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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2 TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 13,1996
DESTEC ENERGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-10592 38-2875546
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
2500 CITYWEST BOULEVARD, SUITE 150
HOUSTON, TEXAS 77042
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 735-4000
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS FOR BUSINESS ACQUIRED.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(c) EXHIBITS.
The following materials are filed as Exhibits to this Current Report on Form
8-K:
/+*/2.1 Share Sale Agreement dated August 4, 1996, among State Electricity
Commission of Victoria, the State of Victoria, the Buyers (as defined)
and the Guarantors (as defined).
/+/2.2 Asset Sale Agreement dated August 4, 1996, between Hazelwood Power
Corporation Ltd. and Hazelwood Power Partnership.
________
+ Filed herewith.
* Confidential treatment has been requested and granted with respect to
portions of this exhibit.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DESTEC ENERGY, INC.
By: /s/ Marian M. Davenport
-------------------------------------
Name: Marian M. Davenport
----------------------------------
Title: Vice President and General Counsel
-----------------------------------
Dated: August 12, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------ ----------- ------
<S> <C> <C>
/+*/2.1 Share Sale Agreement dated August 4, 1996,
among State Electricity Commission of Victoria,
the State of Victoria, the Buyers (as defined) and
the Guarantors (as defined).
/+/2.2 Asset Sale Agreement dated August 4, 1996,
between Hazelwood Power Corporation Ltd. and
Hazelwood Power Partnership.
- -----------
</TABLE>
+Filed herewith.
*Confidential treatment has been requested and granted with respect to
portions of this exhibit.
<PAGE>
EXHIBIT 2.1
**OMITTED INFORMATION DENOTED BY ASTERISKS (***)
HAS BEEN FILED SEPARATELY WITH THE COMMISSION
AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.***
STATE ELECTRICITY COMMISSION OF VICTORIA
and
THE STATE OF VICTORIA
and
THE BUYERS SPECIFIED IN SCHEDULE 1
and
THE GUARANTORS SPECIFIED IN SCHEDULE 1
--------------------------------------------------
Share Sale Agreement
relating to HAZELWOOD POWER CORPORATION LTD
--------------------------------------------------
Freehill Hollingdale & Page
Solicitors
101 Collins Street
Melbourne VIC 3000
Australia
Telephone: (03) 9288 1234
Facsimile: (03) 9288 1567
Reference: RWN/BCF/1810621
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TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATION
l.1 Definitions 2
1.2 Interpretation 8
2. SALE AND PURCHASE
2.1 Sale of Shares 9
2.2 Treasurer's Approval 9
2.3 Method of Payment 9
2.4 Dividend Payment 9
2.5 Section 205 10
3. DEPOSIT
3.1 Payment 10
3.2 Non-refund 10
3.3 Termination where Deposit Received 10
3.4 Notice of Termination where no Deposit Received 10
3.5 Termination if Deposit not paid 11
3.6 Remedies 11
4. PURCHASE PRICE
4.1 Amount 11
4.2 Payment 11
4.3 Interest on sums payable 11
4.4 Interest where Completion is delayed because of a
Financial Assistance application 11
4.5 Subsequent payments of Victorian Duty or State
Equivalent Tax 11
5. COMPLETION
5.1 Date for Completion 12
5.2 Delivery of documents relating to the Company 12
5.3 Meetings 13
5.4 Buyers' obligations at Completion 13
5.5 Remedies 15
6. POST COMPLETION MATTERS
6.1 Repayment of Loans 15
6.2 Definitions 16
7. INTERDEPENDENCY
7.1 Interdependency between completions 16
7.2 Deemed sequence 16
7.3 Rescission of Asset Sale Agreement 17
8. AUDITOR-GENERAL'S AUDIT
8.1 Audit by Auditor-General 17
8.2 Access to books 17
9. BUYERS' OBLIGATIONS
9.1 Buyers' Warranties 17
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2
9.2 Certification 19
9.3 Continued Holding 19
9.4 Buyers' Undertakings 19
9.5 Financial Assistance 20
9.6 Buyers' Indemnities 20
10. EMPLOYEE EQUITY
11. SELLER'S WARRANTIES
l1.l Giving of Warranties 2l
11.2 Reliance 21
11.3 Acknowledgment 21
l1.4 Remedies 22
11.5 Ability to claim 22
