the Partnership, as amended by a
deed dated 23 February 1999.
PERMITTED DISPOSAL means:
(a) any disposal for fair value of obsolete assets which
are no longer required for the operation of the
business in accordance with Good Operating Practice,
and except for assets which are Infrastructure Assets,
the disposal of assets in exchange for other assets of
comparable value and utility;
(b) any disposal of an asset (other than an Infrastructure
Asset) provided that the aggregate value of all assets
disposed of by the Group in any Financial Year
(excluding disposals permitted under any other
paragraph of this definition) does not exceed 5% of the
total assets of the Group (as measured by reference to
the audited consolidated Financial Statements for the
previous Financial Year);
(c) the disposal of an Infrastructure Asset but only if:
(i) it is necessary or desirable in accordance with
Good Operating Practice to replace that
Infrastructure Asset and that asset is replaced in
the ordinary course of business by an asset which
is capable of performing the same function as the
asset replaced and whose selection, purchase,
installation and use is in accordance with Good
Operating Practice; or
(ii) the Infrastructure Asset is surplus to its
requirements having regard to Good Operating
Practice in relation to the Core Business and the
value of that Infrastructure Asset together with
the value of all other surplus Infrastructure
Assets disposed of by the Group in any Financial
Year does not exceed in aggregate $30,000,000;
(d) disposals and acquisitions between Obligors;
(e) disposals of energy products in the ordinary course of
business; or
(f) the disposal of any asset the subject of a contract of
sale entered into prior to the Effective Date and which
has been notified to the Trustee in writing prior to
the Effective Date and the disposal of the Rowville
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electricity transformation and switching facility.
PERMITTED INDEBTEDNESS means in relation to the Obligors (other
than the Core Borrowers):
(a) any Indebtedness incurred by the Guarantors under the
Guarantee or under any other guarantee and indemnity of
any Consolidated Senior Debt; or
(b) any Indebtedness under the Intercompany Loan
Agreements; or
(c) any Subordinated Guarantee Debt; or
(d) any Indebtedness under any Transactional Banking
Agreement; or
(e) any guarantee and/or indemnity issued by an Obligor in
relation to the obligations of another Obligor provided
those obligations are or have been incurred in the
ordinary course of the Core Business; or
(f) any Indebtedness of Eastern under:
(i) the Eastern Notes; or
(ii) the Subordinated Facility Agreement; or
(iii) Hedge Agreements in place as at the Effective
Date solely to manage the interest rate and
currency exposure of Eastern under the Eastern
Notes; or
(g) any Indebtedness of Eastern under the CP Programme for
a period not exceeding 90 days after the Effective
Date; or
(h) any Indebtedness under any equipment lease, provided
there is no breach of clause 6.3(t) of this deed; or
(i) any Indebtedness incurred in the ordinary course of
business by a TXU8 Borrower in favour of another TXU8
Borrower; or
(j) the obligation of a TXU8 Borrower to indemnify another
TXU8 Borrower in respect of any payments made by that
other TXU8 Borrower to TXU8 under the TXU8 Loan
Agreement; or
(k) any other Indebtedness approved in writing by the
Trustee (acting upon the instructions of the Majority
of Senior Creditors).
PERMITTED SECURITY INTEREST means:
(a) any Security Interest arising by operation of law in
the ordinary course of business securing Taxes which
are not yet in arrears and can subsequently be paid
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without penalty or which are Contested Taxes;
(b) any mechanic's, workmen's or any like lien or right of
set-off arising in the ordinary course of business,
securing or otherwise relating to Indebtedness which is
not yet overdue or which has been contested or
litigated in good faith, where the aggregate amount of
the Indebtedness in respect of all such liens and
rights of set-off does not at any time exceed $500,000;
(c) any Security Interest in respect of deposits of money
or property in an amount, or of a value, not exceeding
$1,000,000 in aggregate, by way of security for the
performance of any statutory obligations arising in the
ordinary course of business;
(d) this deed;
(e) the fixed and floating charge dated 1 December 1996
(ASIC Charge No. 517872) granted by Eastern in favour
of Westpac Banking Corporation, subsequently
transferred to Westpac Custodian Nominees Limited and
to be transferred to National Australia Bank Limited
provided that at no time does it secure any moneys,
liabilities or other obligations;
(f) any right of set off arising under a Material Contract
or in favour of NEMMCO or VENCorp over cash deposits,
bank guarantees or similar instruments lodged by any
Obligor by way of compliance with prudential
requirements arising under any Material Regulatory
Instrument; and
(g) any other Security Interest approved in writing by the
Trustee (acting upon the instructions of the Majority
of Senior Creditors).
POTENTIAL EVENT OF DEFAULT means an event which, with the giving
of notice or lapse of time, would become an Event of Default.
PROPERTIES means all properties or premises leased, occupied or
used or owned by an Obligor at any time.
QUALIFYING SUBORDINATED DEBT means the principal amount
(excluding capitalised interest) of any Indebtedness of the Core
Borrowers which is subordinated on the same terms as Junior Debt
is subordinated under this deed and:
(a) in respect of which the creditor (or a trustee or agent
for the creditor) has executed and delivered to the
Trustee a New Creditor Accession Deed; or
(b) in respect of which the creditor (or a trustee or agent
for the creditor) has either:
(i) executed and delivered to the Trustee a Deed of
Subordination; or
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(ii) demonstrated to the absolute satisfaction of the
Trustee and in a manner approved by the Trustee
that the Indebtedness is subordinated on
substantially the same terms as Junior Debt is
subordinated under this deed,
and in respect of which the Trustee has received from lawyers
reasonably approved by the Trustee a legal opinion in form and
substance acceptable to the Trustee in connection with the
obligations of the creditor as a subordinated creditor.
QUARTER means each period of three months ending on 31 March, 30
June, 30 September and 31 December in each year.
RECOVERED MONEY means the aggregate amount received in accordance
with clause 9 which has not been distributed under this deed.
RECOVERED MONEY DISTRIBUTION DATE means a day on which Recovered
Money is available for distribution in accordance with clause 9.
RELATED ENTITY has the meaning it has in the Corporations Law.
RELEVANT JUNIOR DEBT means, in respect of a Junior Creditor, the
Junior Debt in respect of that Junior Creditor.
RELEVANT SENIOR CREDITOR has the meaning given in clause 3.30.
RELEVANT SENIOR DEBT means, in respect of a Senior Creditor, the
Senior Debt in respect of that Senior Creditor.
RETAIL LICENCE means:
(a) the gas retail licence issued by ORG pursuant to the
Gas Industry Act 1994 with effect from 11 December
1997, as amended and transferred to Kinetik;
(b) the electricity retail licence issued by ORG pursuant
to the Electricity Industry Act 1993 with effect from 5
November 1997, as amended and transferred to Kinetik;
(c) the electricity retail licence issued to Eastern by ORG
pursuant to the Electricity Industry Act 1993 with
effect from 3 October 1994, as amended; and
(d) any other licence issued or transferred to, or held by,
an Obligor to sell energy products.
SECURITY INTEREST means any security for the payment of money or
performance of obligations including a mortgage, charge, lien,
pledge, trust or power.
SENIOR CREDITORS means:
(a) the Trustee;
(b) the Facility A Agent;
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(c) the Facility B Agent;
(d) the Facility D Agent;
(e) each Financier;
(f) each Hedge Counterparty;
(g) each Transactional Bank; and
(h) any other person who has provided Indebtedness (which
does not constitute Subordinated Indebtedness) to the
Group and has agreed with the Obligors and the Trustee
to be bound by the terms of this deed and has executed
and delivered to the Trustee a New Creditor Accession
Deed in accordance with clause 14.
SENIOR DEBT means any amount actually or contingently owing under
or in connection with the Senior Finance Documents, whether or
not then due and payable.
SENIOR FINANCE DOCUMENT means each of:
(a) this deed;
(b) the Facility A Syndicated Facilities Agreement;
(c) each Deed Poll;
(d) the Loan Notes;
(e) the Facility B Syndicated Facilities Agreement;
(f) the Facility C Agreements;
(g) the Facility D Facility Agreement;
(h) the Facility E Agreement;
(i) each Transactional Banking Agreement;
(j) the Guarantee;
(k) each Hedge Agreement to which a Hedge Counterparty is a
party;
(l) any document nominated as a Senior Finance Document in
any New Creditor Accession Deed; and
(m) any other document which an Obligor and the Trustee
agree in writing is to be a Senior Finance Document and
any other instrument connected with any of them.
SHARE means:
(a) in respect of a Senior Creditor and a day, the same
proportion (expressed as a percentage (rounded (if
necessary) to the nearest two decimal places)) as the
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proportion which the Amount Owing to that Senior
Creditor on that day bears to the aggregate Amount
Owing on that day to all the Senior Creditors; and
(b) in respect of a Relevant Senior Creditor and a day, the
same proportion (expressed as a percentage (rounded (if
necessary) to the nearest two decimal places)) as the
proportion which the Amount Owing to that Relevant
Senior Creditor on that day bears to the aggregate
Amount Owing on that day to all the Relevant Senior
Creditors.
SUBORDINATED FACILITY AGREEMENT means the agreement dated 24
February 1999 between the Core Borrowers, Eastern and Citibank
N.A., as amended and in respect of which Citibank N.A. with the
prior written consent of the Core Borrowers, Eastern and Texas,
assigned a portion of its rights as "Financier" on 24 December
1999 to BA Australia Limited and a portion of its rights as
"Financier" on 30 December 1999 to Westpac Banking Corporation.
SUBORDINATED GUARANTEE DEBT means any Indebtedness of a Guarantor
under a guarantee and indemnity of any Qualifying Subordinated
Debt provided that the Indebtedness of the Guarantor is
subordinated on the same terms as Junior Debt is subordinated
under this deed and:
(a) in respect of which the beneficiary of the guarantee
and indemnity has executed and delivered to the Trustee
a New Creditor Accession Deed; or
(b) in respect of which the beneficiary of the guarantee
and indemnity has either:
(i) executed and delivered to the Trustee a Deed of
Subordination; or
(ii) demonstrated to the absolute satisfaction of the
Trustee and in a manner approved by the Trustee
that the Indebtedness is subordinated on
substantially the same terms as Junior Debt is
subordinated under this deed,
and in respect of which the Trustee has received from lawyers
reasonably approved by the Trustee a legal opinion in form and
substance acceptable to the Trustee in connection with the
obligations of the beneficiary as a subordinated creditor.
SUBORDINATED INDEBTEDNESS means all liabilities of an Obligor in
connection with any Indebtedness which is fully subordinated to
the interests of the Senior Creditors.
SUBSIDIARY of an entity means:
(a) another entity which is a subsidiary of the first
within the meaning of part 1.2 division 6 of the
Corporations Law; or
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(b) another entity which is a subsidiary of or otherwise
controlled by the first within the meaning of any
approved accounting standard; or
(c) in relation to a Core Borrower, a corporation which is
owned or controlled by that Core Borrower and other
Core Borrowers,
and for the avoidance of doubt, the Core Borrowers and the
Partnership will each be deemed to be a "body corporate" for the
purposes of part 1.2 division 6 of the Corporations Law.
SURETY means a person (other than an Obligor) which at any time
is liable by guarantee or otherwise alone or jointly, or jointly
and severally, to pay or indemnify against non-payment of the
Senior Debt or Junior Debt.
SYSTEMS means for an entity, centralised and decentralised
hardware, software and networks (including interfaces, data
storage and equipment with embedded computer chips or logic) used
by an entity.
TAXES means taxes, levies, imposts, charges and duties imposed by
any authority (including stamp and transaction duties) together
with any related interest, penalties, fines and expenses in
connection with them, except if imposed on the overall net income
of a Creditor.
TEXAS GUARANTEE means the instrument entitled "Guaranty" dated 24
February 1999 given by Texas in favour of Citibank, N.A. and in
respect of which Citibank, N.A., with the prior consent of Texas,
assigned a portion of its rights on 24 December 1999 to BA
Australia Limited and a portion of its rights on 30 December 1999
to Westpac Banking Corporation.
TEXAS INDEMNITY means any right (whether arising by indemnity,
contribution, subrogation or otherwise) against a Core Borrower
or Eastern arising in connection with the Texas Guarantee.
TRANSACTION DOCUMENTS means each Finance Document, Licence,
Material Contract, any document which an Obligor acknowledges in
writing to be a Transaction Document, and any other document
connected with any of them.
TRANSACTIONAL BANK means any financial institution which has or
may provide a Transactional Banking Facility to any Obligor and
which is a Financier or has agreed with the Obligors and the
Trustee to be bound by the terms of this deed and has executed
and delivered to the Trustee a New Creditor Accession Deed.
TRANSACTIONAL BANKING AGREEMENT means any agreement in force from
time to time between any Obligor and a Transactional Bank setting
out the terms and conditions applicable to a Transactional
Banking Facility.
TRANSACTIONAL BANKING FACILITY includes any of the following:
(a) overdraft, credit card, equipment lease, bank
guarantee, insurance bond or similar facility; and
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(b) payroll, cheque encashment, merchant arrangements and
tape negotiation advice and same-day transaction, funds
transfer, direct debit and payment and settlement
facilities which are provided by a bank, and where
relevant, are settled between an Obligor and that bank
within the same day.
TRUST FUND means the amount held by the Trustee under clause 2.1
together with any other property which the Trustee acquires to
hold on the trusts of this deed including, without limitation,
any Security Interest which it executes after the date of this
deed in its capacity as trustee of the trust established under
this deed and any property which represents the proceeds of sale
of any such property or proceeds of enforcement of any Security
Interest.
TXUA means TXU Australia Pty Ltd (ACN 071 611 017).
TXUA-TXU8 LOAN AGREEMENT means the loan agreement dated 24
February 1999 between TXUA (as lender) and TXU8 (as borrower) as
amended by a deed dated on or about the Effective Date.
TXU8 means TXU (No. 8) Pty Ltd (ACN 085 235 776).
TXU8 BORROWER means each Obligor other than the Core Borrowers,
Holdco and TXUA.
TXU8 LOAN AGREEMENT means the agreement dated on or about the
Effective Date between TXU8 (as lender) and the TXU8 Borrowers
(as borrowers).
TXU9 means TXU (No. 9) Pty Ltd (ACN 085 235 801).
WESTAR means Westar Pty Ltd (ACN 086 015 036).
WUGS means Western Underground Gas Storage Pty Ltd (ACN 079 089
311).
YEAR 2000 COMPLIANT means in respect of all Systems that neither
its performance nor functionality is affected by dates prior to,
during or after the year 2000 and that, in particular:
(a) no value for current date causes or is likely to cause
any interruption in operation of the Systems;
(b) date-based functionality of the Systems behaves
consistently for dates prior to, during and after year
2000;
(c) in all data storage, the century in any date must be
specified either explicitly or by unambiguous
algorithms or inferencing rules;
(d) the year 2000 must be recognised as a leap year.
1.2 In this deed, unless the contrary intention appears:
(a) a reference to this deed or another instrument includes
any variation or replacement of any of them;
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(b) a reference to a statute, ordinance, code or other law
includes regulations and other instruments under it and
consolidations, amendments, re-enactments or
replacements of any of them;
(c) the singular includes the plural and vice versa;
(d) the word "person" includes a firm, an entity, an
unincorporated association or an authority;
(e) a reference to a person includes a reference to the
person's executors, administrators, successors,
substitutes (including, without limitation, persons
taking by novation) and assigns;
(f) an agreement, representation or warranty on the part of
or in favour of two or more persons binds or is for the
benefit of them jointly and severally but an agreement
or warranty of a Creditor or the Creditors binds that
Creditor or Creditors severally only;
(g) a reference to any thing (including without limitation,
any amount) is a reference to the whole and each part
of it and a reference to a group of persons is a
reference to all of them collectively, to any two or
more of them collectively and to each of them
individually; and
(h) an accounting term is a reference to that term as it is
used in Australian Accounting Standards.
1.3 Headings are inserted for convenience and do not affect the
interpretation of this deed.
1.4 [Deleted].
1.5 [Deleted].
1.6 If a Senior Finance Document requires or permits any act,
matter or thing to be done by the Core Borrowers, that act,
matter or thing must be done by TXU Australia Holdings (AGP)
Pty Ltd as general partner in the TXU Australia Holdings
(Partnership) Limited Partnership and, once done, will be
deemed to bind:
(a) the Core Borrowers and the TXU Australia Holdings
(Partnership) Limited Partnership; and
(b) each of the partners in the TXU Australia Holdings
(Partnership) Limited Partnership in accordance with
the Partnership Deed.
2 DECLARATION OF TRUST
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2.1 The Trustee declares that it holds the sum of A$10 and will
hold the Trust Fund on trust at any time for itself and the
persons who are Senior Creditors at that time.
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2.2 The trust established under this deed commences on the date
of this deed and unless determined earlier is to end on the
day prior to the eightieth anniversary of the date of this
deed.
2.3 The perpetuity period applicable to the trust established
under this deed is the period of 80 years commencing on the
date of this deed.
2.4 The trust established under this deed is to be known as the
TXU Australia Holdings Trust.
3 DUTIES, POWERS AND RIGHTS OF TRUSTEE
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AUTHORITY OF TRUSTEE
3.1 The Trustee is appointed to enter into and act as trustee
for the Senior Creditors under the Senior Finance Documents
to which it is a party.
EXTENT OF AUTHORITY AND OBLIGATIONS
3.2 Each Senior Creditor irrevocably authorises the Trustee to:
(a) enter into the Senior Finance Documents to which it is
intended to be a party; and
(b) take action on the Senior Creditor's behalf in
accordance with this deed and the other Senior Finance
Documents; and
(c) exercise the rights and carry out the obligations of
the Trustee expressly set out in the Senior Finance
Documents and rights, powers and discretions reasonably
incidental to them.
Each Senior Creditor acknowledges that the Trustee has no
obligations except those expressly set out in the Senior Finance
Documents.
SENIOR CREDITORS BOUND
3.3 Without limiting the liability of the Trustee contemplated
by clause 3.19, each Senior Creditor agrees:
(a) to be bound by anything properly done or properly not
done by the Trustee in accordance with this deed,
whether or not on instructions, and whether or not the
Senior Creditor gave an instruction or approved of the
thing done or not done; and
(b) any instruction given to or action taken by the Trustee
in accordance with this clause 3 is binding on each
Senior Creditor and each Senior Creditor authorises the
Trustee to give any consent and do any other matter or
thing necessary or appropriate to give effect to the
instruction.
EXCLUDED ROLES AND DUTIES
3.4 The appointment as trustee does not mean that the Trustee:
(a) is a trustee for the benefit of; or
(b) is a partner of; or
(c) has a fiduciary duty to, or other fiduciary
relationship with,
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any Senior Creditor, any Junior Creditor, an Obligor or any other
person, except as expressly set out in any Senior Finance
Document.
AFTER CONSULTATION AND INSTRUCTIONS
3.5 If the Trustee proposes to act on any of the following
matters, it agrees to:
(a) seek instructions from the Senior Creditors on the
proposal in accordance with clauses 3.6, 3.7 or 3.8 (as
the case may be); and
(b) take the action contemplated (including, without
limitation, Enforcement Action) if, and only if, it
receives instructions to do so from:
(i) all of the Senior Creditors - on matters listed in
clause 3.6;
(ii) a Majority of Senior Creditors - on matters listed
in clause 3.7;
(iii) the relevant Senior Creditors - on the matters
listed in clause 3.8; or
(iv) either all or a Majority of Senior Creditors - on
matters which the express terms of this deed
require the Trustee to act on the instructions of
either all or a Majority of Senior Creditors (as
the case may be).
MATTERS REQUIRING INSTRUCTIONS FROM ALL SENIOR CREDITORS
3.6 The following matters require instructions from all Senior
Creditors:
(a) a change to clauses 4, 6.3(a), 6.3(b), 6.3(c), 6.3(n),
6.3(q), 6.3(w), 6.4, 6.5, 6.6, 6.7, 6.8 or 8.2 of this
deed and to any defined terms used in those clauses;
(b) a discharge or termination of the Guarantee or a
release of a Guarantor from the Guarantee or of the
Core Borrowers, TXU8 or any Material Operating
Subsidiary from its obligations under this deed;
(c) a change to the definition of Majority of Senior
Creditors; and
(d) a change to clauses 3.5 to 3.9 or any provision of this
deed which requires the consent, approval, agreement or
instructions of all or a Majority of Senior Creditors;
(e) a change to clause 9;
(f) the waiver of any breach or other non-performance of
obligations by the Core Borrowers under clauses 6.3(n),
6.3(w) or 6.8;
(g) a release of any property mortgaged or charged under a
Security Interest granted to the Trustee; and
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(h) a change to this deed or any other Senior Finance
Document to which the Trustee is a party which will
increase the monetary obligations of the Senior
Creditors.
MATTERS REQUIRING INSTRUCTIONS FROM A MAJORITY OF SENIOR CREDITORS
3.7 The following matters require instructions from a Majority
of Senior Creditors:
(a) a variation of or change to this deed or any other
Senior Finance Document to which the Trustee is a party
other than a variation or change listed in clause 3.6;
(b) the exercise of the Trustee's rights in its capacity as
trustee in connection with clause 8 of this deed
(except clause 8.1(a) and clause 8.2(b) in the
circumstances set out in clause 3.8 and clause 8.2(b)
of this deed);
(c) the exercise of the Trustee's rights in its capacity as
trustee in connection with the Guarantee other than the
discharge or termination of the Guarantee or the
release of a Guarantor from the Guarantee (except in
the circumstances set out in clause 3.8 of this deed);
(d) the waiver of any breach or other non-performance of
obligations (other than the obligations referred to in
clause 3.6(f)) by an Obligor in connection with any
Senior Finance Document to which the Trustee is a party
or any obligation in any other Senior Finance Document
incorporated by reference from this deed;
(e) the waiver of any breach or other non-performance of
obligations by a Junior Creditor in connection with
this deed; and
(f) a release of any Obligor (other than the Core
Borrowers, TXU8 or any Material Operating Subsidiary)
from its obligations under this deed unless all of the
issued shares in the Obligor are being sold,
transferred or otherwise disposed of to a person which
is not an Obligor or a Related Entity of an Obligor and
such sale, transfer or disposal is permitted under
paragraph (b) of the definition of "Permitted
Disposal".
MATTERS REQUIRING INSTRUCTIONS FROM RELEVANT SENIOR CREDITORS
3.8
(a) A waiver by the Trustee of a breach or failure by an
Obligor to pay any money payable under a Senior Finance
Document requires instructions from the Senior Creditor
which is a party to or has the benefit of that Senior
Finance Document or if more than one Senior Creditor is
a party to or benefits from that Senior Finance
Document, the requisite number of Senior Creditors who
are required to provide corresponding instructions
under that Senior Finance Document.
(b) Any Senior Creditor which is a party to or has the
benefit of a Senior Finance Document or if there is
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more than one Senior Creditor which is a party to or
has the benefit of a Senior Finance Document then the
requisite number of Senior Creditors who are required
to provide instructions under that Senior Finance
Document may instruct the Trustee in the exercise of
the Trustee's rights in its capacity as trustee in
connection with this deed (including, without
limitation, clause 8.2(b)) and the Guarantee following
an Event of Default under clause 8.1(a) in respect of a
payment under that Senior Finance Document.
(c) Nothing in this clause permits an individual Senior
Creditor to instruct the Trustee individually if that
Senior Creditor is represented by an agent or trustee
and the ability of that Senior Creditor to give
instructions or take any individual action is
prohibited by any relevant Senior Finance Document.
OVERRIDING INSTRUCTIONS
3.9 In relation to all matters other than those under clauses
3.6 and 3.8 , a Majority of Senior Creditors may instruct
the Trustee and, if they do, the Trustee agrees to act in
accordance with the instructions.
WITHOUT CONSULTATION OR INSTRUCTIONS
3.10 Subject to clause 3.11, in any case where the Trustee does
not require instructions under clause 3.5 or does not
receive instructions or requests under clause 3.9, the
Trustee may exercise its rights in its capacity as trustee
for the Senior Creditors and observe its obligations in that
capacity as it sees fit. It need not consult any Senior
Creditor before doing so.
TRUSTEE'S ACTIONS
3.11 Whenever the Trustee:
(a) seeks instructions from the Senior Creditors , it
agrees to specify a reasonable period within which
those instructions are to be given; and
(b) receives instructions from a Majority of Senior
Creditors or all of them, it agrees to follow them but
only in so far as they are in accordance with this
deed; and
(c) exercises its rights in its capacity as trustee for the
Senior Creditors or takes any other action, it agrees,
subject to this deed, to act in the interests (in its
absolute opinion based upon the information which it
has at the time) of the Senior Creditors taken as a
whole.
SENIOR CREDITOR'S INSTRUCTIONS
3.12 Whenever a Senior Creditor gives instructions:
(a) it must do so in accordance with this deed and within
any time period specified by the Trustee for giving
instructions; and
(b) it authorises the Trustee to give any consent or do any
other thing appropriate to carry out the instructions.
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If a Senior Creditor does not give instructions in relation to
Action proposed or recommended by the Trustee within any time
period specified by the Trustee, it is taken to have instructed
the Trustee to take the proposed or recommended Action.
TRUSTEE'S OBLIGATIONS
3.13 The Trustee agrees:
(a) (DEFAULT AND REVIEW) to notify each Senior Creditor of
an Event of Default or Potential Event of Default
promptly after the Trustee becomes aware of it; and
(b) (MATERIAL NOTICES RECEIVED) to give each Senior
Creditor promptly after receiving it a copy of each
notice or other communication or document which is
received from an Obligor in connection with this deed
and which the Trustee considers material; and
(c) (MATERIAL NOTICES GIVEN) to give each Senior Creditor
promptly a copy of any notice or other communication or
document which the Trustee gives an Obligor in
connection with the Senior Finance Documents and which
the Trustee considers material; and
(d) (ACTION TAKEN) to give each Senior Creditor promptly a
report on anything done after instructions from the
Senior Creditors under clauses 3.5 to 3.12; and
(e) (DEFAULT) to give:
(i) notice to any Obligor of the non-payment, in the
manner provided in a Senior Finance Document, of
any money payable when due under a Senior Finance
Document following receipt of written notice of
such non-payment from a Senior Creditor which has
failed to be paid the money when due, subject to
the non-payment not having been waived and
otherwise in accordance with clause 3.8; and
(ii) a copy of such notice to each Senior Creditor.
TRUSTEE'S AWARENESS OF CERTAIN EVENTS
3.14 The Trustee is taken not to be aware of an Event of Default
or Potential Event of Default until either:
(a) an Authorised Officer of the Trustee who is responsible
for the administration of the transactions contemplated
by this deed has actual knowledge of sufficient facts
to ascertain that an Event of Default or Potential
Event of Default has occurred; or
(b) the Trustee receives a notice regarding an Event of
Default or Potential Event of Default under clause
6.1(p).
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TRUSTEE MAY ASSUME COMPLIANCE
3.15 Until it becomes aware in accordance with clause 3.14, the
Trustee may assume that no Event of Default or Potential
Event of Default has occurred and that the Obligors are
observing all their obligations in connection with the
Senior Finance Documents and need not inquire whether that
is, in fact, the case.
LIMIT ON DISCLOSURE OBLIGATIONS
3.16 Despite anything else in this deed, this deed does not
oblige the Trustee to disclose information or provide
documents relating to an Obligor or any other person if the
Trustee reasonably believes that to do so would constitute a
breach of law or duty of confidentiality.
NO FURTHER OBLIGATIONS
3.17 The Senior Creditors agree that the Trustee has no
obligations, other than those in clause 3.13, either
initially or on a continuing basis:
(a) to keep itself informed, or to inform a Senior
Creditor, about the performance by an Obligor of its
obligations under the Senior Finance Documents; or
(b) to provide a Senior Creditor with any information or
documents with respect to an Obligor (whether coming
into its possession before or after accommodation is
provided under the Senior Finance Documents).
INDIVIDUAL RESPONSIBILITY OF SENIOR CREDITORS
3.18 Each Senior Creditor acknowledges for the benefit of the
Trustee and each of its Related Entities that the Senior
Creditor has:
(a) entered into the Senior Finance Documents; and
(b) made and will continue to make its own independent
investigation of the financial condition and affairs of
each Obligor based on documents and information which
it considers appropriate; and
(c) made and will continue to make its own appraisal of the
creditworthiness of each Obligor; and
(d) made its own assessment and approval of the margin,
fees and other return to be obtained under the Senior
Finance Documents,
without relying on the Trustee (in whatever capacity) or any of
its Related Entities or on any representation made by any of
them.
EXONERATION OF TRUSTEE
3.19 Neither the Trustee nor any of its respective directors,
officers, employees, agents, attorneys or Related Entities
is responsible or liable to any Senior Creditor:
(a) because an Obligor fails to perform its obligations
under the Senior Finance Documents; or
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(b) for the financial condition of an Obligor; or
(c) because any statement, representation or warranty in a
Senior Finance Document is incorrect or misleading; or
(d) for the effectiveness, genuineness, validity,
enforceability, admissibility in evidence or
sufficiency of the Senior Finance Documents or any
document signed or delivered in connection with the
Senior Finance Documents; or
(e) for acting or for refraining from acting in accordance
with the instructions of a Majority of Senior Creditors
or all the Senior Creditors.
Without limiting this clause 3.19, the Trustee is not responsible
nor liable to any Senior Creditor for anything done or not done
in connection with the Senior Finance Documents by the Trustee or
its respective directors, officers, employees, agents, attorneys
or Related Entities except to the extent that the act or omission
amounts to fraud, gross negligence or wilful misconduct by the
Trustee or its delegates or gross or wilful breach by it or its
delegates of its or their obligations in its capacity as trustee
for the Senior Creditors.
TRUSTEE IN CAPACITY OF A SENIOR CREDITOR
3.20 If the Trustee is also a Financier or Hedge Counterparty,
then in its capacity as a Financier or Hedge Counterparty
it:
(a) has the same rights and obligations under the Senior
Finance Documents as the other Financiers and Hedge
Counterparties; and
(b) may exercise those rights and agrees to observe those
obligations independently from its role as Trustee as
if it were not the Trustee.
TRUSTEE DEALING IN DIFFERENT CAPACITIES
3.21 The Trustee may:
(a) engage in any kind of banking, trust or other business
with an Obligor or the Senior Creditors or any of their
Related Entities; and
(b) accept fees and other consideration from an Obligor or
any of the Obligor's Related Entities for services in
connection with the Senior Finance Documents or any
other arrangement,
as if it were not the Trustee and without having to account to
the Senior Creditors for any income it derives in doing so.
The Senior Creditors release the Trustee from any obligation it
might otherwise have to them in relation to these matters.
RESTRICTION ON SENIOR CREDITORS EXERCISING RIGHTS
3.22 A Senior Creditor may exercise a right in respect of a
matter referred to in clauses 3.5 to 3.12 against an Obligor
under any Senior Finance Document independently of the
Trustee only if:
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(a) the Trustee has been instructed in accordance with
clauses 3.5 to 3.12 to exercise the right; and
(b) the Trustee has not done so within a reasonable time
(and then only if any request by the Trustee under
clause 3.30 for funds in connection with the exercise
has been complied with),
and subject to the Senior Creditor being permitted to exercise
such a right under any relevant agency provisions which may apply
to the Senior Creditor under any Senior Finance Document other
than this deed.
NOTICE OF TRANSFER
3.23 The Trustee may treat each Senior Creditor as the holder or
obligor of the rights and obligations of that Senior
Creditor for all purposes under the Senior Finance Documents
until a transfer certificate (or other notice of the
assignment or transfer satisfactory to the Trustee) signed
by the substitute, assignee or transferee is given to the
Trustee in accordance with clause 14.
SENIOR CREDITOR TO PAY OVER AMOUNTS RECEIVED DIRECTLY
3.24 If a Senior Creditor receives or recovers an amount due to
it under a Senior Finance Document after the Trustee has
made a declaration under clause 8.2(a) (but not clause
8.2(b)) other than through distribution by the Trustee under
this deed, then it agrees to:
(a) notify the Trustee promptly; and
(b) pay an amount equal to that amount to the Trustee
within two Business Days after receiving it.
If the Senior Creditor receives the amount by applying a set-off,
the set-off occurs when the Senior Creditor records the set-off
in its books of account.
The amount paid to the Trustee is to be:
(c) taken to have been received by the Trustee and not by
the Senior Creditor who receives it (and the Amount
Owing of that Senior Creditor is to continue to include
that amount); and
(d) distributed by the Trustee to the parties entitled to
it in accordance with their entitlements under this
deed.
PRO-RATA REFUNDS
3.25 If a Senior Creditor who receives an amount referred to in
clause 3.24 is obliged to refund any part of it under laws
relating to Insolvency Events, then each Senior Creditor to
which that amount was distributed under clause 9 agrees to
pay to the Trustee (for payment to the Senior Creditor who
has to make the refund) its pro rata share of the amount
required to be refunded.
PROCEEDS OF LITIGATION
3.26 Despite clause 3.24, where a Senior Creditor recovers an
amount in legal proceedings it has brought as permitted by
clause 3.22, the Senior Creditor may retain the recovered
amount and need not pay the recovered amount to the Trustee
or share it with any other party who could have joined in
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the proceedings (or could have taken separate proceedings)
but did not.
If more than one Senior Creditor takes proceedings it has brought
as permitted by clause 3.22, the recovered amount is to be shared
by each of those Senior Creditors in the proportion that the
amount due for payment to it at that time bears to the total of
the amounts at that time due for payment to all the Senior
Creditors who take proceedings.
In each case, any surplus is to be paid to the Trustee.
AMENDMENT TO DEED
3.27 Each Senior Creditor authorises the Trustee to agree with
the other parties to this deed or any other Senior Finance
Document to which the Trustee is a party to a variation or
change to this deed or the other Senior Finance Document if:
(a) all or a Majority of Senior Creditors (as required
under clauses 3.5 to 3.9) have instructed, or are taken
to have instructed, the Trustee that they consent to,
or approve of, the variation or change; or
(b) the Trustee is satisfied that the variation or change
is made to correct a manifest error or an error of a
minor nature or that the variation or change is only of
a formal or technical nature.
SENIOR CREDITORS TO INDEMNIFY AGAINST NON-PAYMENT
3.28 Each Senior Creditor individually in accordance with its
Share indemnifies the Trustee against the non-receipt of a
payment from the Obligors and the Costs incurred by the
Trustee in funding the amount not paid, if the Trustee:
(a) reasonably claims a payment from the Core Borrowers
under clause 12 or from any other Obligor under a
corresponding provision of any other Senior Finance
Document to which the Trustee is a party; and
(b) does not receive it within seven days after the claim
is made,
provided that if the payment and Costs relate to a claim by the
Trustee for payment on account of one or more Senior Creditors,
only each of those Senior Creditors must indemnify the Trustee in
the proportion which the Amount Owing to each of them bears the
total Amount Owing to all of those Senior Creditors.
Each Senior Creditor agrees to pay amounts due under this
indemnity to the Trustee within 2 Business Days of demand from
the Trustee.
THE CORE BORROWERS' BACK-TO-BACK INDEMNITY
3.29 The Core Borrowers indemnify each Senior Creditor against
any liability or loss arising from, and any Costs incurred
in connection with, the Senior Creditor making a payment
under clause 3.28, clause 3.30 or clause 3.31.
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FUNDS BEFORE ACTING
3.30 If the Trustee proposes to exercise a right arising in its
capacity as trustee for the Senior Creditors or take any
Action (whether or not at the instruction of a Majority of
Senior Creditors or all Senior Creditors) in accordance with
this deed and the Trustee reasonably considers this could
result in the Core Borrowers or any other Obligor becoming
obliged to pay to the Trustee an amount under clause 12 or
under a corresponding provision of any other Senior Finance
Document to which the Trustee is a party, as the case may
be, the Trustee:
(a) may request the Senior Creditors (or only the relevant
Senior Creditors ("RELEVANT SENIOR CREDITORS") in
connection with any action under clause 3.8 or clause
8.2(b) of this deed) to place it in funds at least
equal to the amount the Trustee reasonably determines
would be the Core Borrowers' liability; and
(b) need not act until the Senior Creditors or Relevant
Senior Creditors (as the case may be) do so.
Each Senior Creditor or Relevant Senior Creditor (as the case may
be) agrees to fund the Trustee rateably in accordance with its
Share.
IF A SENIOR CREDITOR DOES NOT FUND
3.31 If a Senior Creditor or a Relevant Senior Creditor (as the
case may be) does not fund the Trustee under clause 3.30
within a period determined by the Trustee to be reasonable,
then the Trustee agrees to promptly request each other
Senior Creditor or other Relevant Senior Creditor (as the
case may be) to fund the defaulting Senior Creditor's share.
If one or more other Senior Creditors or Relevant Senior
Creditors (as the case may be) agree to fund the defaulting
Senior Creditor's or Relevant Senior Creditor's (as the case
may be) share, then the obligations of the Senior Creditors
or Relevant Senior Creditors (as the case may be) under
clause 3.30 are taken to be satisfied. Each Senior Creditor
agrees that:
(a) a payment by a Senior Creditor to the Trustee under
this clause 3.31 constitutes a loan by the Senior
Creditor to the defaulting Senior Creditor; and
(b) the loan accrues interest at the rate and in the manner
notified by the paying Senior Creditor to the
defaulting Senior Creditor and the Trustee.
The defaulting Senior Creditor agrees to pay to the Trustee (for
the account of each funding Senior Creditor) on demand from the
Trustee the loan principal and interest on each loan.
CORE BORROWERS' COSTS OBLIGATION NOT AFFECTED
3.32 A payment by a Senior Creditor under clauses 3.28, 3.30 or
3.31 does not relieve the Core Borrowers of their
obligations under clause 12 or any other Obligor of its
obligations under any corresponding provisions of any other
Senior Finance Document.
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COMPLIANCE MAY BE ASSUMED
3.33 In relation to any act of the Trustee, neither the Obligors
nor the Junior Creditors need enquire:
(a) whether the Trustee needed to consult or has consulted
the Senior Creditors; or
(b) whether instructions have been given to the Trustee by
a Majority of Senior Creditors or all Senior Creditors;
or
(c) about the terms of any instructions.
As between the Trustee and the Obligors, all action taken by the
Trustee under the Senior Finance Documents is taken to be
authorised under this deed unless the Core Borrowers have actual
notice to the contrary.
As between the Trustee and the Junior Creditors, all action taken
by the Trustee under this deed is taken to be authorised by the
Senior Creditors unless the Junior Creditors have actual notice
to the contrary.
TRUSTEE IS NOT RESPONSIBLE FOR SENIOR CREDITOR'S BREACH
3.34 The Trustee is not responsible to the Obligors if a Senior
Creditor does not observe its obligations under the Senior
Finance Documents.
DELEGATION BY TRUSTEE
3.35 The Trustee may employ agents and attorneys and may delegate
any of its rights or obligations in its capacity as trustee
for the Senior Creditors without notifying the Senior
Creditors of the delegation.
DUTIES WHEN DELEGATING
3.36 The Trustee agrees to exercise reasonable care in selecting
delegates and to supervise their actions.