l1.6 Limitation on claims 23
11.7 Quantification of Claims 23
1l.8 State Equivalent Tax 23
12. SELLER'S INDEMNITIES/COVENANTS
12.1 Tax Indemnity 24
12.2 Indemnity 24
12.3 Claims procedure 24
13. ACTION PENDING COMPLETION
13.1 Carrying on of business 25
13.2 Buyers' Representative 26
13.3 Access 26
14. ANNOUNCEMENTS
14.1 Legal requirements 26
14.2 Disclosure to officers and professional advisers 27
14.3 Further publicity 27
14.4 Company's compliance with Electricity Act 27
15. DUTIES, COSTS AND EXPENSES
15.1 Payment of Duty 27
15.2 Indemnity 27
15.3 Costs and expenses 27
15.4 Costs of performance 27
16. GUARANTORS' GUARANTEE AND INDEMNITY
16.1 Guarantee 27
16.2 Additional Funding 28
16.3 Indemnity 28
16.4 Extent of guarantee and indemnity 28
16.5 Avoidance of payments 28
16.6 Continuing guarantee and indemnity 29
16.7 Warranties of the Guarantors 29
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3
16A CBA GROUP UNDERTAKINGS
17. STATE'S GUARANTEE AND INDEMNITY
17.1 Guarantee 30
17.2 Indemnity 30
17.3 Extent of guarantee and indemnity 30
17.4 Avoidance of payments 30
17.5 Continuing guarantee and indemnity 31
17.6 Warranties of the State 31
18. NOTICES
18.1 General 31
18.2 Legibility of facsimile transmission 32
19. ON-GOING OBLIGATIONS
19.1 Continued Access 32
19.2 Power Station Operations 33
19.3 IKEA Lease 33
19.4 Heads of Agreement 33
19.5 Novation of ETSA Agreements 33
19.6 [ETSA Hedge Contract] 34
20. GENERAL
20.1 Governing law and jurisdiction 34
20.2 Waivers 34
20.3 Variation 34
20.4 Further assurances 34
20.5 Third party rights 34
20.6 This agreement supersedes others 35
20.7 Assignment 35
WARRANTY 1 SHARES AND CAPITAL
l.1 Title 1
l.2 Consents l
1.3 Issued capital 1
1.4 Authorised capital 1
1.5 Fully paid 1
1.6 Issue of other securities 1
1.7 No legal impediment 1
1.8 Authorisations 2
WARRANTY 2 CORPORATE EXISTENCE
2.1 Corporate existence 2
2.2 Compliance with constituent documents 2
WARRANTY 3 THE 1995 ACCOUNTS
3.1 Basis of preparation 2
3.2 Fair Presentation 2
WARRANTY 4 PERIOD SINCE THE DRAFT BALANCE SHEET
4.1 Carrying on business 2
[CONFIDENTIAL TREATMENT REQUESTED]
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4
WARRANTY 5 ASSETS
5.1 Title to assets 3
5.2 Book Debts 3
WARRANTY 6 DISCLOSURE
6.1 Disclosure 4
WARRANTY 7 SECURED DEBT
WARRANTY 8 CONTRACTS
8.1 Foreign currency transactions 4
8.2 Change of control 4
8.3 No notices 4
WARRANTY 9 DELEGATIONS AND OFFERS
9.1 Powers of attorney 4
9.2 Offers outstanding 4
WARRANTY 10 CREDITORS
10.1 Outstanding Notes 5
WARRANTY 11 CORPORATE STRUCTURE
11.1 Shareholdings 5
11.2 Permanent establishment 5
11.3 Memberships 5
WARRANTY 12 EMPLOYEES
12.1 Allowances 5
l2.2 Termination of employment 5
12.3 Employee Plans 5
WARRANTY 13 SUPERANNUATION SCHEMES
13.1 List complete 6
13.2 Funding 6
13.3 Approvals 6
WARRANTY 14 UNIONS
14.1 Agreements 6
14.2 Awards 6
WARRANTY 15 COMPLIANCE WITH LAW
15.1 Compliance with law 7
15.2 Conduct and practices 7
15.3 Licences obtained 7
WARRANTY 16 LITIGATION
16.1 Company not a party to any litigation 7
16.2 No litigation pending or threatened 7
WARRANTY 17 SOLVENCY
17.1 No liquidation or winding-up 7
17.2 No petition 8
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5
17.3 No writ of execution 8
17.4 No receiver 8
WARRANTY 18 RECORDS AND CONSTITUENT DOCUMENTS
18.1 Records 8
18.2 Memorandum and Articles 8
18.3 Register of members 8
WARRANTY 19 TAXES AND DUTIES
19.1 Provisioning 8
19.2 Documents stamped 8
19.3 Returns submitted 9
WARRANTY 20 INSURANCES
20.1 Premiums Paid 9
20.2 Maintenance of policies 9
<PAGE>
THIS SHARE SALE AGREEMENT is made on 4 August 1996 between the following
parties:
1. STATE ELECTRICITY COMMISSION OF VICTORIA of Level 5, 452 Flinders
Street, Melbourne 3000 ("Seller");
2. THE HONOURABLE ALAN ROBERT STOCKDALE in his capacity as Treasurer of the
State of Victoria for and on behalf of the Crown in right of the State
("State");
3. The Buyers specified in column A of Schedule l (each a "BUYER" and together
the "Buyers"); and
4. The Guarantors specified in column C of Schedule 1 (each a "GUARANTOR" and
together the "GUARANTORS").
RECITALS:
A. The Seller is the beneficial owner of the Shares.
B. The Seller agrees to sell (and procure the sale by the Nominees) and the
Buyers agree to buy, the Shares on the terms and conditions set out in this
agreement.
C. Immediately before the sale of the Shares, the Buyers will, under the Asset
Sale Agreement, purchase the Assets from the Company on the terms and
conditions set out in such Agreement.
D. The State agrees to guarantee the obligations of the Seller under this
agreement.
E. Each Guarantor severally agrees to guarantee the obligations of its
Respective Buyer's contribution to the payments to be made by the Buyers and
the Company under this agreement on the terms and conditions set out in this
agreement.
F. The estimated total proceeds to the State and the Seller from the
transactions contemplated by this agreement are $2,400,000,000, assuming
Completion occurs on 13 September 1996, the components of which are as
follows:
S
(a) Dividend (clause 2.4) l,l81,400,551.13
(b) Estimated State Equivalent Tax:
(clause 5.4(b) and 11.8)
(1) Asset sale 486,579,121.87
(2) trading profits Nil
(c) Purchase Price (clause 5.4(a)) 1,000
(d) Repayment of SECV Loan (clause 6) 456,478,955
(e) Repayment of TCV Loan (clause 6) 142,025,344.52
(f) Estimated Victorian Duty (clause 5.4(c)) 133,515,027.48
-----------------
Estimated total proceeds $2,400,000,000.00
=================
<PAGE>
2
THE PARTIES AGREE as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this agreement:
"1995 ACCOUNTS" means the audited balance sheet of the Company as at 30 June
1995, the audited profit and loss statement for the Company for the period 28
June 1994 to 30 June 1995 and all notes forming part of those accounts, a copy
of which is set out in Annexure A.
"ADVISERS" means all of the advisers of the State or the Seller in relation to
the sale of the Company and all other transactions contemplated by this
agreement including without limitation, CS First Boston Australia Limited, KPMG,
KPMG Corporate Finance (Vic.) Pty Ltd, Energy Projects Division of the
Department of Treasury and Finance and Freehill Hollingdale & Page.
"AFFILIATE" means any person or entity that has a relationship with a designated
person whereby either of such persons or entities directly or indirectly
controls, is controlled by or is under common control with the other. For this
purpose, the term "control" means the power, direct or indirect, of one person
to direct or cause the direction of the management or policies of another,
whether by contract, through voting, securities or otherwise.
"ALLOCATION STATEMENT" means, in relation to the Company, any statement which,
for the purposes of section 153B of the Electricity Act, is an allocation
statement pursuant to which any property, rights or liabilities of Generation
Victoria were vested in the Company and includes the Generation Victoria
allocation statement dated 31 January 1995 (as amended on 23 August 1995 and
29 February 1996) (the "GV ALLOCATION STATEMENT").
"APPROVAL DATE" means the date on which the Company is able to give the
Financial Assistance, being:
(a) (where no application is made under section 205(12) of the Corporations Law)
the first Business Day after the 21 day notice period referred to in section
205(12) has expired; or
(b) (where an application is or applications are made under section 205(l2) of
the Corporations Law) the first Business Day after:
(1) the application or each application has been withdrawn; or
(2) the Court has approved the giving of the Financial Assistance,
whichever applicable date first occurs.
"ASSETS" has the meaning given to that term in the Asset Sale Agreement.
"ASSET SALE AGREEMENT" means the agreement so titled of today's date entered
into between the Company and the Buyers under which the Buyers shall acquire
certain assets.
"ASSOCIATE" has the meaning given to that term in the Electricity Act.