RESPONSIBILITY FOR DELEGATES
3.37 The Trustee is responsible for any loss arising due to the
fraud, gross negligence or wilful misconduct of a delegate
or gross or wilful breach by the delegate of their
obligations.
TRUSTEE MAY RELY ON COMMUNICATIONS AND OPINIONS
3.38 In relation to the Senior Finance Documents, the Trustee may
rely:
(a) on any communication or document it believes to be
genuine and correct and to have been signed or sent by
the appropriate person; and
(b) as to legal, accounting, taxation or other professional
matters, on opinions and statements of any legal,
accounting, taxation or professional advisers used by
it.
FORCE MAJEURE
3.39 Despite any other provision of this deed, the Trustee need
not act (whether or not on instructions from one or more of
the Senior Creditors) if it is impossible to act due to any
cause beyond its control (including war, riot, natural
disaster, labour dispute, or law taking effect after the
date of this agreement). The Trustee agrees to notify each
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Senior Creditor promptly after it determines that it is
unable to act.
NO RESPONSIBILITY FOR FORCE MAJEURE
3.40 The Trustee has no responsibility or liability for any loss
or expense suffered or incurred by any party as a result of
its not acting for so long as the impossibility under clause
3.39 (Force majeure) continues. However, the Trustee agrees
to make reasonable efforts to avoid or remove the causes of
non-performance and agrees to continue performance under
this deed promptly when the causes are removed.
AUTHORITY TO EXECUTE
3.41 Each other party to this deed irrevocably authorises the
Trustee to execute any New Obligor Accession Deed signed by
a new Obligor on its behalf.
4 SUBORDINATION
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SUBORDINATION
4.1 Despite any other agreement between a Junior Creditor and an
Obligor but except as permitted by clauses 4.6 and 4.7, each
party agrees with each other party that no part of the
Junior Debt is due for payment or capable of being declared
due for payment unless:
(a) the Senior Debt is satisfied or repaid in full; or
(b) an Event occurs; or
(c) that Junior Debt is refinanced by Qualifying
Subordinated Debt or Consolidated Senior Debt.
RIGHTS AND OBLIGATIONS FOLLOWING AN EVENT
4.2 If an Event occurs, then the Junior Debt is payable
immediately.
4.3 If an Event occurs, then each Junior Creditor agrees, on
request from the Trustee, to:
(a) prove for the whole of its Relevant Junior Debt; and
(b) immediately send to the Trustee a copy of its notice of
proof.
4.4 A Junior Creditor may not prove for its Relevant Junior Debt
except following a request from the Trustee under clause
4.3.
4.5 Except as permitted by clause 4.7, if a Junior Creditor
receives or recovers any money on account of that Junior
Creditor's Relevant Junior Debt (but excluding any payment
to the Junior Financiers under or on account of the Texas
Guarantee) or any amount is paid to any person in connection
with that Junior Creditor's Relevant Junior Debt (excluding
any payment to the Junior Financiers under or on account of
the Texas Guarantee but including, without limitation, to an
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assignee of that Junior Creditor's Relevant Junior Debt),
whether by way of repayment, satisfaction or otherwise and
whether from an Obligor or from any other person, including,
without limitation, a liquidator, provisional liquidator or
administrator of an Obligor, then that Junior Creditor
agrees forthwith to pay to the Trustee for the account of
the Senior Creditors, without the need for any demand, an
amount equal to the lesser of the full amount so received,
recovered or paid and the full amount of the Senior Debt at
that time.
JUNIOR CREDITOR UNDERTAKINGS
4.6 A Junior Creditor may not, without the prior written consent
of the Trustee or, following the occurrence of an Event of
Default, except as directed by the Trustee:
(a) directly or indirectly demand payment of, sue for,
accept payment or repayment of (except for demands,
suits, payments or repayments which are permitted under
clause 4.7) or in any way allow by reduction of an
Obligor's assets or otherwise, the discharge,
satisfaction or extinguishment of its Relevant Junior
Debt (except as a result of a payment under or on
account of the Texas Guarantee or for the purposes of
exercising rights under the Texas Guarantee); or
(b) vary or amend any agreement or document under which an
Obligor's obligations in respect of its Relevant Junior
Debt arise if such variation or amendment would result
in its Relevant Junior Debt ceasing to be subordinated
to the Senior Debt on the terms of this clause 4; or
(c) set off its Relevant Junior Debt against any
Indebtedness of the Junior Creditor to the Obligor; or
(d) assign, charge or otherwise deal with its Relevant
Junior Debt unless the assignee, chargee or other
person to the dealing (or its trustee or agent) has
agreed to be bound as a Junior Creditor under this deed
and has executed and delivered to the Trustee a New
Creditor Accession Deed or a Deed of Subordination; or
(e) accept the benefit of any guarantee in respect of its
Relevant Junior Debt other than a guarantee which
creates Subordinated Guarantee Debt or in the case of
the Junior Financiers, the Texas Guarantee; or
(f) suffer to exist or take a Security Interest to secure
payment of its Relevant Junior Debt; or
(g) except as permitted by clause 6.3(k), borrow or raise
money from or otherwise become indebted to an Obligor;
or
(h) convert any Junior Debt into shares in an Obligor.
PERMITTED JUNIOR CREDITOR PAYMENTS
4.7 So long as:
(a) no Senior Debt is due and payable but unpaid; and
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(b) no Event of Default or Potential Event of Default has
occurred and is subsisting; and
(c) the payment is permitted under clause 6.5 (except in
the case of a payment in respect of the Intercompany
Loan Debt of TXU8 under TXUA - TXU8 Loan Agreement),
an Obligor may pay, prepay, repay, satisfy or discharge, and a
Junior Creditor (other than Texas) may receive and retain,
payments of interest, payments, prepayments or repayments of
principal and any other amounts which are due and owing on the
Junior Debt (other than on the Texas Indemnity or on any
Subordinated Guarantee Debt) not earlier than the date the same
are due in accordance with or as contemplated by, and in the
amounts contemplated by, the terms of the Junior Finance
Documents (except in the case of the Junior Finance Debt which
may be repaid earlier than the date it is due provided it is
repaid (directly or indirectly) from Qualifying Subordinated
Debt) and the Junior Creditors (other than Texas) may make
demands in respect of, or so as to establish a liability to pay,
any amount so permitted to be paid.
4.8 Except as permitted by clause 4.7 or with the prior written
consent of the Trustee or, following the occurrence of an
Event of Default, as directed by the Trustee, a Junior
Creditor may not take any action to recover the Relevant
Junior Debt including, without limitation, by:
(a) voting for the winding up of an Obligor; or
(b) requisitioning a meeting to consider:
(i) a resolution for the winding up of an Obligor; or
(ii) a scheme of arrangement for an Obligor; or
(iii) a resolution for the appointment of an
administrator to an Obligor; or
(c) applying to the court to wind up an Obligor.
4.9 If a liquidator, provisional liquidator or administrator of
an Obligor sets off against the Relevant Junior Debt any
amounts in respect of which a Junior Creditor is indebted to
the Obligor, then the Junior Creditor indemnifies the Senior
Creditors against Loss they suffer because the amount set
off is not part of its Relevant Junior Debt.
OBLIGORS
4.10 Each Obligor may not, without the consent of the Senior
Creditors:
(a) permit or suffer any guarantee, indemnity or guarantee
and indemnity to be given in respect of the Junior Debt
other than a guarantee or guarantee and indemnity which
creates Subordinated Guarantee Debt or in the case of
the Junior Finance Debt, the Texas Guarantee; or
(b) suffer to exist or grant a Security Interest to secure
payment of the Junior Debt; or
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(c) directly pay (except for payments or repayments which
are permitted under clause 4.7) or in any way reduce
the Obligor's assets to discharge the Junior Debt; or
(d) vary or amend any agreement or document under which the
Obligor's obligations in respect of its Junior Debt
arise if such variation or amendment would result in
its Junior Debt ceasing to be subordinated to the
Senior Debt on the terms of this clause 4; or
(e) set off the Junior Debt against any Indebtedness of the
Junior Creditor to the Obligor; or
(f) enter into any arrangement which results in the Junior
Debt not being subordinated to the Senior Debt on the
terms of this clause 4; or
(g) create, grant, extend or permit to subsist or be
imposed any Security Interest ranking in priority to,
equally with or subsequent to the Senior Debt or any
Security Interest for the Senior Debt; or
(h) take any action to recover any amount owing under or
any amount it is entitled to receive under an
Intercompany Loan Agreement including, without
limitation, by doing any of the things specified in
clause 4.8; or
(i) except as permitted by clause 6.3(k), be the creditor
in respect of any Indebtedness; or
(j) convert any Junior Debt into shares in that Obligor.
4.11 Except as permitted under clause 4.7, each Obligor agrees to
notify the Trustee immediately if it receives a demand
whether direct or indirect for payment of any of the Junior
Debt.
REVOCATION OF APPROVALS
4.12 Any approval given by the Trustee in connection with this
deed immediately terminates if:
(a) a Junior Creditor or an Obligor defaults under this
deed; or
(b) the Obligor is unable to pay its debts as they fall
due; or
(c) an Event occurs; or
(d) the Trustee demands payment of the Senior Debt from an
Obligor in accordance with the Senior Finance
Documents.
PRESERVATION OF SENIOR CREDITOR'S RIGHTS
4.13 No obligation of a Junior Creditor arising under this deed
is released or abrogated, prejudiced or affected by any act
matter or thing that a Senior Creditor may do or omit to do
which but for this provision would or might release,
abrogate, prejudice or affect the obligations of the Junior
Creditor including, without limitation:
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(a) the granting of time, credit or any indulgence or
concession to an Obligor or any Surety by the Trustee
or a Senior Creditor or by any compounding or
compromise, release, abandonment, waiver, variation,
relinquishment, renewal or transfer of any securities,
documents of title, assets or any rights of a Senior
Creditor against an Obligor or any Surety of any other
person or by neglect or omission to enforce any such
rights;
(b) the liquidation, receivership, official management or
administration of an Obligor, any Junior Creditor or
any Surety which is an entity or the bankruptcy or
death of any Surety who is a natural person, or any
Junior Creditor or an Obligor or any Surety entering
into any compromise or assignment of property or scheme
of arrangement or composition of debts or scheme of
reconstruction;
(c) any person giving a guarantee or other Security
Interest in respect of all or any of the Senior Debt;
(d) failure by an Obligor or any Surety or any other person
to provide any Security Interest which ought to be
provided or to have been provided under any agreement
in respect of all or any part of the Senior Debt;
(e) any alteration, addition or variation to any agreement
in respect of all or any part of the Senior Debt;
(f) any Security Interest held or taken at any time by a
Senior Creditor for all or any part of the Senior Debt
being void, defective or informal;
(g) an Obligor or any Surety being discharged from its
obligation to pay all or any of the Senior Debt
otherwise than by payment or satisfaction of those
moneys to a Senior Creditor; or
(h) a Junior Creditor being discharged from its obligations
to a Senior Creditor under this deed.
4.14 If a Senior Creditor holds any other Security Interest for
or right in respect of all or any of the Senior Debt, then:
(a) the Senior Creditor need not resort to that other
Security Interest or right before enforcing its rights
under this deed;
(b) the liability of each Junior Creditor under this deed
is not affected by reason that the other Security
Interest or right is or may be wholly or partly void or
unenforceable.
4.15 This deed does not prejudicially affect and is not
prejudicially affected by any Security Interest or guarantee
held by a Senior Creditor either at the date of this deed or
at any subsequent time.
4.16 Nothing contained in this deed merges, discharges,
extinguishes, postpones, lessens or prejudices any Security
Interest now held or which may subsequently be held or taken
by a Senior Creditor for payment of any of the Senior Debt.
Nor does this deed or any Security Interest:
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(a) affect:
(i) any right or remedy which the Senior Creditor now
has or subsequently may have or be entitled to by
law, equity or statute against any other person as
surety or on any bill of exchange, promissory
note, letter of credit or other negotiable
instrument; or
(ii) security to the Senior Creditor for all or part of
the Senior Debt; or
(b) operate as a payment of the Senior Debt until the same
has been actually paid in cash.
Nothing in any Security Interest and no other right or remedy
which a Senior Creditor has or subsequently may have apart from
this deed discharges, extinguishes, postpones, lessens or
otherwise prejudices this deed. A Senior Creditor is not under
any obligation to resort to any Security Interest in priority to
this deed.
4.17 The subordination under this deed is a continuing
subordination and remains in full force until payment in
full of the Senior Debt.
POWER OF ATTORNEY
4.18 Each Junior Creditor irrevocably appoints the Trustee and
each Authorised Officer of the Trustee severally its
attorney.
4.19 Each attorney may:
(a) in the name of the Junior Creditor or the attorney do
anything which the Junior Creditor may lawfully do to
exercise a right of proof of the Junior Creditor
following an Event occurring (including, without
limitation, executing drawdown notices, repayment
notices or any notice in relation to amounts payable
under Intercompany Loan Agreements, executing deeds and
instituting, conducting and defending legal proceedings
and receiving any dividend arising out of that right);
and
(b) delegate its powers (including, without limitation,
this power of delegation) to any person for any period
and may revoke a delegation; and
(c) exercise or concur in exercising its powers even if the
attorney has a conflict of duty in exercising its
powers or has a direct or personal interest in the
means or result of that exercise of powers.
4.20 The Junior Creditor agrees to ratify anything done by an
attorney or its delegate in accordance with clause 4.19.
4.21 The Junior Creditor may not exercise the right of proof
referred to in clause 4.19 independently of the attorney.
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APPLICATION AS BETWEEN JUNIOR FINANCE DEBT AND TEXAS INDEMNITY
4.22 If the Senior Debt has been paid in full, the provisions of
clause 4 apply (whether or not an Event has occurred) as
between the Junior Financiers, Texas and the Obligors as if:
(a) a reference to the Senior Creditors were a reference to
the Junior Financiers;
(b) a reference to the Senior Debt were a reference to the
Junior Finance Debt;
(c) a reference to the Junior Debt were a reference to the
Texas Indemnity and the Intercompany Loan Debt of TXU8
under the TXUA - TXU8 Loan Agreement;
(d) a reference to the Trustee were a reference to the
Junior Financiers; and
(e) a reference to the Junior Creditors were a reference to
Texas and the Obligors.
TEXAS GUARANTEE
4.23 Nothing in this clause 4 shall restrict the rights of the
Junior Financiers under the Texas Guarantee in respect of
any amount which is scheduled to be due in accordance with
the Junior Finance Documents and, but for this clause 4,
would be due and payable to the Junior Financiers.
CORPORATIONS LAW
4.24 This clause 4 is intended to operate as a "debt
subordination" (as defined in section 563C(2) of the
Corporations Law) by each Junior Creditor.
OBLIGORS
4.25 Each Obligor acknowledges and agrees that any amendment or
variation to any Senior Finance Document does not affect,
prejudice or relieve any of the Obligors of their respective
obligations under the Intercompany Loan Agreements.
TEXAS
4.26 The parties acknowledge that the only obligations incurred
by Texas in entering into this deed are as a Junior Creditor
and that those obligations only arise to the extent to which
Texas has any right (whether arising by indemnity,
contribution, subrogation or otherwise) against a Core
Borrower or Eastern in connection with any payment by Texas
under the Texas Guarantee.
NOTICE TO JUNIOR CREDITORS
4.27 Each Obligor undertakes to notify the relevant Junior
Creditors as soon as it becomes aware of:
(a) any Senior Debt being due and payable but unpaid;
(b) the occurrence of any Event of Default or Potential
Event of Default; or
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(c) it being precluded by clause 6 from making any payment
or repayment in respect of the Junior Debt owing to
those Junior Creditors.
5 REPRESENTATIONS AND WARRANTIES
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REPRESENTATIONS AND WARRANTIES
5.1 Each Obligor represents and warrants (except in relation to
matters disclosed to the Trustee by the Obligor and accepted
by the Trustee in writing) that:
(a) (INCORPORATION AND EXISTENCE) it has been incorporated
as a company limited by shares in accordance with the
laws of its place of incorporation, is validly existing
under those laws and has power and authority to carry
on its business as it is now being conducted; and
(b) (POWER) it has power (including, without limitation,
power under the Partnership Deed, in the case of each
Core Borrower) to enter into the Transaction Documents
to which it is a party and observe its obligations
under them; and
(c) (AUTHORISATIONS) it has in full force and effect the
Authorisations necessary for it to enter into the
Transaction Documents to which it is a party, to
observe its obligations and exercise its rights under
them and to allow them to be enforced; and
(d) (VALIDITY OF OBLIGATIONS) its obligations under the
Transaction Documents to which it is a party are valid
and binding and are enforceable against it in
accordance with their terms except to the extent
limited by equitable principles and laws affecting
creditors' rights generally; and
(e) (NO CONTRAVENTION OR EXCEEDING POWER) the Transaction
Documents to which it is a party and the transactions
under them which involve it do not :
(i) contravene its constituent documents (if any); or
(ii) contravene any law or obligation by which it is
bound or to which any of its assets are subject
which, in the case of the Licences or the Material
Contracts to which it is a party, has or is likely
to have a Material Adverse Effect; or
(iii) cause a limitation on its powers or the powers of
its directors to be exceeded; and
(f) (ACCOUNTS) its most recent audited Financial Statements
last given to the Trustee are a true and fair statement
of its financial position as at the date to which they
are prepared and disclose or reflect all its actual and
contingent liabilities as at that date; and
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(g) (CONSOLIDATED ACCOUNTS) if it is required to prepare
consolidated Financial Statements under the
Corporations Law, the most recent audited consolidated
Financial Statements of the economic entity constituted
by it and the entities which it controls last given to
the Trustee are a true and fair statement of the
economic entity's financial position as at the date to
which they are prepared and disclose or reflect all the
economic entity's actual and contingent liabilities as
at that date; and
(h) (NO MATERIAL CHANGE) there has been no change in its
financial position since the date to which its
Financial Statements last given to the Trustee were
prepared which is likely to have a Material Adverse
Effect; and
(i) (NO MATERIAL CHANGE TO ECONOMIC ENTITY) if it is
required to prepare consolidated Financial Statements
under the Corporations Law, there has been no change in
the consolidated financial position of the economic
entity constituted by it and the entities which it
controls since the date to which the consolidated
Financial Statements of the economic entity last given
to the Trustee were prepared which is likely to have a
Material Adverse Effect; and
(j) (EVENT OF DEFAULT) no Event of Default which has not
been waived or (to the best of its knowledge,
information and belief having made due enquiry)
Potential Event of Default (except if notice of that
Potential Event of Default has been given to the
Trustee) continues unremedied; and
(k) (DEFAULT UNDER LAW - MATERIAL ADVERSE EFFECT) it is not
in default under any Transaction Document to which it
is a party or in breach of a law or obligation
affecting it or its assets in a way which is or has
likely to have a Material Adverse Effect; and
(l) (LITIGATION) there is no proceeding or any pending or
(to the best of its knowledge, information and belief
having made due enquiry) threatened proceeding
affecting it or any of its assets before a court,
Governmental Agency, commission or arbitrator which
could reasonably be expected to result in a Material
Adverse Effect; and
(m) (NOT A TRUSTEE) it does not enter into any Transaction
Document as trustee; and
(n) (OWNERSHIP OF PROPERTY) it is the beneficial owner of
and has good title to all property held by it or on its
behalf and all undertakings carried on by it free from
Security Interests other than Permitted Security
Interests; and
(o) (BENEFIT) it benefits by entering into the Transaction
Documents to which it is a party; and
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(p) (SOLVENCY) no Insolvency Event has occurred and is
continuing in respect of it; and
(q) (NO BENEFIT TO RELATED PARTY) it has not contravened
and will not contravene section 243H or section 243ZE
of the Corporations Law by entering into any
Transaction Document or participating in any
transaction in connection with a Transaction Document;
and
(r) (NO IMMUNITY) it has no immunity from the jurisdiction
of a court or from legal process; and
(s) (YEAR 2000) it is Year 2000 Compliant; and
(t) (INFORMATION) to the best of its knowledge and belief,
having made due enquiry, all historical information
provided to each Senior Creditor or a Related Entity of
any of them by or on behalf of an Obligor in connection
with the Transaction Documents is true and accurate in
all material respects as at the date when such
information was provided and, to the best of its
knowledge, there are no material facts or circumstances
which have not been disclosed to each Senior Creditor
and which, if disclosed, might reasonably be expected
to significantly adversely affect the decision of a
person considering whether to provide financial
accommodation to an Obligor and all forecasts and
projections have been made in good faith; and
(u) (SHAREHOLDINGS) from and including the date of
Financial Close:
(i) Texas is the ultimate holding company of the Core
Borrowers; and
(ii) the Core Borrowers directly or indirectly own and
control all of the issued shares in each other
Obligor; and
(v) (CONTROL) Texas ultimately controls the composition of
the board of directors of each Obligor and no person
other than Texas and the board of directors of the
relevant Obligor has management and operational control
of an Obligor; and
(w) (SUBSIDIARIES) all Subsidiaries of the Core Borrowers
are Obligors other than the Excluded Subsidiaries and
the Core Borrowers do not have any Subsidiaries other
than those notified by them to the Trustee; and
(x) (RANKING) its obligations under the Senior Finance
Documents to which it is a party rank in all respects:
(i) at least equally with all its other unsecured and
unsubordinated indebtedness (actual or contingent
and whether present or future), except liabilities
mandatorily preferred by law; and
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(ii) in terms of repayment or payment in winding up, in
priority to all Subordinated Indebtedness and
other Junior Debt; and
(y) (TAXATION) to the best of its knowledge, information
and belief having made due enquiry, it has complied
with all material taxation laws in all jurisdictions in
which it is subject to Taxes, it has paid all material
Taxes due and payable by it, other than Contested
Taxes; and
(z) (INSURANCE) all insurances considered appropriate by
each Obligor and the Trustee and which are available on
reasonable and commercial terms to that Obligor's:
(i) business, assets and operations, including loss of
revenue arising from loss or damage to its own
assets or the assets of all suppliers or
customers; and
(ii) public liability in regard to all operations in
respect of general and products liability,
including the failure of gas supply liability,
bushfire liability; and
(iii) professional indemnity liability; and
(iv) directors and officers liability,
have been effected and are in full force and effect, it has not
made any material misstatement or misrepresentations or omitted
to disclose any material facts to the insurers or their agents in
relation thereto and it is not aware of any reason giving rise to
any right or likelihood that any such policies may be terminated
or that any insurers thereunder will refuse to pay any claim when
made; and
(aa) (INTELLECTUAL PROPERTY) it owns, or has the right and
licence to use, all trade secrets, confidential
information, know-how, patents, trade marks, designs
(whether registered or unregistered), copyright, and
computer programs necessary for the conduct of the Core
Business; and
(bb) (ENVIRONMENTAL LAWS) the occupation, use and
development of each of its Properties complies with all
Environmental Laws and all Authorisations required
under any Environmental Law relating to those
Properties are in full force and effect other than
non-compliances which are neither likely to have a
Material Adverse Effect nor likely to create any
potential liability for the Senior Creditors; and
(cc) (LICENCES) the Licences are validly issued under the
Gas Industry Act 1994, the Electricity Industry Act
1993 or other relevant legislation, as the case may be,
and are in full force and effect and, to the best of
its knowledge, no event or circumstance has arisen or
is likely to arise which may give rise to any right to
revoke, rescind, terminate or suspend any Licence other
than an event or circumstance in respect of which:
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(i) the ORG has issued a `no action' letter which is
still in effect indicating that the ORG will not
be taking any action; or
(ii) there has been insufficient time to obtain a `no
action' letter from the ORG and in respect of
which it has been demonstrated to the Trustee that
there has been diligent pursuit of the issue by
the ORG of a `no action' letter and the remedy of
any actual or potential contravention of a Licence
condition arising from the event or circumstance
and that a `no action' letter is likely to be
issued by the ORG; or
(iii) the event or circumstance could not reasonably be
expected to cause the ORG to exercise any right to
revoke, rescind, terminate or suspend any Licence;
and
(dd) (OTHER MATERIAL AUTHORISATIONS) in the case of the
Licence Holders, no other material Authorisations are
required which have not been or cannot now be obtained
by it to enable it to conduct its business; and
(ee) (SINGLE PURPOSE COMPANIES) it does not carry on any
business activities other than activities in connection
with the Core Business; and
(ff) [Deleted]; and
(gg) (MATERIAL REGULATORY INSTRUMENTS AND CONTRACTS) in the
case of each Licence Holder, it is not:
(i) (without affecting clause 5.1(cc)), in breach of
any Material Regulatory Instrument which has or is
likely to have a Material Adverse Effect; and
(ii) in default under any Material Contract to which it
is a party where such default has or is likely to
have a Material Adverse Effect; and
(hh) (PARTNERSHIP) the Partnership is a limited partnership
established pursuant to the Partnership Deed and within
the meaning of and validly constituted and existing and
registered under Part 3 of the Partnership Act 1958 of
Victoria; and
(ii) (EXCLUDED SUBSIDIARIES) none of the Excluded
Subsidiaries owns any assets (other than assets
relevant to its status as a body corporate and which
have a nominal value) or conducts or carries on any
business activities.
CONTINUATION OF REPRESENTATIONS AND WARRANTIES
5.2 The representations and warranties in clause 5.1 are taken
also to be made on the date of each Drawdown Notice and on
each Drawdown Date and on the date of delivery of a
compliance certificate in accordance with clause 6.1(l) of
this deed by reference to the then current circumstances.
Each Obligor agrees to notify the Trustee of anything that
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happens that would mean it could not truthfully repeat all
its representations and warranties in this clause 5 on the
date of each Drawdown Notice, on each Drawdown Date and on
the date of delivery of a compliance certificate in
accordance with clause 6.1(l) of this deed by reference to
the then current circumstances. A notification under this
clause 5.2 does not limit the Trustee's rights under clause
8.
6 UNDERTAKINGS
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GENERAL UNDERTAKINGS
6.1 Each Obligor undertakes to:
(a) (ACCOUNTING RECORDS) keep proper accounting records and
ensure that each of its Subsidiaries does the same; and
(b) (INFORMATION) give the Trustee any document or other
information that the Trustee reasonably requests from
time to time; and
(c) (COPIES)give the Trustee sufficient copies of any
communication or document it is required to give the
Trustee so as to enable the Trustee to give one copy to
each Senior Creditor; and
(d) (STATUS CERTIFICATES) on reasonable request from the
Trustee if the Trustee considers in good faith that an
Event of Default or Potential Event of Default may have
occurred, give the Trustee a certificate signed by two
of its directors which states whether an Event of
Default or Potential Event of Default continues
unremedied; and
(e) (MAINTAIN AUTHORISATIONS) obtain, renew on time and
comply with the terms of, each Authorisation necessary
for it to enter into the Transaction Documents to which
it is a party, to observe its obligations and exercise
its rights under them and to allow them to be enforced;
and
(f) (ANNUAL ACCOUNTS) give audited Financial Statements of
each Material Operating Subsidiary for each Financial
Year to the Trustee as soon as practicable and in any
event by no later than 90 days after the end of that
year; and
(g) (ANNUAL CONSOLIDATED ACCOUNTS) give the audited
consolidated Financial Statements of the Group for each
Financial Year to the Trustee as soon as practicable
and in any event by no later than 90 days after the end
of that year; and
(h) (HALF YEARLY ACCOUNTS) give the unaudited Financial
Statements of each Material Operating Subsidiary for
the first half of each Financial Year to the Trustee as
soon as practicable and in any event by no later than
60 days after the end of that half year; and
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(i) (HALF YEARLY CONSOLIDATED ACCOUNTS) give the unaudited
consolidated Financial Statements of the Group for the
first half of each Financial Year to the Trustee as
soon as practicable and in any event by no later than
60 days after the end of that half year; and
(j) (QUARTERLY ACCOUNTS) give unaudited quarterly
consolidated management accounts for the Group (in a
form approved by the Trustee) certified by an
Authorised Officer of the Core Borrowers for the
Quarters ending 31 March and 30 September in each year
to the Trustee as soon as practicable and in any event
by no late than 60 days after the end of that Quarter;
and
(k) (FINANCIAL PROJECTIONS) give annual financial
projections (on a consolidated basis incorporating
profit and loss, balance sheet and cashflow projections
together with a brief commentary and listing the
assumptions made in calculating those projections) for
the Group for each Financial Year to the Trustee as
soon as practicable and in any event by no later than
the commencement of that Financial Year; and
(l) (COMPLIANCE CERTIFICATE) give to the Trustee promptly
after the release of the management accounts for each
Quarter, a certificate which certificate must:
(i) be signed by an Authorised Officer of the Core
Borrowers; and
(ii) set out in reasonable detail the computations and
financial and other information necessary to
establish compliance by the Core Borrowers with
the financial undertakings in clause 6.4
(Financial Undertakings); and
(iii) state whether any Event of Default or (to the
best of its knowledge, information and belief
having made due enquiry) Potential Event of
Default has occurred and is subsisting; and (iv)
in the case of the certificate delivered in
connection with the management accounts for the
end of a Financial Year, be subsequently
confirmed in writing by its auditors at the time
of delivery of the annual Financial Statements as
being correct so far as it relates to compliance
by the Core Borrowers with the financial
undertakings in clause 6.4 (Financial
Undertakings); and
(v) [Deleted]; and
(vi) state the amount and term of the Hedge Agreements
entered into by the Core Borrowers and Eastern and
that the Core Borrowers and Eastern are in
compliance with their obligations under clause
6.2; and
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(m) (FINANCIAL STATEMENTS) ensure that the Financial
Statements referred to above:
(i) are prepared in accordance with Australian
Accounting Standards; and
(ii) at the time of delivery, give a true and fair view
of the state of affairs of the Group or the
Material Operating Subsidiary, as the case may be,
as at the date on which, and for the period in
respect of which, they are prepared or an
explanation of any divergence between the
Financial Statements as presented and such
a true and fair view; and
(n) (INCORRECT REPRESENTATION OR WARRANTY) immediately upon
becoming aware notify the Trustee if any representation
or warranty made by it or on its behalf in connection
with a Senior Finance Document is found to be
materially incorrect or misleading; and
(o) (ENSURE NO EVENT OF DEFAULT) do everything within its
powers necessary to ensure that no Event of Default
occurs; and
(p) (NOTIFY DETAILS OF EVENT OF DEFAULT OR POTENTIAL EVENT
OF DEFAULT) if an Event of Default or Potential Event
of Default occurs, upon becoming aware, notify the
Trustee giving full details of the event and any step
taken or proposed to remedy it; and
(q) (LITIGATION) promptly notify the Trustee in writing and
in reasonable detail, and keep the Trustee informed, of
any litigation or administrative or arbitration or
other proceedings before or of any Governmental Agency,
court, commission or arbitrator taking place,
commenced, pending or, to the best of its knowledge,
threatened against it or any of its assets:
(i) in the case of a Licence Holder, under section 36
of the Office of the Regulator-General Act 1994;
or
(ii) in the case of a Licence Holder, under the
Electricity Industry Act 1993, Gas Industry Act
1994 or the Gas Pipelines Access Law in relation
to a "civil penalty provision", "conduct
provision" or "regulatory provision" (as defined
in those Acts or Law); or
(iii) which could reasonably be expected to result in
it incurring a liability in excess of $10,000,000
or which has or is likely to have a Material
Adverse Effect; and
(r) (CONSTITUTION) promptly notify the Trustee of any
proposal to change to its constitution; and
(s) (ENVIRONMENTAL MATTERS) promptly notify the Trustee of
any breach or potential breach of any Environmental Law
or other law or of any complaint or the issuing of any
proceedings or notice or requirements against or upon
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53
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it in respect of, or which is or is likely to result
in, any potential environmental liability or
contravention of any Environmental Law which has or
would have a Material Adverse Effect; and
(t) (REGULATORY) in the case of the Licence Holders,
provide notice to the Trustee as soon as it becomes
aware of any of the following:
(i) any material breach of the Gas Industry Act 1994,
the Electricity Industry Act 1993, the Office of
the Regulator-General Act 1994, the Gas Pipelines
Access Law, the Pipelines Act 1967, the Gas Safety
Act 1997, National Electricity Law or the
Electricity Safety Act 1998;
(ii) any breach of a material term of any Licence;
(iii) any actual or proposed amendment, variation or
cancellation of any of the Licences;
(iv) any material breach of a Material Regulatory
Instrument or a Material Contract to which it is
a party;
(v) any actual or proposed material amendment or
variation of any Material Contract to which it is
a party;
(vi) any actual or proposed issue to a third party of a
distribution licence in respect of a Distribution
Area;
(vii) in relation to a class of customers, any actual
or proposed issue to a third party of a gas retail
licence in respect of a class of customers in the
Franchise Area prior to those customers being
considered contestable;
(viii) any order or provisional order under section 35
of the Office of Regulator-General Act 1994 made,
served or threatened to be made or served on a
Licence Holder or its business by the ORG;
(ix) any actual or proposed inquiry under Part 4 of the
Office of the Regulator-General Act 1994
concerning a Licence Holder which is likely to
have a Material Adverse Effect;
(x) any actual or proposed price determination under
Part 3 of the Office of the Regulator-General Act
1994 concerning the Licence Holder prices or
charges for distribution services, retail services
or other services and cost pass throughs which
determination (if made) is likely to have a
Material Adverse Effect;
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(xi) the ORG is considering or threatening to appoint
an administrator to all or any part of the
business of a Licence Holder under the Gas
Industry Act 1994 or the Electricity Industry Act
1993 or other equivalent legislation in any other
relevant jurisdiction;
(xii) the possible or threatened suspension of a
Licence Holder under or pursuant to any Material
Regulatory Instrument or relevant statute; and
(u) (NOTICES) in the case of any Licence Holder, promptly
provide to the Trustee a copy of any notice given to it
under clause 3.4 of a Distribution Licence or a Retail
Licence; and
(v) (PERMITTED DISPOSALS) promptly notify the Trustee of
any Permitted Disposals (other than disposals in the
ordinary course of business) of any single asset or
assets having an aggregate value which exceeds
$10,000,000 in any Financial Year and provide the
Trustee with such information about such Permitted
Disposals as the Trustee reasonably requests; and
(w) (CORE BUSINESS) engage only in, and continue to engage
only in, activities which relate to the Core Business;
and
(x) (LICENCES) in the case of the Licence Holders, they
will:
(i) comply in all material respects with the
legislation referred to in clause 6.1(t)(i) and
the Material Regulatory Instruments where failure
to comply has or is likely to have a Material
Adverse Effect;
(ii) comply with the terms and conditions of the
Licences except in respect of an event or
circumstance in respect of which:
(A) the ORG has issued a "no action" letter,
which is still in effect, to a Licence Holder
indicating that the ORG will not be taking
any action in respect of that event
or circumstance; or
(B) there has been insufficient time to obtain a
"no action" letter from the ORG and the
Licence Holder has demonstrated to the
Trustee that it has been diligently pursuing
the issue by the ORG of a "no action" letter
and the remedy of any actual or potential
contravention of a Licence condition arising
from the event or circumstance and that a
"no action" letter is likely to be issued by
the ORG; and
(iii) take all necessary steps to remedy any breach by
the Licence Holder of any Material Regulatory
Instrument, any Licence or any Material Contract
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to which it is a party or any breach of the
legislation referred to in clause 6.1(t)(i)
without delay; and
(y) (INFRASTRUCTURE) in the case of any Obligor which holds
a Distribution Licence , protect, keep, maintain and
preserve the Infrastructure in good working order and
condition and renew or replace when worn out, obsolete
or destroyed all present or future components of the
Infrastructure which are necessary for the conduct of
the Core Business; and
(z) (GOOD STANDING) maintain its good standing, ensure that
it remains entitled to carry on business and own
property in each jurisdiction in which such entitlement
is necessary; and
(aa) (LAWS) comply at all times with the requirements of all
applicable laws and the lawful orders or decrees of any
Governmental Agency where failure to comply is likely
to have a Material Adverse Effect; and
(bb) (AUTHORISATIONS) in the case of the Licence Holders,
promptly obtain, maintain and renew on time each
Authorisation to be obtained by it which is necessary
for carrying on its Core Business; and
(cc) (TAXES) pay when due all Taxes payable by it, other
than Contested Taxes; and
(dd) (BUSINESS) ensure that its business is conducted in a
proper and efficient manner in accordance with prudent
business practices and in accordance with legislation
referred to in clause 6.1(t)(i), the Licences, the
Material Regulatory Instruments, the Material Contracts
and Good Operating Practice; and
(ee) (COPIES) in the case of the Core Borrowers and each
Material Operating Subsidiary, promptly deliver to the
Trustee a copy of each report, statement or notice
given to its shareholders in their capacity as such
where such report, statement or notice is required by
law or regulation to be given to such shareholders; and
(ff) (INTELLECTUAL PROPERTY) in the case of the Licence
Holders, maintain, preserve and protect all copyrights,
patents, trade marks (whether registered or common law
marks), trade names, trade secrets, confidential
information, know-how and other intellectual property
material to its business in accordance with prudent
business so that the business carried on in connection
with them may be properly and advantageously conducted
at all times; and
(gg) (INSURANCE)
(i) keep all of its property and assets insured to the
extent it is insurable on reasonable and
commercial terms with insurers and on terms
approved by the Trustee (which approval may not be
unreasonably withheld):
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(A) for its full insurable value on a replacement
and reinstatement basis and revenue in
respect of revenue less variable expenses;
and
(B) such insurance to be against fire, explosion
and other risks which a prudent owner of
property of a similar type to that being
insured would insure and any other risks
reasonably specified by the Trustee with a
policy sum insured of not less than the
aggregate of the value of assets and
insurable revenue; and
(ii) maintain insurance for general and products
liability including failure to supply and in a
form usual to the risks insured by a prudent
operator and in a manner reasonably specified by
the Trustee for an indemnity limit of not less
than A$500,000,000 for any one occurrence; and
(iii) maintain insurance for professional indemnity in
the form usual to the risks insured by prudent
operators and in a manner reasonably specified by
the Trustee for an indemnity limit of not less
than A$50,000,000; and
(iv) maintain insurance for directors and officers
liability in the form usual to the risks insured
by prudent operators in a manner reasonably
specified by the Trustee for an indemnity limit of
not less than A$100,000,000; and
(v) arrange all insurance policies in such a way to
incorporate reasonable deductibles or self
insurance retentions and as may be agreed between
the Core Borrowers and the Trustee certain assets
such as pipelines may be self insured for material
damage but not for business interruption; and
(vi) maintain with insurers approved by the Trustee
(which approval may not be unreasonably withheld),
workers compensation, public liability and other
insurances which a prudent person engaged in a
similar business or undertaking to that of the
Obligor would effect or which are reasonably
specified by the Trustee; and
(vii) arrange the insurances referred to in paragraphs
(A) and (B) above to include the interests of the
Trustee and to specify the terms of claims
management and payment procedures agreed by the
Trustee with the Obligors; and
(viii) if requested by the Trustee, deposit with the
Trustee all insurance policies and certificates of
insurance in connection with or comprising any of
the properties or assets or liabilities of the
Obligors; and
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(ix) pay each insurance premium in a manner prescribed
by the insurers to ensure the continuity of cover
and, on request from the Trustee, produce receipts
for the payment; and
(x) not do or permit anything to be done or fail to do
anything which prejudices any insurance; and
(xi) immediately rectify anything which might prejudice
any insurance and immediately reinstate the
insurance if it lapses; and
(xii) not, without the consent of the Trustee,
materially restrict the coverage under, cancel or
allow to lapse insurance in connection with any of
its property, assets and liability; and
(xiii) notify the Trustee immediately when an event
occurs which gives rise or might give rise to a
claim exceeding $5,000,000 under or which could
materially prejudice a policy of insurance
required by this clause or if any policy of
insurance required by this clause is cancelled;
and
(xiv) [Deleted]; and
(hh) [Deleted]; and
(ii) [Deleted]; and
(jj) [Deleted]; and
(kk) (GROUP RELATIONS) except as permitted under clause 4,
in relation to any Indebtedness from one Obligor to
another Obligor, not take any action or bring any
proceedings in respect of any money owing or due for
payment in relation thereto or any failure to comply
with any obligations thereunder without the prior
written consent of the Trustee; and
(ll) (MATERIAL CONTRACTS) ensure that each Material Contract
to which it is a party remains in full force and effect
(except where it is discharged or terminated by
performance in accordance with its terms); and
(mm) [Deleted]; and
(nn) [Deleted]; and
(oo) [Deleted]; and
(pp) [Deleted]; and
(qq) (TXU8 LOAN): ensure that at all times the Indebtedness
owed by the TXU8 Borrowers to TXU8 under the TXU8 Loan
Agreement (after deducting any Indebtedness owing by
TXU8 to the TXU8 Borrowers ) exceeds the amount of the
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Consolidated Senior Debt less the Amount Owing to any
Transactional Bank in respect of or in connection with
any Transactional Banking Facility; and
(rr) (TXU8 BORROWERS): ensure that all Obligors (other than
the Core Borrowers, Holdco and TXUA) are jointly and
severally liable for the Indebtedness owing to TXU8
under the TXU8 Loan Agreement; and
(ss) (EASTERN NOTE ISSUE): use its best endeavours to
refinance and replace by 30 June 2000 the Eastern Notes
issued by Eastern as at the Effective Date with
Indebtedness incurred by the Core Borrowers; and
(tt) (STATEMENT OF POLICY AND PRINCIPLES): notify the
Trustee of any change in the Group's statement of
policy and principles in relation to energy trading
from that in existence as at the Effective Date and
deliver a copy of the revised statement to the Trustee
as soon as practicable after the change occurs.