"AUDITOR-GENERAL" means the Auditor-General for the State.
"AUTHORISATION" includes:
(a) any consent, registration, filing, agreement, notarisation, certificate,
licence, approval, permit, authority or exemption from, by or with a
Governmental Agency; and
(b) in relation to anything which may be proscribed or restricted in whole or in
part by law or otherwise if a Governmental Agency intervenes or acts in any
way within a specified
<PAGE>
3
period after lodgement, registration or other notification of anything, the
expiration of that period without the intervention or action by that
Governmental Agency.
"BALANCE SHEET" means the balance sheet of the Company as at 30 June 1996 set
out in Annexure C.
"BASE RATE" means, in respect of a given date, the rate percent per annum which
is described as the "Average Mid Rate" and appears on the page entitled "BBSW"
on the Reuters Monitor System at or about 10.00 am (Melbourne time) on that date
for a bank accepted bill of exchange having a tenor of 30 days.
"BUSINESS" means the businesses of the generation and supply of electricity, the
exploration for, mining, production and supply of coal and other raw products
used in the supply of electricity, the supply of coal to other persons, the
acquisition and trade of electricity, coal and other raw products used in the
generation of electricity and the provision of related field, technical and
engineering services carried on by the Company, including the construction and
operation of power stations.
"BUSINESS DAY" means a day on which banks are open for business in Melbourne,
excluding a Saturday or a Sunday or a public holiday.
"BUYERS' REPRESENTATIVE" has the meaning given to that term in clause 13.2.
"BUYERS' WARRANTIES" means the warranties and representations of the Buyers set
out in clause 9.1.
"COMPANY" means Hazelwood Power Corporation Ltd ACN 065 381 204.
"COMPANY'S FUND" means that part of the Victorian Electricity Industry
Superannuation Fund which relates to the Company.
"COMPLETION" means completion of the sale and purchase of the Shares under
clause 5.
"COMPLETION DATE" means the later of:
(a) 13 September 1996; and
(b) the first Business Day after the Approval Date, or such other date as is
agreed in writing by the parties.
"CONTROL" has the same meaning as that in parts 3.6 and 3.7 of the Corporations
Law.
"CONTROLLING GROUP MEMBER" has the meaning given to that term in clause
5.4(f)(4).
"DATA ROOM DOCUMENTATION" means all documentation contained in the data room and
listed in the Data Room Index dated 6 June 1996 and any supplementary Data Room
Index sheets 1 to 26 and the Industry Index and supplementary indices A and OG.
"DEPOSIT" means $100,000,000.
"DISCLOSURES" means the information described in schedule 3.
"DISPOSE OF" includes transfer, sell or otherwise dispose of any right, title
or interest in or otherwise allow any person to acquire a Relevant Interest in,
but does not include the giving of any Security Interest to a bank or other
financial institution.
"DOLLARS" "A$" and "$" means the lawful currency of the Commonwealth of
Australia.
"DUTY" means any stamp, transaction or registration duty or similar charge
imposed by any State Governmental Agency and includes, but is not limited to,
any interest, fine, penalty, charge or
<PAGE>
4
other amount imposed in respect of the above, but excludes any State Equivalent
Tax or other Tax.
"ELECTRICITY ACT" means the Electricity Industry Act 1993.
"EMPLOYEES" means those employees engaged in the Business as at Completion.
"ENERGY BRIX OR EBAC" means Energy Brix Australia Corporation Pty Ltd
(ACN 051 705 364).
"EBAC COMPLETION DATE" means the first to occur of:
(a) the completion date as defined in the EBAC Share Sale Agreement; or
(b) the completion date as defined in any agreement for the sale of the whole of
the issued share capital of EBAC to any buyer pursuant to the EBAC Support
Deed, if completion of the EBAC Share Sale Agreement does not occur on the
Completion Date as defined in the EBAC Share Sale Agreement.
"EBAC" SHARE SALE AGREEMENT" means the agreement so titled of today's date
entered into between the Seller, the State and the buyer listed therein under
which the buyer acquires all the issued shares of EBAC.
["EBAC SUPPORT DEED" means the agreement so titled of today's date entered into
between the Buyers, the State and the Seller pursuant to which the Buyers agree
to procure a nominee to purchase all the issued shares of EBAC upon the
occurrence of certain events.]