CORE BORROWER'S AND EASTERN'S HEDGE UNDERTAKINGS
6.2 The Core Borrowers and Eastern undertake as follows:
(a) (PERFORM HEDGES): they will perform and observe all of
the obligations on their part contained in the Hedge
Agreements referred to in this clause 6.2;
(b) (MINIMUM HEDGING): with effect on and from the
Effective Date, they will have in force Hedge
Agreements with financial institutions under which the
Group's Interest expense in respect of not less than
50% of the aggregate of all Indebtedness of the Group,
with a maturity, program life or availability period of
more than 364 days outstanding from time to time, is
hedged at all times for a period not less than three
years.
If the Interest payable under an instrument in respect of
Indebtedness is calculated by reference to a fixed rate and not a
variable rate, the instrument shall be deemed to be a Hedge
Agreement for the purpose of this paragraph;
(c) (MARK TO MARKET): notwithstanding any other term in any
Senior Finance Document and excluding any Hedge
Agreements in place as at the Effective Date, the Core
Borrowers and Eastern shall not be obliged to enter
into any Hedge Agreement which would require the Core
Borrowers and Eastern under United States or Australian
generally accepted accounting principles, to mark to
market the obligations under any one or more Hedge
Agreements;
(d) (TERMINATION): they will not terminate or close out or
consent or agree to the termination or closing out of
any of the Hedge Agreements to which they are a party
as at the Effective Date prior to their stated maturity
dates; and
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(e) (MAXIMUM HEDGING): the Core Borrowers may enter into
hedging arrangements with Hedge Counterparties not
otherwise hedged in accordance with this clause 6.2 but
must not at any time enter into interest rate hedging
arrangements to hedge in excess of 100% of the Group's
Interest expense in respect of the Indebtedness of the
Group.
ACCESSION OF HEDGE COUNTERPARTIES
6.2A
No financial institution providing hedging facilities which has
not agreed to subject itself to the terms of this deed as a Hedge
Counterparty will be entitled to share in any of the arrangements
constituted by this deed in respect of the Hedge Liabilities.
UNDERTAKING OF HEDGE COUNTERPARTIES
6.2B
Except as the Majority of Senior Creditors have previously
consented to in writing, no Hedge Counterparty will:
(a) demand (other than as may be necessary in order to
exercise a right to terminate or close out any hedging
transaction as provided in and permitted under clause
6.2B(b)) or receive payment, prepayment or repayment
of, or any distribution in respect of, or on account
of, any Hedge Liabilities in cash or in kind, or apply
any money or property in or towards the discharge of
any Hedge Liabilities except:
(i) for scheduled payments arising under the terms of
the Hedge Agreements; and/or
(ii) for the proceeds of enforcement of this deed
received and applied in accordance with the terms
of this deed and any other Senior Finance
Document;
(b) exercise any right to terminate or close out any
hedging transaction under the Hedge Agreements prior to
its stated maturity unless:
(i) the Core Borrowers or Eastern (as the case may be)
have failed to make any payment due under the
Hedge Agreement after any grace periods applicable
thereto and such default is not cured within 5
Business Days of notice of such default being
given to the Trustee; or
(ii) the Trustee has made a declaration under clause
8.2(a) of this deed in respect of the Amount Owing
to all Senior Creditors; or
(iii) the Hedge Counterparty is entitled to exercise
such a right under section 5(b)(i) (Illegality) of
any Hedge Agreement which is based on the master
agreement prepared by the International Swap
Dealers Association or the corresponding provision
of any other Hedge Agreement; or
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(c) discharge all or any part of the Hedge Liabilities by
set-off, any right of combination of accounts or
otherwise except if and to the extent that those Hedge
Liabilities are permitted to be paid under paragraph
(a) above; or
(d) permit to subsist or receive after the date of
Financial Close any Security Interest or any financial
support (including ,without limitation, the taking of
any participation, the giving of any guarantee,
indemnity or other assurance against loss, or the
making of any deposit or payment) for, or in respect
of, any of the Hedge Liabilities other than under this
deed.
NOTIFICATION OF HEDGE EXPOSURES
6.2C
Each Hedge Counterparty must, on request by the Trustee following
the occurrence of an Event of Default or Potential Event of
Default, give written notice to the Trustee certifying its Hedge
Exposure as at the date of the notice.
NEGATIVE UNDERTAKINGS
6.3
Each Obligor undertakes that it will not:
(a) (ENCUMBRANCES): create or allow to exist or subsist any
Security Interest on the whole or any part of its
present or future property, except for Permitted
Security Interests; and
(b) (DEBT RESTRICTION): in the case of:
(i) each Obligor other than the Core Borrowers and
TXU8, without the prior written consent of the
Trustee (acting on the instructions of the
Majority of Senior Creditors), incur any
Indebtedness other than Permitted Indebtedness;
and
(ii) any Obligor, without the prior written consent of
the Trustee (acting on the instructions of the
Majority of Senior Creditors), incur any
Indebtedness (other than the Junior Finance Debt
or any Indebtedness incurred by an Obligor under
any lease or licence which it is permitted to
enter into in accordance with clause 6.3(t)
(except for a lease or licence permitted under
clause 6.3(t)(iii) and (iv))) which is otherwise
permitted under this deed to be incurred in favour
of a creditor if that creditor has:
(A) any interest in or rights over (including,
without limitation, a Security Interest) any
assets owned or leased by, or licensed to, or
otherwise used by the Group; or
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(B) the benefit of any guarantee, indemnity,
letter of credit, legally binding letter of
comfort or suretyship, put option or any
similar instrument or obligation ("SUPPORT")
in connection with that Indebtedness,
unless the Trustee on behalf of the Senior Creditors is granted
an equivalent interest in or rights over such assets or Support
(as the case may be); and
(iii) TXU8, incur any Indebtedness other than Permitted
Indebtedness permitted under paragraph (a),(b),
(c) and (k) of the definition of "Permitted
Indebtedness"; and
(c) (DISPOSALS OF ASSETS): sell, transfer or otherwise
dispose of any asset (whether in a single transaction
or in a series of transactions and whether voluntarily
or involuntarily and including by disposal of an asset
which is subsequently leased-back):
(i) which is an interest in a Licence or Material
Contract to which it is a party (except a sale,
transfer or other disposal from an Obligor to
another Obligor); or
(ii) any other asset unless it is a Permitted Disposal,
provided that the Senior Creditors shall reasonably consider (but
without any obligation to approve) any sale and lease-back
proposal if the Trustee has received:
(iii) a copy of the documents relevant to the
transaction;
(iv) a satisfactory opinion from an Australian law firm
or accounting firm as to the tax implications of
the transaction;
(v) in circumstances where the Trustee's legal counsel
are of the view that there are Australian taxation
issues and have recommended that a ruling be
obtained from the Australian Taxation Office, a
favourable ruling from the Australian Taxation
Office; and
(vi) evidence that there will be no adverse impact on
the cashflow of the Obligors or the rights of the
Senior Creditors under the Transaction Documents;
and
(d) (SECURITISATION): assign, sub-participate an interest
in, otherwise dispose of, or create or allow to exist
any Security Interest over, receivables arising from
network charges, or any other receivables or other
monetary assets except for a securitisation programme
where the proceeds received or receivable by the Group
are applied to permanently repay and reduce Senior Debt
and provided that such securitisation programme
constitutes a Permitted Disposal; and
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(e) (ENVIRONMENTAL LAW): by any act or omission or series
of acts or omissions breach any Environmental Law if
the breach has or is likely to have a Material Adverse
Effect; and
(f) (SPECULATIVE TRANSACTIONS): engage in or enter into any
Derivative Transaction or any similar transaction,
including in respect of energy trading, other than
under Hedge Agreements, unless that transaction would
be a transaction which would ordinarily be carried out
by a prudent, responsible company carrying on a major
utilities business and be in accordance with Good
Operating Practice; and
(g) (LICENCES): in the case of the Licence Holders, vary or
allow to be varied in any material respect a Licence
without the prior written consent of the Trustee
(acting on the instructions of the Majority of Senior
Creditors) (such consent not to be unreasonably
withheld); and
(h) (VARIATION OF AGREEMENTS): without the prior written
consent of the Trustee (acting on the instructions of
the Majority of Senior Creditors):
(i) vary or allow to be varied any Intercompany Loan
Agreement or vary or allow to be varied in any
material adverse respect any other Material
Contract to which it is party; or
(ii) cancel, revoke, surrender or repudiate any
Material Contract to which it is a party; or
(iii) terminate, permit the termination of or do
anything or refrain from doing anything which
would entitle any other person to terminate any
Material Contract to which it is a party (other
than discharge by performance in accordance with
its terms) unless it is replaced immediately in
substantially the same terms; and
(i) (PARTNERSHIPS AND JOINT VENTURES): enter into any
partnerships or joint venture agreements or agreements
of similar effect without the prior written consent of
the Trustee unless entered into in the course of the
Core Business; and
(j) (SUBSIDIARIES): create or acquire any Subsidiary
without the prior written consent of the Trustee
(acting on the instructions of the Majority of Senior
Creditors) unless:
(i) the Subsidiary executes and delivers a New Obligor
Accession Deed agreeing to be bound as an Obligor
under this deed; and
(ii) the Subsidiary executes and delivers a deed
agreeing to be bound jointly and severally as a
borrower under the TXU8 Loan Agreement; and
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(iii) the Trustee is provided with any other documents,
instruments and assurances as the Trustee
reasonably requires in order to ensure that the
Subsidiary is bound as an Obligor under this deed
and as a borrower under the TXU8 Loan Agreement
and that their New Obligor Accession Deed is
enforceable against that Subsidiary; and
(iv) the Subsidiary carries on only activities in
connection with the Core Business; and
(k) (LOANS): be the creditor in respect of any Indebtedness
except for:
(i) deposits made with a Financier in the ordinary
course of business;
(ii) in the case of a Licence Holder, Indebtedness
extended to customers on arm's-length terms in
the ordinary course of business;
(iii) loans which are permitted to be made in
accordance with clause 6.5;
(iv) Permitted Indebtedness; or
(v) as approved in writing by the Trustee; and
(l) (ARM'S-LENGTH TERMS): enter into any transaction with
any person otherwise than on arm's-length terms and for
full market value; and
(m) [Deleted]; and
(n) (PARTNERSHIP): in the case of each Core Borrower,
resign from, terminate or dissolve the Partnership or
attempt to do so without the prior written consent of
the Trustee; and
(o) [Deleted]; and
(p) [Deleted]; and
(q) (SUBORDINATED DEBT): incur any Subordinated
Indebtedness other than Qualifying Subordinated Debt;
and
(r) (EXCLUDED SUBSIDIARY): permit any Excluded Subsidiary
to own any assets (other than assets relevant to its
status as a body corporate and which have a nominal
value) or to conduct or carry on any business
activities unless and until the Excluded Subsidiary has
executed and delivered to the Trustee a New Obligor
Accession Deed under which it agrees to be bound as an
Obligor under this deed and a deed under which it
agrees to be bound jointly and severally as a borrower
under the TXU8 Loan Agreement; and
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(s) (HOLDCO): in the case of Holdco, own any assets (other
than assets relevant to its status as a body corporate
and which have a nominal value) or conduct or carry on
any business activities except:
(i) its interest in the ALP Loan Agreement and
Holdco-TXUA Loan Agreement; and
(ii) the shares held by it in TXUA and TXU (No. 12) Pty
Ltd; and
(t) (LEASES): enter into or permit to subsist any lease or
licence of any assets if the aggregate of all rent or
licence fees payable in respect of all such leases and
licences exceeds $5,000,000 in any Financial Year,
provided that an Obligor may lease or license:
(i) interests in real property but excluding any plant
and equipment whether or not it is affixed or
attached to land and may constitute a fixture;
(ii) motor vehicles;
(iii) except in the case of TXUA, Generation Assets
situated in South Australia upon the condition
that the Obligors are not, and will not be, in
breach of clause 6.3(b) of this deed in connection
with the lease or licence; and
(iv) except in the case of TXUA, any other Generation
Asset or other Infrastructure Asset provided that:
(A) the Obligors are not, and will not be, in
breach of Clause 6.3(b) of this deed in
connection with the lease or licence; and
(B) the arrangements with the lessor or licensor
incorporate a right or benefit in favour of
the Trustee (on behalf of the Senior
Creditors), whether or not an equivalent
right or benefit is granted to any specific
creditor, that in the event of the lessor or
licensor being entitled to repossess the
relevant leased or licensed assets and/or
terminate the lease or licence, the Trustee
will have an entitlement which is enforceable
against the lessor or licensor to, either
directly or through a nominee:
(aa) receive at least 30 days notice from the
lessor or licensor of the lessor's or
licensor's intention to repossess the
relevant leased or licensed assets
and/or terminate the lease or licence;
and (ab) remedy or procure the remedy
of any defaults by the relevant
Obligor under the lease or licence; and
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(ac) enter into possession of and manage and
operate the relevant leased or licensed
assets as if it were the lessee or
licensee provided it agrees to become
bound by the terms of the lease or
licence and perform the obligations of
the lessee or licensee; and
(ad) within a period of not less than 6
months from taking possession, to sell,
transfer, assign, novate or otherwise
dispose of or procure the sale,
transfer, assignment, novation or
disposal of the lease or licence to a
respectable, solvent and skilled person
capable of performing the lessee's or
licensee's obligations under the lease
or licence who is approved by the
lessor; and
(u) (GENERATION ASSETS): acquire after the Effective Date
any Generation Asset if as a result the aggregate value
of all Generation Assets owned or leased by the Group
exceeds 20% of the aggregate value of all assets of the
Group; and
(v) (TXU8): in the case of TXU8, own any assets (other than
assets relevant to its status as a body corporate and
which have a nominal value) or conduct or carry on any
business activities except:
(i) its interest in the TXUA - TXU8 Loan Agreement and
the TXU8 Loan Agreement; and
(ii) its liabilities under any Permitted Indebtedness
it is permitted to incur under this deed; and
(iii) the shares held by it in TXU9; and
(w) (WESTPAC CHARGE): permit or allow any moneys,
liabilities or obligations to be secured at any time by
the Security Interest referred to in paragraph (e) of
the definition of "Permitted Security Interest"; and
(x) (TXUA): in the case of TXUA, own any assets (other than
assets relevant to its status as a body corporate and
which have a nominal value) or conduct or carry on any
business activities except:
(i) its interest in the TXUA - TXU8 Loan Agreement and
the Holdco - TXUA Loan Agreement; and
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(ii) the shares held by it in TXU8, the TXU Borrowers
and the Excluded Subsidiaries; and
(iii) any Permitted Indebtedness under this deed; and
(iv) general administration and support services for
the Group.
FINANCIAL UNDERTAKINGS
6.4 Each Core Borrower undertakes to ensure that:
(a) the ratio of Consolidated Senior Debt (but excluding
the Hedge Exposures of the Hedge Counterparties and any
other financial institution which is a party to a Hedge
Agreement (applying the definition of Hedge Exposure as
if that financial institution was a Hedge
Counterparty)) to Consolidated Net Worth is no greater
than 70:30 at all times; and
(b) the Consolidated Interest Cover Ratio as at:
(i) 30 June 2000 and 30 September 2000 will be not
less than 1.65:1; and
(ii) each subsequent Calculation Date will be not less
than 1.75:1; and
(c) the Consolidated Net Worth will not be less than
$1,300,000,000 at all times.
DISTRIBUTIONS
6.5 The Core Borrowers shall not:
(a) subject to clause 6.8, declare or distribute any
declared dividends or make any other distribution
whatever to shareholders or holders of equity or
capital in the Core Borrowers; or
(b) redeem or buy back any of the issued share capital of
the Core Borrowers or reduce the capital of the Core
Borrowers; or
(c) make any loan to any Core Borrower (in its individual
capacity) or to any Related Entity (other than an
Obligor) or make any payment or repayment of any loan;
or
(d) prepay or repay any amount of principal in respect of
Junior Finance Debt, Qualifying Subordinated Debt or
other Subordinated Indebtedness (unless that Junior
Finance Debt, Qualifying Subordinated Debt or other
Subordinated Indebtedness is repaid (directly or
indirectly) by means of or refinanced and replaced by
Qualifying Subordinated Debt or Consolidated Senior
Debt); or
(e) pay any Interest in respect of Junior Finance Debt,
Qualifying Subordinated Debt or other Subordinated
Indebtedness having a principal amount which exceeds
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15% of the aggregate of Consolidated Senior Debt and
Consolidated Net Worth,
unless the following conditions are satisfied:
(f) no Event of Default or Potential Event of Default is
subsisting or would occur as a result of the
declaration, distribution, payment, repayment,
reduction, redemption or loan; and
(g) the Consolidated Interest Cover Ratio as at:
(i) 30 June 2000, 30 September 2000 and 31 December
2000 is not less than 1.90:1; and
(ii) each Calculation Date occurring on or after 31
March 2001 is not less than 2.00:1; and
(h) the Obligors are not in default in respect of any
monetary obligation which is included in Consolidated
Senior Debt.
6.6 The Core Borrowers may pay Interest in respect of Junior
Finance Debt, Qualifying Subordinated Debt or other
Subordinated Indebtedness having a principal amount which is
15% or less of the aggregate of Consolidated Senior Debt and
Consolidated Net Worth and the Core Borrowers may elect upon
which Junior Finance Debt, Qualifying Subordinated Debt or
other Subordinated Indebtedness they pay Interest which they
are permitted to pay provided that:
(a) no Senior Debt is due and payable but unpaid; and
(b) no Event of Default or Potential Event of Default has
occurred and is subsisting; and
(c) the relevant interest rate complies with clause 6.7.
6.7 The interest rate or effective interest rate applicable to
any Interest which the Core Borrowers are permitted to pay
under clause 6.6 must be:
(a) where the lender is a Related Entity of the Core
Borrowers, no more than 5% per annum above the Bank
Bill Rate applicable from time to time ; and
(b) in all other circumstances, an interest rate or
effective interest rate determined on normal arm's
length commercial terms.
6.8 Notwithstanding clause 6.5, the Core Borrowers may not
declare or distribute any declared dividends or make any
other distribution to shareholders or holders of equity or
capital in Core Borrowers (other than permitted payments in
respect of Junior Finance Debt, Qualifying Subordinated Debt
or other Subordinated Indebtedness) on or before 31 December
2000.
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7 [DELETED]
8 DEFAULT
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EVENTS OF DEFAULT
8.1 Each of the following is an Event of Default (whether or not
it is within the Obligor's power to prevent it):
(a) (PAYMENT): an Obligor does not pay, in the manner
provided in a Senior Finance Document, any money
payable (excluding Interest) when due or, in the case
of Interest, any Interest due under a Senior Finance
Document within two Business Days of notice of the
non-payment being given by the Trustee to the Obligor
(or, where non-payment on its due date has arisen
solely by reason of a technical, computer or similar
error outside the control of the Obligor, within two
Business Days of notice of such non-payment being given
by the Trustee to the Obligor); or
(b) (BREACH OF FINANCIAL UNDERTAKINGS): a Core Borrower
fails at any time to comply with the undertakings in
clauses 6.4(a) or 6.4(c) or, in respect of the
undertaking in clause 6.4(b):
(i) the Core Borrowers fail to deliver to the Trustee
a certificate of compliance on the due date as
required by clause 6.1(l) (Compliance
certificate); or
(ii) it is apparent from a certificate of compliance or
from the Financial Statements delivered to the
Trustee in accordance with clause 6.1 (General
undertakings) that the Core Borrowers are in
breach of the undertaking in clause 6.4(b); or
(iii) a Core Borrower gives notice to the Trustee of a
breach of its undertaking in clause 6.4(b); or
(iv) the Trustee gives notice in writing to the Core
Borrowers that they are in breach of the
undertaking in clause 6.4(b) and the Core
Borrowers are in fact in breach of that
undertaking; or
(c) (REGULATORY EVENTS): an Obligor fails to comply with
its undertakings in clause 6.1(x) (Licences) or 6.3(h)
(Variation of Agreements) or fails to give notice in
accordance with clause 6.1(t) (Regulatory) in respect
of a matter referred to in clause 6.1(t) which matter
has or is likely to have a Material Adverse Effect or
is likely to lead to the revocation or cancellation of
a Licence or the termination of a Material Contract to
which it is a party; or
(d) (OTHER DEFAULTS): an Obligor commits any breach of, or
defaults in the due performance or observance of, any
of its obligations or undertakings under the Senior
Finance Documents (other than a breach or default
described in paragraph (a), (b) or (c) above) and the
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breach or default, if capable of remedy, continues
unremedied for 30 days after the Obligor receives a
notice from the Trustee of the breach or default or,
where a specific period of grace is allowed in the
Senior Finance Documents for that breach or default,
the breach or default remains unremedied at the end of
that grace period; or
(e) (CROSS DEFAULT): any Indebtedness of an Obligor (other
than the Junior Finance Debt or any Qualifying
Subordinated Debt) exceeding in aggregate $10,000,000
(or its equivalent in another currency):
(i) is not satisfied on time or at the end of any
applicable period of grace; or
(ii) becomes prematurely payable and is not discharged
when due; or
(iii) is not discharged at maturity or when duly
called; or
(f) (EXECUTION AGAINST PROPERTY): execution of a court
order or other legal right is levied and not stayed,
withdrawn or satisfied within 10 Business Days of being
made or a judgment is enforced or an order or Security
Interest is enforced, or becomes enforceable, against
any property of an Obligor for an amount exceeding
$5,000,000; or
(g) (MISREPRESENTATION): any representation, warranty or
statement made or deemed to be made in a Senior Finance
Document or otherwise made or deemed to be made by or
on behalf of an Obligor in favour of a Senior Creditor,
proves to have been or is found to have been untrue,
incorrect or misleading in any material respect when
made or deemed made; or
(h) (INSOLVENCY EVENT): an Insolvency Event occurs in
respect of an Obligor except in the case of a members
voluntary winding up or a voluntary deregistration or
dissolution of an Obligor which owns no assets and is
solvent; or
(i) (CESSATION OF BUSINESS): an Obligor stops payment
generally, ceases to carry on its business or a
material part of it, or threatens to do either of those
things, except to effect a members voluntary winding up
or to deregister, dissolve, reconstruct or amalgamate
while solvent on terms approved by the Trustee; or
(j) (REDUCTION OF CAPITAL): an Obligor takes action to
reduce its capital or passes a resolution referred to
in section 254N of the Corporations Law, in either case
without the prior written consent of the Trustee
provided that a reduction of capital in relation to
shares held by the Core Borrowers in Holdco to
facilitate the payment of any portion of the Amount
Owing to a Senior Creditor shall be permitted; or
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(k) (SHARE BUY-BACK): an Obligor without the prior written
consent of the Trustee:
(i) effects, or enters or attempts to enter into an
agreement to effect, a buy-back of any of its
shares other than an employee share scheme
buy-back or an odd lot buy-back;
(ii) passes a resolution under section 257C or section
257D of the Corporations Law, other than a
resolution pursuant to an employee share scheme
buy-back, or convenes a meeting to consider such a
resolution; or
(iii) applies to a court to convene any such meeting or
to approve any such resolution or buy-back;
provided that a buy-back of any shares held by the Core Borrowers
in Holdco to facilitate the payment of any portion of the Amount
Owing to a Senior Creditor shall be permitted and for the
purposes of this paragraph words and expressions which are used
in this paragraph and which are defined in the Corporations Law
have the meanings given to them in the Corporations Law; or
(l) (INVALIDITY):
(i) any party to a Finance Document (other than a
Senior Creditor) or a person on that party's
behalf claims that a Finance Document or a
material clause in a Finance Document is wholly or
partly void, voidable or unenforceable; or
(ii) a Finance Document or a material clause in a
Finance Document is or becomes wholly or partly
void, voidable or unenforceable, and, if that
state of affairs is remediable, and the Obligor
and each other party (other than the Trustee) to
that Finance Document fails promptly to take all
steps reasonably requested by the Trustee to
remedy, in co-operation with the Trustee and
the other Creditors, the relevant defect; or
(m) (CHANGE IN CIRCUMSTANCES): a change occurs in a
circumstance which is warranted under a Senior Finance
Document to exist or in the business, assets or
financial condition of an Obligor or any other event or
series of events, whether related nor not, occurs which
has, or is likely to have, a Material Adverse Effect
and, if capable of remedy, is not remedied within 30
days after the Obligor receives a notice of such event
from the Trustee; or
(n) (CHANGE OF SHAREHOLDING): if at any time the
representation and warranty in clause 5.1(u) is untrue,
incorrect or misleading; or
(o) (CHANGE OF CONTROL): Texas ceases for any reason to
ultimately control the composition of the board of
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directors and to have management and operational
control of each Obligor; or
(p) (CHANGE OF CONSTITUTION): without the prior written
consent of the Trustee, an Obligor materially changes,
or passes a resolution to materially change, its
constitution; or
(q) (INVESTIGATION): a person is appointed under the
Corporations Law or other companies and securities
legislation to investigate any part of the affairs of
an Obligor unless the Obligor has demonstrated to the
reasonable satisfaction of the Trustee within 10
Business Days of the appointment that no Material
Adverse Effect will, or is likely to, result from the
investigation or as a consequence thereof; or
(r) (SEIZURE): all or any material part of the assets of an
Obligor are seized or otherwise appropriated by, or
custody thereof is assumed by any Governmental Agency
or an Obligor is otherwise prevented from exercising
normal control over all or a material part of its
assets or loses any of the rights or privileges
necessary to maintain its existence or to carry on its
business, unless the Obligor has demonstrated to the
reasonable satisfaction of the Trustee within 10
Business Days of such seizure, appropriation,
assumption of custody or execution ("EXERCISE OF
Rights") that no Material Adverse Effect will, or is
likely to, result from such Exercise of Rights or as a
consequence thereof; or
(s) (ENVIRONMENTAL EVENT): any Governmental Agency takes
any action, or there is any claim or requirement of
substantial expenditure or alteration of activity,
under any Environmental Law, or there is any breach or
threatened breach of any Authorisation, which is likely
to have a Material Adverse Effect or any circumstance
arises which may give rise to such action, claim,
requirement or breach and, if capable of remedy, the
Obligors fail to take steps (to the satisfaction of the
Trustee) to remedy the matter within 30 days of
becoming aware of such Governmental Agency action,
claim, breach or threatened breach; or
(t) (LICENCES):
(i) a Licence Holder fails to take any step necessary
or desirable to preserve a Licence or to avoid a
Licence being placed in jeopardy;
(ii) a Licence is varied in a material adverse respect
without the prior written consent of the Trustee
or is suspended, cancelled, transferred (except to
another Obligor), revoked or allowed to lapse;
(iii) any person (other than an Obligor) is issued a
distribution licence in respect of all or any part
of a Distribution Area and the issue of the
licence is likely to have a Material Adverse
Effect;
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(iv) a Licence Holder receives any notice of revocation
of a Licence;
(v) [Deleted];
(vi) an administrator is appointed to all or any part
of the business of a Licence Holder under the Gas
Industry Act 1994, or the Electricity Industry Act
1993 or any corresponding legislation in a
jurisdiction other than Victoria;
(vii) the receipt by a Licence Holder of a notice of
intention to serve a provisional or final
enforcement order or the receipt by a Licence
Holder of a provisional or final enforcement order
under the Office of the Regulator-General Act 1994
or any corresponding legislation in a jurisdiction
other than Victoria; or
(viii) a material clause in a Licence is or becomes
wholly or partly void, voidable or unenforceable,
or is claimed to be so by an Obligor or by anyone
on its behalf and, if capable of remedy, that
state of affairs is not remedied within 10
Business Days of the Obligor becoming aware of
it; or
(u) (LEGISLATION): any legislation is passed or amended
(including, without limitation, any amendment to the
Gas Industry Act 1994, the Electricity Industry Act
1993, the Office of the Regulator-General Act 1994) or
a Material Regulatory Instrument is amended which has a
Material Adverse Effect; or
(v) (VOIDABLE PROVISIONS): a Material Contract or any
material provision of a Material Contract is or becomes
void, voidable or unenforceable; or
(w) (BREACH): there occurs a breach or event of default
under any of the Material Contracts , or an Obligor
fails to exercise or enforce its rights under any of
them, and the breach or failure has or is likely to
have a Material Adverse Effect; or
(x) (ANY OTHER EVENT): any other event which an Obligor and
the Trustee may agree shall be an Event of Default for
the purposes of this clause 8.1 occurs; or
(y) (CHANGE IN GROUP STRUCTURE): an Obligor (other than the
Core Borrowers) ceases to be a wholly owned Subsidiary
of the Core Borrowers; or
(z) (HEDGE AGREEMENT): an event of default (other than in
relation to the Hedge Counterparty) occurs under a
Hedge Agreement; or
(aa) [Deleted]; or
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(bb) (SUSPENSION): an event of default or default event
occurs in relation to a Licence Holder under the MSO
Rules or the National Electricity Code which is likely
to lead to the suspension of the Licence Holder under
those Rules or that Code; or
(cc) (SECURITY INTEREST): any Security Interest is created
or allowed to exist or subsist on any shares held in
the Core Borrowers or an Obligor creates or allows to
exist or subsist a Security Interest on the whole or
any part of its present or future property except for a
Permitted Security Interest and the Security Interest
is not discharged and released within 30 days after the
Core Borrowers receive a notice of such event from the
Trustee.
CONSEQUENCES OF DEFAULT
8.2 If an Event of Default occurs, then the Trustee may:
(a) if instructed by the Majority of Senior Creditors,
declare at any time by notice to the Core Borrowers (or
other relevant Obligors, in the case of a Transactional
Banking Facility) that:
(i) an amount equal to the total Amount Owing to all
Senior Creditors is either:
(A) payable on demand; or
(B) immediately due for payment; and/or
(ii) the Senior Creditors' obligations specified in the
notice are terminated; or
(b) if instructed by one or more Senior Creditors in
accordance with clause 3.8, declare at any time by
notice to the Core Borrowers (or other relevant
Obligors, in the case of a Transactional Banking
Facility) that:
(i) an amount equal to the total Amount Owing to all
of the Senior Creditors who are a party to or have
the benefit of the Senior Finance Document in
respect of which the default has occurred is
either:
(A) payable on demand; or
(B) immediately due for payment; and/or
(ii) the relevant Senior Creditors' obligations
specified in the notice are terminated.
8.3 The Trustee may make either or both of the declarations
referred to in clause 8.2(a) and 8.2(b). The making of
either of them gives immediate effect to its provisions. The
Core Borrowers or other relevant Obligors (in the case of a
Transactional Banking Facility) must pay any amount demanded
in accordance with a demand.
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8.4
(a) If the Trustee makes any declaration under clause 8.2:
(i) the declaration does not affect or diminish the
duties and obligations of an Obligor under the
Senior Finance Documents; and
(ii) each Obligor must continue to perform its
obligations under the Senior Finance Documents as
if the declaration had not been made, subject to
any directions that may be given by the Trustee
(acting upon the instructions of the Majority of
Senior Creditors) from time to time in accordance
with the Senior Finance Documents.
(b) Clause 8.4(a) does not affect the obligations of the
Core Borrowers (or other relevant Obligors, in the case
of a Transactional Banking Facility) under clause 8.3.
8.5
(a) After a declaration is made under clause 8.2, the
relevant Senior Finance Documents may be enforced (but
subject always to clause 8.2) without further notice to
or consent by an Obligor or any other person even if a
Senior Creditor accepts any part of the Amount Owing to
it after an Event of Default or there has been any
other Event of Default.
(b) A Senior Creditor is not liable to any Obligor for any
Loss or damage an Obligor may suffer, incur or be
liable for arising out of or in connection with the
Senior Creditor exercising any right under any Senior
Finance Document except for any Loss or damage
resulting from the fraud, wilful misconduct or gross
negligence of the Senior Creditor.
9 DISTRIBUTION OF RECOVERED MONEY
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9.1 If at any time the Trustee receives money under a Senior
Finance Document which is available for distribution (this
includes money which is received by the Trustee before a
notice is given under clause 8.2(a) but which, for any
reason whatsoever, has not been distributed by the time a
notice is given under clause 8.2(a)) on or after the Fixed
Date whether or not it represents the proceeds of recovery
action taken under any Senior Finance Document, then the
money must be distributed by the Trustee in accordance with
clause 9.4.
9.2 Unless the Majority of Senior Creditors decide otherwise,
money referred to in clause 9.1 does not form part of the
Recovered Money on a Recovered Money Distribution Date if in
accordance with any Senior Finance Document the money has
been placed to the credit of a suspense account in order to
preserve rights to prove in the bankruptcy or liquidation of
any person.
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9.3 Any suspense account to which money is placed under clause
9.2 is to be an interest bearing account selected reasonably
by the Trustee. Interest earned on the account is to be
treated as Recovered Money.
9.4 Recovered Money is to be distributed by the Trustee as soon
as practicable after the Trustee receives it as follows:
(a) [Deleted];
(b) first, towards satisfaction of all costs, charges and
expenses properly incurred by the Trustee in or
incidental to the exercise or performance or attempted
exercise or performance of any of the rights, powers or
remedies conferred under any Senior Finance Document;
(c) secondly, towards satisfaction of any other expenses or
outgoings in connection with any receivership under or
the enforcement of any Senior Finance Document;
(d) thirdly, towards payment to the Trustee of any money
due to it in its capacity as Trustee under any Senior
Finance Document;
(e) fourthly, towards payment to each Senior Creditor of an
amount (not exceeding the Amount Owing of that Senior
Creditor) equal to that Senior Creditor's Share at that
time of the Recovered Money;
(f) fifthly, to the extent that this deed secures the
payment of other amounts, towards payment to the
persons entitled to those amounts and, if more than
one, in a proportion for each person equal to the
proportion that the amount owed to that person bears to
the aggregate amount owed to all those persons; and
(g) sixthly, the surplus (if any) shall be paid on demand,
to the relevant Obligors, but will not carry interest.
.
9.5 If at any time the Trustee receives money under a Senior
Finance Document after a notice is given under clause 8.2(b)
but before a notice is given under clause 8.2(a) (whether or
not it represents the proceeds of recovery action taken
under any Senior Finance Document) then the money must be
distributed by the Trustee in accordance with clause 9.4
except that the references in clause 9.4(e) to "Senior
Creditor" shall be limited to the Senior Creditors who have
instructed or were entitled to instruct the Trustee to take
action under clause 8.2(b) in accordance with clause 3.8 of
this deed.
10 REPLACEMENT OF TRUSTEE
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REMOVAL OF TRUSTEE
10.1 A Majority of Senior Creditors may remove the Trustee from
office, in each case by notice given to the Trustee, if:
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(a) an Insolvency Event occurs or arises in relation to the
Trustee; or
(b) the Trustee is guilty of negligence or wilful
misconduct in the discharge of its duties under this
deed.
Subject to clause 10.3, removal of the Trustee from office will
take effect:
(c) (if notice of removal is given pursuant to paragraph
(a)): when the notice is given; or
(d) (in any other case): 20 Business Days after the notice
of removal is given to the Trustee.
RETIREMENT
10.2 The Trustee may retire as Trustee by giving to Core
Borrowers and each other Senior Creditor not less than 30
days' notice of its intention to do so. No retirement takes
effect unless:
(a) there has been appointed as a successor Trustee
approved by the Core Borrowers (which approval may not
be unreasonably withheld or delayed) either:
(i) a Senior Creditor nominated by a Majority of
Senior Creditors or, failing such a nomination;
(ii) a reputable and experienced bank or financial
institution nominated by the Trustee and
acceptable to a Majority of Senior Creditors; and
(b) the successor Trustee has obtained title to any
guarantee, indemnity, guarantee and indemnity and
Security Interest held by the retiring Trustee in a
manner approved by each Senior Creditor.
10.3 Subject to clause 10.4 when a successor Trustee is
appointed, the retiring or removed Trustee is discharged
(without prejudice to any accrued right or obligation) from
any further obligation under the Senior Finance Documents.
The new Trustee and each other party to the Senior Finance
Documents has the same rights and obligations among
themselves as they would have had if the new Trustee had
originally been a party to the Senior Finance Documents.
10.4 The retiring or removed Trustee agrees, at its own expense,
to execute and cause its successors to execute documents and
do everything else necessary or appropriate to transfer the
Trust Fund into the name of the new Trustee and to ensure
that all public registers record the new Trustee as the
trustee of the Trust Fund.
11 LIMITATION ON LIABILITY
- --------------------------------------------------------------------------------
11.1 [Deleted].
11.2 [Deleted].
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11.3 [Deleted].
11.4 [Deleted].
LIMITATION ON LIABILITY
11.5 The Trustee acknowledges that the liability of TXU Australia
(LP) No. 1 Ltd and TXU Australia (LP)_ No. 2 Ltd to
contribute to the debts or obligations of the Partnership
is, subject to the Partnership Act 1958 of Victoria limited
to the amount shown in relation to it in the Register (as
defined in the Partnership Act 1958 of Victoria) as to the
extent to which it is liable to contribute. Nothing in this
deed or the other Transaction Documents imposes any
liability on TXU Australia (LP) No. 1 Ltd and TXU Australia
(LP) No. 2 Ltd in excess of the limit referred to in this
clause 11.5 provided that this limitation does not affect
the amount of any Amount Owing, the Guaranteed Money or the
liability of the Obligors (other than TXU Australia (LP) No.
1 Ltd and TXU Australia (LP) No. 2 Ltd) under the Senior
Finance Documents.
12 COSTS, CHARGES, EXPENSES AND INDEMNITIES
- --------------------------------------------------------------------------------
WHAT THE CORE BORROWERS AGREE TO PAY
12.1 The Core Borrowers agree to pay or reimburse the Trustee and
each other Senior Creditor on demand for:
(a) the reasonable Costs of the Trustee and each other
Senior Creditor in connection with:
(i) the negotiation, preparation, execution and
registration of and payment of Taxes on any Senior
Finance Document; and
(ii) their being satisfied that conditions to drawing
have been met; and
(iii) giving and considering consents, approvals,
agreements, waivers, discharges and releases and
any variation or amendment of, under, to or
otherwise in connection with a Senior Finance
Document; and
(b) [Deleted]; and
(c) the Costs of the Trustee and each other Senior Creditor
in connection with the enforcing of or preserving
rights (or considering enforcing or preserving them)
under any Senior Finance Document, or doing anything in
connection with any enquiry by an authority involving
the Obligor or any of its Related Entities; and
(d) Taxes and fees (including registration fees) and fines
and penalties in respect of fees paid, or that the
Trustee reasonably believes are payable, in connection
with any Senior Finance Document or a payment or
receipt or any other transaction contemplated by any
Senior Finance Document. However, the Core Borrowers
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need not pay a fine or penalty in connection with Taxes
or fees to the extent that it has placed the Trustee in
sufficient cleared funds for the Trustee to be able to
pay the Taxes or fees by the due date.
The Trustee or Senior Creditor may debit any of these amounts to
the Core Borrowers' account after asking the Core Borrowers to
pay and the Core Borrowers have failed to pay the amount
requested.
INDEMNITY
12.2 The Core Borrowers indemnify the Trustee and each other
Senior Creditor against any liability or Loss arising from,
and any Costs incurred in connection with:
(a) financial accommodation requested under a Senior
Finance Document not being provided in accordance with
the request for any reason except default of the
Trustee or the Senior Creditor; or
(b) financial accommodation under a Senior Finance Document
being repaid, discharged or made payable other than at
its maturity or on an Interest Payment Date relevant to
that accommodation; or
(c) the Trustee or any other Senior Creditor acting in
connection with a Senior Finance Document in good faith
on fax, electronic mail or telephone instructions
purporting to originate from the offices of an Obligor
or to be given by an Authorised Officer of an Obligor
and which it believes to be genuine and correct; or
(d) an Event of Default; or
(e) the Trustee or the Senior Creditor exercising or
attempting to exercise a right or remedy in connection
with a Senior Finance Document after an Event of
Default and for so long as it subsists; or
(f) any indemnity the Trustee or any other Senior Creditor
properly gives a Controller or an administrator of an
Obligor or to the Trustee in respect of an indemnity
properly given by the Trustee or the other Senior
Creditor to such Controller or administrator.
ITEMS INCLUDED IN LOSS, LIABILITY AND COSTS
12.3 The Core Borrowers agree that:
(a) the Costs referred to in clause 12.1 (What the Core
Borrowers agree to pay) and the liability, Loss or
Costs referred to in clause 12.2 (Indemnity) include in
relation to clause 12.1(a), reasonable legal Costs and
in relation to clause 12.1(c) and 12.2, legal Costs in
accordance with any written agreement as to legal costs
or, if no agreement, on whichever is the higher of a
full indemnity basis or solicitor and own client basis;
and
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(b) the Costs referred to in clause 12.1((a)) and (c) (What
the Core Borrower agrees to pay) include those paid, or
that the Trustee or relevant Senior Creditor reasonably
believes are payable, to persons engaged by the Trustee
or a Senior Creditor in connection with the Senior
Finance Documents (such as consultants); and
(c) Loss or liability and any Costs in any indemnity under
the Senior Finance Documents may include "break costs".
These may be calculated by any method the Senior
Creditor reasonably chooses including by reference to
any Loss it incurs because the Senior Creditor
terminates arrangements it has made with others to fund
(or to maintain its funding of) financial accommodation
under the Senior Finance Documents.
PAYMENT OF EMPLOYEES' LOSSES
12.4 The Core Borrowers agree to pay the Trustee or Senior
Creditor an amount equal to any liability or Loss and any
Costs of the kind referred to in clause 12.2 (Indemnity)
suffered or incurred by any employee, officer, agent or
contractor of the Trustee or the Senior Creditor unless
caused by that person's gross negligence.
CURRENCY CONVERSION ON JUDGMENT DEBT
12.5 If a judgment, order or proof of debt for an amount in
connection with a Senior Finance Document is expressed in a
currency other than that in which the amount is due under
the Senior Finance Document, then the Core Borrowers
indemnify the Trustee and each Senior Creditor against:
(a) any difference arising from converting the other
currency if the rate of exchange used by the Trustee or
the Senior Creditor in accordance with the Senior
Finance Documents for converting currency when it
receives a payment in the other currency is less
favourable to the Trustee or the Senior Creditor than
the rate of exchange used for the purpose of the
judgment, order or acceptance of proof of debt; and
(b) the Costs of conversion.
TRUSTEE FEES
12.6 The Core Borrowers agree to pay the Trustee a fee for acting
as trustee under this deed, such fee to be of an amount and
to be paid in a manner as separately agreed in writing
between the Core Borrowers and the Trustee.
13 NOTICES
- --------------------------------------------------------------------------------
FORM
13.1 Unless expressly stated otherwise in the Senior Finance
Documents, all notices, certificates, consents, approvals,
waivers and other communications in connection with a Senior
Finance Document:
<PAGE>
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(a) must be in writing, signed by an Authorised Officer of
the sender and marked for attention as set out in
schedule 5 if the recipient has notified otherwise,
then marked for attention in the way last notified; and
(b) must be:
(i) left at the address set out in schedule 5; or
(ii) sent by prepaid post (airmail, if appropriate) to
the address set out in schedule 5; or
(iii) sent by fax to the fax number set out in
schedule 5,
but if the intended recipient has notified a changed
postal address or fax number, then the communication
must be to that address or number; and
(c)
(d) if sent by post, are taken to be received three
Business Days after posting (or seven Business Days
after posting if sent to or from a place outside
Australia); and
(e) if sent by fax, are taken to be received at the time
shown in the transmission report as the time that the
whole fax was sent; and
(f) take effect from the time they are received unless a
later time is specified in them provided that if the
receipt is on a day which is not a Business Day or is
after 4.00pm (addressee's time) it is taken to be
received at 9.00am on the following Business Day.
WAIVER OF NOTICE PERIOD
13.2 The Trustee may waive a period of notice required to be
given by an Obligor under this deed.
14 CHANGE IN CREDITORS
- --------------------------------------------------------------------------------
NEW SENIOR CREDITOR
14.1 A person may only become a Senior Creditor under this deed
and be entitled to receive the benefits of a Senior Creditor
and be bound by the obligations of a Senior Creditor if that
person has:
(a) executed two counterparts of a New Creditor Accession
Deed in a form and executed in a manner approved by the
Trustee (acting reasonably); and
(b) delivered the two executed counterparts of the New
Creditor Accession Deed to the Trustee for execution by
the Trustee; and
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(c) delivered to the Trustee any other document reasonably
requested by the Trustee to evidence that the New
Creditor Accession Deed is enforceable against that
person,
and an Event of Default or Potential Event of Default will not
occur as a result of that person becoming a Senior Creditor under
this deed.
NEW JUNIOR CREDITOR
14.2 Subject to clause 14.9, a person may only become a Junior
Creditor under this deed if that person has:
(a) agreed to accede to this deed and to receive the
benefits of a Junior Creditor and be bound by the
obligations of a Junior Creditor under this deed by:
(i) executing two counterparts of a New Creditor
Accession Deed in a form and executed in a manner
approved by the Trustee (acting reasonably); and
(ii) delivering the two executed counterparts of the
New Creditor Accession Deed to the Trustee for
execution by the Trustee; and
(iii) delivering to the Trustee any other document
reasonably requested by the Trustee to evidence
that the New Creditor Accession Deed is
enforceable against that person; or
(b) agreed to be bound by the obligations of a Junior
Creditor as if it were a party to this deed as a Junior
Creditor by:
(i) executing (and arranging for the execution by any
relevant Obligor of) three counterparts of a Deed
of Subordination in a form and executed in a
manner approved by the Trustee (acting
reasonably); and
(ii) delivering the three executed counterparts of the
Deed of Subordination to the Trustee for execution
by the Trustee; and
(iii) delivering to the Trustee any other document
reasonably requested by the Trustee to evidence
that the Deed of Subordination is enforceable
against that person; or
(c) demonstrated to the absolute satisfaction of the
Trustee and in a manner approved by the Trustee that
the Indebtedness owed to it by any Obligor is
subordinated on substantially the same terms as Junior
Debt is subordinated under this deed.
CHANGE IN SENIOR CREDITORS
14.3 If any Senior Creditor assigns any of its rights or
transfers by novation any of its rights and obligations
under any Finance Document (in accordance with the relevant
provisions of the relevant Finance Document), it must cause
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the assignee or transferee to become a new Senior Creditor
by:
(a) executing three counterparts of a New Creditor
Accession Deed in a form and executed in a manner
approved by the Trustee (acting reasonably); and
(b) delivering the three executed counterparts of the New
Creditor Accession Deed to the Trustee for execution by
the Trustee; and
(c) delivering to the Trustee any other document reasonably
requested by the Trustee to evidence that the New
Creditor Accession Deed is enforceable against that
assignee or transferee.
CHANGE IN JUNIOR CREDITOR
14.4 If any Junior Creditor (other than an Obligor or Texas) who
is a party to this deed assigns any of its rights or
transfers by novation any of its rights or obligations under
any Junior Finance Document (in accordance with the relevant
provisions of the relevant Junior Finance Document), then,
subject to clause 14.9, it must cause the assignee or
transferee to become a new Junior Creditor by:
(a) executing three counterparts of a New Creditor
Accession Deed which is then in a form and executed in
a manner approved by the Trustee (acting reasonably);
(b) delivering the three executed counterparts of the New
Creditor Accession Deed to the Trustee for execution by
the Trustee; and
(c) delivering to the Trustee any other document reasonably
requested by the Trustee to evidence that the New
Creditor Accession Deed is enforceable against that
assignee or transferee.
EFFECT OF ACCESSION
14.5 On and from the Accession Date for a New Creditor:
(a) the New Creditor becomes bound by this deed and
receives the benefits under this deed as if it were a
party to this deed;
(b) in the case of assignment or transfer to the New
Creditor, the assigning or transferring party continues
to be bound by this deed unless the Relevant Senior
Debt or Relevant Junior Debt (as the case may be) is
reduced to zero, in which case it is released from any
further obligations under this deed; and
(a) each other party continues to be bound by this deed on
the basis that the New Creditor is a Creditor.
AUTHORITY
14.6 Each other party to this deed (other than any Creditor which
is assigning any of its rights or transferring by novation
any of its rights and obligations under any Finance Document
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to the New Creditor) irrevocably authorises the Trustee to
execute any New Creditor Accession Deed signed by a New
Creditor on its behalf.
14.7 Each Senior Creditor irrevocably authorises the Trustee to
execute any Deed of Subordination signed by a new Junior
Creditor and an Obligor on its behalf.
RESTRICTION ON SENIOR CREDITORS
14.8 Notwithstanding anything else in this deed, neither an
Obligor nor any Related Entity of an Obligor can accede to
this deed as a Senior Creditor.
NEW JUNIOR CREDITOR - CONDITION PRECEDENT
14.9 If it is proposed that a person become a Junior Creditor
after the date of this deed, the Trustee may, as a condition
precedent to that person becoming a Junior Creditor, acting
reasonably request that it receive from lawyers reasonably
approved by the Trustee a legal opinion in form and
substance acceptable to the Trustee in connection with the
enforceability of the subordination provisions of this deed
against that person.
NOTICE OF CHANGE
14.10 The Trustee may treat each Creditor (or any assignee or
substitute or New Creditor of which the Trustee has actual
notice) as the holder of the benefit of that Creditor's
interests and subject to the Creditor's obligations under
the relevant Finance Documents for all purposes, unless and
until it receives notice to the contrary.
14.11 A Creditor must promptly notify the Trustee of any
assignment or novation of that Creditor's rights, benefits
or obligations under any Finance Document.
15 GENERAL
- --------------------------------------------------------------------------------
SET-OFF
15.1 At any time after an Event of Default and for so long as it
subsists, the Trustee or a Senior Creditor may set off any
amount due for payment by the Trustee or the Senior
Creditor, respectively, to an Obligor against any amount due
for payment by that Obligor to the Trustee or the Senior
Creditor, respectively, under the Senior Finance Documents.
CERTIFICATES
15.2 The Trustee, a Senior Creditor or a Junior Financier may
give an Obligor a certificate about an amount payable or
other matter in connection with a Transaction Document. The
certificate is sufficient evidence of the amount or other
matter, unless it is proved to be incorrect.
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PROMPT PERFORMANCE
15.3 If this deed specifies when an Obligor agrees to perform an
obligation, the Obligor agrees to perform it by the time
specified. The Obligor agrees to perform all other
obligations promptly.
DISCRETION IN EXERCISING RIGHTS
15.4 The Trustee, a Senior Creditor or a Junior Financier may
exercise a right or remedy or give or refuse its consent in
any way it considers appropriate (including by imposing
conditions), unless a Transaction Document expressly states
otherwise.
CONSENTS
15.5 Each Obligor agrees to comply with all conditions in any
consent the Trustee, a Senior Creditor or a Junior Financier
gives in connection with a Transaction Document.
PARTIAL EXERCISING OF RIGHTS
15.6 If the Trustee, a Senior Creditor or a Junior Financier does
not exercise a right or remedy fully or at a given time, the
Trustee, Senior Creditor or Junior Financier can still
exercise it later.
NO LIABILITY FOR LOSS
15.7 None of the Trustee, a Senior Creditor or a Junior Financier
is liable for Loss caused by the exercise or attempted
exercise of, failure to exercise, or delay in exercising, a
right or remedy.
CONFLICT OF INTEREST
15.8 The Trustee's or a Senior Creditor's or a Junior Financier's
rights and remedies under this deed may be exercised even if
this involves a conflict of duty or the Trustee or the
Senior Creditor or Junior Financier has a personal interest
in their exercise.
REMEDIES CUMULATIVE
15.9 The rights and remedies of the Trustee, a Senior Creditor or
a Junior Financier under this deed are in addition to other
rights and remedies given by law independently of this deed.
RIGHTS AND OBLIGATIONS ARE UNAFFECTED
15.10 Rights given to the Trustee, a Senior Creditor or a Junior
Financier under this deed and an Obligor's liabilities under
it are not affected by any law that might otherwise affect
them.
INDEMNITIES
15.11 The indemnities in this deed are continuing obligations,
independent of the Obligors' other obligations under this
agreement and continue after this deed ends. It is not
necessary for the Trustee, a Senior Creditor or a Junior
Financier to incur expense or make payment before enforcing
a right of indemnity under this deed.
VARIATION AND WAIVER
15.12 Unless this deed expressly states otherwise, a provision of
this deed, or right created under it, may not be waived or
varied except in writing signed by the party or parties to
be bound.
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CONFIDENTIALITY
15.13 The Trustee, each Senior Creditor and each Junior Financier
agrees not to disclose information provided by the Obligors
that is not publicly available except:
(a) in connection with any person exercising rights or
dealing with rights or obligations under a Transaction
Document (including when consulting other Senior
Creditors after a Potential Event of Default or an
Event of Default or in connection with preparatory
steps such as negotiating with any potential assignee
or potential participant of the Creditor's rights or to
any ratings agency for the purposes of securitisation
or other person who is considering contracting with the
Creditor in connection with a Transaction Document); or
(b) to a person considering entering into (or who enters
into) a credit swap with the Trustee or a Senior
Creditor involving credit events relating to the Core
Borrowers or any of their Related Entities; or
(c) to officers, employees, legal and other advisers and
auditors of the Trustee, a Senior Creditor or a Junior
Financier; or
(d) to any party to this agreement or any Related Entity of
the Trustee, a Senior Creditor or a Junior Financier,
provided the recipient agrees to act consistently with
this clause 15.13; or
(e) with the Obligors' consent (not to be unreasonably
withheld); or
(f) as allowed, requested or required by any law, stock
exchange or regulatory authority.
The Obligors consent to disclosures made in accordance with this
clause 15.13.
FURTHER STEPS
15.14 The Obligors agree to do anything the Trustee or a Senior
Creditor asks (such as obtaining consents, signing and
producing documents and getting documents completed and
signed) to bind the Obligors and any other person intended
to be bound under the Senior Finance Documents.
INCONSISTENT LAW
15.15 To the extent permitted by law, this deed prevails to the
extent it is inconsistent with any law.
SUPERVENING LEGISLATION
15.16 Any present or future legislation which operates to vary
the obligations of the Obligors in connection with a Finance
Document with the result that the Trustee's, a Senior
Creditor's or a Junior Financier's rights, powers or
remedies are adversely affected (including by way of delay
or postponement) is excluded except to the extent that its
exclusion is prohibited or rendered ineffective by law.
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TIME OF THE ESSENCE
15.17 Time is of the essence in any Senior Finance Document in
respect of an obligation of an Obligor to pay money.
COUNTERPARTS
15.18 This deed may consist of a number of copies of this deed
each signed by one or more parties to the deed. When taken
together, the signed copies are treated as making up the one
document.
SERVING DOCUMENTS
15.19 Without preventing any other method of service, any
document in a court action may be served on a party by being
delivered to or left at that party's address for service of
notices under clause 13 (Notices). TXU Australia (LP) No. 1
Ltd and TXU Australia (LP) No. 2 Ltd irrevocably appoint TXU
Australia Holdings (AGP) Pty Ltd to receive any document
referred to in this clause. If, for any reason, TXU
Australia Holdings (AGP) Pty Ltd ceases to be able to
receive those documents, TXU Australia (LP) No. 1 Ltd and
TXU Australia (LP) No. 2 Ltd must immediately appoint
another person within Victoria to receive any such document
and notify the Trustee.
CONSENT BY OBLIGORS
15.20 Each Obligor unconditionally and irrevocably consents to
any Subsidiary becoming an Obligor after the date of this
deed by executing and delivering a New Obligor Accession
Deed and agrees that any Subsidiary becoming an Obligor will
not adversely affect or prejudice:
(a) its obligations under any Finance Document; or
(b) the rights of the Creditors under any of the Finance
Documents.
16 GOVERNING LAW, JURISDICTION AND SERVICE OF PROCESS
- --------------------------------------------------------------------------------
16.1 This deed is governed by the law in force in Victoria.
16.2 Each party irrevocably and unconditionally submits to the
non-exclusive jurisdiction of the courts of Victoria and
courts of appeal from them. Each party waives any right it
has to object to an action being brought in those courts
including, without limitation, by claiming that the action
has been brought in an inconvenient forum or that those
courts do not have jurisdiction.
16.3 Without preventing any other mode of service, any document
in an action (including, without limitation, any writ of
summons or other originating process or any third or other
party notice) may be served on any party by being delivered
to or left for that party at its address for service of
notices under clause 13.
EXECUTED as a deed
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SCHEDULE 1 OBLIGORS
- --------------------------------------------------------------------------------
- ------------------------------------------ -----------------------
NAME OF OBLIGOR ACN
- ------------------------------------------ -----------------------
TXU Australia Holdings Pty Ltd 086 006 859
TXU Australia Pty Ltd 071 611 017
TXU (No. 8) Pty Ltd 085 235 776
TXU (No. 9) Pty Ltd 085 235 801
Westar Pty Ltd 086 015 036
Kinetik Energy Pty Ltd 086 014 968
Eastern Energy Limited 064 651 118
TXU (No. 12) Pty Ltd 087 307 908
TXU (No. 7) Pty Ltd 085 235 749
Western Underground Gas Storage Pty Ltd 079 089 311
TXU Networks Pty Ltd 075 826 881
TXU (No. 14)Pty Ltd 076 229 519
Global Customer Solutions Pty Ltd 080 886 513
TXU Australia (Bairnsdale Power) Pty Ltd 081 074 142
TXU Australia Services Pty Ltd 081 074 160
TXU (No. 13) Pty Ltd 075 826 925
- ------------------------------------------ -----------------------
<PAGE>
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SCHEDULE 2 FINANCIERS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------- -------------------- -------------------------------------------------
NAME OF FINANCIER ACN/ARBN NOTICE DETAILS
- --------------------------------- -------------------- -------------------------------------------------
FACILITY A FINANCIERS
- --------------------------------- -------------------- -------------------------------------------------
<S> <C> <C>
BA Australia Limited ACN: 004 617 341 Level 63, MLC Centre, 19-29 Martin Place,
Sydney, NSW, 2000
FAX: (612) 9221 1023
ATTENTION: Vice President
- --------------------------------- -------------------- -------------------------------------------------
Deutsche Bank AG ARBN: 064 164 162 Level 23
333 Collins Street
and Melbourne Vic 3000
Deutsche Australia Limited ACN: 006 385 593 FAX: (613) 9270 4451
ATTENTION: Manager, Loans Administration
- --------------------------------- -------------------- -------------------------------------------------
National Australia Bank Limited ACN: 004 044 937 Level 2
271 Collins Street
Melbourne Vic 3000
FAX: (613) 9659 6927
ATTENTION: Ms Chris Kunaratnam
- --------------------------------- -------------------- -------------------------------------------------
The Toronto-Dominion Bank ARBN: 082 818 175 Level 36
385 Bourke Street
Melbourne Vic 3000
FAX: (613) 9670 3779
ATTENTION: Manager, Credit Administration
- --------------------------------- -------------------- -------------------------------------------------
Paribas Group Australia Limited ACN: 002 174 843 Level 11
3 Spring Street
Sydney NSW 2000
FAX: (02) 9241 5363
ATTENTION: Relationship Manager
- --------------------------------- -------------------- -------------------------------------------------
Commonwealth Bank of Australia ACN: 123 123 124 Level 12
385 Bourke Street
Melbourne Vic 3000
FAX: (03) 9675 7288
ATTENTION: John Batchelor
- --------------------------------- -------------------- -------------------------------------------------
<PAGE>
89
- --------------------------------- -------------------- -------------------------------------------------
Australia and New Zealand ACN: 005 357 522 Level 17
Banking Group Limited 530 Collins Street
Melbourne Vic 3000
FAX: (03) 9273 3591
ATTENTION: Mr Peter Ryan
- --------------------------------- -------------------- -------------------------------------------------
Westdeutsche Landesbank ARBN: 076 170 039 Level 29
Girozentrale 60 Margaret Street
Sydney NSW 2000
FAX: (02) 9777 8028
ATTENTION: Terreene Bates
- --------------------------------- -------------------- -------------------------------------------------
Bayerische Hypo-Und 1 Finlayson Green, #17-01
Vereinsbank AG, Singapore Singapore, 049246
Branch
FAX: 0015 65 230 0824
ATTENTION: Mr Saw Shaw Sheng
- --------------------------------- -------------------- -------------------------------------------------
Credit Agricole Indosuez ACN: 002 540 409 Level 30
Australia Limited 201 Kent Street
Sydney NSW 2000
FAX: (02) 9252 4691
ATTENTION: Lily Miu/Mun Lum
- --------------------------------- -------------------- -------------------------------------------------
The Royal Bank of Scotland plc Six Battery Road #27-01
Singapore 049909
FAX: 0011 65 324 2691
ATTENTION: Jerry Chum
- --------------------------------- -------------------- -------------------------------------------------
United Overseas Bank Limited ARBN: 060 785 284 Level 9, 32 Martin Place
Sydney NSW 2000
FAX: (02) 9221 1541
ATTENTION: Kevin Yung
- --------------------------------- -------------------- -------------------------------------------------
IBJ Australia Bank Limited ACN: 009 150 109 Level 21
52 Martin Place
Sydney NSW 2000
FAX: (02) 9377 8884
ATTENTION: Tim Kapadia/Greg Atkin
- --------------------------------- -------------------- -------------------------------------------------
Bankgesellschaft Berlin AG No. 1 Crown Court Cheapside
London EC2V 6LR
FAX: 0015 44 207 572 9326
ATTENTION: Birgit Leischner/Langhlan Waterson
- --------------------------------- -------------------- -------------------------------------------------
<PAGE>
90
- --------------------------------- -------------------- -------------------------------------------------
ABN AMRO Bank N.V., ARBN: 079 478 612 Level 27, 367 Collins Street
Australian Branch Melbourne Vic 3000
and FAX: (03) 9612 1600
ATTENTION: David Heathcote
ABN AMRO Australia Limited ACN: 000 862 797
- --------------------------------- -------------------- -------------------------------------------------
National Australia Asset ACN: 062 806 884 Level 3 South, 271 Collins Street
Management Limited Melbourne Vic 3000
FAX: (03) 9205 3440
ATTENTION: Chris Kunaratnam/Randal
Paterson/Laura Crothers
- --------------------------------- -------------------- -------------------------------------------------
Commerzbank 8 Shenton Way #42 - 01
Aktiengesellschaft, Singapore Temasek Tower, Singapore 068811
Branch
FAX: 0011 65 226 2792
ATTENTION: Phillip Ong/Mark Ruccker
- --------------------------------- -------------------- -------------------------------------------------
Westpac Banking Corporation ARBN: 007 457 141 Level 9
360 Collins Street
Melbourne Vic 3000
FAX: (03) 9670 5013
ATTENTION: Colin Butson
- --------------------------------- -------------------- -------------------------------------------------
FACILITY B FINANCIERS
- --------------------------------- -------------------- -------------------------------------------------
National Australia Bank Limited ACN: 004 044 937 Level 3 South
271 Collins Street
Melbourne Vic 3000
FAX: (613) 9659 6927
ATTENTION: Ms Chris Kunaratnam
- --------------------------------- -------------------- -------------------------------------------------
The Toronto-Dominion Bank ARBN: 082 818 175 Level 36
385 Bourke Street
Melbourne Vic 3000
FAX: (613) 9670 3779
ATTENTION: Manager, Credit Administration
- --------------------------------- -------------------- -------------------------------------------------
IBJ Australia Bank Limited ACN: 009 150 109 Level 21
52 Martin Place
Sydney NSW 2000
FAX: (02) 9377 8884
ATTENTION: Mr Robert Hutchfield, Head of
Corporate & Project Finance
- --------------------------------- -------------------- -------------------------------------------------
<PAGE>
91
- --------------------------------- -------------------- -------------------------------------------------
Commonwealth Bank of Australia ACN: 123 123 124 Level 12
385 Bourke Street
Melbourne Vic 3000
FAX: (03) 9675 7288
ATTENTION: Mr John Batchelor, Vice
President - Business Development
- --------------------------------- -------------------- -------------------------------------------------
Australia and New Zealand ACN: 005 357 522 Level 17
Banking Group Limited 530 Collins Street
Melbourne Vic 3000
FAX: (03) 9273 3591
ATTENTION: Mr Peter Ryan
- --------------------------------- -------------------- -------------------------------------------------
Tokai Australia Finance ACN: 002 933 557 Level 19
Corporation Limited 52 Martin Place
Sydney NSW 2000
FAX: (02) 9221 1775
ATTENTION: Mr Florian Wieser, Chief
Manager - Corporate Banking
- --------------------------------- -------------------- -------------------------------------------------
Bank of Tokyo - Mitsubishi ACN: 008 606 273 Level 18
(Australia) Limited 600 Bourke Street
Melbourne Vic 3000
FAX: (03) 9600 0920
ATTENTION: Mr Robert MacIsaac
- --------------------------------- -------------------- -------------------------------------------------
Morgan Guaranty Trust Company ARBN: 065 326 356 Level 25
of New York 333 Collins Street
Melbourne Vic 3000
FAX: (03) 9623 8346
ATTENTION: Mr Wesley Kimathi Marangu
- --------------------------------- -------------------- -------------------------------------------------
SG Australia Custodian Company ACN: 009 573 880 Level 20
Pty Ltd as trustee of the 101 Collins Street
Asset - 1 ENE sub-trust Melbourne Vic 3000
FAX: (03) 9654 6590
ATTENTION: Mr Anthony Jenkins
- --------------------------------- -------------------- -------------------------------------------------
UBS Australia Limited ACN: 003 059 461 Level 25
1 Farrer Place
Sydney NSW 2000
FAX: (02) 9324 3170
ATTENTION: Ms Justine Shearer, Associate
Director
- --------------------------------- -------------------- -------------------------------------------------
<PAGE>
92
- --------------------------------- -------------------- -------------------------------------------------
Westpac Banking Corporation ARBN: 007 457 141 Level 9
360 Collins Street
Melbourne Vic 3000
FAX: (03) 9670 4875
ATTENTION: Manager, Utilities
- --------------------------------- -------------------- -------------------------------------------------
BA Australia Limited ACN: 004 617 641 Level 63
MLC Centre
19-29 Martin Place
Sydney NSW 2000
FAX: (02) 9211 1023
ATTENTION: Vice President - Project
Finance
- --------------------------------- -------------------- -------------------------------------------------
FACILITY C FINANCIERS
- --------------------------------- -------------------- -------------------------------------------------
National Australia Bank Limited ACN: 004 044 937 Level 2
271 Collins Street
Melbourne Vic 3000
FAX: (613) 9659 6927
ATTENTION: Ms Chris Kunaratnam
- --------------------------------- -------------------- -------------------------------------------------
Westpac Banking Corporation ARBN: 007 457 141 Level 9
360 Collins Street
Melbourne Vic 3000
FAX: (03) 9670 5013
ATTENTION: Colin Butson
- --------------------------------- -------------------- -------------------------------------------------
Australia and New Zealand ACN: 005 357 522 Level 17
Banking Group Limited 530 Collins Street
Melbourne Vic 3000
FAX: (03) 9273 3591
ATTENTION: Mr Peter Ryan
- --------------------------------- -------------------- -------------------------------------------------
FACILITY D FINANCIERS
- --------------------------------- -------------------- -------------------------------------------------
The Chase Manhattan Bank ARBN: 074 112 011 Level 37
530 Collins Street
Melbourne Vic 3000
FAX: (03) 9612 3222
ATTENTION: Mr John Dixon
- --------------------------------- -------------------- -------------------------------------------------
Commonwealth Bank of Australia ACN: 123 123 124 Level 12
385 Bourke Street
Melbourne Vic 3000
FAX: (03) 9675 7288
ATTENTION: Bill Thomson
- --------------------------------- -------------------- -------------------------------------------------
<PAGE>
93
- --------------------------------- -------------------- -------------------------------------------------
FACILITY E FINANCIERS
- --------------------------------- -------------------- -------------------------------------------------
National Australia Bank Limited ACN: 004 044 937 Level 2
271 Collins Street
Melbourne Vic 3000
FAX: (613) 9659 6927
ATTENTION: Ms Chris Kunaratnam
- --------------------------------- -------------------- -------------------------------------------------
Westpac Banking Corporation ARBN: 007 457 141 Level 9
360 Collins Street
Melbourne Vic 3000
FAX: (03) 9670 5013
ATTENTION: Colin Butson
- --------------------------------- -------------------- -------------------------------------------------
</TABLE>
<PAGE>
94
- --------------------------------------------------------------------------------
SCHEDULE 3 HEDGE COUNTERPARTIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------- ------------------- -------------------------------------------------
NAME OF HEDGE COUNTERPARTY ACN/ARBN NOTICE DETAILS
- ---------------------------------- ------------------- -------------------------------------------------
<S> <C> <C>
Bank of America, National ARBN: 064 874 531 Level 63, MLC Centre, 19-29 Martin Place,
Association Sydney, NSW, 2000
FAX: (612) 9221 1023
ATTENTION: Vice President
- ---------------------------------- ------------------- -------------------------------------------------
Deutsche Bank AG ARBN: 064 164 162 Level 23
333 Collins Street
Melbourne Vic 3000
FAX: (613) 9270 4451
ATTENTION: Manager, Loans Administration
- ---------------------------------- ------------------- -------------------------------------------------
National Australia Bank Limited ACN: 004 044 937 Level 2
271 Collins Street
Melbourne Vic 3000
FAX: (613) 9659 6927
ATTENTION: Ms Chris Kunaratnam
- ---------------------------------- ------------------- -------------------------------------------------
SG Australia Limited ACN: 002 093 021 Level 20
101 Collins Street
Melbourne Vic 3000
FAX: (03) 9654 6590
ATTENTION: Mr Anthony Jenkins
- ---------------------------------- ------------------- -------------------------------------------------
The Toronto-Dominion Bank ARBN: 082 818 175 Level 36
385 Bourke Street
Melbourne Vic 3000
FAX: (613) 9670 3779
ATTENTION: Manager, Credit Administration
- ---------------------------------- ------------------- -------------------------------------------------
Westpac Banking Corporation ARBN: 007 457 141 Level 9
360 Collins Street
Melbourne Vic 3000
FAX: (03) 9670 5013
ATTENTION: Colin Butson
- ---------------------------------- ------------------- -------------------------------------------------
Citibank, N.A. ARBN: 072 814 058 Level 26
101 Collins Street
Melbourne Vic 3000
FAX: (03) 9653 7301
ATTENTION: John Bowes
- ---------------------------------- ------------------- -------------------------------------------------
<PAGE>
95
- ---------------------------------- ------------------- -------------------------------------------------
NAME OF HEDGE COUNTERPARTY ACN/ARBN NOTICE DETAILS
- ---------------------------------- ------------------- -------------------------------------------------
Australia and New Zealand Banking ACN: 005 357 522 Level 17
Group Limited 530 Collins Street
Melbourne Vic 3000
FAX: (03) 9273 3591
ATTENTION: Mr Peter Ryan
- ---------------------------------- ------------------- -------------------------------------------------
</TABLE>
<PAGE>
96
- --------------------------------------------------------------------------------
SCHEDULE 4 NEW CREDITOR ACCESSION DEED
- --------------------------------------------------------------------------------
DEED dated
BETWEEN:
[ ] (the ("NEW CREDITOR"); and
[[* if assignment or novation][ ] (the ("RETIRING CREDITOR"); and]
[ ] (the ("TRUSTEE") for itself and on behalf of the other
parties to the Deed of Common Terms.
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this deed, " Deed of Common Terms" means the deed of common terms
dated 24 February 1999 between the Trustee and others. Terms defined in
the Deed of Common Terms have the same meaning in this deed.
1.2 INTERPRETATION
Clause 1.2 of the Deed of Common Terms applies to this deed.
2. ACCESSION AND RELEASE
2.1 [[* if New Creditor by assignment or novation]With effect from and
including [the date of this deed/other date as appropriate]:
(a) the New Creditor assumes the obligations and acquires the rights
of the Retiring Creditor [or specify portion of rights acquired]
under the Deed of Common Terms and each [Senior/Junior] Finance
Document, as a [Senior/Junior] Creditor;
(b) each other party to the Deed of Common Terms and each
[Senior/Junior] Finance Document acquires corresponding rights
against and assumes corresponding obligations towards the New
Creditor; and
(c) the Retiring Creditor is released from its obligations [or
specify portion of obligations] under the Deed of Common Terms
but without prejudice to any existing liability).]
2.2 [[* If New Creditor not by assignment or novation] With effect from and
including [the date of this deed/other date as appropriate]:
(a) the New Creditor assumes the obligations and acquires the rights
of a [Senior/Junior] Creditor under the Deed of Common Terms; and
(b) each other party to the Deed of Common Terms and each
[Senior/Junior] Finance Document acquires corresponding rights
against and assumes corresponding obligations towards the New
Creditor.]
2.3 This deed and [nominate any other document] is a [Senior/Junior]
Finance Document and the New Creditor is a [Senior Creditor/Junior
Creditor] for the purposes of the Deed of Common Terms.
<PAGE>
97
- --------------------------------------------------------------------------------
3. NOTICES
For the purpose of the [Senior/Junior] Finance Documents, the address
for correspondence of the New Creditor is the address set out below: [
]
4. LAW
This deed is governed by the laws of the Victoria.
5. ATTORNEYS
Each attorney executing this certificate states that he or she has no
notice of revocation or suspension of his or her power of attorney.
EXECUTED as a deed.
[Execution provisions]
<PAGE>
98
- --------------------------------------------------------------------------------
SCHEDULE 5 NOTICES
- --------------------------------------------------------------------------------
CORE BORROWERS AND OBLIGORS TEXAS
Address: Level 49 Address: Energy Plaza
525 Collins Street 1601 Bryan Street
Melbourne Vic 3000 Dallas, Texas 75201
United States of America
Fax: 9629 8292
Fax: (214) 812 2488
Attention: Managing Director Attention:
BA AUSTRALIA LIMITED CITIBANK, N.A.
Address: Level 63 Address: Level 26
MLC Centre 101 Collins Street
19-29 Martin Place Melbourne Vic 3000
Sydney NSW 2000
Fax: 9653 7301
Fax: (02) 9211 1023
Attention: Mr John Bowes
Attention: Vice President - Project Finance
WESTPAC BANKING CORPORATION FACILITY A AGENT AND FACILITY B AGENT
Address: Level 9 Address: Level 2
360 Collins Street 271 Collins Street
Melbourne Vic 3000 Melbourne Vic 3000
Fax: 9670 4875 Fax: 9659 6927
Tel: 9659 6755
Attention: Manager Utilities Attention: Head of Agency
TRUSTEE
Address: Level 2
271 Collins Street
Melbourne Vic 3000
Fax: 9659 6927
Tel: 9659 6755
Attention: Head of Agency
<PAGE>
99
- --------------------------------------------------------------------------------
FACILITY D AGENT FINANCIERS
Address: Level 35 As set out in schedule 2
AAP Center
259 George Street
Sydney NSW 2000
Fax: (02) 9251 3371
Attention: Yvonne Blunt
HEDGE COUNTERPARTIES
As set out in schedule 3
<PAGE>
100
- --------------------------------------------------------------------------------
SCHEDULE 6 - DEED OF SUBORDINATION
- --------------------------------------------------------------------------------
DATED:
PARTIES: [ ] ("SUBORDINATED CREDITOR")
[ ] ("OBLIGOR")
[ ] ("TRUSTEE") for itself and on behalf of
the Senior Creditors under the Deed of Common Terms
1 DEFINITIONS AND INTERPRETATION
- --------------------------------------------------------------------------------
DEFINITIONS
1.1 In this deed, the following words have these meanings unless
the contrary intention appears:
DEED OF COMMON TERMS means the deed of common terms dated 24
February 1999 between the Trustee and others.
SUBORDINATED DEBT means any amount actually or contingently owing
by the Obligor to the Subordinated Creditor [under or in
connection with the Subordinated Debt Documents].
SUBORDINATED DEBT DOCUMENTS means [specify details of
subordinated debt documents].
1.2 Terms defined in the Deed of Common Terms have the same
meaning in this deed.
INTERPRETATION
1.3 Clause 1.2 of the Deed of Common Terms applies to this deed.
2 SUBORDINATION
- --------------------------------------------------------------------------------
2.1 With effect from and including the [date of this deed]:
(a) the Subordinated Creditor and Obligor agree with the
Trustee that the Subordinated Debt is subordinated to
the Senior Debt in the same manner as Junior Debt is
subordinated to the Senior Debt in accordance with the
Deed of Common Terms and as if references in the Deed
of Common Terms to:
(i) Junior Creditor included a reference to the
Subordinated Creditor;
(ii) Junior Debt included a reference to the
Subordinated Debt; and
(iii) Junior Finance Documents included a reference to
the Subordinated Debt Documents; and
<PAGE>
101
- --------------------------------------------------------------------------------
(b) the Subordinated Creditor agrees to be bound by, and to
assume the obligations of a Junior Creditor as if it
were a party to the Deed of Common Terms; and
(c) the Subordinated Creditor acknowledges that the Trustee
on its own behalf and on behalf of the Senior Creditors
acquires corresponding rights against the Subordinated
Creditor as if were a party to the Deed of Common
Terms.
2.2 The subordination of the Subordinated Debt is intended to
operate as a "debt subordination" (as defined in section
563C(2) of the Corporations Law) by the Subordinated
Creditor.
3 LAWS
- --------------------------------------------------------------------------------
This deed is governed by the law in force in Victoria.
EXECUTED as a deed.
[Execution clauses]
<PAGE>
102
- --------------------------------------------------------------------------------
SCHEDULE 7 NEW OBLIGOR ACCESSION DEED
- --------------------------------------------------------------------------------
DEED dated
BETWEEN:
[*] [(ACN [*])] (the "NEW OBLIGOR"); and
[*] (the "TRUSTEE") for itself and on behalf of the other parties to
the Deed of Common Terms.
OPERATIVE PROVISIONS:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this deed "Deed of Common Terms" means the deed of common terms dated
[*] between [ ], the Trustee and others.
Definitions in the Deed of Common Terms apply in this deed.
1.2 INTERPRETATION
Clause 1.2 of the Deed of Common Terms applies to this deed.
2. ACCESSION
With effect from and including the [date of this deed]:
(a) the New Obligor assumes the obligations and acquire the rights of
Obligor under the Deed of Common Terms;
(b) each other party to the Deed of Common Terms acquires
corresponding rights against and assumes corresponding
obligations towards the New Obligor as an Obligor: and
(c) the New Obligor represents and warrants to and for the benefit
of each Senior Creditor each of the representations and
warranties in clause 5.1 of the Deed of Common Terms.
3. NOTICES
For the purpose of the Finance Documents, the address for correspondence
of the New Obligor is the address set out below: [ ]
4. LAW
This deed is governed by the laws of Victoria.
4. ATTORNEYS
Each attorney executing this deed states that he or she has no notice of
revocation or suspension of his or her power of attorney.
[Execution provisions]
<PAGE>
103
- --------------------------------------------------------------------------------
EXECUTION PAGE
- --------------------------------------------------------------------------------
EXHIBIT 4(D)
------------------------------------------
EASTERN ENERGY LIMITED (ACN 064 651 118)
TO
THE BANK OF NEW YORK,
TRUSTEE
---------
INDENTURE
(FOR UNSECURED DEBT SECURITIES)
DATED AS OF DECEMBER 1, 1996
------------------------------------------
<PAGE>
TABLE OF CONTENTS
PARTIES..................................................................... 1
RECITAL OF THE COMPANY.......................................................7
ARTICLE ONE..................................................................7
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION......................7
SECTION 101. DEFINITIONS.................................................7
ACT....................................................................8
ADDITIONAL AMOUNTS.....................................................8
A$.....................................................................8
AFFILIATE..............................................................8
A-GAAP.................................................................8
ATTRIBUTABLE DEBT......................................................8
AUSTRALIA..............................................................8
AUTHENTICATING AGENT...................................................8
AUTHORIZED OFFICER.....................................................8
BOARD OF DIRECTORS.....................................................8
BOARD RESOLUTION.......................................................8
BUSINESS DAY...........................................................9
CAPITAL STOCK..........................................................9
COMMISSION.............................................................9
COMMON STOCK...........................................................9
COMPANY................................................................9
COMPANY REQUEST........................................................9
COMPANY ORDER..........................................................9
CONSOLIDATED NET TANGIBLE ASSETS.......................................9
CORPORATE TRUST OFFICE.................................................9
CORPORATION............................................................9
DEBT...................................................................9
DEFAULTED INTEREST.....................................................9
DOLLAR" or "$..........................................................9
EVENT OF DEFAULT.......................................................9
GOVERNMENTAL AUTHORITY.................................................9
GOVERNMENT OBLIGATIONS................................................10
HOLDER................................................................10
INDENTURE.............................................................10
INTEREST PAYMENT DATE.................................................10
JOINT VENTURE.........................................................10
MATURITY..............................................................10
MORTGAGE..............................................................10
OFFICER'S CERTIFICATE.................................................10
OPINION OF COUNSEL....................................................10
OUTSTANDING...........................................................11
PAYING AGENT..........................................................11
2
<PAGE>
PERSON................................................................11
PLACE OF PAYMENT......................................................11
PREDECESSOR SECURITY..................................................12
PRINCIPAL PROPERTY....................................................12
REDEMPTION DATE.......................................................12
REDEMPTION PRICE......................................................12
REGULAR RECORD DATE...................................................12
RESPONSIBLE OFFICER...................................................12
RESTRICTED SUBSIDIARY.................................................12
SALE AND LEASE-BACK TRANSACTION.......................................12
SECURITIES............................................................12
SECURITY REGISTER.....................................................12
SECURITY REGISTRAR....................................................12
SPECIAL RECORD DATE...................................................12
STATED MATURITY.......................................................12
SUBSIDIARY............................................................13
TRUST INDENTURE ACT...................................................13
TRUSTEE...............................................................13
UNITED STATES.........................................................13
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.......................13
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.....................14
SECTION 104. ACTS OF HOLDERS............................................14
SECTION 105. NOTICES, ETC. TO TRUSTEE AND COMPANY.......................16
SECTION 106. NOTICE TO HOLDERS OF SECURITIES; WAIVER....................17
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT..........................17
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS...................17
SECTION 109. SUCCESSORS AND ASSIGNS.....................................18
SECTION 110. SEPARABILITY CLAUSE........................................18
SECTION 111. BENEFITS OF INDENTURE......................................18
SECTION 112. GOVERNING LAW..............................................18
SECTION 113. LEGAL HOLIDAYS.............................................18
SECTION 114. AGENT TO RECEIVE SERVICE OF PROCESS........................18
ARTICLE TWO.................................................................19
SECURITY FORMS..............................................................19
SECTION 201. FORMS GENERALLY............................................19
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION............19
ARTICLE THREE...............................................................20
The Securities..............................................................20
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.......................20
SECTION 302. DENOMINATIONS..............................................23
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.............23
SECTION 304. TEMPORARY SECURITIES.......................................25
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE........25
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES...........26
3
<PAGE>
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.............27
SECTION 308. PERSONS DEEMED OWNERS......................................28
SECTION 309. CANCELLATION BY SECURITY REGISTRAR.........................29
SECTION 310. COMPUTATION OF INTEREST....................................29
SECTION 311. ADDITIONAL AMOUNTS.........................................29
ARTICLE FOUR................................................................31
Redemption of Securities....................................................31
SECTION 401. APPLICABILITY OF ARTICLE...................................31
SECTION 402. ELECTION TO REDEEM; NOTICE TO TRUSTEE......................31
SECTION 403. SELECTION OF SECURITIES TO BE REDEEMED.....................31
SECTION 404. NOTICE OF REDEMPTION.......................................32
SECTION 405. SECURITIES PAYABLE ON REDEMPTION DATE......................33
SECTION 406. SECURITIES REDEEMED IN PART................................33
ARTICLE FIVE................................................................34
Sinking Funds...............................................................34
SECTION 501. APPLICABILITY OF ARTICLE...................................34
SECTION 502. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES......34
SECTION 503. REDEMPTION OF SECURITIES FOR SINKING FUND..................34
ARTICLE SIX.................................................................35
Covenants...................................................................35
SECTION 601. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.................35
SECTION 602. MAINTENANCE OF OFFICE OR AGENCY............................35
SECTION 603. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST..........36
SECTION 604. CORPORATE EXISTENCE........................................37
SECTION 605. MAINTENANCE OF PROPERTIES..................................38
SECTION 606. ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE..............38
SECTION 607. WAIVER OF CERTAIN COVENANTS................................38
SECTION 608. RESTRICTIONS ON SECURED DEBT...............................39
JOINT VENTURE.........................................................41
SECTION 609. LIMITATIONS ON SALE LEASE-BACK TRANSACTIONS................41
ATTRIBUTABLE DEBT.....................................................41
SALE AND LEASE-BACK TRANSACTION.......................................41
SECTION 610. DIVIDEND RESTRICTION.......................................41
ARTICLE SEVEN...............................................................42
Satisfaction and Discharge..................................................42
SECTION 701. DEFEASANCE.................................................42
SECTION 702. SATISFACTION AND DISCHARGE OF INDENTURE....................44
SECTION 703. APPLICATION OF TRUST MONEY.................................45
ARTICLE EIGHT...............................................................46
Events of Default; Remedies.................................................46
SECTION 801. EVENTS OF DEFAULT..........................................46
SECTION 802. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.........47
SECTION 803. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE.................................................48
SECTION 804. TRUSTEE MAY FILE PROOFS OF CLAIM...........................48
4
<PAGE>
SECTION 805. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES.................................................49
SECTION 806. APPLICATION OF MONEY COLLECTED.............................49
SECTION 807. LIMITATION ON SUITS........................................50
SECTION 808. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,.......50
SECTION 809. RESTORATION OF RIGHTS AND REMEDIES.........................51
SECTION 810. RIGHTS AND REMEDIES CUMULATIVE.............................51
SECTION 811. DELAY OR OMISSION NOT WAIVER...............................51
SECTION 812. CONTROL BY HOLDERS OF SECURITIES...........................51
SECTION 813. WAIVER OF PAST DEFAULTS....................................52
SECTION 814. UNDERTAKING FOR COSTS......................................52
SECTION 815. WAIVER OF STAY OR EXTENSION LAWS...........................53
ARTICLE NINE................................................................53
The Trustee.................................................................53
SECTION 901. CERTAIN DUTIES AND RESPONSIBILITIES........................53
SECTION 902. NOTICE OF DEFAULTS.........................................54
SECTION 903. CERTAIN RIGHTS OF TRUSTEE..................................54
SECTION 904. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.....55
SECTION 905. MAY HOLD SECURITIES........................................55
SECTION 906. MONEY HELD IN TRUST........................................55
SECTION 907. COMPENSATION AND REIMBURSEMENT.............................55
SECTION 908. DISQUALIFICATION; CONFLICTING INTERESTS....................56
SECTION 909. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY....................56
SECTION 910. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR..........57
SECTION 911. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.....................59
SECTION 912. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS................................................60
SECTION 913. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY..........60
SECTION 914. CO-TRUSTEES AND SEPARATE TRUSTEES..........................61
SECTION 915. APPOINTMENT OF AUTHENTICATING AGENT........................62
ARTICLE TEN.................................................................64
Holders' Lists and Reports by Trustee and Company...........................64
SECTION 1001. LISTS OF HOLDERS..........................................64
SECTION 1002. REPORTS BY TRUSTEE AND COMPANY............................64
ARTICLE ELEVEN..............................................................64
Consolidation, Merger, Conveyance or Other Transfer.........................64
SECTION 1101. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS......64
SECTION 1102. SUCCESSOR CORPORATION SUBSTITUTED.........................65
ARTICLE TWELVE..............................................................65
Supplemental Indentures.....................................................65
SECTION 1201. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS........65
SECTION 1202. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS...........67
SECTION 1203. EXECUTION OF SUPPLEMENTAL INDENTURES......................68
SECTION 1204. EFFECT OF SUPPLEMENTAL INDENTURES.........................69
SECTION 1205. CONFORMITY WITH TRUST INDENTURE ACT.......................69
SECTION 1206. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES........69
5
<PAGE>
SECTION 1207. MODIFICATION WITHOUT SUPPLEMENTAL INDENTURE...............69
ARTICLE THIRTEEN............................................................70
Meetings of Holders; Action Without Meeting.................................70
SECTION 1301. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.................70
SECTION 1302. CALL, NOTICE AND PLACE OF MEETINGS........................70
SECTION 1303. PERSONS ENTITLED TO VOTE AT MEETINGS......................70
SECTION 1304. QUORUM; ACTION............................................71
SECTION 1305. ATTENDANCE AT MEETINGS; DETERMINATION OF VOTING RIGHTS;...71
SECTION 1306. COUNTING VOTES AND RECORDING ACTION OF MEETINGS...........72
SECTION 1307. ACTION WITHOUT MEETING....................................73
ARTICLE FOURTEEN............................................................73
Immunity of Incorporators, Stockholders, Officers and Directors.............73
SECTION 1401. LIABILITY SOLELY CORPORATE................................73
ARTICLE FIFTEEN.............................................................74
Securities of the First and Second Series...................................74
SECTION 1501. DESIGNATION OF SECURITIES OF THE FIRST AND SECOND SERIES..74
Testimonium.................................................................70
Signatures..................................................................70
Acknowledgements............................................................72
6
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INDENTURE, dated as of December 1, 1996, between EASTERN
ENERGY LIMITED (ACN 064 651 118), a corporation duly organized and existing
under the laws of the State of Victoria, Commonwealth of Australia (herein
called the "Company"), having its principal office at Level 17, 452 Flinders
Street, Melbourne, Australia 3000, and THE BANK OF NEW YORK, a corporation of
the State of New York, having its principal corporate trust office at 101
Barclay Street, 21 West, New York, New York 10286 as Trustee (herein called the
"Trustee").
RECITAL OF THE COMPANY
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), in an unlimited aggregate principal amount to be issued in one or
more series as contemplated herein; and all acts necessary to make this
Indenture a valid agreement of the Company have been performed.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires, capitalized terms
used herein shall have the meanings assigned to them in Article One of this
Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of any
series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
(b) all terms used herein without definition which are defined in
the Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States, and, except as otherwise herein expressly
provided, the term "generally accepted accounting principles" with respect
to any computation required or permitted hereunder shall mean such
accounting principles as are generally accepted in the United States at
the date of such computation or, at the election of the Company from time
to time, at the date of the execution and delivery of this Indenture; and
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<PAGE>
(d) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Article Nine, are defined in
that Article.
"ACT", when used with respect to any Holder of a Security, has
the meaning specified in Section 104.
"ADDITIONAL AMOUNTS" has the meaning specified in Section 311.
"A$" means a dollar or other equivalent unit in such coin or
currency of Australia as at the time shall be legal tender for the payment of
public and private debts.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"CONTROL" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or through one or
more intermediaries, whether through the ownership of voting securities, by
contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.
"A-GAAP" means generally accepted accounting principles in
Australia, and, except as otherwise herein expressly provided, the term "A-GAAP"
with respect to any computation required or permitted hereunder shall mean such
accounting principles as are generally accepted in Australia at the date of such
computation or, at the election of the Company from time to time, at the date of
the execution and delivery of this Indenture; provided, however, that in
determining generally accepted accounting principles applicable to the Company,
the Company shall, to the extent required, conform to any order, rule or
regulation of any administrative agency, regulatory authority or other
governmental body having jurisdiction over the Company.
"ATTRIBUTABLE DEBT" has the meaning specified in Section 609.
"AUSTRALIA" means the Commonwealth of Australia.
"AUTHENTICATING AGENT" means any Person (other than the Company
or an Affiliate of the Company) authorized by the Trustee pursuant to Section
915 to act on behalf of the Trustee to authenticate one or more series of
Securities.
"AUTHORIZED OFFICER" means the Chairman, the Managing Director,
the Chief Financial Officer, the Controller, any General Manager, or any other
officer or agent of the Company duly authorized by the Board of Directors to act
in respect of matters relating to this Indenture.
"BOARD OF DIRECTORS" means either the board of directors of the
Company or any committee thereof duly authorized to act in respect of matters
relating to this Indenture.
"BOARD RESOLUTION" means a copy of a resolution certified by the
Secretary or any Director of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
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<PAGE>
"BUSINESS DAY", when used with respect to a Place of Payment or
any other particular location specified in the Securities or this Indenture,
means any day, other than a Saturday or Sunday, which is not a day on which
banking institutions or trust companies in such Place of Payment or other
location are generally authorized or required by law, regulation or executive
order to remain closed, except as may be otherwise specified as contemplated by
Section 301.
"CAPITAL STOCK" of a corporation means its common stock and its
preferred stock and preference stock, if any of such corporation.
"COMMISSION" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, as amended, or, if at any time after the date of execution and delivery of
this Indenture such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body, if any, performing
such duties at such time.
"COMMON STOCK", when used in this Indenture with respect to an
Australian corporation, means the ordinary shares of such corporation.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"COMPANY REQUEST" or "COMPANY ORDER" means a written request or
order signed in the name of the Company by an Authorized Officer and delivered
to the Trustee.
"CONSOLIDATED NET TANGIBLE ASSETS" means the total amount of
assets (less depreciation, valuation and other applicable reserves) which under
A-GAAP would be included on a consolidated balance sheet of the Company and its
consolidated Subsidiaries after deducting therefrom all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which
at any particular time its corporate trust business shall be principally
administered, which office at the date of execution and delivery of this
Indenture is located at 101 Barclay Street, 21 West, New York, New York 10286.
"CORPORATION" means a corporation, association, company, limited
liability company, joint stock company or business trust.
"DEBT" means notes, bonds, debentures or other similar evidences
of indebtedness for money borrowed.
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"DOLLAR" or "$" means a dollar or other equivalent unit in such
coin or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.
"EVENT OF DEFAULT" has the meaning specified in Section 801.
"GOVERNMENTAL AUTHORITY" means the government of the United
States or of any State or Territory thereof or of the District of Columbia or of
any county, municipality or other political subdivision of any of the foregoing,
9
<PAGE>
or any department, agency, authority or other instrumentality of any of the
foregoing.
"GOVERNMENT OBLIGATIONS" means:
(a) direct obligations of, or obligations the principal of
and interest on which are unconditionally guaranteed by, the
United States and entitled to the benefit of the full faith
and credit thereof; and
(b) certificates, depositary receipts or other instruments
which evidence a direct ownership interest in obligations
described in clause (a) above or in any specific interest or
principal payments due in respect thereof; provided,
however, that the custodian of such obligations or specific
interest or principal payments shall be a bank or trust
company (which may include the Trustee or any Paying Agent)
subject to Federal or state supervision or examination with
a combined capital and surplus of at least $50,000,000; and
provided, further, that except as may be otherwise required
by law, such custodian shall be obligated to pay to the
holders of such certificates, depositary receipts or other
instruments the full amount received by such custodian in
respect of such obligations or specific payments and shall
not be permitted to make any deduction therefrom.
"HOLDER" means a Person in whose name a Security is registered in the
Security Register.
"INDENTURE" means this instrument as originally executed and delivered
and as it may from time to time be supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof and shall include the terms of a
particular series of Securities established as contemplated by Section
301.
"INTEREST PAYMENT DATE", when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"JOINT VENTURE" has the meaning specified in Section 608.
"MATURITY", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal
becomes due and payable as provided in such Security or in this
Indenture, whether at the Stated Maturity, by declaration of
acceleration, upon call for redemption or otherwise.
"MORTGAGE" means any mortgage, pledge, lien, security interest,
conditional sale or other title retention agreement or similar
encumbrance, whether on realty or personalty.
"OFFICER'S CERTIFICATE" means a certificate signed by an Authorized
Officer and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel for the Company, or other counsel reasonably acceptable to the
Trustee.
10
<PAGE>
"OUTSTANDING", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities deemed to have been paid in accordance with
Section 701; and
(c) Securities which have been paid pursuant to Section 306
or in exchange for or in lieu of which other Securities have
been authenticated and delivered pursuant to this Indenture,
other than any such Securities in respect of which there
shall have been presented to the Trustee proof satisfactory
to it and the Company that such Securities are held by a
bona fide purchaser or purchasers in whose hands such
Securities are valid obligations of the Company;
provided, however, that in determining whether or not the Holders of the
requisite principal amount of the Securities Outstanding under this
Indenture, or the Outstanding Securities of any series, have given any
request, demand, authorization, direction, notice, consent or waiver
hereunder or whether or not a quorum is present at a meeting of Holders of
Securities, Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor
(unless the Company, such Affiliate or such obligor owns all Securities
Outstanding under this Indenture, or (except for purposes of actions to be
taken by Holders of more than one series voting as a class under Section
812) all Outstanding Securities of each such series, as the case may be,
determined without regard to this provision) shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver or upon any such
determination as to the presence of a quorum, only Securities which the
Trustee knows to be so owned shall be so disregarded; provided, however,
that Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Securities
and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor; and
provided, further, that, in the case of any Security the principal of
which is payable from time to time without presentment or surrender, the
principal amount of such Security that shall be deemed to be Outstanding
at any time for all purposes of this Indenture shall be the original
principal amount thereof less the aggregate amount of principal thereof
theretofore paid.
"PAYING AGENT" means any Person, including the Company, authorized by
the Company to pay the principal of, and premium, if any, or interest,
if any, on any Securities on behalf of the Company.
"PERSON" means any individual, corporation, partnership, joint venture,
trust or unincorporated organization or any Governmental Authority.
"PLACE OF PAYMENT", when used with respect to the Securities of any
series, means the place or places, specified as contemplated by Section
301, at which, subject to Section 602, principal of and premium, if
11
<PAGE>
any, and interest, if any, on the Securities of such series are
payable.
"PREDECESSOR SECURITY" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition,
any Security authenticated and delivered under Section 306 in exchange
for or in lieu of a mutilated, destroyed, lost or stolen Security shall
be deemed (to the extent lawful) to evidence the same debt as the
mutilated, destroyed, lost or stolen Security.
"PRINCIPAL PROPERTY" means poles, towers, pole top structures,
conductors, lines, meters, timeswitches, substations, transformers, and
similar types of equipment (excluding all products marketed by the
Company or any of its Subsidiaries) constituting an electric
distribution system.
"REDEMPTION DATE", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to
this Indenture.
"REDEMPTION PRICE", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to
this Indenture.
"REGULAR RECORD DATE" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 301.
"RESPONSIBLE OFFICER", when used with respect to the Trustee, means any
officer of the Trustee assigned by the Trustee to administer its
corporate trust matters.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company which owns
a Principal Property.
"SALE AND LEASE-BACK TRANSACTION" has the meaning specified in Section
609.
"SECURITIES" has the meaning stated in the first recital of this
Indenture and more particularly means any securities authenticated and
delivered under this Indenture.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 305.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest on the
Securities of any series means a date fixed by the Trustee pursuant to
Section 307.
"STATED MATURITY", when used with respect to any obligation or any
installment of principal thereof or interest thereon, means the date on
which the principal of such obligation or such installment of principal
or interest is stated to be due and payable (without regard to any
provisions for redemption, prepayment, acceleration, purchase or
extension).
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<PAGE>
"SUBSIDIARY" means any corporation the majority of whose common stock
is owned by the Company or another Subsidiary.
"TRUST INDENTURE ACT" means, as of any time, the Trust Indenture Act of
1939, or any successor statute, as in effect at such time.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become
such with respect to one or more series of Securities pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall
mean or include each Person who is then a Trustee hereunder, and if at
any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with
respect to Securities of that series.
"UNITED STATES" means the United States of America, its Territories,
its possessions and other areas subject to its political jurisdiction.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Except as otherwise expressly provided in this Indenture, upon
any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the
Company shall, if requested by the Trustee, furnish to the
Trustee an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to
the proposed action (including any covenants compliance with
which constitutes a condition precedent) have been complied
with and an Opinion of Counsel stating that in the opinion of
such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application
or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture
relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall
include:
(a) a statement that each Person signing such certificate or
opinion has read such covenant or condition and the
definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such Person,
such Person has made such examination or investigation as is
necessary to enable such Person to express an informed
opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each such
Person, such condition or covenant has been complied with.
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SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is
not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such
Person may certify or give an opinion with respect to some
matters and one or more other such Persons as to other
matters, and any such Person may certify or give an opinion as
to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel,
unless such officer knows, or in the exercise of reasonable
care should know, that the certificate or opinion or
representations with respect to the matters upon which such
Officer's Certificate or opinion are based are erroneous. Any
such certificate or Opinion of Counsel may be based, insofar
as it relates to factual matters, upon a certificate or
opinion of, or representations by, any officer, employee or
agent of the Company stating that the information with respect
to such factual matters is in the possession of the Company,
unless such counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates,
statements, opinions or other instruments under this
Indenture, they may, but need not, be consolidated and form
one instrument.
Whenever, subsequent to the receipt by the Trustee of any
Board Resolution, Officer's Certificate, Opinion of Counsel or
other document or instrument, a clerical, typographical or
other inadvertent or unintentional error or omission shall be
discovered therein, a new document or instrument may be
substituted therefor in corrected form with the same force and
effect as if originally filed in the corrected form and,
irrespective of the date or dates of the actual execution
and/or delivery thereof, such substitute document or
instrument shall be deemed to have been executed and/or
delivered as of the date or dates required with respect to the
document or instrument for which it is substituted. Anything
in this Indenture to the contrary notwithstanding, if any such
corrective document or instrument indicates that action has
been taken by or at the request of the Company which could not
have been taken had the original document or instrument not
contained such error or omission, the action so taken shall
not be invalidated or otherwise rendered ineffective but shall
be and remain in full force and effect, except to the extent
that such action was a result of willful misconduct or bad
faith. Without limiting the generality of the foregoing, any
Securities issued under the authority of such defective
document or instrument shall nevertheless be the valid
obligations of the Company entitled to the benefits of this
Indenture equally and ratably with all other Outstanding
Securities, except as aforesaid.
SECTION 104. ACTS OF HOLDERS.
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<PAGE>
(a) Any request, demand, authorization, direction, notice,
consent, election, waiver or other action provided by this
Indenture to be made, given or taken by Holders may be
embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person
or by an agent duly appointed in writing or, alternatively,
may be embodied in and evidenced by the record of Holders
voting in favor thereof, either in person or by proxies duly
appointed in writing, at any meeting of Holders duly called
and held in accordance with the provisions of Article
Thirteen, or a combination of such instruments and any such
record. Except as herein otherwise expressly provided, such
action shall become effective when such instrument or
instruments or record or both are delivered to the Trustee
and, where it is hereby expressly required, to the Company.
Such instrument or instruments and any such record (and the
action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing
such instrument or instruments and so voting at any such
meeting. Proof of execution of any such instrument or of a
writing appointing any such agent, or of the holding by any
Person of a Security, shall be sufficient for any purpose of
this Indenture and (subject to Section 901) conclusive in
favor of the Trustee and the Company, if made in the manner
provided in this Section. The record of any meeting of
Holders shall be proved in the manner provided in Section
1306.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of
a witness of such execution or by a certificate of a notary
public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the
execution thereof or may be proved in any other manner which
the Trustee and the Company deem sufficient. Where such
execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The principal amount and serial numbers of Securities
held by any Person, and the date of holding the same, shall
be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice,
consent, election, waiver or other Act of a Holder shall
bind every future Holder of the same Security and the Holder
of every Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by
the Trustee or the Company in reliance thereon, whether or
not notation of such action is made upon such Security.
(e) Until such time as written instruments shall have been
delivered to the Trustee with respect to the requisite
percentage of principal amount of Securities for the action
contemplated by such instruments, any such instrument
executed and delivered by or on behalf of a Holder may be
revoked with respect to any or all of such Securities by
written notice by such Holder or any subsequent Holder,
proven in the manner in which such instrument was proven.
(f) Securities of any series authenticated and delivered
after any Act of Holders may, and shall if required by the
Trustee, bear a notation in form approved by the Trustee as
15
<PAGE>
to any action taken by such Act of Holders. If the Company
shall so determine, new Securities of any series so modified
as to conform, in the opinion of the Trustee and the
Company, to such action may be prepared and executed by the
Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
(g) If the Company shall solicit from Holders any request,
demand, authorization, direction, notice, consent, waiver or
other Act, the Company may, at its option, fix in advance a
record date for the determination of Holders entitled to
give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no
obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record
date, but only the Holders of record at the close of
business on the record date shall be deemed to be Holders
for the purposes of determining whether Holders of the
requisite proportion of the Outstanding Securities have
authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other
Act, and for that purpose the Outstanding Securities shall
be computed as of the record date.
SECTION 105. NOTICES, ETC. TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice,
consent, election, waiver or Act of Holders or other document
provided or permitted by this Indenture to be made upon, given
or furnished to, or filed with, the Trustee by any Holder or
by the Company, or the Company by the Trustee or by any
Holder, shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing and
delivered personally to an officer or other responsible
employee of the addressee, or transmitted by facsimile
transmission or other direct written electronic means to such
telephone number or other electronic communications address as
the parties hereto shall from time to time designate, or
transmitted by certified or registered mail, charges prepaid,
to the applicable address set opposite such party's name below
or to such other address as either party hereto may from time
to time designate:
If to the Trustee, to:
The Bank of New York
Corporate Trust Department
101 Barclay Street, 21 West
New York, New York 10286
Attention: Vice President, Corporate Trust Administration
Telephone: (212) 815-5375
Telecopy: (212) 815-5915
If to the Company, to:
Eastern Energy Limited (ACN 064 651 118)
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<PAGE>
Level 17, 452 Flinders Street
Melbourne, Australia 3000
Attention: Chief Financial Officer
Telephone: (613) 9229-6130
Telecopy: (613) 9229-6112
Any communication contemplated herein shall be deemed to have
been made, given, furnished and filed if personally delivered,
on the date of delivery, if transmitted by facsimile
transmission or other direct written electronic means, on the
date of transmission, and if transmitted by certified or
registered mail, on the date of receipt.
SECTION 106. NOTICE TO HOLDERS OF SECURITIES; WAIVER.
Except as otherwise expressly provided herein, where this
Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given, and shall be deemed given,
to Holders if in writing and mailed, first-class postage
prepaid, to each Holder affected by such event, at the address
of such Holder as it appears in the Security Register, not
later than the latest date, if any, and not earlier than the
earliest date, if any, prescribed for the giving of such
notice.
In case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give
such notice to Holders by mail, then such notification as
shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose
hereunder. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect
in any notice so mailed, to any particular Holder shall affect
the sufficiency of such notice with respect to other Holders.
Any notice required by this Indenture may be waived in writing
by the Person entitled to receive such notice, either before
or after the event otherwise to be specified therein, and such
waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If and only if this Indenture becomes subject to the Trust
Indenture Act: if any provision of this Indenture limits,
qualifies or conflicts with another provision hereof which is
required or deemed to be included in this Indenture by, or is
otherwise governed by, any of the provisions of the Trust
Indenture Act, such other provision shall control; and if any
provision hereof otherwise conflicts with the Trust Indenture
Act, the Trust Indenture Act shall control, if applicable to
this Indenture.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
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<PAGE>
The Article and Section headings in this Indenture and the
Table of Contents are for convenience only and shall not
affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company
and Trustee shall bind their respective successors and
assigns, whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or the Securities
shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or the Securities, express or
implied, shall give to any Person, other than the parties
hereto, their successors hereunder, and the Holders, any
benefit or any legal or equitable right, remedy or claim under
this Indenture.
SECTION 112. GOVERNING LAW.
This Indenture and the Securities shall be governed by and
construed in accordance with the internal laws of the State of
New York without regard to principles of conflicts of laws
thereof; provided, however, that all matters governing the
authorization by the Company of this Indenture and the
Securities will be governed by, and construed in accordance
with, the laws of the State of Victoria, Australia.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security shall not be a Business Day
at any Place of Payment, then (notwithstanding any other
provision of this Indenture or of the Securities other than a
provision in Securities of any series, or in the Board
Resolution or Officer's Certificate which establishes the
terms of the Securities of such series, which specifically
states that such provision shall apply in lieu of this
Section) payment of interest or principal and premium, if any,
need not be made at such Place of Payment on such date, but
may be made on the next succeeding Business Day at such Place
of Payment, in each case with the same force and effect, and
in the same amount, as if made on the Interest Payment Date or
Redemption Date, or at the Stated Maturity, as the case may
be, and, if such payment is made or duly provided for on such
Business Day, no interest shall accrue on the amount so
payable for the period from and after such Interest Payment
Date, Redemption Date or Stated Maturity, as the case may be,
to such Business Day.
SECTION 114. AGENT TO RECEIVE SERVICE OF PROCESS.
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Unless otherwise specified in an Officer's Certificate
delivered to the Trustee, Reid & Priest LLP in New York City
will be the authorized agent of the Company to receive service
of process in the State of New York.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY.
The definitive Securities of each series shall be in
substantially the form or forms thereof established in the
indenture supplemental hereto establishing such series or in a
Board Resolution establishing such series, or in an Officer's
Certificate pursuant to such supplemental indenture or Board
Resolution, in each case with such appropriate insertions,
omissions, substitutions and other variations as are required
or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with
the rules of any securities exchange or as may, consistently
herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities.
If the form or forms of Securities of any series are
established in a Board Resolution or in an Officer's
Certificate pursuant to a Board Resolution, such Board
Resolution and Officer's Certificate, if any, shall be
delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 303 for the
authentication and delivery of such Securities.
Unless otherwise specified as contemplated by Section 301, the
Securities of each series shall be issuable in registered form
without coupons. The definitive Securities shall be produced
in such manner as shall be determined by the officers
executing such Securities, as evidenced by their execution
thereof.
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication shall be in
substantially the form set forth below:
This is one of the Securities of the series
designated therein referred to in the
within-mentioned Indenture.
Dated:
--------------------------
as Trustee
By:
--------------------------------
Authorized Signatory
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ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. Prior to
the authentication and delivery of Securities of any series
there shall be established by specification in a supplemental
indenture or in a Board Resolution, or in an Officer's
Certificate pursuant to a supplemental indenture or a Board
Resolution:
(a) the title of the Securities of such series (which shall
distinguish the Securities of such series from Securities of
all other series);
(b) any limit upon the aggregate principal amount of the
Securities of such series which may be authenticated and
delivered under this Indenture (except for Securities
authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities of
such series pursuant to Section 304, 305, 306, 406 or 1206
and except for any Securities which, pursuant to Section
303, are deemed never to have been authenticated and
delivered hereunder);
(c) the Person or Persons (without specific identification)
to whom interest on Securities of such series shall be
payable on any Interest Payment Date, if other than the
Persons in whose names such Securities (or one or more
Predecessor Securities) are registered at the close of
business on the Regular Record Date for such interest;
(d) the date or dates on which the principal of the
Securities of such series is payable or any formulary or
other method or other means by which such date or dates
shall be determined, by reference or otherwise (without
regard to any provisions for redemption, prepayment,
acceleration, purchase or extension);
(e) the rate or rates at which the Securities of such series
shall bear interest, if any (including the rate or rates at
which overdue principal shall bear interest, if different
from the rate or rates at which such Securities shall bear
interest prior to Maturity, and, if applicable, the rate or
rates at which overdue premium or interest shall bear
interest, if any), or any formulary or other method or other
means by which such rate or rates shall be determined, by
reference or otherwise; the date or dates from which such
interest shall accrue; the Interest Payment Dates on which
such interest shall be payable and the Regular Record Date,
if any, for the interest payable on such Securities on any
Interest Payment Date; and the basis of computation of
interest, if other than as provided in Section 310;
(f) the place or places at which or methods by which (i) the
principal of and premium, if any, and interest, if any, on
Securities of such series shall be payable, (ii)
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registration of transfer of Securities of such series may be
effected, (iii) exchanges of Securities of such series may
be effected and (iv) notices and demands to or upon the
Company in respect of the Securities of such series and this
Indenture may be served; the Security Registrar for such
series; and if such is the case, that the principal of such
Securities shall be payable without presentment or surrender
thereof;
(g) the period or periods within which, or the date or dates
on which, the price or prices at which and the terms and
conditions, if other than as provided in Article Four, upon
which the Securities of such series may be redeemed, in
whole or in part, at the option of the Company and any
restrictions on such redemptions, including but not limited
to a restriction on a partial redemption by the Company of
the Securities of any series, resulting in delisting of such
Securities from any national exchange;
(h) the obligation or obligations, if any, of the Company to
redeem or purchase the Securities of such series pursuant to
any sinking fund or other mandatory redemption provisions or
at the option of a Holder thereof and the period or periods
within which or the date or dates on which, the price or
prices at which and the terms and conditions upon which such
Securities shall be redeemed or purchased, in whole or in
part, pursuant to such obligation, and applicable exceptions
to the requirements of Section 404 in the case of mandatory
redemption or redemption at the option of the Holder;
(i) the denominations in which Securities of such series
shall be issuable if other than denominations of One Hundred
Thousand Dollars ($100,000) and any integral multiple of One
Thousand Dollars ($1,000) in excess thereof;
(j) the currency or currencies, including composite
currencies, in which payment of the principal of and
premium, if any, and interest, if any, on the Securities of
such series shall be payable (if other than in Dollars);
(k) if the principal of or premium, if any, or interest, if
any, on the Securities of such series are to be payable, at
the election of the Company or a Holder thereof, in a coin
or currency other than that in which the Securities are
stated to be payable, the period or periods within which and
the terms and conditions upon which, such election may be
made;
(l) if the principal of or premium, if any, or interest, if
any, on the Securities of such series are to be payable, or
are to be payable at the election of the Company or a Holder
thereof, in securities or other property, the type and
amount of such securities or other property, or the
formulary or other method or other means by which such
amount shall be determined, and the period or periods within
which, and the terms and conditions upon which, any such
election may be made;
(m) if the amount payable in respect of principal of or
premium, if any, or interest, if any, on the Securities of
such series may be determined with reference to an index or
other fact or event ascertainable outside this Indenture,
the manner in which such amounts shall be determined to the
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extent not established pursuant to clause (e) of this
paragraph;
(n) if other than the principal amount thereof, the portion
of the principal amount of Securities of such series which
shall be payable upon declaration of acceleration of the
Maturity thereof pursuant to Section 802;
(o) any Events of Default, in addition to those specified in
Section 801, with respect to the Securities of such series,
and any covenants of the Company for the benefit of the
Holders of the Securities of such series, in addition to
those set forth in Article Six;
(p) the terms, if any, pursuant to which the Securities of
such series may be converted into or exchanged for shares of
Capital Stock or other securities of the Company or any
other Person;
(q) the obligations or instruments, if any, which shall be
considered to be Government Obligations in respect of the
Securities of such series denominated in a currency other
than Dollars or in a composite currency, and any additional
or alternative provisions for the reinstatement of the
Company's indebtedness in respect of such Securities after
the satisfaction and discharge thereof as provided in
Section 701;
(r) if the Securities of such series are to be issued in
global form, (i) any limitations on the rights of the Holder
or Holders of such Securities to transfer or exchange the
same or to obtain the registration of transfer thereof, (ii)
any limitations on the rights of the Holder or Holders
thereof to obtain certificates therefor in lieu of global
form and (iii) any and all other matters incidental to such
Securities;
(s) if the Securities of such series are to be issuable as
bearer securities, any and all matters incidental thereto
which are not specifically addressed in a supplemental
indenture as contemplated by clause (g) of Section 1201;
(t) to the extent not established pursuant to clause (r) of
this paragraph, any limitations on the rights of the Holders
of the Securities of such Series to transfer or exchange
such Securities or to obtain the registration of transfer
thereof; and if a service charge will be made for the
registration of transfer or exchange of Securities of such
series the amount or terms thereof;
(u) any exceptions to Section 113, or variation in the
definition of Business Day, with respect to the Securities
of such series;
(v) any collateral security, insurance or guarantee for
the Securities of such series;
(w) any rights or duties of another Person to assume the
obligations of the Company with respect to the Securities of
such series (whether as joint obligor, primary obligor,
secondary obligor or substitute obligor) and any rights or
duties to discharge and release any obligor with respect to
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the Securities of such series or this Indenture to the
extent related to such series;
(x) any rights to change or eliminate any provision of this
Indenture or to add any new provision to this Indenture (by
supplemental indenture or otherwise) without the consent of
the Holders of the Securities of such series or with the
consent of the Holders of the Securities of such series as
specified for such series;
(y) the agent to receive service of process in the State of
New York, if other than Reid & Priest LLP in New York City;
and
(z) any other terms of the Securities of such series not
inconsistent with the provisions of this Indenture.
SECTION 302. DENOMINATIONS.
Unless otherwise provided as contemplated by Section 301 with
respect to any series of Securities, the Securities of each
series shall be issuable in denominations of One Hundred
Thousand Dollars ($100,000) and any integral multiple of One
Thousand Dollars ($1,000) in excess thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
Unless otherwise provided as contemplated by Section 301 with
respect to any series of Securities, the Securities shall be
executed on behalf of the Company by an Authorized Officer and
may have the corporate seal of the Company affixed thereto or
reproduced thereon attested by any other Authorized Officer or
by the Secretary or an Assistant Secretary of the Company. The
signature of any or all of these officers on the Securities
may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at the time of execution Authorized
Officers or the Secretary or an Assistant Secretary of the
Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices
prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
The Trustee shall authenticate and deliver Securities of a
series, for original issue, at one time or from time to time
in accordance with the Company Order referred to below, upon
receipt by the Trustee of:
(a) the instrument or instruments establishing the form or
forms and terms of such series, as provided in Sections
201 and 301;
(b) a Company Order requesting the authentication and
delivery of such Securities and, to the extent that the
terms of such Securities shall not have been established in
an indenture supplemental hereto or in a Board Resolution,
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or in an Officer's Certificate pursuant to a supplemental
indenture or Board Resolution, all as contemplated by
Sections 201 and 301, establishing such terms;
(c) the Securities of such series, executed on behalf of
the Company by an Authorized Officer;
(d) an Opinion of Counsel to the effect that:
(i) the form or forms of such Securities have been
duly authorized by the Company and have been
established in conformity with the provisions of
this Indenture;
(ii) the terms of such Securities have been duly
authorized by the Company and have been established
in conformity with the provisions of this
Indenture; and
(iii) such Securities, when authenticated and
delivered by the Trustee and issued and delivered
by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel,
will have been duly issued under this Indenture and
will constitute valid and legally binding
obligations of the Company, entitled to the
benefits provided by this Indenture, and
enforceable in accordance with their terms,
subject, as to enforcement, to laws relating to or
affecting generally the enforcement of creditors'
rights, including, without limitation, bankruptcy
and insolvency laws and to general principles of
equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
If the form or terms of the Securities of any series have been
established by or pursuant to a Board Resolution or an
Officer's Certificate as permitted by Sections 201 or 301, the
Trustee shall not be required to authenticate such Securities
if the issuance of such Securities pursuant to this Indenture
will materially or adversely affect the Trustee's own rights,
duties or immunities under the Securities and this Indenture
or otherwise in a manner which is not reasonably acceptable to
the Trustee.
Unless otherwise specified as contemplated by Section 301 with
respect to any series of Securities, each Security shall be
dated the date of its authentication.
Unless otherwise specified as contemplated by Section 301 with
respect to any series of Securities, no Security shall be
entitled to any benefit under this Indenture or be valid or
obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the
form provided for herein executed by the Trustee or an
Authenticating Agent by manual signature, and such certificate
upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and
delivered hereunder and is entitled to the benefits of this
Indenture. Notwithstanding the foregoing, if any Security
shall have been authenticated and delivered hereunder to the
Company, or any Person acting on its behalf, but shall never
have been issued and sold by the Company, and the Company
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<PAGE>
shall deliver such Security to the Trustee for cancellation as
provided in Section 309 together with a written statement
(which need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel) stating that such
Security has never been issued and sold by the Company, for
all purposes of this Indenture such Security shall be deemed
never to have been authenticated and delivered hereunder and
shall never be entitled to the benefits hereof.
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any
series, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Securities
which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in
lieu of which they are issued, with such appropriate
insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as
evidenced by their execution of such Securities; provided,
however, that temporary Securities need not recite specific
redemption, sinking fund, conversion or exchange provisions.
Unless otherwise specified as contemplated by Section 301 with
respect to the Securities of any series, after the preparation
of definitive Securities of such series, the temporary
Securities of such series shall be exchangeable, without
charge to the Holder thereof, for definitive Securities of
such series upon surrender of such temporary Securities at the
office or agency of the Company maintained pursuant to Section
602 in a Place of Payment for such Securities. Upon such
surrender of temporary Securities for such exchange, the
Company shall, except as aforesaid, execute and the Trustee
shall authenticate and deliver in exchange therefor definitive
Securities of the same series, of authorized denominations and
of like tenor and aggregate principal amount.
Until exchanged in full as hereinabove provided, the temporary
Securities of any series shall in all respects be entitled to
the same benefits under this Indenture as definitive
Securities of the same series and of like tenor authenticated
and delivered hereunder.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept in each office designated
pursuant to Section 602, with respect to the Securities of
each series, a register (all registers kept in accordance with
this Section being collectively referred to as the "Security
Register") in which, subject to such reasonable regulations as
it may prescribe, the Company shall provide for the
registration of Securities of such series and the registration
of transfer thereof. The Company shall designate one Person to
maintain the Security Register for the Securities of each
series on a consolidated basis, and such Person is referred to
herein, with respect to such series, as the "Security
Registrar." Anything herein to the contrary notwithstanding,
the Company may designate one or more of its offices as an
office in which a register with respect to the Securities of
one or more series shall be maintained, and the Company may
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designate itself the Security Registrar with respect to one or
more of such series. The Security Register shall be open for
inspection by the Trustee and the Company at all reasonable
times.
Except as otherwise specified as contemplated by Section 301
with respect to the Securities of any series, upon surrender
for registration of transfer of any Security of such series at
the office or agency of the Company maintained pursuant to
Section 602 in a Place of Payment for such series, the Company
shall execute, and the Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one
or more new Securities of the same series, of authorized
denominations and of like tenor and aggregate principal
amount.
Except as otherwise specified as contemplated by Section 301
with respect to the Securities of any series, any Security of
such series may be exchanged at the option of the Holder, for
one or more new Securities of the same series, of authorized
denominations and of like tenor and aggregate principal
amount, upon surrender of the Securities to be exchanged at
any such office or agency. Whenever any Securities are so
surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
All Securities delivered upon any registration of transfer or
exchange of Securities shall be valid obligations of the
Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered
upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company,
the Trustee or the Security Registrar) be duly endorsed or
shall be accompanied by a written instrument of transfer in
form satisfactory to the Company, the Trustee or the Security
Registrar, as the case may be, duly executed by the Holder
thereof or his attorney duly authorized in writing.
Unless otherwise specified as contemplated by Section 301 with
respect to Securities of any series, no service charge shall
be made for any registration of transfer or exchange of
Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer
or exchange of Securities, other than exchanges pursuant to
Section 304, 406 or 1206 not involving any transfer.
The Company shall not be required to execute or to provide for
the registration of transfer of or the exchange of (a)
Securities of any series during a period of 15 days
immediately preceding the date of the mailing of any notice of
redemption of such Securities called for redemption or (b) any
Security so selected for redemption in whole or in part,
except the unredeemed portion of any Security being redeemed
in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
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If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Security of the same
series, and of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (a)
evidence to their satisfaction of the ownership of and the
destruction, loss or theft of any Security and (b) such
security or indemnity as may be reasonably required by them to
save each of them and any agent of either of them harmless,
then, in the absence of notice to the Company or the Trustee
that such Security is held by a Person purporting to be the
owner of such Security, the Company shall execute and the
Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Security, a new Security of the same
series, and of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
Notwithstanding the foregoing, in case any such mutilated,
destroyed, lost or stolen Security has become or is about to
become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this
Section in lieu of any destroyed, lost or stolen Security
shall constitute an original additional contractual obligation
of the Company, whether or not the destroyed, lost or stolen
Security shall be at any time enforceable by anyone other than
the Holder of such new Security, and any such new Security
shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Securities
of such series duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Unless otherwise specified as contemplated by Section 301 with
respect to the Securities of any series, interest on any
Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to
the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest.
Any interest on any Security of any series which is payable,
but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest")
shall forthwith cease to be payable to the Holder on the
related Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the
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Company, at its election in each case, as provided in clause
(a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of
such series (or their respective Predecessor Securities) are
registered at the close of business on a date (herein called
a "Special Record Date") for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security of
such series and the date of the proposed payment, and at the
same time the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit on
or prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than
10 days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at
the expense of the Company, shall promptly cause notice of
the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder of Securities of such series
at the address of such Holder as it appears in the Security
Register, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons
in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the
close of business on such Special Record Date.
(b) The Company may make payment of any Defaulted Interest
on the Securities of any series in any other lawful manner
not inconsistent with the requirements of any securities
exchange on which such Securities may be listed, and upon
such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and
Section 305, each Security delivered under this Indenture upon
registration of transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other
Security.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the
Company or the Trustee may treat the Person in whose name such
Security is registered as the absolute owner of such Security
for the purpose of receiving payment of principal of and
premium, if any, and (subject to Sections 305 and 307)
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interest, if any, on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and
neither the Company, the Trustee nor any agent of the Company
or the Trustee shall be affected by notice to the contrary.
SECTION 309. CANCELLATION BY SECURITY REGISTRAR.
All Securities surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to
any Person other than the Security Registrar, be delivered to
the Security Registrar and, if not theretofore canceled, shall
be promptly canceled by the Security Registrar. The Company
may at any time deliver to the Security Registrar for
cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any
manner whatsoever or which the Company shall not have issued
and sold, and all Securities so delivered shall be promptly
canceled by the Security Registrar. No Securities shall be
authenticated in lieu of or in exchange for any Securities
canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Securities held by
the Security Registrar shall be disposed of in accordance with
a Company Order delivered to the Security Registrar and the
Trustee, and the Security Registrar shall promptly deliver a
certificate of disposition to the Trustee and the Company
unless, by a Company Order, similarly delivered, the Company
shall direct that canceled Securities be returned to it. The
Security Registrar shall promptly deliver evidence of any
cancellation of a Security in accordance with this Section 309
to the Trustee and the Company.
SECTION 310. COMPUTATION OF INTEREST.
Except as otherwise specified as contemplated by Section 301
for Securities of any series, interest on the Securities of
each series shall be computed on the basis of a 360-day year
consisting of twelve 30-day months and for any period shorter
than a full month, on the basis of the actual number of days
elapsed in such period.
SECTION 311. ADDITIONAL AMOUNTS.
All payments of, or in respect of, principal of, and any
interest on, the Securities of the First Series shall be made
without withholding or deduction for, or on account of, any
present or future taxes, duties, assessments or governmental
charges of whatever nature imposed or levied by or on behalf
of Australia or any political subdivision or taxing authority
thereof or therein, unless such taxes, duties, assessments or
governmental charges are required by Australia or any
political subdivision or taxing authority thereof or therein
to be withheld or deducted. In that event, the Company will
pay such additional amounts of, or in respect of, principal
of, and any interest on, such Securities ("Additional
Amounts") as will result (after deduction of such taxes,
duties, assessments or governmental charges and any additional
taxes, duties, assessments or governmental charges payable in
respect of such payment) in the payment to the Holder of such
Security of the amounts which would have been payable in
respect of such Security had no such withholding or deduction
been required, except that no Additional Amounts shall be so
payable for or on account of:
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(a) any tax, duty, assessment or other governmental charge
that would not have been imposed but for the fact that such
Holder
(i) was a resident, domiciliary or national of, or
engaged in business or maintained a permanent
establishment or was physically present in,
Australia or otherwise has some connection with
Australia other than the mere ownership of, or
receipt of payment under, such Security; or
(ii) presented such Security for payment in
Australia, unless such Security could not have been
presented for payment elsewhere; or
(iii) presented such Security more than 30 days
after the date on which the payment in respect of
such Security first became due and payable or
provided for, whichever is later, except to the
extent that the Holder would have been entitled to
such Additional Amounts if it had presented such
Security for payment on any day within such period
of 30 days; or
(b) any estate, inheritance, gift, sales, transfer,
personal property or similar tax, assessment or other
governmental charge;
(c) any tax, assessment or other governmental charge which
is payable otherwise than by withholding from payments of
(or in respect of) principal of, or any interest on such
Securities;
(d) any withholding or deduction from payments to an
Australian resident which would not have been required if
the Holder had provided the Company with a tax file number,
within the meaning of the Income Tax Assessment Act, 1936
(Commonwealth of Australia), prior to the payment from which
such withholding or deduction is made;
(e) any tax, assessment or other governmental charge that is
imposed or withheld by reason of the failure to comply by
the Holder or the beneficial owner of such Security with a
request of the Company addressed to such Holder
(i) to provide information concerning the
nationality, residence or identity of such Holder
or such beneficial owner, or
(ii) to make any declaration or other similar claim
or satisfy any information or reporting
requirements, which, in the case of (i) or (ii), is
required or imposed by a statute, treaty,
regulation or administrative practice of the taxing
jurisdiction as a precondition to exemption from
all or part of such tax, assessment or other
governmental charge; or
(f) any combination of items (a), (b), (c), (d) and (e); nor
shall Additional Amounts be paid with respect to any payment
of, or in respect of, the principal of, or any interest on,
any such Security to any such Holder who is a fiduciary or
partnership or other than the sole beneficial owner of such
payment to the extent such payment would be required by the
laws of Australia or any political subdivision or taxing
authority thereof or therein to be included in the income
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for tax purposes of a beneficiary or settlor with respect to
such fiduciary or a member of such partnership or a
beneficial owner who would not have been entitled to such
Additional Amounts had it been the Holder of such Security.
Whenever there is mentioned, in any context, the payment
of the principal of, or any interest on, or in respect of,
any such Security, such mention shall be deemed to include
mention of the payment of Additional Amounts provided for
in this Indenture to the extent that, in such context,
Additional Amounts are, were or would be payable in
respect thereof pursuant to this Indenture.
As to any Additional Amounts provided for in this
Indenture, the Trustee shall be entitled to receive and
shall be fully protected in relying upon an Officer's
Certificate setting forth the amount of such Additional
Amounts, and the Trustee shall not be required to verify
the calculation of such Additional Amounts.
ARTICLE FOUR
REDEMPTION OF SECURITIES
SECTION 401. APPLICABILITY OF ARTICLE.
Securities of any series which are redeemable before their
Stated Maturity shall be redeemable in accordance with
their terms and (except as otherwise specified as
contemplated by Section 301 for Securities of such series)
in accordance with this Article.
SECTION 402. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall
be evidenced by a Board Resolution or an Officer's
Certificate. The Company shall, at least 45 days prior to
the Redemption Date fixed by the Company (unless a shorter
notice shall be satisfactory to the Trustee), notify the
Trustee in writing of such Redemption Date and of the
principal amount of such Securities to be redeemed. In the
case of any redemption of Securities (a) prior to the
expiration of any restriction on such redemption provided
in the terms of such Securities or elsewhere in this
Indenture or (b) pursuant to an election of the Company
which is subject to a restriction or condition specified
in the terms of such Securities, the Company shall furnish
the Trustee with an Officer's Certificate evidencing
compliance with such restriction or condition.
SECTION 403. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all the Securities of any series are to be
redeemed, the particular Securities to be redeemed shall
be selected by the Trustee from the Outstanding Securities
of such series not previously called for redemption, by
such method as shall be provided for any particular
series, or, in the absence of any such provision, by such
method as the Trustee shall deem fair and appropriate and
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which may provide for the selection for redemption of
portions (equal to the minimum authorized denomination for
Securities of such series or any integral multiple
thereof) of the principal amount of Securities of such
series of a denomination larger than the minimum
authorized denomination for Securities of such series;
provided, however, that if, as indicated in an Officer's
Certificate, the Company shall have offered to purchase
all or any principal amount of the Securities then
Outstanding of any series, and less than all of such
Securities as to which such offer was made shall have been
tendered to the Company for such purchase, the Trustee, if
so directed by Company Order, shall select for redemption
all or any principal amount of such Securities which have
not been so tendered.
The Trustee shall promptly notify the Company and the
Security Registrar in writing of the Securities selected
for redemption and, in the case of any Securities selected
to be redeemed in part, the principal amount thereof to be
redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the
redemption of Securities shall relate, in the case of any
Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which
has been or is to be redeemed.
SECTION 404. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided
in Section 106 to the Holders of the Securities to be
redeemed not less than 30 nor more than 60 days prior to
the Redemption Date.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the Securities of any series are to be
redeemed, the identification of the particular Securities to
be redeemed and the portion of the principal amount of any
Security to be redeemed in part,
(d) that on the Redemption Date the Redemption Price,
together with accrued interest, if any, to the Redemption
Date, will become due and payable upon each such Security to
be redeemed and, if applicable, that interest thereon will
cease to accrue on and after said date,
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price and accrued
interest, if any, unless it shall have been specified as
contemplated by Section 301 with respect to such Securities
that such surrender shall not be required,
(f) that the redemption is for a sinking or other fund,
if such is the case, and
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(g) such other matters as the Company shall deem desirable
or appropriate.
Unless otherwise specified with respect to any Securities in
accordance with Section 301, with respect to any notice of
redemption of Securities at the election of the Company,
unless, upon the giving of such notice, such Securities shall
be deemed to have been paid in accordance with Section 701,
such notice may state that such redemption shall be
conditional upon the receipt by the Paying Agent or Agents for
such Securities, on or prior to the date fixed for such
redemption, of money sufficient to pay the principal of and
premium, if any, and interest, if any, on such Securities and
that if such money shall not have been so received such notice
shall be of no force or effect and the Company shall not be
required to redeem such Securities. In the event that such
notice of redemption contains such a condition and such money
is not so received, the redemption shall not be made and
within a reasonable time thereafter notice shall be given, in
the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not
required to be made, and the Paying Agent or Agents for the
Securities otherwise to have been redeemed shall promptly
return to the Holders thereof any of such Securities which had
been surrendered for payment upon such redemption.
Notice of redemption of Securities to be redeemed at the
election of the Company, and any notice of non-satisfaction of
a condition for redemption as aforesaid, shall be given by the
Company or, at the Company's request, by the Trustee in the
name and at the expense of the Company. Notice of mandatory
redemption of Securities shall be given by the Trustee in the
name and at the expense of the Company.
SECTION 405. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, and the
conditions, if any, set forth in such notice having been
satisfied, the Securities or portions thereof so to be
redeemed shall, on the Redemption Date, become due and payable
at the Redemption Price therein specified, and from and after
such date (unless, in the case of an unconditional notice of
redemption, the Company shall default in the payment of the
Redemption Price and accrued interest, if any) such Securities
or portions thereof, if interest-bearing, shall cease to bear
interest. Upon surrender of any such Security for redemption
in accordance with such notice, such Security or portion
thereof shall be paid by the Company at the Redemption Price,
together with accrued interest, if any, to the Redemption
Date; provided, however, that no such surrender shall be a
condition to such payment if so specified as contemplated by
Section 301 with respect to such Security; and provided,
further, that except as otherwise specified as contemplated by
Section 301 with respect to such Security, any installment of
interest on any Security the Stated Maturity of which
installment is on or prior to the Redemption Date shall be
payable to the Holder of such Security, or one or more
Predecessor Securities, registered as such at the close of
business on the related Regular Record Date according to the
terms of such Security and subject to the provisions of
Section 307.
SECTION 406. SECURITIES REDEEMED IN PART.
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Upon the surrender of any Security which is to be redeemed
only in part at a Place of Payment therefor (with, if the
Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing), the Company shall
execute, and the Trustee shall authenticate and deliver to the
Holder of such Security, without service charge, a new
Security or Securities of the same series, of any authorized
denomination requested by such Holder and of like tenor and in
aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so
surrendered.
ARTICLE FIVE
SINKING FUNDS
SECTION 501. APPLICABILITY OF ARTICLE.
The provisions of this Article shall be applicable to any
sinking fund for the retirement of the Securities of any
series, except as otherwise specified as contemplated by
Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as
a "mandatory sinking fund payment", and any payment in excess
of such minimum amount provided for by the terms of Securities
of any series is herein referred to as an "optional sinking
fund payment". If provided for by the terms of Securities of
any series, the cash amount of any mandatory sinking fund
payment may be subject to reduction as provided in Section
502. Each sinking fund payment shall be applied to the
redemption of Securities of the series in respect of which it
was made as provided for by the terms of such Securities.
SECTION 502. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company (a) may deliver to the Trustee Outstanding
Securities (other than any previously called for redemption)
of a series in respect of which a mandatory sinking fund
payment is to be made and (b) may apply as a credit Securities
of such series which have been redeemed either at the election
of the Company pursuant to the terms of such Securities or
through the application of permitted optional sinking fund
payments pursuant to the terms of such Securities or
Outstanding Securities purchased by the Company, in each case
in satisfaction of all or any part of such mandatory sinking
fund payment with respect to the Securities of such series;
provided, however, that no Securities shall be applied in
satisfaction of a mandatory sinking fund payment if such
Securities shall have been previously so applied. Securities
so applied shall be received and credited for such purpose by
the Trustee at the Redemption Price specified in such
Securities for redemption through operation of the sinking
fund and the amount of such mandatory sinking fund payment
shall be reduced accordingly.
SECTION 503. REDEMPTION OF SECURITIES FOR SINKING FUND.
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Not less than 45 days prior to each sinking fund payment date
for the Securities of any series, the Company shall deliver to
the Trustee an Officer's Certificate specifying:
(a) the amount of the next succeeding mandatory sinking
fund payment for such series;
(b) the amount, if any, of the optional sinking fund payment
to be made together with such mandatory sinking fund
payment;
(c) the aggregate sinking fund payment;
(d) the portion, if any, of such aggregate sinking fund
payment which is to be satisfied by the payment of cash; and
(e) the portion, if any, of such aggregate sinking fund
payment which is to be satisfied by delivering and crediting
Securities of such series pursuant to Section 502 and
stating the basis for such credit and that such Securities
have not previously been so credited, and the Company shall
also deliver to the Trustee any Securities to be so
delivered. If the Company shall not deliver such Officer's
Certificate, the next succeeding sinking fund payment for
such series shall be made entirely in cash in the amount of
the mandatory sinking fund payment. Not less than 30 days
before each such sinking fund payment date the Trustee shall
select the Securities to be redeemed upon such sinking fund
payment date in the manner specified in Section 403 and
cause notice of the redemption thereof to be given in the
name of and at the expense of the Company in the manner
provided in Section 404. Such notice having been duly given,
the redemption of such Securities shall be made upon the
terms and in the manner stated in Sections 405 and 406.
ARTICLE SIX
COVENANTS
SECTION 601. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company shall pay the principal of and premium, if any,
and interest, if any, on the Securities of each series in
accordance with the terms of such Securities and this
Indenture.
SECTION 602. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in each Place of Payment for the
Securities of each series an office or agency where payment of
such Securities shall be made, where the registration of
transfer or exchange of such Securities may be effected and
where notices and demands to or upon the Company in respect of
such Securities and this Indenture may be served. The Company
shall give prompt written notice to the Trustee of the
location, and any change in the location, of each such office
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or agency and prompt notice to the Holders of any such change
in the manner specified in Section 106. If at any time the
Company shall fail to maintain any such required office or
agency in respect of Securities of any series, or shall fail
to furnish the Trustee with the address thereof, payment of
such Securities shall be made, registration of transfer or
exchange thereof may be effected and notices and demands in
respect thereof may be served at the Corporate Trust Office of
the Trustee, and the Company hereby appoints the Trustee as
its agent for all such purposes in any such event.
The Company may also from time to time designate one or more
other offices or agencies with respect to the Securities of
one or more series, for any or all of the foregoing purposes
and may from time to time rescind such designations; provided,
however, that, unless otherwise specified as contemplated by
Section 301 with respect to the Securities of such series, no
such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency for
such purposes in each Place of Payment for such Securities in
accordance with the requirements set forth above. The Company
shall give prompt written notice to the Trustee, and prompt
notice to the Holders in the manner specified in Section 106,
of any such designation or rescission and of any change in the
location of any such other office or agency.
Anything herein to the contrary notwithstanding, any office or
agency required by this Section may be maintained at an office
of the Company, in which event the Company shall perform all
functions to be performed at such office or agency.
SECTION 603. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent
with respect to the Securities of any series, it shall, on or
before each due date of the principal of and premium, if any,
and interest, if any, on any of such Securities, segregate and
hold in trust for the benefit of the Persons entitled thereto
a sum sufficient to pay the principal and premium or interest
so becoming due until such sums shall be paid to such Persons
or otherwise disposed of as herein provided. The Company shall
promptly notify the Trustee of any failure by the Company (or
any other obligor on such Securities) to make any payment of
principal of or premium, if any, or interest, if any, on such
Securities.
Whenever the Company shall have one or more Paying Agents for
the Securities of any series, it shall, on or before each due
date of the principal of and premium, if any, and interest, if
any, on such Securities, deposit with such Paying Agents sums
sufficient (without duplication) to pay the principal and
premium or interest so becoming due, such sum to be held in
trust for the benefit of the Persons entitled to such
principal, premium or interest, and (unless such Paying Agent
is the Trustee) the Company shall promptly notify the Trustee
of any failure by it so to act.
The Company shall cause each Paying Agent for the Securities
of any series, other than the Company or the Trustee, to
execute and deliver to the Trustee an instrument in which such
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Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent shall:
(a) hold all sums held by it for the payment of the
principal of and premium, if any, or interest, if any, on
such Securities in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any failure by the Company
(or any other obligor upon such Securities) to make any
payment of principal of or premium, if any, or interest, if
any, on such Securities; and
(c) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to
the Trustee all sums so held in trust by such Paying Agent
and furnish to the Trustee such information as it possesses
regarding the names and addresses of the Persons entitled to
such sums.
The Company may at any time pay, or by Company Order direct
any Paying Agent to pay, to the Trustee all sums held in trust
by the Company or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums
were held by the Company or such Paying Agent and, if so
stated in a Company Order delivered to the Trustee, in
accordance with the provisions of Article Seven; and, upon
such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the
principal of and premium, if any, or interest, if any, on any
Security and remaining unclaimed for two years after such
principal and premium, if any, or interest has become due and
payable shall be paid to the Company on Company Request, or,
if then held by the Company, shall be discharged from such
trust; and, upon such payment or discharge, the Holder of such
Security shall, as an unsecured general creditor and not as a
Holder of an Outstanding Security, look only to the Company
for payment of the amount so due and payable and remaining
unpaid, and all liability of the Trustee or such Paying Agent
with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being
required to make any such payment to the Company, may at the
expense of the Company cause to be mailed, on one occasion
only, notice to such Holder that such money remains unclaimed
and that, after a date specified therein, which shall not be
less than 30 days from the date of such mailing, any unclaimed
balance of such money then remaining will be paid to the
Company.
SECTION 604. CORPORATE EXISTENCE.
Subject to the rights of the Company under Article Eleven, the
Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate
existence.
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SECTION 605. MAINTENANCE OF PROPERTIES.
The Company shall cause (or, with respect to property owned in
common with others, make reasonable effort to cause) all its
properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working
order and shall cause (or, with respect to property owned in
common with others, make reasonable effort to cause) to be
made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as, in the judgment
of the Company, may be necessary so that the business carried
on in connection therewith may be properly conducted;
provided, however, that nothing in this Section shall prevent
the Company from discontinuing, or causing the discontinuance
of, the operation and maintenance of any of its properties if
such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business.
SECTION 606. ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.
Not later than November 1 in each year, commencing November 1,
1997, the Company shall deliver to the Trustee an Officer's
Certificate which need not comply with Section 102, executed
by the principal executive officer, the principal financial
officer or the principal accounting officer of the Company, as
to such officer's knowledge of the Company's compliance with
all conditions and covenants under this Indenture, such
compliance to be determined without regard to any period of
grace or requirement of notice under this Indenture.
SECTION 607. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply
with any term, provision or condition set forth in
(a) any covenant or restriction specified with respect to
the Securities of any one or more series, as contemplated by
Section 301, if before the time for such compliance the
Holders of at least a majority in aggregate principal amount
of the Outstanding Securities of all series with respect to
which compliance with such covenant or restriction is to be
omitted, considered as one class, shall, by Act of such
Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or
condition; provided, however, that no such waiver shall be
effective as to any of the matters contemplated in clause
(a), (b) or (c) in Section 1202 without the consent of the
Holders specified in such clause; and
(b) Section 604, 605 or Article Eleven if before the time
for such compliance the Holders of at least a majority in
principal amount of Securities Outstanding under this
Indenture shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance
with such term, provision or condition;
but, in the case of (a) or (b), no such waiver shall extend to or affect
such term, provision or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the obligations of
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the Company and the duties of the Trustee in respect of any such term,
provision or condition shall remain in full force and effect.
SECTION 608. RESTRICTIONS ON SECURED DEBT.
So long as the Securities of the First Series remain
Outstanding, neither the Company nor any Restricted Subsidiary
may create, assume or guarantee any Debt secured by a Mortgage
on any Principal Property owned by the Company or a Subsidiary
or on any shares of Capital Stock or Debt issued by any
Restricted Subsidiary and held by the Company or any
Subsidiary, unless the Company also secures, or causes such
Restricted Subsidiary to secure, the Securities (and, if the
Company so elects, any other Debt of the Company or such
Restricted Subsidiary which is not subordinate to the
Securities) equally and ratably with (or prior to) such
secured Debt, so long as such secured Debt shall be so
secured, unless after giving effect thereto the aggregate
amount of all such secured Debt, together with all
Attributable Debt of the Company and its Restricted
Subsidiaries in respect of Sale and Lease-Back Transactions
(other than those described in clause (a) of Section 609)
would not exceed 10% of Consolidated Net Tangible Assets.
This restriction will not apply to, and there will be excluded
in computing secured Debt for the purpose of such restriction,
Debt secured by
(a) Mortgages existing on the date of this Indenture;
(b) Mortgages on any property, shares of Capital Stock or
Debt existing at the time of acquisition thereof or
Mortgages on property acquired after the date of this
Indenture to secure the payment of all or any part of the
purchase price or construction cost of such property,
including any improvements to such property, or to secure
any Debt incurred no later than one year after, the
acquisition or completion of construction of property for
the purpose of financing all or any part of the purchase
price or construction cost thereof, provided that such
Mortgage only extend to such property (together with
improvements thereto and renewals and replacements thereof),
shares of Capital Stock or Debt;
(c) Mortgages on property of, or on any shares of Capital
Stock or Debt of, any corporation existing at the time such
corporation becomes a Restricted Subsidiary, provided that
such Mortgage only extend to such property (together with
improvements thereto and renewals and replacements thereof),
shares of Capital Stock or Debt;
(d) Mortgages in favor of the Company or a Restricted
Subsidiary, other than a Mortgage from the Company in
favor of a Restricted Subsidiary;
(e) Mortgages under workers' compensation laws, unemployment
insurance laws or similar legislation; Mortgages incurred in
the ordinary course of business to secure surety or appeal
bonds to which the Company or any Restricted Subsidiary is a
party or in lieu of such bonds; Mortgages imposed by law in
favor of governmental entities for other than taxes,
assessments or other applicable governmental charges or
levies;
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(f) any Mortgage securing taxes or assessments or franchise
fees or license fees or other applicable governmental
charges or levies, including sales taxes, value added taxes
and customs and excise taxes and duties that either
(i) are not yet delinquent by more than 30 days,
or
(ii) are being contested in good faith by
appropriate proceedings and as to which appropriate
reserves or provisions, if any, as are required in
accordance with A-GAAP shall have been made;
(g) any judgment or other similar Mortgage arising in
connection with court proceedings, provided that either
(i) the execution or enforcement of each such
Mortgage is effectively stayed within 30 days after
entry of such judgment (or such judgment has been
discharged within such 30 day period) and the
claims secured thereby are being contested in good
faith by appropriate proceedings timely commenced
and diligently prosecuted;
(ii) the payment of which judgment or other similar
Mortgage is covered in full by insurance and the
insurance company has not denied or contested
coverage thereof; or
(iii) so long as each Mortgage is adequately
bonded, any appropriate legal proceedings that may
have been duly initiated for the review of such
judgment, decree or order shall not have been fully
terminated or the period within which such
proceedings may be initiated shall not have
expired;
(h) Mortgages on or over property employed in any Joint
Venture, of which the Company and its Subsidiaries own less
than 50% of the ownership interest, to secure Debt of such
Joint Venture provided that such Debt is non-recourse to the
Company or any of its Subsidiaries;
(i) Mortgages on or over all or any part of the ownership
interest of the Company or any of its Subsidiaries in any
Joint Venture, to secure the due payment of amounts payable
under or in respect of such Joint Venture to the Joint
Venture or any of the Joint Venturers; and
(j) any extension, renewal or replacement (or successive
extensions, renewals or replacements), as a whole or in
part, of any Mortgage referred to in the foregoing clauses
(a) through (i), inclusive, provided that such extension,
renewal or replacement Mortgage is limited to all or a part
of the same property, shares of Capital Stock or Debt that
secured the Mortgage extended, renewed or replaced (plus
improvements on the property) and the Debt so secured, at
the time of the extension, renewal or replacement, is not
increased.
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"JOINT VENTURE" means any partnership, joint venture, joint
tenancy or other co-ownership arrangement with respect to
property where the Company or any of its Subsidiaries is an
owner of an undivided interest in such property.
SECTION 609. LIMITATIONS ON SALE LEASE-BACK TRANSACTIONS.
So long as the Securities of the First Series remain
Outstanding, neither the Company nor any Restricted
Subsidiary will enter into any Sale and Lease-Back
Transaction with respect to any assets or property unless
(a) such transaction is between the Company and a
Restricted Subsidiary or between Restricted Subsidiaries; or
(b) the Company would be entitled to incur indebtedness
secured by a mortgage on the assets or property involved in
such transaction at least equal in amount to the
Attributable Debt with respect to such Sale and Lease-Back
Transaction, without equally and ratably securing the
Securities, pursuant to the limitation on secured Debt
contained in Section 608.
"ATTRIBUTABLE DEBT" means, with regard to a Sale and
Lease-Back Transaction with respect to any assets or
property of any character at the time of determination,
the greater of: (a) the fair market value of such assets
or property (as determined in good faith by the Board of
Directors); or (b) the present value of the total net
amount of rent required to be paid under such lease during
the remaining term thereof (including any period for which
such lease has been extended), discounted at the rate of
interest set forth or implicit in the terms of such lease
(or, if not practicable to determine such rate, the
interest rate per annum borne by the Securities)
compounded semi-annually. In the case of any lease which
is terminable by the lessee upon the payment of a penalty,
such net amount shall be the lesser of the net amount
determined assuming termination upon the first date such
lease may be terminated (in which case the net amount
shall also include the amount of the penalty, but no rent
shall be considered as required to be paid under such
lease subsequent to the first date upon which it may be so
terminated) or the net amount determined assuming no such
termination.
"SALE AND LEASE-BACK TRANSACTION" means any arrangement
with any lender or investor providing for the leasing by
the Company or any Restricted Subsidiary of any Principal
Property which has been or is to be sold or transferred by
the Company or such Restricted Subsidiary to such lender
or investor or to any person to whom funds have been or
are to be advanced by such lender or investor on the
security of such Principal Property.
SECTION 610. DIVIDEND RESTRICTION.
So long as any Securities of the First Series remain
Outstanding, the Company covenants that it shall not
declare and pay any dividends in cash or property on any
shares of its Capital Stock or make any other
distributions in cash or property to its capital
shareholders or acquire any shares of its Capital Stock if
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(a) the aggregate amount of dividends and distributions
paid to capital shareholders, from January 1, 1996 to the
date of such declaration of dividend or distribution,
including the amount of such dividend or distribution,
would exceed (b) the sum of the Company's accumulated net
income or accumulated net cash flows after capital
expenditures, whichever is greater, from January 1, 1996
to the date of such declaration of dividend or
distribution and the amount of aggregate consideration
received by the Company for any of its Capital Stock
issued after the date of this Indenture and before the
date of such declaration of dividend or distribution;
provided that this restriction shall not apply to the
creation of any subordinated shareholder loans in exchange
for equity (but shall apply to the repayment of such
loans).
ARTICLE SEVEN
SATISFACTION AND DISCHARGE
SECTION 701. DEFEASANCE.
Any Security or Securities, or any portion of the
principal amount thereof, shall be deemed to have been
paid for all purposes of this Indenture, and the entire
indebtedness of the Company in respect thereof shall be
deemed to have been satisfied and discharged, if there
shall have been irrevocably deposited with the Trustee or
any Paying Agent (other than the Company), in trust:
(a) money in an amount which shall be sufficient, or
(b) in the case of a deposit made prior to the Maturity of
such Securities or portions thereof, Government Obligations,
which shall not contain provisions permitting the redemption
or other prepayment thereof at the option of the issuer
thereof, the principal of and the interest on which when
due, without any regard to reinvestment thereof, will
provide moneys which, together with the money, if any,
deposited with or held by the Trustee or such Paying Agent,
shall be sufficient, or
(c) a combination of (a) or (b) which shall be sufficient,
to pay when due the principal of and premium, if any, and interest, if
any, due and to become due on such Securities or portions thereof on or
prior to Maturity; provided, however, that in the case of the provision
for payment or redemption of less than all the Securities of any series,
such Securities or portions thereof shall have been selected by the
Trustee as provided herein and, in the case of a redemption, the notice
requisite to the validity of such redemption shall have been given or
irrevocable authority shall have been given by the Company to the Trustee
to give such notice, under arrangements satisfactory to the Trustee; and
provided, further, that the Company shall have delivered to the Trustee
and such Paying Agent:
(x) if such deposit shall have been made prior to
the Maturity of such Securities, a Company Order
stating that the money and Government Obligations
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deposited in accordance with this Section shall be
held in trust, as provided in Section 703; and
(y) if Government Obligations shall have been
deposited, an opinion of an independent public
accountant of nationally recognized standing,
selected by the Company, to the effect that the
requirements set forth in clause (b) above have
been satisfied; and
(z) if such deposit shall have been made prior to
the Maturity of such Securities, an Opinion of
Counsel to the effect that the Holders will not
recognize income, gain or loss for Federal income
tax purposes as a result of the satisfaction and
discharge of the Company's indebtedness in respect
of such Securities, and such Holders will be
subject to Federal income taxation on the same
amounts and in the same manner and at the same
times as if such satisfaction and discharge had not
occurred. Such Opinion of Counsel shall be based
upon a change in law occurring after the date
hereof, or a regulation, ruling or other official
statement of the Internal Revenue Service of the
United States issued after the date hereof.
Upon the deposit of money or Government Obligations, or both,
in accordance with this Section, together with the documents
required by clauses (x), (y) and (z) above, the Trustee shall,
upon receipt of a Company Request, acknowledge in writing that
the Security or Securities or portions thereof with respect to
which such deposit was made are deemed to have been paid for
all purposes of this Indenture and that the entire
indebtedness of the Company in respect thereof has been
satisfied and discharged as contemplated in this Section. In
the event that all of the conditions set forth in the
preceding paragraph shall have been satisfied in respect of
any Securities or portions thereof except that, for any
reason, the Opinion of Counsel specified in clause (z) shall
not have been delivered, such Securities or portions thereof
shall nevertheless be deemed to have been paid for all
purposes of this Indenture, and the Holders of such Securities
or portions thereof shall nevertheless be no longer entitled
to the benefits of this Indenture or of any of the covenants
of the Company under Article Six (except the covenants
contained in Sections 602 and 603) or any other covenants made
in respect of such Securities or portions thereof as
contemplated by Section 301, but the indebtedness of the
Company in respect of such Securities or portions thereof
shall not be deemed to have been satisfied and discharged
prior to Maturity for any other purpose, and the Holders of
such Securities or portions thereof shall continue to be
entitled to look to the Company for payment of the
indebtedness represented thereby; and, upon Company Request,
the Trustee shall acknowledge in writing that such Securities
or portions thereof are deemed to have been paid for all
purposes of this Indenture.
If payment at Stated Maturity of less than all of the
Securities of any series is to be provided for in the manner
and with the effect provided in this Section, the Security
Registrar shall select such Securities, or portions of
principal amount thereof, in the manner specified by Section
403 for selection for redemption of less than all the
Securities of a series.
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In the event that Securities which shall be deemed to have
been paid for purposes of this Indenture, and, if such is the
case, in respect of which the Company's indebtedness shall
have been satisfied and discharged, all as provided in this
Section do not mature and are not to be redeemed within the 60
day period commencing with the date of the deposit of moneys
or Government Obligations, as aforesaid, the Company shall, as
promptly as practicable, give a notice, in the same manner as
a notice of redemption with respect to such Securities, to the
Holders of such Securities to the effect that such deposit has
been made and the effect thereof.
Notwithstanding that any Securities shall be deemed to have
been paid for purposes of this Indenture, as aforesaid, the
obligations of the Company and the Trustee in respect of such
Securities under Sections 304, 305, 306, 404, 503 (as to
notice of redemption), 602, 603, 907, 909, 910 and 915 and
this Article Seven shall survive.
The Company shall pay, and shall indemnify the Trustee or any
Paying Agent with which Government Obligations shall have been
deposited as provided in this Section against, any tax, fee or
other charge imposed on or assessed against such Government
Obligations or the principal or interest received in respect
of such Government Obligations, including, but not limited to,
any such tax payable by any entity deemed, for tax purposes,
to have been created as a result of such deposit.
Anything herein to the contrary notwithstanding, (a) if, at
any time after a Security would be deemed to have been paid
for purposes of this Indenture, and, if such is the case, the
Company's indebtedness in respect thereof would be deemed to
have been satisfied or discharged, pursuant to this Section
(without regard to the provisions of this paragraph), the
Trustee or any Paying Agent, as the case may be, shall be
required to return the money or Government Obligations, or
combination thereof, deposited with it as aforesaid to the
Company or its representative under any applicable Federal or
State bankruptcy, insolvency or other similar law, such
Security shall thereupon be deemed retroactively not to have
been paid and any satisfaction and discharge of the Company's
indebtedness in respect thereof shall retroactively be deemed
not to have been effected, and such Security shall be deemed
to remain Outstanding and (b) any satisfaction and discharge
of the Company's indebtedness in respect of any Security shall
be subject to the provisions of the last paragraph of Section
603.
SECTION 702. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of
further effect (except as hereinafter expressly provided), and
the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of
this Indenture, when
(a) no Securities remain Outstanding hereunder; and
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(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company;
provided, however, that if, in accordance with the last paragraph of
Section 701, any Security, previously deemed to have been paid for
purposes of this Indenture, shall be deemed retroactively not to have been
so paid, this Indenture shall thereupon be deemed retroactively not to
have been satisfied and discharged, as aforesaid, and to remain in full
force and effect, and the Company shall execute and deliver such
instruments as the Trustee shall reasonably request to evidence and
acknowledge the same.
Notwithstanding the satisfaction and discharge of this
Indenture as aforesaid, the obligations of the Company and the
Trustee under Sections 304, 305, 306, 404, 503 (as to notice
of redemption), 602, 603, 907, 909, 910 and 915 and this
Article Seven shall survive.
Upon satisfaction and discharge of this Indenture as provided
in this Section, the Trustee shall assign, transfer and turn
over to the Company, subject to the lien provided by Section
907, any and all money, securities and other property then
held by the Trustee for the benefit of the Holders of the
Securities other than money and Government Obligations held by
the Trustee pursuant to Section 703.
SECTION 703. APPLICATION OF TRUST MONEY.
Neither the Government Obligations nor the money deposited
pursuant to Section 701, nor the principal or interest
payments on any such Government Obligations, shall be
withdrawn or used for any purpose other than, and shall be
held in trust for, the payment of the principal of and
premium, if any, and interest, if any, on the Securities or
portions of principal amount thereof in respect of which such
deposit was made, all subject, however, to the provisions of
Section 603; provided, however, that, so long as there shall
not have occurred and be continuing an Event of Default any
cash received from such principal or interest payments on such
Government Obligations, if not then needed for such purpose,
shall, to the extent practicable, be invested in Government
Obligations of the type described in clause (b) in the first
paragraph of Section 701 maturing at such times and in such
amounts as shall be sufficient, together with any other moneys
and the principal of and interest on any other Governmental
Obligations then held by the Trustee, to pay when due the
principal of and premium, if any, and interest, if any, due
and to become due on such Securities or portions thereof on
and prior to the Maturity thereof, and interest earned from
such reinvestment shall be paid over to the Company as
received, free and clear of any trust, lien or pledge under
this Indenture except the lien provided by Section 907; and
provided, further, that, so long as there shall not have
occurred and be continuing an Event of Default, any moneys
held in accordance with this Section on the Maturity of all
such Securities in excess of the amount required to pay the
principal of and premium, if any, and interest, if any, then
due on such Securities shall be paid over to the Company free
and clear of any trust, lien or pledge under this Indenture
except the lien provided by Section 907; and provided,
further, that if an Event of Default shall have occurred and
be continuing, moneys to be paid over to the Company pursuant
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to this Section shall be held until such Event of Default
shall have been waived or cured.
ARTICLE EIGHT
EVENTS OF DEFAULT; REMEDIES
SECTION 801. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to
Securities of any series, means any one of the following
events:
(a) failure to pay interest, if any, on any Security of
such series within 30 days after the same becomes due and
payable; or
(b) failure to pay the principal of or premium, if any, on
any Security of such series when the same becomes due and
payable whether at Maturity, upon redemption or otherwise;
or
(c) failure to perform or breach of any covenant or warranty
of the Company in this Indenture (other than a covenant or
warranty a default in the performance of which or breach of
which is elsewhere in this Section specifically dealt with
or which has expressly been included in this Indenture
solely for the benefit of one or more series of Securities
other than such series) for a period of 60 days after there
has been given, by registered or certified mail, to the
Company by the Trustee, or to the Company and the Trustee by
the Holders of at least 25% in principal amount of the
Outstanding Securities of such series, a written notice
specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of
Default" hereunder, unless the Trustee, or the Trustee and
the Holders of a principal amount of Securities of such
series not less than the principal amount of Securities the
Holders of which gave such notice, as the case may be, shall
agree in writing to an extension of such period prior to its
expiration; or
(d) an order is made by a court of competent jurisdiction
that the Company be wound up or dissolved or an order is
made appointing a liquidator or provisional liquidator in
respect of the Company or a liquidator or provisional
liquidator is appointed in respect of the Company (whether
or not under an order) and such order is not vacated or such
liquidator is not removed within 90 days;
(e) the Company enters into, or resolves to enter into, a
scheme of arrangement, deed of company arrangement or
composition with, or assignment for the benefit of, all or
any class of its creditors or it proposes a reorganization,
moratorium or other administration, in each case under any
applicable Australian, Federal or State bankruptcy,
insolvency or other similar law, involving any of them or
the Company resolves to wind itself up or otherwise dissolve
itself or gives notice of intention to do so.
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(f) the Company is or states that it is insolvent or, as a
result of the operation of section 459F(1) of the Australian
Corporations Law, is taken to have failed to comply with a
statutory demand; or
(g) the Company or the directors or shareholders of the
Company take any step to obtain protection or the Company is
granted protection from the creditors of the Company
(including, without limitation, summoning a creditors'
meeting to consider a proposal for corporate voluntary
arrangement) under any applicable legislation or an
administrator is appointed to the Company and such step is
not reversed or such administrator is not removed within 90
days;
(h) a controller (as defined in the Australian Corporations
Law) is appointed in respect of any substantial part of the
property of the Company and such controller is not removed
within 90 days;
(i) anything analogous or having a substantially similar
effect to any of the events specified in paragraphs (d),
(e), (f), (g), and (h) above happens under the law of any
applicable jurisdiction; or
(j) any other Event of Default specified with respect to
Securities of such series.
SECTION 802. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default other than those specified by Sections
801(d)-(i) shall have occurred and be continuing, either the
Trustee or the Holders of not less than 25% in principal
amount of the Securities of such series may then declare the
principal of all Securities of such series and interest
accrued thereon to be due and payable immediately. If an Event
of Default specified in Section 801(d)-(i) shall have occurred
and be continuing, the principal of all Securities then
Outstanding and interest accrued thereon shall become due and
payable immediately without any declaration or other act by
the Trustee or any Holder.
At any time after such a declaration of acceleration with
respect to Securities of any series shall have been made and
before a judgment or decree for payment of the money due shall
have been obtained by the Trustee as hereinafter in this
Article provided, the Event or Events of Default giving rise
to such declaration of acceleration may be waived by the
Holders of a majority in aggregate principal amount of the
Securities of such series then Outstanding, and such
declaration and its consequences shall, without further act,
be deemed to have been rescinded and annulled, if
(a) the Company shall have paid or deposited with the
Trustee a sum sufficient to pay
(i) all overdue interest on all Securities of such
series;
(ii) the principal of and premium, if any, on any
Securities of such series which have become due
otherwise than by such declaration of acceleration
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and interest thereon at the rate or rates
prescribed therefor in such Securities;
(iii) to the extent that payment of such interest
is lawful, interest upon overdue interest, if any,
at the rate or rates prescribed therefor in such
Securities;
(iv) all amounts due to the Trustee under Section
907;
and
(b) any other Event or Events of Default with respect to
Securities of such series, other than the nonpayment of the
principal of Securities of such series which shall have
become due solely by such declaration of acceleration, shall
have been cured or waived as provided in Section 813.
No such rescission shall affect any subsequent Event of Default or impair
any right consequent thereon.
SECTION 803. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
If an Event of Default described in clause (a) or (b) of
Section 801 shall have occurred and be continuing, the Company
shall, upon demand of the Trustee, pay to it, for the benefit
of the Holders of the Securities of the series with respect to
which such Event of Default shall have occurred, the whole
amount then due and payable on such Securities for principal
and premium, if any, and interest, if any, and, to the extent
permitted by law, interest on premium, if any, and on any
overdue principal and interest, at the rate or rates
prescribed therefor in such Securities, and, in addition
thereto, such further amount as shall be sufficient to cover
any amounts due to the Trustee under Section 907.
If the Company shall fail to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an
express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid, may prosecute such
proceeding to judgment or final decree and may enforce the
same against the Company or any other obligor upon such
Securities and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of
the Company or any other obligor upon such Securities,
wherever situated.
If an Event of Default with respect to Securities of any
series shall have occurred and be continuing, the Trustee may
in its discretion proceed to protect and enforce its rights
and the rights of the Holders of Securities of such series by
such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
SECTION 804. TRUSTEE MAY FILE PROOFS OF CLAIM.
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In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative
to the Company or any other obligor upon the Securities or the
property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal
of the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or
otherwise,
(a) to file and prove a claim for the whole amount of
principal, premium, if any, and interest, if any, owing and
unpaid in respect of the Securities and to file such other
papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim
for amounts due to the Trustee under Section 907) and of the
Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute
the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such judicial proceeding is hereby
authorized by each Holder to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amounts due it under
Section 907.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the
rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such
proceeding.
SECTION 805. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or the
production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery
of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, be for the ratable
benefit of the Holders in respect of which such judgment has
been recovered.
SECTION 806. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such
money on account of principal or premium, if any, or interest,
if any, upon presentation of the Securities in respect of
which or for the benefit of which such money shall have been
collected and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
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FIRST: To the payment of all amounts due the Trustee under
Section 907;
SECOND: To the payment of the amounts then due and unpaid
upon the Securities for principal of and premium, if any,
and interest, if any, in respect of which or for the benefit
of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts
due and payable on such Securities for principal, premium,
if any, and interest, if any, respectively; and
THIRD: To the payment of the remainder, if any, to the
Company or to whomsoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may
direct.
SECTION 807. LIMITATION ON SUITS.
No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(a) such Holder shall have previously given written notice
to the Trustee of a continuing Event of Default with respect
to the Securities of such series;
(b) the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities of such
series in respect of which an Event of Default shall have
occurred and be continuing shall have made written request
to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders shall have offered to the Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity shall have failed to
institute any such proceeding; and
(e) no direction inconsistent with such written request
shall have been given to the Trustee during such 60-day
period by the Holders of a majority in aggregate principal
amount of the Outstanding Securities of all series in
respect of which an Event of Default shall have occurred and
be continuing, considered as one class;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of
any other of such Holders or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under
this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all of such Holders.
SECTION 808. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST.
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Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute
and unconditional, to receive payment of the principal of and
premium, if any, and (subject to Section 307) interest, if
any, on such Security on the Stated Maturity or Maturities
expressed in such Security (or, in the case of redemption, on
the Redemption Date) and to institute suit for the enforcement
of any such payment, and such rights shall not be impaired
without the consent of such Holder.
SECTION 809. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such
proceeding shall have been discontinued or abandoned for any
reason, or shall have been determined adversely to the Trustee
or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, and Trustee and
such Holder shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and
remedies of the Trustee and such Holder shall continue as
though no such proceeding had been instituted.
SECTION 810. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to
the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 811. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder to
exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article or by
law to the Trustee or to the Holders may be exercised from
time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
SECTION 812. CONTROL BY HOLDERS OF SECURITIES.
If an Event of Default shall have occurred and be continuing
in respect of a series of Securities, the Holders of a
majority in aggregate principal amount of the Outstanding
Securities of such series shall have the right to direct the
time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, with respect to the Securities
of such series; provided, however, that if an Event of Default
shall have occurred and be continuing with respect to more
than one series of Securities, the Holders of a majority in
aggregate principal amount of the Outstanding Securities of
all such series, considered as one class, shall have the right
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to make such direction, and not the Holders of the Securities
of any one of such series; and provided, further, that such
direction shall not be in conflict with any rule of law or
with this Indenture. The Trustee may take any other action,
deemed proper by the Trustee, which is not inconsistent with
such direction. Before proceeding to exercise any right or
power hereunder at the direction of such Holders, the Trustee
shall be entitled to receive from such Holders reasonable
security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with
any such direction.
SECTION 813. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities of any series may on
behalf of the Holders of all the Securities of such series
waive any past default hereunder with respect to such series
and its consequences, except a default
(a) in the payment of the principal of or premium, if any,
or interest, if any, on any Security of such series, or
(b) in respect of a covenant or provision hereof which under
Section 1202 cannot be modified or amended without the
consent of the Holder of each Outstanding Security of such
series affected.
Upon any such waiver, such default shall cease to exist, and
any and all Events of Default arising therefrom shall be
deemed to have been cured, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.
SECTION 814. UNDERTAKING FOR COSTS.
The Company and the Trustee agree, and each Holder by his
acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in
any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply
to any suit instituted by the Company, to any suit instituted
by the Trustee, to any suit instituted by any Holder, or group
of Holders, holding in the aggregate more than 10% in
aggregate principal amount of the Outstanding Securities of
all series in respect of which such suit may be brought,
considered as one class, or to any suit instituted by any
Holder for the enforcement of the payment of the principal of
or premium, if any, or interest, if any, on any Security on or
after the Stated Maturity or Maturities expressed in such
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Security (or, in the case of redemption, on or after the
Redemption Date).
SECTION 815. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage
of, any stay or extension law wherever enacted, now or at any
time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been
enacted.
ARTICLE NINE
THE TRUSTEE
SECTION 901. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Upon receipt of a notice from the Company that this
Indenture is subject to the Trust Indenture Act, the Trustee
shall have and be subject to all the duties and
responsibilities specified with respect to an indenture
trustee in the Trust Indenture Act. Prior to receipt of any
such notice, the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this
Indenture; provided, however, that if an Event of Default
shall have occurred and be continuing, with respect to one
or more series of Securities, the Trustee shall comply with
Section 315(c) of the Trust Indenture Act, unless otherwise
directed by the Holders of such Securities, in accordance
with Section 812. No implied covenants or obligations shall
be read into this Indenture against the Trustee.
(b) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it.
(c) Notwithstanding anything contained in this Indenture to
the contrary and whether or not this Indenture is qualified
under the Trust Indenture Act, the duties and
responsibilities of the Trustee under this Indenture shall
be subject to the protections, exculpations and limitations
on liability afforded to a trustee under the provisions of
Section 315(d) of the Trust Indenture Act.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section.
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SECTION 902. NOTICE OF DEFAULTS.
The Trustee shall give notice of any default hereunder with
respect to the Securities of any series to the Holders of
Securities of such series in the manner and to the extent
required to do so by the Trust Indenture Act, unless such
default shall have been cured or waived; provided, however,
that in the case of any default of the character specified in
Section 801(c), no such notice to Holders shall be given until
at least 45 days after the occurrence thereof. For the purpose
of this Section, the term "default" means any event which is,
or after notice or lapse of time, or both, would become, an
Event of Default.
SECTION 903. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 901 and to the provisions
of the Trust Indenture Act, if this Indenture becomes subject
to the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document
reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or
Company Order, or as otherwise expressly provided herein,
and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at
the request or direction of any Holder pursuant to this
Indenture, unless such Holder shall have offered to the
Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document,
but the Trustee, in its discretion, may make such further
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inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall (subject to
applicable legal requirements) be entitled to examine,
during normal business hours, the books, records and
premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or
by or through agents or attorneys and the Trustee shall not
be responsible for any misconduct or negligence on the part
of any agent or attorney appointed with due care by it
hereunder; and
(h) the Trustee shall not be charged with knowledge of any
default or Event of Default, as the case may be, with
respect to the Securities of any series for which it is
acting as Trustee unless either (i) a Responsible Officer of
the Trustee shall have actual knowledge of the default or
Event of Default, as the case may be, or (ii) written notice
of such default or Event of Default, as the case may be,
shall have been given to the Trustee by the Company, any
other obligor on such Securities or by any Holder of such
Securities.
SECTION 904. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities (except
the Trustee's certificates of authentication) shall be taken
as the statements of the Company, and neither the Trustee nor
any Authenticating Agent assumes responsibility for their
correctness. The Trustee makes no representations as to the
validity or sufficiency of this Indenture or of the
Securities. Neither the Trustee nor any Authenticating Agent
shall be accountable for the use or application by the Company
of Securities or the proceeds thereof.
SECTION 905. MAY HOLD SECURITIES.
Each of the Trustee, any Authenticating Agent, any Paying
Agent, any Security Registrar or any other agent of the
Company, in its individual or any other capacity, may become
the owner or pledgee of Securities and, subject to Sections
908 and 913, may otherwise deal with the Company with the same
rights it would have if it were not the Trustee,
Authenticating Agent, Paying Agent, Security Registrar or such
other agent.
SECTION 906. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be
segregated from other funds, except to the extent required by
law. The Trustee shall be under no liability for interest on
any money received by it hereunder except as expressly
provided herein or otherwise agreed with, and for the sole
benefit of, the Company.
SECTION 907. COMPENSATION AND REIMBURSEMENT.
The Company shall
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(a) pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder
(which compensation shall not be limited by any provision of
law in regard to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, reimburse
the Trustee upon its request for all reasonable expenses,
disbursements and advances reasonably incurred or made by
the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel),
except to the extent that any such expense, disbursement or
advance may be attributable to the Trustee's negligence,
wilful misconduct or bad faith; and
(c) indemnify the Trustee for, and hold it harmless from and
against, any loss, liability or expense reasonably incurred
by it arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder or the
performance of its duties hereunder, including the
reasonable costs and expenses of defending itself against
any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except
to the extent any such loss, liability or expense may be
attributable to its negligence, wilful misconduct, bad faith
or breach of its obligations under this Indenture.
As security for the performance of the obligations of the
Company under this Section, the Trustee shall have a lien
prior to the Securities upon all property and funds held or
collected by the Trustee as such other than property and funds
held in trust under Section 703 (except as otherwise provided
in Section 703). "Trustee" for purposes of this Section shall
include any predecessor Trustee; provided, however, that the
negligence, wilful misconduct or bad faith of any Trustee
hereunder shall not affect the rights of any other Trustee
hereunder.
In addition to the rights provided to the Trustee pursuant to
the provisions of the immediately preceding paragraph of this
Section 907, when the Trustee incurs expenses or renders
services in connection with an Event of Default specified in
Section 801(d) or Section 801(e), the expenses (including the
reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute
expenses of administration under any applicable Australian,
Federal or State bankruptcy, insolvency or other similar law.
SECTION 908. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee shall have or acquire any conflicting interest
within the meaning of the Trust Indenture Act, it shall either
eliminate such conflicting interest or resign to the extent,
in the manner and with the effect, and subject to the
conditions, provided in the Trust Indenture Act and this
Indenture. For purposes of Section 310(b)(1) of the Trust
Indenture Act and to the extent permitted thereby, the
Trustee, in its capacity as trustee in respect of the
Securities of any series, shall not be deemed to have a
conflicting interest arising from its capacity as trustee in
respect of the Securities of any other series.
SECTION 909. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
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There shall at all times be a Trustee hereunder which shall be
(a) a corporation organized and doing business under the
laws of the United States, any State or Territory thereof or
the District of Columbia, authorized under such laws to
exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000 and subject to
supervision or examination by Federal or State authority, or
(b) if and to the extent permitted by the Commission by
rule, regulation or order upon application, a corporation or
other Person organized and doing business under the laws of
a foreign government, authorized under such laws to exercise
corporate trust powers, having a combined capital and
surplus of at least $50,000,000 or the Dollar equivalent of
the applicable foreign currency and subject to supervision
or examination by authority of such foreign government or a
political subdivision thereof substantially equivalent to
supervision or examination applicable to United States
institutional trustees,
and, in either case, qualified and eligible under this Article and the
Trust Indenture Act. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of such supervising
or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified
in this Article.
SECTION 910. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article
shall become effective until the acceptance of appointment
by the successor Trustee in accordance with the applicable
requirements of Section 911.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice
thereof to the Company. If the instrument of acceptance by a
successor Trustee required by Section 911 shall not have
been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the
Securities of such series.
(c) The Trustee may be removed at any time with respect to
the Securities of any series by Act of the Holders of a
majority in principal amount of the Outstanding Securities
of such series delivered to the Trustee and to the Company.
(d) If at any time:
(i)the Trustee shall fail to comply with Section 908 after
written request therefor by the Company or by any Holder
who has been a bona fide Holder for at least six months, or
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(ii) the Trustee shall cease to be eligible under Section 909
and shall fail to resign after written request therefor by
the Company or by any such Holder, or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of
its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (x) the Company by a Board Resolution may remove
the Trustee with respect to all Securities or (y) subject to Section 814,
any Holder who has been a bona fide Holder for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the
office of Trustee for any cause (other than as contemplated
in clause (y) in subsection (d) of this Section), with
respect to the Securities of one or more series, the
Company, by a Board Resolution, shall promptly appoint a
successor Trustee or Trustees with respect to the Securities
of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at
any time there shall be only one Trustee with respect to the
Securities of any particular series) and shall comply with
the applicable requirements of Section 911. If, within one
year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect
to the Securities of any series shall be appointed by Act of
the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the
Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements
of Section 911, become the successor Trustee with respect to
the Securities of such series and to that extent supersede
the successor Trustee appointed by the Company. If no
successor Trustee with respect to the Securities of any
series shall have been so appointed by the Company or the
Holders and accepted appointment in the manner required by
Section 911, any Holder who has been a bona fide Holder of a
Security of such series for at least six months may, on
behalf of itself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such
series.
(f) So long as no event which is, or after notice or lapse
of time, or both, would become, an Event of Default shall
have occurred and be continuing, and except with respect to
a Trustee appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities pursuant to
subsection (e) of this Section, if the Company shall have
delivered to the Trustee (i) a Board Resolution appointing a
successor Trustee, effective as of a date specified therein,
and (ii) an instrument of acceptance of such appointment,
effective as of such date, by such successor Trustee in
accordance with Section 911, the Trustee shall be deemed to
have resigned as contemplated in subsection (b) of this
Section, the successor Trustee shall be deemed to have been
appointed by the Company pursuant to subsection (e) of this
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Section and such appointment shall be deemed to have been
accepted as contemplated in Section 911, all as of such
date, and all other provisions of this Section and Section
911 shall be applicable to such resignation, appointment and
acceptance except to the extent inconsistent with this
subsection (f).
(g) The Company (or, should the Company fail to so act as
promptly as practicable, the successor Trustee at the
expense of the Company) shall give notice of each
resignation and each removal of the Trustee with respect to
the Securities of any series and each appointment of a
successor Trustee with respect to the Securities of any
series by mailing written notice of such event by
first-class mail, postage prepaid, to all Holders of
Securities of such series as their names and addresses
appear in the Security Register. Each notice shall include
the name of the successor Trustee with respect to the
Securities of such series and the address of its corporate
trust office.
SECTION 911. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of all series, every
such successor Trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring
Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the
retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment
of all sums owed to it, execute and deliver an instrument
transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but
not all) series, the Company, the retiring Trustee and each
successor Trustee with respect to the Securities of one or
more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall
accept such appointment and which (i) shall contain such
provisions as shall be necessary or desirable to transfer
and confirm to, and to vest in, each successor Trustee all
the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee
relates, (ii) if the retiring Trustee is not retiring with
respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all
the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those
series as to which the retiring Trustee is not retiring
shall continue to be vested in the retiring Trustee and
(iii) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one
Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee
shall be trustee of a trust or trusts hereunder separate and
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apart from any trust or trusts hereunder administered by any
other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of
the retiring Trustee shall become effective to the extent
provided therein and each such successor Trustee, without
any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any
successor Trustee, such retiring Trustee, upon payment of
all sums owed to it, shall duly assign, transfer and deliver
to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment
of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company
shall execute any instruments which fully vest in and
confirm to such successor Trustee all such rights, powers
and trusts referred to in subsection (a) or (b) of this
Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall
be qualified and eligible under this Article.
SECTION 912. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the
corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further
act on the part of any of the parties hereto. In case any
Securities shall have been authenticated, but not delivered,
by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may
adopt such authentication and deliver the Securities so
authenticated with the same effect as if such successor
Trustee had itself authenticated such Securities.
SECTION 913. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If the Trustee shall be or become a creditor of the Company or
any other obligor upon the Securities (other than by reason of
a relationship described in Section 311(b) of the Trust
Indenture Act), the Trustee shall be subject to any and all
provisions of the Trust Indenture Act regarding the collection
of claims against the Company or such other obligor if the
Trust Indenture Act shall at that time be applicable. For
purposes of Section 311(b) of the Trust Indenture Act:
(a) the term "cash transaction" means any transaction in
which full payment for goods or securities sold is made
within seven days after delivery of the goods or securities
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in currency or in checks or other orders drawn upon banks or
bankers and payable upon demand;
(b) the term "self-liquidating paper" means any draft, bill
of exchange, acceptance or obligation which is made, drawn,
negotiated or incurred by the Company for the purpose of
financing the purchase, processing, manufacturing, shipment,
storage or sale of goods, wares or merchandise and which is
secured by documents evidencing title to, possession of, or
a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods,
wares or merchandise previously constituting the security,
provided the security is received by the Trustee
simultaneously with the creation of the creditor
relationship with the Company arising from the making,
drawing, negotiating or incurring of the draft, bill of
exchange, acceptance or obligation.
SECTION 914. CO-TRUSTEES AND SEPARATE TRUSTEES.
At any time or times, for the purpose of meeting the legal
requirements of any applicable jurisdiction, the Company and
the Trustee shall have power to appoint, and, upon the written
request of the Trustee or of the Holders of at least 33% in
principal amount of the Securities then Outstanding, the
Company shall for such purpose join with the Trustee in the
execution and delivery of all instruments and agreements
necessary or proper to appoint, one or more Persons approved
by the Trustee either to act as co-trustee, jointly with the
Trustee, or to act as separate trustee, in either case with
such powers as may be provided in the instrument of
appointment, and to vest in such Person or Persons, in the
capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of
this Section. If the Company does not join in such appointment
within 15 days after the receipt by it of a request so to do,
or if an Event of Default shall have occurred and be
continuing, the Trustee alone shall have power to make such
appointment.
Should any written instrument or instruments from the Company
be required by any co-trustee or separate trustee so appointed
to more fully confirm to such co-trustee or separate trustee
such property, title, right or power, any and all such
instruments shall, on request, be executed, acknowledged and
delivered by the Company.
Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed
subject to the following conditions:
(a) the Securities shall be authenticated and delivered, and
all rights, powers, duties and obligations hereunder in
respect of the custody of securities, cash and other
personal property held by, or required to be deposited or
pledged with, the Trustee hereunder, shall be exercised
solely, by the Trustee;
(b) the rights, powers, duties and obligations hereby
conferred or imposed upon the Trustee in respect of any
property covered by such appointment shall be conferred or
imposed upon and exercised or performed either by the
Trustee or by the Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument
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appointing such co-trustee or separate trustee, except to
the extent that under any law of any jurisdiction in which
any particular act is to be performed, the Trustee shall be
incompetent or unqualified to perform such act, in which
event such rights, powers, duties and obligations shall be
exercised and performed by such co-trustee or separate
trustee;
(c) the Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Company, may
accept the resignation of or remove any co-trustee or
separate trustee appointed under this Section, and, if an
Event of Default shall have occurred and be continuing, the
Trustee shall have power to accept the resignation of, or
remove, any such co-trustee or separate trustee without the
concurrence of the Company. Upon the written request of the
Trustee, the Company shall join with the Trustee in the
execution and delivery of all instruments and agreements
necessary or proper to effectuate such resignation or
removal. A successor to any co-trustee or separate trustee
so resigned or removed may be appointed in the manner
provided in this Section;
(d) no co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the
Trustee, or any other such trustee hereunder; and
(e) any Act of Holders delivered to the Trustee shall be
deemed to have been delivered to each such co-trustee and
separate trustee.
SECTION 915. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents with
respect to the Securities of one or more series, which shall
be authorized to act on behalf of the Trustee to authenticate
Securities of such series issued upon original issuance and
upon exchange, registration of transfer or partial redemption
thereof or pursuant to Sections 304, 306 or 1206, and
Securities so authenticated shall be entitled to the benefits
of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder.
Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or
the Trustee's certificate of authentication, such reference
shall be deemed to include authentication and delivery on
behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the
Trustee by an Authenticating Agent. Each Authenticating Agent
shall be acceptable to the Company and shall at all times be a
corporation organized and doing business under the laws of the
United States, any State or Territory thereof or the District
of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of
not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions
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of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in
this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or
consolidation to which such Authenticating Agent shall be a
party, or any corporation succeeding to the corporate agency
or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such
corporation shall be otherwise eligible under this Section,
without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The
Trustee may at any time terminate the agency of an
Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case
at any time such Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section,
the Trustee may appoint a successor Authenticating Agent which
shall be acceptable to the Company. Any successor
Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under
the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under
this Section, and the Trustee shall be entitled to be
reimbursed for such payments, in accordance with, and subject
to the provisions of Section 907.
The provisions of Sections 308, 904 and 905 shall be
applicable to each Authenticating Agent.
If an appointment with respect to the Securities of one or
more series shall be made pursuant to this Section, the
Securities of such series may have endorsed thereon, in lieu
of the Trustee's certificate of authentication, an alternate
certificate of authentication substantially in the following
form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
Dated:
-----------------------------
As Trustee
By
---------------------------
As Authenticating
Agent
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By
--------------------------
Authorized Signatory
If all of the Securities of a series may not be originally
issued at one time, and if the Trustee does not have an office capable of
authenticating Securities upon original issuance located in a Place of Payment
where the Company wishes to have Securities of such series authenticated upon
original issuance, the Trustee, if so requested by the Company in writing (which
writing need not comply with Section 102 and need not be accompanied by an
Opinion of Counsel), shall appoint, in accordance with this Section and in
accordance with such procedures as shall be acceptable to the Trustee, an
Authenticating Agent having an office in a Place of Payment designated by the
Company with respect to such series of Securities.
ARTICLE TEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 1001. LISTS OF HOLDERS.
Semiannually, not later than May 1 and November 1 in each
year, commencing November 1, 1997, and at such other times as the Trustee may
request in writing, the Company shall furnish or cause to be furnished to the
Trustee information as to the names and addresses of the Holders, and the
Trustee shall preserve such information and similar information received by it
in any other capacity and afford to the Holders access to information so
preserved by it, all to such extent, if any, and in such manner as shall be
required by the Trust Indenture Act; provided, however, that no such list need
be furnished so long as the Trustee shall be the Security Registrar.
SECTION 1002. REPORTS BY TRUSTEE AND COMPANY.
Not later than June 1 in each year, commencing June 1, 1997,
the Trustee shall transmit to the Holders and the Commission a report, dated as
of the next preceding December 31 with respect to any events and other matters
described in Section 313(a) of the Trust Indenture Act, in such manner and to
the extent, if any, required by the Trust Indenture Act. The Trustee shall
transmit to the Holders and the Commission, and the Company shall file with the
Trustee (within 30 days after filing with the Commission in the case of reports
which pursuant to the Trust Indenture Act must be filed with the Commission and
furnished to the Trustee) and transmit to the Holders, such other information,
reports and other documents, if any, at such times and in such manner, as shall
be required by the Trust Indenture Act.
ARTICLE ELEVEN
CONSOLIDATION, MERGER, CONVEYANCE OR OTHER TRANSFER
SECTION 1101. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
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The Company shall not consolidate with or merge into any other
corporation, or convey or otherwise transfer or lease its properties and assets
substantially as an entirety to any Person, unless
(a) the corporation formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a Person organized and validly
existing under the laws of Australia, any State thereof or territory
therein, or the United States, any State thereof or the District of
Columbia, and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, the due and punctual payment of the principal of and
premium, if any, and interest, if any, on all Outstanding Securities
and the performance of every covenant of this Indenture on the part of
the Company to be performed or observed;
(b) immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have occurred and be
continuing; and
(c) the Company shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, or other transfer or lease and such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transactions have been
complied with.
SECTION 1102. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation by the Company with or merger by the
Company into any other corporation or any conveyance, or other transfer or lease
of the properties and assets of the Company substantially as an entirety in
accordance with Section 1101, the successor corporation formed by such
consolidation or into which the Company is merged or the Person to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor Person had been named as the Company
herein, and thereafter, except in the case of a lease, the predecessor Person
shall be relieved of all obligations and covenants under this Indenture and the
Securities Outstanding hereunder.
ARTICLE TWELVE
SUPPLEMENTAL INDENTURES
SECTION 1201. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
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(a) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein and in the Securities, all as provided in Article
Eleven; or
(b) to add one or more covenants of the Company or other
provisions for the benefit of all Holders or for the benefit of the
Holders of, or to remain in effect only so long as there shall be
Outstanding, Securities of one or more specified series, or to
surrender any right or power herein conferred upon the Company; or
(c) to add any additional Events of Default with respect to
all or any series of Securities Outstanding hereunder; or
(d) to change or eliminate any provision of this Indenture or
to add any new provision to this Indenture; provided, however, that if
such change, elimination or addition shall adversely affect the
interests of the Holders of Securities of any series (other than any
series the terms of which permit such change, elimination or addition)
Outstanding on the date of such indenture supplemental hereto, such
change, elimination or addition shall become effective with respect to
such series only pursuant to the provisions of Section 1202 hereof or
when no Security of such series remains Outstanding; or
(e) to provide collateral security for all but not part of
the Securities; or
(f) to establish the form or terms of Securities of any
series as contemplated by Sections 201 and 301; or
(g) to provide for the authentication and delivery of bearer
securities and coupons appertaining thereto representing interest, if
any, thereon and for the procedures for the registration, exchange and
replacement thereof and for the giving of notice to, and the
solicitation of the vote or consent of, the holders thereof, and for
any and all other matters incidental thereto; or
(h) to evidence and provide for the acceptance of appointment
hereunder by a separate or successor Trustee or co-trustee with respect
to the Securities of one or more series and to add to or change any of
the provisions of this Indenture as shall be necessary to provide for
or facilitate the administration of the trusts hereunder by more than
one Trustee, pursuant to the requirements of Section 911(b); or
(i) to provide for the procedures required to permit the
Company to utilize, at its option, a noncertificated system of
registration for all, or any series of, the Securities; or
(j) to change any place or places where (i) the principal of
and premium, if any, and interest, if any, on all or any series of
Securities shall be payable, (ii) all or any series of Securities may
be surrendered for registration of transfer, (iii) all or any series of
Securities may be surrendered for exchange and (iv) notices and demands
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to or upon the Company in respect of all or any series of Securities
and this Indenture may be served; or
(k) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other changes to the provisions hereof
or to add other provisions with respect to matters or questions arising
under this Indenture, provided that such other changes or additions
shall not adversely affect the interests of the Holders of Securities
of any series.
Without limiting the generality of the foregoing, if the Trust
Indenture Act as in effect at the date of the execution and delivery of this
Indenture or at any time thereafter shall be amended and
(x) if any such amendment shall require one or more
changes to any provisions hereof or the inclusion herein of
any additional provisions, or shall by operation of law be
deemed to effect such changes or incorporate such provisions
by reference or otherwise, this Indenture shall be deemed to
have been amended so as to conform to such amendment to the
Trust Indenture Act, and the Company and the Trustee may,
without the consent of any Holders, enter into an indenture
supplemental hereto to effect or evidence such changes or
additional provisions; or
(y) if any such amendment shall permit one or more
changes to, or the elimination of, any provisions hereof
which, at the date of the execution and delivery hereof or at
any time thereafter, are required by the Trust Indenture Act
to be contained herein, this Indenture shall be deemed to have
been amended to effect such changes or elimination, and the
Company and the Trustee may, without the consent of any
Holders, enter into an indenture supplemental hereto to
evidence such amendment hereof.
SECTION 1202. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities of all series then Outstanding
under this Indenture, considered as one class, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or modifying
in any manner the rights of the Holders of Securities of such series under this
Indenture; provided, however, that if there shall be Securities of more than one
series Outstanding hereunder and if a proposed supplemental indenture shall
directly affect the rights of the Holders of Securities of one or more, but less
than all, of such series, then the consent only of the Holders of a majority in
aggregate principal amount of the Outstanding Securities of all series so
directly affected, considered as one class, shall be required; and provided,
further, that no such supplemental indenture and no supplemental indenture
executed pursuant to Section 1201 shall:
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(a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or reduce the
principal amount thereof or the rate of interest thereon (or the amount
of any installment of interest thereon) or change the method of
calculating such rate or reduce any premium payable upon the redemption
thereof, or change the coin or currency (or other property), in which
any Security or any premium or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity of any Security (or, in the
case of redemption, on or after the Redemption Date), without, in any
such case, the consent of the Holder of such Security, or
(b) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of the Holders of
which is required for any such supplemental indenture, or the consent
of the Holders of which is required for any waiver of compliance with
any provision of this Indenture or of any default hereunder and its
consequences, or reduce the requirements of Section 1304 for quorum or
voting, without, in any such case, the consent of the Holder of each
Outstanding Security of such series, or
(c) modify any of the provisions of this Section, Section 607
or Section 813 with respect to the Securities of any series, except to
increase the percentages in principal amount referred to in this
Section or such other Sections or to provide that other provisions of
this Indenture cannot be modified or waived without the consent of the
Holder of each Outstanding Security affected thereby; provided,
however, that this clause shall not be deemed to require the consent of
any Holder with respect to changes in the references to "the Trustee"
and concomitant changes in this Section, or the deletion of this
proviso, in accordance with the requirements of Sections 911(b) and
1201(h).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof. A
waiver by a Holder of such Holder's right to consent under this Section shall be
deemed to be a consent of such Holder.
SECTION 1203. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 901) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
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shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties, immunities or liabilities under this
Indenture or otherwise.
SECTION 1204. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby. Any supplemental indenture permitted by this
Article may restate this Indenture in its entirety, and, upon the execution and
delivery thereof, any such restatement shall supersede this Indenture as
theretofore in effect for all purposes.
SECTION 1205. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act as then in effect
if this Indenture is at the time subject to the Trust Indenture Act.
SECTION 1206. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
SECTION 1207. MODIFICATION WITHOUT SUPPLEMENTAL INDENTURE.
If the terms of any particular series of Securities shall have
been established in a Board Resolution or an Officer's Certificate as
contemplated by Section 301, and not in an indenture supplemental hereto,
additions to, changes in or the elimination of any of such terms may be effected
by means of a supplemental Board Resolution or Officer's Certificate, as the
case may be, delivered to, and accepted by, the Trustee; provided, however, that
such supplemental Board Resolution or Officer's Certificate shall not be
accepted by the Trustee or otherwise be effective unless all conditions set
forth in this Indenture which would be required to be satisfied if such
additions, changes or elimination were contained in a supplemental indenture
shall have been appropriately satisfied. Upon the acceptance thereof by the
Trustee, any such supplemental Board Resolution or Officer's Certificate shall
be deemed to be a "supplemental indenture" for purposes of this Article Twelve.
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ARTICLE THIRTEEN
MEETINGS OF HOLDERS; ACTION WITHOUT MEETING
SECTION 1301. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Holders of Securities of one or more, or all,
series may be called at any time and from time to time pursuant to this Article
to make, give or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be made, given or
taken by Holders of Securities of such series.
SECTION 1302. CALL, NOTICE AND PLACE OF MEETINGS.
(a) The Trustee may at any time call a meeting of Holders of
Securities of one or more, or all, series for any purpose specified in
Section 1301, to be held at such time and at such place in the Borough
of Manhattan, The City of New York, as the Trustee shall determine, or,
with the approval of the Company, at any other place. Notice of every
such meeting, setting forth the time and the place of such meeting and
in general terms the action proposed to be taken at such meeting, shall
be given, in the manner provided in Section 106, not less than 21 nor
more than 180 days prior to the date fixed for the meeting.
(b) If the Trustee shall have been requested to call a meeting
of the Holders of Securities of one or more, or all, series by the
Company or by the Holders of 33% in aggregate principal amount of all
of such series, considered as one class, for any purpose specified in
Section 1301, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not
have given the notice of such meeting within 21 days after receipt of
such request or shall not thereafter proceed to cause the meeting to be
held as provided herein, then the Company or the Holders of Securities
of such series in the amount above specified, as the case may be, may
determine the time and the place in the Borough of Manhattan, The City
of New York, or in such other place as shall be determined or approved
by the Company, for such meeting and may call such meeting for such
purposes by giving notice thereof as provided in subsection (a) of this
Section.
(c) Any meeting of Holders of Securities of one or more, or
all, series shall be valid without notice if the Holders of all
Outstanding Securities of such series are present in person or by proxy
and if representatives of the Company and the Trustee are present, or
if notice is waived in writing before or after the meeting by the
Holders of all Outstanding Securities of such series, or by such of
them as are not present at the meeting in person or by proxy, and by
the Company and the Trustee.
SECTION 1303. PERSONS ENTITLED TO VOTE AT MEETINGS.
To be entitled to vote at any meeting of Holders of Securities
of one or more, or all, series a Person shall be (a) a Holder of one or more
Outstanding Securities of such series, or (b) a Person appointed by an
instrument in writing as proxy for a Holder or Holders of one or more
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Outstanding Securities of such series by such Holder or Holders. The only
Persons who shall be entitled to attend any meeting of Holders of Securities of
any series shall be the Persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
SECTION 1304. QUORUM; ACTION.
The Persons entitled to vote a majority in aggregate principal
amount of the Outstanding Securities of the series with respect to which a
meeting shall have been called as hereinbefore provided, considered as one
class, shall constitute a quorum for a meeting of Holders of Securities of such
series; provided, however, that if any action is to be taken at such meeting
which this Indenture expressly provides may be taken by the Holders of a
specified percentage, which is less than a majority, in principal amount of the
Outstanding Securities of such series, considered as one class, the Persons
entitled to vote such specified percentage in principal amount of the
Outstanding Securities of such series, considered as one class, shall constitute
a quorum. In the absence of a quorum within one hour of the time appointed for
any such meeting, the meeting shall, if convened at the request of Holders of
Securities of such series, be dissolved. In any other case the meeting may be
adjourned for such period as may be determined by the chairman of the meeting
prior to the adjournment of such meeting. In the absence of a quorum at any such
adjourned meeting, such adjourned meeting may be further adjourned for such
period as may be determined by the chairman of the meeting prior to the
adjournment of such adjourned meeting. Except as provided by Section 1305(e),
notice of the reconvening of any meeting adjourned for more than 30 days shall
be given as provided in Section 1302(a) not less than 10 days prior to the date
on which the meeting is scheduled to be reconvened. Notice of the reconvening of
an adjourned meeting shall state expressly the percentage, as provided above, of
the principal amount of the Outstanding Securities of such series which shall
constitute a quorum.
Except as limited by Section 1202, any resolution presented to
a meeting or adjourned meeting duly reconvened at which a quorum is present as
aforesaid may be adopted only by the affirmative vote of the Holders of a
majority in aggregate principal amount of the Outstanding Securities of the
series with respect to which such meeting shall have been called, considered as
one class; provided, however, that, except as so limited, any resolution with
respect to any action which this Indenture expressly provides may be taken by
the Holders of a specified percentage, which is less than a majority, in
principal amount of the Outstanding Securities of such series, considered as one
class, may be adopted at a meeting or an adjourned meeting duly reconvened and
at which a quorum is present as aforesaid by the affirmative vote of the Holders
of such specified percentage in principal amount of the Outstanding Securities
of such series, considered as one class.
Any resolution passed or decision taken at any meeting of
Holders of Securities duly held in accordance with this Section shall be binding
on all the Holders of Securities of the series with respect to which such
meeting shall have been held, whether or not present or represented at the
meeting.
SECTION 1305. ATTENDANCE AT MEETINGS; DETERMINATION OF VOTING RIGHTS;
CONDUCT AND ADJOURNMENT OF MEETINGS.
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(a) Attendance at meetings of Holders of Securities may be in
person or by proxy; and, to the extent permitted by law, any such proxy
shall remain in effect and be binding upon any future Holder of the
Securities with respect to which it was given unless and until
specifically revoked by the Holder or future Holder of such Securities
before being voted.
(b) Notwithstanding any other provisions of this Indenture,
the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Holders of Securities in regard to proof
of the holding of such Securities and of the appointment of proxies and
in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence
of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Except as otherwise permitted
or required by any such regulations, the holding of Securities shall be
proved in the manner specified in Section 104 and the appointment of
any proxy shall be proved in the manner specified in Section 104. Such
regulations may provide that written instruments appointing proxies,
regular on their face, may be presumed valid and genuine without the
proof specified in Section 104 or other proof.
(c) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Holders as provided in Section 1302(b), in
which case the Company or the Holders of Securities of the series
calling the meeting, as the case may be, shall in like manner appoint a
temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the Persons entitled to vote a
majority in aggregate principal amount of the Outstanding Securities of
all series represented at the meeting, considered as one class.
(d) At any meeting each Holder or proxy shall be entitled to
one vote for each $1 principal amount of Securities held or represented
by him; provided, however, that no vote shall be cast or counted at any
meeting in respect of any Security challenged as not Outstanding and
ruled by the chairman of the meeting to be not Outstanding. The
chairman of the meeting shall have no right to vote, except as a Holder
of a Security or proxy.
(e) Any meeting duly called pursuant to Section 1302 at which
a quorum is present may be adjourned from time to time by Persons
entitled to vote a majority in aggregate principal amount of the
Outstanding Securities of all series represented at the meeting,
considered as one class; and the meeting may be held as so adjourned
without further notice.
SECTION 1306. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of
Holders shall be by written ballots on which shall be subscribed the signatures
of the Holders or of their representatives by proxy and the principal amounts
and serial numbers of the Outstanding Securities, of the series with respect to
which the meeting shall have been called, held or represented by them. The
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permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports of all votes cast at the meeting. A record of the proceedings of each
meeting of Holders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the inspectors of votes
on any vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1302 and, if
applicable, Section 1304. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
SECTION 1307. ACTION WITHOUT MEETING.
In lieu of a vote of Holders at a meeting as hereinbefore
contemplated in this Article, any request, demand, authorization, direction,
notice, consent, waiver or other action may be made, given or taken by Holders
by written instruments as provided in Section 104.
ARTICLE FOURTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 1401. LIABILITY SOLELY CORPORATE.
No recourse shall be had for the payment of the principal of
or premium, if any, or interest, if any, on any Securities, or any part thereof,
or for any claim based thereon or otherwise in respect thereof, or of the
indebtedness represented thereby, or upon any obligation, covenant or agreement
under this Indenture, against any incorporator, stockholder, officer or
director, as such, past, present or future of the Company or of any predecessor
or successor corporation (either directly or through the Company or a
predecessor or successor corporation), whether by virtue of any constitutional
provision, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly agreed and understood that this
Indenture and all the Securities are solely corporate obligations, and that no
personal liability whatsoever shall attach to, or be incurred by, any
incorporator, stockholder, officer or director, past, present or future, of the
Company or of any predecessor or successor corporation, either directly or
indirectly through the Company or any predecessor or successor corporation,
because of the indebtedness hereby authorized or under or by reason of any of
the obligations, covenants or agreements contained in this Indenture or in any
of the Securities or to be implied herefrom or therefrom, and that any such
personal liability is hereby expressly waived and released as a condition of,
and as part of the consideration for, the execution of this Indenture and the
issuance of the Securities.
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ARTICLE FIFTEEN
SECURITIES OF THE FIRST AND SECOND SERIES
SECTION 1501. DESIGNATION OF SECURITIES OF THE FIRST AND SECOND SERIES.
There is hereby created a series of Securities designated
"6.75% Senior Notes due 2006" (herein sometimes referred to as "Securities of
the First Series") and limited in aggregate principal amount (except as
contemplated in Section 301(b) hereof) to Two Hundred Fifty Million Dollars
($250,000,000). The form and terms of the Securities of the First Series shall
be established in an Officer's Certificate.
There is hereby created a series of Securities designated
"7.25% Senior Notes due 2016" (herein sometimes referred to as "Securities of
the Second Series") and limited in aggregate principal amount (except as
contemplated in Section 301(b) hereof) to One Hundred Million Dollars
($100,000,000). The form and terms of the Securities of the Second Series shall
be established in an Officer's Certificate.
-------------------------
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first above written.
EASTERN ENERGY LIMITED (ACN 064 651 118)
By: /s/ Stephen E. Blanch
------------------------------------
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THE BANK OF NEW YORK, Trustee
By: /s/ Walter N. Gitlin
-----------------------------------
Walter N. Gitlin
Vice President
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 21st day of November, 1996, before me personally came
Stephen E. Blanch, to me known, who, being by me duly sworn, did depose and say
that he is the Managing Director of Eastern Energy Limited (ACN 064 651 118),
one of the corporations described in and which executed the foregoing instrument
and that he signed his name thereto by authority of the Board of Directors.
/s/ Illegible
-----------------------------------------
Notary Public
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 2nd day of December, 1996, before me personally came
Walter N. Gitlin, to me known, who, being by me duly sworn, did depose and say
that he is a Vice President of The Bank of New York, one of the corporations
described in and which executed the foregoing instrument and that he signed his
name thereto by authority of the Board of Directors.
/s/ Illegible
-----------------------------------------
Notary Public
78
Worsham Forsythe Wooldridge LLP
Exhibit 5(A)
May 5, 2000
TXU Australia Holdings (Partnership) Limited Partnership
452 Flinders Street
Melbourne, Victoria, Australia 3000
Ladies and Gentlemen:
Reference is made to the Registration Statement (Registration
Statement) on Form S-1 to be filed by TXU Australia Holdings (Partnership)
Limited Partnership (Partnership), on or about the date hereof, with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, for the registration of unsecured junior maturing principal
securities (Securities) of the Partnership in an aggregate offering amount of
US$300,000,000. In connection therewith, we have reviewed such documents and
records as we have deemed necessary to enable us to express an opinion on the
matters covered hereby.
Based upon the foregoing, we are of the opinion that:
1. The Partnership is a limited partnership validly organized and
existing under the laws of the State of Victoria, Australia.
2. The Securities will be valid, legal and binding obligations of the
Partnership when:
(a) (i) a meeting or meetings of the Board of Directors of the
general partner of the Partnership, TXU Australia Holdings (AGP) Pty Ltd.
(Board), shall have been held and favorable action shall have been taken at such
meeting or meetings to approve and authorize substantially in final form an
indenture to be entered into by the Partnership and a trustee and under which
the Securities are to be issued (Indenture), (ii) a meeting or meetings of the
Board shall have been held and favorable action shall have been taken at such
meeting or meetings to authorize the proper officers of the general partner to
execute an officer's certificate creating the terms of the Securities and such
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-2-
officers shall have executed such officer's certificates, (iii) the Board or
the proper officers of the general partner pursuant to delegated authority from
the Board shall have approved and authorized the issuance and sale of the
Securities and (iv) the Board or the proper officers of the general partner
pursuant to delegated authority from the Board shall have taken such other
final action as may be necessary to consummate the authorization of the
proposed issuance and sale of the Securities;
(b) the Indenture and officer's certificate shall have been
executed and/or certified, as appropriate, and delivered; and
(c) the Securities shall have been issued and delivered for the
consideration contemplated in the Registration Statement and any prospectus
supplement relating to the Securities of a particular series.
We are members of the State Bar of Texas and do not hold ourselves out
as experts on the laws of New York or Australia. Accordingly, in rendering this
opinion, we have relied, with your consent, as to all matters of Australian law,
upon the opinion of even date herewith addressed to you by Baker & McKenzie,
counsel to the Partnership, and as to New York law, upon the opinion of even
date herewith addressed to you by Thelen, Reid & Priest LLP, counsel to the
Partnership.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of our name as counsel in the Registration
Statement.
Very truly yours,
WORSHAM FORSYTHE
WOOLDRIDGE LLP
By: /s/ T. A. Mack
---------------------------------
A Partner
THELEN REID & PRIEST LLP
NEW YORK ATTORNEYS AT LAW NEW YORK OFFICE
SAN FRANCISCO 40 WEST 57TH STREET DIRECT DIAL NUMBER
WASHINGTON, D.C. NEW YORK, N.Y. 10019-4097
LOS ANGELES TEL (212) 603-2000 FAX (212) 603-2001
SAN JOSE www. thelenreid.com
Exhibit 5(B) & 8
May 5, 2000
TXU Australia Holdings (Partnership) Limited Partnership
452 Flinders Street
Melbourne, Victoria, Australia 3000
Ladies and Gentlemen:
Reference is made to the Registration Statement (Registration
Statement) on Form S-1 to be filed by TXU Australia Holdings (Partnership)
Limited Partnership (Partnership), on or about the date hereof, with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
for the registration of unsecured junior maturing principal securities
(Securities) of the Partnership in an aggregate offering amount of
US$300,000,000. In connection therewith, we have reviewed such documents and
records as we have deemed necessary to enable us to express an opinion on the
matters covered hereby.
Based upon the foregoing, we are of the opinion that:
1. The Partnership is a limited partnership validly organized and
existing under the laws of the State of Victoria, Australia.
2. The Securities will be valid, legal and binding obligations of the
Partnership when:
(a) (i) a meeting or meetings of the Board of Directors of the
general partner of the Partnership, TXU Australia Holdings (AGP) Pty Ltd.
(Board), shall have been held and favorable action shall have been taken at such
meeting or meetings to approve and authorize substantially in final form an
indenture to be entered into by the Partnership and a trustee and under which
the Securities are to be issued (Indenture), (ii) a meeting or meetings of the
Board shall have been held and favorable action shall have been taken at such
meeting or meetings to authorize the proper officers of the general partner to
execute an officer's certificate creating the terms of the Securities and such
officers shall have executed such officer's certificates, (iii) the Board or the
proper officers of the general partner pursuant to delegated authority from the
Board shall have approved and authorized the issuance and sale of the Securities
and (iv) the Board or the proper officers of the general partner pursuant to
delegated authority from the Board shall have taken such other final action as
may be necessary to consummate the authorization of the proposed issuance and
sale of the Securities;
(b) the Indenture and officer's certificate shall have been
executed and/or certified, as appropriate, and delivered; and
<PAGE>
(c) the Securities shall have been issued and delivered for the
consideration contemplated in the Registration Statement and any prospectus
supplement relating to the Securities of a particular series.
3. The statements contained in the Registration Statement under the
caption "Material US Income Tax Considerations" constitute an accurate
description, in general terms, of certain United States federal income tax
considerations that may be relevant to a holder of the Securities based on the
facts and law at the date hereof.
We are members of the New York Bar and do not hold ourselves out as
experts on the laws of Australia. As to all matters of Australian law, we have
with your consent relied upon an opinion of even date herewith addressed to you
by Baker & McKenzie of Melbourne, Australia.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of our name as counsel in the Registration
Statement.
Very truly yours,
/s/ Thelen Reid & Priest LLP
THELEN REID & PRIEST LLP
EXHIBIT 5(C) & 8(B)
BAKER & McKENZIE
Soliciters and Attorneys
Rialto
Level 39
525 Collins Street
Melbourne Vic 3000 Australia
G.P.O. Box 2119T
Melbourne Vic 3001
Our Ref: 163498/v4/TK/KWG/VLD 5 May 2000
TXU Australia Holdings (Partnership) Limited Partnership
452 Flinders Street
MELBOURNE
VICTORIA 3000
Dear Sirs
INDENTURE (FOR UNSECURED SUBORDINATED DEBT SECURITIES) BETWEEN TXU AUSTRALIA
HOLDINGS (PARTNERSHIP) LIMITED PARTNERSHIP AND THE BANK OF NEW YORK
("INDENTURE")
Reference is made to the Registration Statement (the "Registration Statement")
on Form S-1 to be filed by TXU Australia Holdings (Partnership) Limited
Partnership (the "Partnership"), on or about the date hereof, with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
for the registration of unsecured junior maturing principal securities (the
"Securities") of the Partnership in an aggregate offering amount of
US$300,000,000.
When used in this opinion, "Relevant Jurisdictions" means the State of Victoria
and the Commonwealth of Australia.
All references to time, except where otherwise stated, are references to time in
Melbourne, Victoria.
1. DOCUMENTS
We have examined the following documents:
(a) a copy of the Registration Statement to be filed by the Partnership on or
about the date of this legal opinion with the Securities and Exchange
Commission;
(b) a copy of an executed power of attorney (the "Power of Attorney")
signed by TXU Australia Holdings (AGP) Pty Ltd ;
<PAGE>
(c) a copy of the Limited Partnership Deed dated January 27,1999 of the
Partnership;
(d) a copy of the Deed of Amendment to the Partnership Deed dated February 23,
1999 of the Partnership;
(e) a copy of the Second Deed of Amendment to the Partnership Deed;
(f) the certificate of registration confirming registration of the Partnership
as a limited partnership pursuant to the Partnership Act 1958 (Vic);
(g) a legal opinion dated on or about the date of this opinion issued by
Worsham, Forsythe & Wooldridge LLP to you in relation to this matter; and
(h) a legal opinion on or about the date of this opinion issued by Thelen Reid
& Priest to you in relation to this matter;
(i) a legal opinion dated 3 May 2000 issued by Norton Rose in relation to
TXU Australia (LP) No. 1 Limited and TXU Australia (LP) No. 2 Limited,
the limited partners of the Partnership.
We have also examined any certificates and corporate and other records and
documents of the Partnership and any other matters, documents and records as we
have deemed necessary or appropriate for the purpose of rendering this opinion.
2. ASSUMPTIONS
For the purposes of giving this opinion we have assumed the following:
(a) the authenticity of all seals and signatures and of any duty stamp and
marking on all documents examined by us;
(b) the completeness and the conformity to original instruments of all copies
submitted to us and that any document submitted to us continues unamended
and is in full force and effect;
(c) where the Indenture has been submitted to us in draft or proposed form, it
will be duly executed in that form;
(d) that the directors of TXU Australia Holdings (AGP) Pty Ltd properly
performed their statutory, common law and equitable duties and that all
applicable laws of the Relevant Jurisdictions or of the constitution of TXU
Australia Holdings (AGP) Pty Ltd relating to the declaration of directors'
interests and the powers of interested directors to vote were duly observed
although there is nothing in any minutes of the Board of Directors of TXU
Australia Holdings (AGP) Pty Ltd or searches referred to in paragraph 3(c)
which would lead us to believe otherwise;
(e) the Power of Attorney has been executed by the persons authorised to
execute it and that the persons executing the Power of Attorney hold the
offices they are stated to hold on the face of the document although there
is nothing in the searches which lead us to believe otherwise;
2
<PAGE>
(f) all corporate records and other documents inspected by us are genuine,
complete, up-to-date and accurate and no relevant corporate records or
documents have been withheld from us, whether deliberately or
inadvertently; and
(g) all facts, statements and opinions stated in the documents, certificates,
letters, resolutions or opinions and on which we have relied in providing
this opinion are and continue to be correct and no relevant matter was
withheld from us, whether deliberately or inadvertently;
(h) the Power of Attorney has not been rescinded, amended, modified or revoked.
3. QUALIFICATIONS
Our opinion is subject to the following qualifications:
(a) we express no opinion as to any laws or any requirements under any laws
other than issues or matters affected by the laws of the Relevant
Jurisdictions in force at the date of this opinion. In particular, we have
not investigated and express no opinion on or the effect of the laws of the
State of New York, U.S.A.;
(b) we express no opinion as to factual matters other than as expressly set out
herein and (other than as expressly set out herein) we have not made any
independent investigation of applicable facts, but have relied, to the
extent we deemed proper, on the completeness and accuracy of statements as
to factual matters made by the Partnership or its officers or other
representatives of the Partnership, and we are not aware of any facts
inconsistent with them;
(c) we have relied on searches of public records on file for the Partnership at
the Victorian Office of Fair Trading and Business Affairs and for the
partners of the Partnership at the Australian Securities and Investments
Commission on May 5, 2000 and May 5, 2000 (Melbourne time) respectively to
ascertain, among other things:
(i) certain details relating to officeholders in TXU Australia Holdings
(AGP) Pty Ltd;
(ii) that the Partnership is registered and existing in Victoria; and
(iii) that no receiver, liquidator or administrator has been appointed or
winding up order made for TXU Australia Holdings (AGP) Pty Ltd.
(d) The records of the Australian Securities and Investments Commission and the
Victorian Office of Fair Trading may not be complete or up to date and may
not record details of all charges lodged for registration with the
3
<PAGE>
Australian Securities and Investments Commission which may be enforceable
against a liquidator or administrator;
(e) we have relied, with your consent, on the opinions referred to in paragraph
1(f), (g) and (h).
4. OPINION
Based on the assumptions and subject to the qualifications set out above, we are
of the following opinion:
(a) Based solely on the searches referred to in paragraph 3(c), the
Partnership is a limited partnership validly registered and existing
under the laws of the State of Victoria, Australia.
(b) The Securities will be valid, legal and binding obligations of the
Partnership when:
(1) (i) a meeting or meetings of the Board of Directors of the
general partner of the Partnership, TXU Australia Holdings (AGP) Pty
Ltd (the "Board"), shall have been held and favorable action shall
have been taken at such meeting or meetings to approve and authorize
substantially in final form an indenture to be entered into by the
Partnership and a trustee and under which the Securities are to be
issued (the "Indenture"), (ii) a meeting or meetings of the Board
shall have been held and favorable action shall have been taken at
such meeting or meetings to authorize the proper officers of the
general partner to execute an officer's certificate creating the terms
of the Securities and such officers shall have executed such officer's
certificate, (iii) the Board or the proper officers of the general
partner pursuant to delegated authority from the Board shall have
approved and authorized the issuance and sale of the Securities, and
(iv) the Board or the proper officers of the general partner pursuant
to delegated authority from the Board shall have taken such other
final action as may be necessary to consummate the authorization of
the proposed issuance and sale of the Securities;
(2) the Indenture and officer's certificate shall have been
executed and/or certified, as appropriate, and delivered; and
(3) the Securities shall have been issued and delivered for the
consideration contemplated in the Registration Statement and any
prospectus supplement relating to the Securities of a particular
series.
(c) The statements contained in the Registration Statement under the
caption "Material Australian Income Tax Considerations" constitute an
accurate description, in general terms, of certain Australian income
tax considerations that may be relevant to a holder of the Securities
based on the facts and law at the date hereof.
4
<PAGE>
This opinion is given only on behalf of Baker & McKenzie, Melbourne, Victoria
and not on behalf of any other office or associated firm of Baker & McKenzie.
This opinion is addressed to you for your sole benefit and is given at 9.00 am
on May 5, 2000 (Melbourne time). This opinion may be filed as an exhibit to the
Registration Statement with the Securities and Exchange Commission. This opinion
is not to be transmitted to or relied on by any other person or for any other
purpose, nor is it otherwise to be quoted or referred to in any other public
document or filed with any other governmental agency or other person, in each
case without our consent.
Yours faithfully
BAKER & MCKENZIE
/s/ Baker & McKenzie
EXHIBIT 12
TXU AUSTRALIA GROUP
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
1999 1998 1997 1996 1995
(Unaudited) (Unaudited)
---------- ---------- ---------- -------------- --------------
Millions of Australian Dollars, Except Ratios
EARNINGS:
<S> <C> <C> <C> <C> <C>
Net income/(loss) from continuing
operations $ (1.2) $ 46.2 $ 26.1 $ 9.2 $ 76.7
Add: Income tax expense/(benefit) (17.4) 35.6 31.0 16.5 12.7
Loss on equity investments 0.8 0.1 - - -
Fixed charges (see details below) 206.9 93.3 97.5 111.9 44.5
Amortization of capitalized interest 0.1 - - - -
Less: Interest capitalized (2.8) (0.1) - - -
---------- --------- ---------- ---------- -----------
Total earnings $ 186.4 $ 175.1 $ 154.6 $ 137.6 $ 133.9
========== ========= ========== ========== ===========
FIXED CHARGES:
Interest expense $ 190.7 $ 91.1 $ 95.4 $ 109.8 $ 44.5
Capitalized interest 2.8 0.1 - - -
Amortization of debt issuance costs 13.4 2.1 2.1 2.1 -
---------- --------- ---------- ---------- -----------
Total fixed charges 206.9 93.3 97.5 111.9 44.5
========== ========= ========== ========== ===========
RATIO OF EARNINGS TO FIXED
CHARGES
0.9(1) 1.9 1.6 1.2 3.0
========== ========= ========== ========== ===========
TXU CORP. RATIO OF EARNINGS TO
FIXED CHARGES 1.9 1.8 2.1 2.2 0.7
========== ========= ========== ========== ===========
</TABLE>
(1) The ratio of earnings to fixed charges of 0.9 for the year ended December
31, 1999 was less than one to one coverage by $20.5 million.
EXHIBIT 21
TXU AUSTRALIA GROUP COMPANIES
TXU AUSTRALIA HOLDINGS (PARTNERSHIP) LIMITED PARTNERSHIP
TXU AUSTRALIA HOLDINGS PTY LTD
TXU AUSTRALIA PTY LTD
TXU AUSTRALIA (BAIRNSDALE POWER) PTY LTD
GLOBAL CUSTOMER SOLUTIONS PTY LTD
TXU ELECTRICITY LIMITED
TXU (NO. 13) PTY LTD
TXU (NO. 7) PTY LTD
TXU (NO. 8) PTY LTD
EASTCOAST POWER PTY LTD
INTEGRATED PROCESS SOLUTIONS PTY LTD
EASTCOAST GAS PTY LTD
TXU NETWORKS PTY LTD
TXU (NO. 14) PTY LTD
WESTERN UNDERGROUND GAS STORAGE PTY LTD
TXU (NO. 9) PTY LTD
TXU NETWORKS (GAS) PTY LTD
TXU PTY LTD
GASMART (VIC) PTY LTD
TXU AUSTRALIA SERVICES PTY LTD
TXU (NO. 3) PTY LTD
TXU (NO. 4) PTY LTD
TXU (NO. 6) PTY LTD
TXU AUSTRALIA (QUEENSLAND) PTY LTD
TXU (SOUTH AUSTRALIA) PTY LTD
EXHIBIT 23(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of TXU Australia
Holdings (Partnership) Limited Partnership on Form S-1 of our reports dated
April 28, 2000 with respect to the consolidated financial statements of TXU
Australia Holdings (Partnership) Limited Partnership and Gascor Holdings No. 2
Pty Ltd (which report expresses a qualified opinion and includes an explanatory
paragraph relating to the July 1, 1997 valuation of the property, plant and
equipment of Gascor), appearing in the Prospectus, which is part of the
Registration Statement.
We also consent to the reference to us under the headings "Experts"
and "Selected Consolidated Financial Information" in such Prospectus.
/s/ Deloitte Touche Tohmatsu
Melbourne, Australia
May 5, 2000
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2)
------------
-----------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification No.)
One Wall Street, New York, New York 10286
(Address of principal executive offices) (Zip code)
-----------------
TXU AUSTRALIA HOLDINGS (PARTNERSHIP)
LIMITED PARTNERSHIP
(Exact name of obligor as specified in its charter)
Victoria, Australia 98-0203436
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
452 Flinders Street
Melbourne, Victoria Australia 3000
(Address of principal executive offices) (Zip code)
-----------------
JUNIOR MATURING PRINCIPAL SECURITIES*
(Title of the securities)
- -------------------
* Specific title to be determined in connection with sale of Junior
Maturing Principal Securities.
<PAGE>
ITEM 1. GENERAL INFORMATION.*
Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Superintendent of Banks of the 2 Rector Street, New York, N.Y. 10006
State of New York and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation 550 17th Street, N.W., Washington, D.C.
20429
New York Clearing House Association New York, N.Y. 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 2.)
ITEM 16. LIST OF EXHIBITS.
Exhibits identified in parentheses below, on file with the Commission,
are incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R.
ss.229.10(d).
1. - A copy of the Organization Certificate of The Bank of New
York (formerly Irving Trust Company) as now in effect, which
contains the authority to commence business and a grant of
powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to
Form T-1 filed with Registration Statement No. 33-29637.)
4. - A copy of the existing By-laws of the Trustee. (Exhibit 4
to Form T-1 filed with Registration Statement No. 33-31019.)
6. - The consent of the Trustee required by Section 321(b) of
the Act. (Exhibit 6 to Form T-1 filed with Registration
Statement No. 33-44051.)
7. - A copy of the latest report of condition of the Trustee
published pursuant to law or to the requirements of its
supervising or examining authority.
- -------------------
*Pursuant to General Instruction B, the Trustee has responded only to
Items 1, 2 and 16 of this form since to the best of the knowledge of the Trustee
the obligor is not in default under any indenture under which the Trustee is a
trustee.
<PAGE>
NOTE
Inasmuch as this Form T-1 is being filed prior to the ascertainment by
the Trustee of all facts on which to base a responsive answer to Item 2, the
answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 2nd day of May, 2000.
THE BANK OF NEW YORK
By: /S/ WALTER N. GITLIN
------------------------------------
Walter N. Gitlin
Vice President
-2-
<PAGE>
EXHIBIT 7
(Page 1 of 3)
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1999, published in accordance with
a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
- ------ --------------
Cash and balances due from
depository institutions:
Noninterest-bearing balances
and currency and coin.......................................... $ 3,247,576
Interest-bearing balances........................................ 6,207,543
Securities:
Held-to-maturity securities...................................... 827,248
Available-for-sale securities.................................... 5,092,464
Federal funds sold and Securities
purchased under agreements to resell........................... 5,306,926
Loans and lease financing
receivables:
Loans and leases, net of unearned
income................................................ 37,734,000
LESS: Allowance for loan and
lease losses.......................................... 575,224
LESS: Allocated transfer risk
reserve............................................... 13,278
Loans and leases, net of unearned
income, allowance, and reserve................................. 37,145,498
Trading Assets..................................................... 8,573,870
Premises and fixed assets (including
capitalized leases).............................................. 723,214
Other real estate owned............................................ 10,962
Investments in unconsolidated subsid-
iaries and associated companies.................................. 215,006
Customers' liability to this bank on
acceptances outstanding.......................................... 682,590
Intangible assets.................................................. 1,219,736
Other assets....................................................... 2,542,157
-----------
Total assets....................................................... $71,794,790
===========
<PAGE>
EXHIBIT 7
(Page 2 of 3)
LIABILITIES
- -----------
Deposits:
In domestic offices.............................................. $27,551,017
Noninterest-bearing..................................... 11,354,172
Interest-bearing........................................ 16,196,845
In foreign offices, Edge and
Agreement subsidiaries, and IBFs................................. 27,950,004
Noninterest-bearing..................................... 639,410
Interest-bearing........................................ 27,310,594
Federal funds purchased and Securities
sold under agreements to repurchase ............................. 1,349,708
Demand notes issued to the U.S.
Treasury......................................................... 300,000
Trading liabilities................................................ 2,339,554
Other borrowed money:
With remaining maturity of one year or less...................... 638,106
With remaining maturity of more than
one year through three years .................................. 449
With remaining maturity of more than
three years.................................................. 31,080
Bank's liability on acceptances
executed and outstanding......................................... 684,185
Subordinated notes and debentures.................................. 1,552,000
Other liabilities.................................................. 3,704,252
----------
Total liabilities.................................................. 66,100,355
----------
EQUITY CAPITAL
- --------------
Common stock....................................................... 1,135,284
Surplus............................................................ 866,947
Undivided profits and capital
reserves......................................................... 3,765,900
Net unrealized holding gains (losses)
on available-for-sale securities................................. (44,599)
Cumulative foreign currency
translation adjustments.......................................... (29,097)
-----------
Total equity capital............................................... 5,694,435
-----------
Total liabilities and equity capital............................... $71,794,790
===========
<PAGE>
EXHIBIT 7
(Page 3 of 3)
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi )
Alan R. Griffith ) Directors
Gerald L. Hassell )
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE TXU
AUSTRALIA HOLDINGS (PARTNERSHIP) LIMITED PARTNERSHIP FINANCIAL STATEMENTS FOR
FISCAL YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<CURRENCY> AUSTRALIAN DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 0.6062
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,697,040
<OTHER-PROPERTY-AND-INVEST> 1,300,590
<TOTAL-CURRENT-ASSETS> 371,165
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 231,391
<TOTAL-ASSETS> 4,600,186
<COMMON> 0
<CAPITAL-SURPLUS-PAID-IN> 884,000
<RETAINED-EARNINGS> 63,607
<TOTAL-COMMON-STOCKHOLDERS-EQ> 947,607
0
0
<LONG-TERM-DEBT-NET> 1,933,394
<SHORT-TERM-NOTES> 960,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 320,484
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 438,701
<TOT-CAPITALIZATION-AND-LIAB> 4,600,186
<GROSS-OPERATING-REVENUE> 887,670
<INCOME-TAX-EXPENSE> (19,807)
<OTHER-OPERATING-EXPENSES> 719,833
<TOTAL-OPERATING-EXPENSES> 719,833
<OPERATING-INCOME-LOSS> 187,644
<OTHER-INCOME-NET> (2,789)
<INCOME-BEFORE-INTEREST-EXPEN> 184,855
<TOTAL-INTEREST-EXPENSE> (190,706)
<NET-INCOME> (5,851)
0
<EARNINGS-AVAILABLE-FOR-COMM> (5,851)
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> (64,111)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