"EBAC TRUST CONTRIBUTION" means:
(a) forty two million, seven hundred thousand four hundred and ninety dollars
($42,700,490) if the buyer listed in the EBAC Share Sale Agreement acquires
all of the issued shares in Energy Brix; or
(b) fifty million dollars ($50,000,000) if the Buyers' nominee acquires all the
issued shares in Energy Brix under the EBAC Support Deed upon the occurrence
of certain events.
"ENERGY LEVY ORDER" means any order made under section 158B of the Electricity
Act.
"ENERGY SECURITIES" means, in relation to a company, fully or partly paid shares
in the capital of that company (including stock), options in respect of or
rights to subscribe for any such shares, securities (debt or equity) convertible
into or exchangeable for any such shares, and equity securities the income
and/or capital rights of which are determined by reference to the income and/or
capital rights of any such shares in the company (together with options to
subscribe for any such securities and securities convertible into or
exchangeable for any such securities).
"ESTIMATED STATE EQUIVALENT TAX" has the meaning given to that term in clause
11.8.
"ESTIMATED VICTORIAN DUTY" means the estimate of Victoria stamp duty referred to
in clause 5.4(c).
["ESTA AGREEMENTS" means the deeds described in clauses 17.2 to 17.10
(inclusive) of the Generation Licence.]
"ESTA HEDGE CONTRACT" means the agreement titled Hedging Contract of today's
date between the Company and the Seller under which the Company and the Seller
establish electricity hedging arrangements.
"EXEMPT PERSON" means a person who holds or will hold a beneficial interest in
the shares held by a shareholder in a Buyer by virtue of its investment or
interest in:
[CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
5
(a) a regulated superannuation fund, an approved deposit fund or a pooled
superannuation fund in each case within the meaning of the Superannuation
Industry (Supervision) Act 1993;
(b) or arising out of, a life policy within the meaning of the Life Insurance
Act 1995; or
(c) prescribed interests issued pursuant to a deed which is an approved deed as
defined in section 1066 of the Corporations Law.
"FINANCIAL ACCOMMODATION LEVY" means the levy payable pursuant to section 40N of
the Financial Management Act 1994 for the period from 1 July 1995 up to and
including the Completion Date.
"FINANCIAL ASSISTANCE" means the financial assistance which the Company may give
for the purpose of, or in connection with, the acquisition by the Buyers of the
Shares.
"FUND TRUSTEE" shall have the same meaning as ascribed to that expression under
the EBAC Support Deed.
"GENERATOR" means the holder of a generation licence issued under Part 12 of the
Electricity Act by the Office of the Regulator-General.
"GENERATION LICENCE" means the generation licence issued to the Company under
Part l2 of the Electricity Act by the Office of the Regulator-General on 31
January 1995 as amended on 7 August 1995, 1 March 1996 and 23 July 1996.
"GOVERNMENTAL AGENCY" means the government of any country or any state,
territory, municipality or other political subdivision of a country, and any
minister, administrative or judicial body, department, commission, authority,
instrumentality, tribunal, agency or entity of any such government.
"GROUNDWATER LICENCE" means the groundwater licence issued or to be issued to
the Company under section 51 of the Water Act 1989 in substantially and in all
material respects in the same form as the draft groundwater licence set out in
Annexure E.
"GROUP" means:
(a) in relation to each shareholder in each Buyer other than CISL (Hazelwood)
Pty Ltd, ("CFS SPV") (and each person who holds a beneficial interest in the
shares held by that shareholder) ("first named person"):
(1) the Ultimate Holding Vehicle of that first named person; and
(2) every person interposed between that Ultimate Holding Vehicle and the
first named person,
with each such vehicle, person or corporation being a "GROUP MEMBER"; and
(b) in relation to CFS SPV (and each person who holds a beneficial interest in
the shares held by CFS SPV):
(1) Commonwealth Investment Services Limited ("CISL"); and
(2) any:
(A) regulated superannuation fund, approved deposit fund or pooled
superannuation fund (in each case within the meaning of the
Superannuation Industry (Supervision) Act 1993);
(B) life insurance company as defined in the Life Insurance Act 1995;
or
<PAGE>
6
(C) trust in relation to which there is an approved deed as defined in
section 1066 of the Corporations Law,
in respect of which CISL is the manager or has been granted full
management rights in respect of any investment by that fund, life
insurance company or trust in the Buyer.
with each such corporation, fund, trust or person being a "Group Member.
"GV ALLOCATION STATEMENT" has the meaning given that term in the definition of
Allocation Statement".
"HEADS OF AGREEMENT" means the heads of agreement dated 31 July 1996 entered
into between the Company and Power Net Victoria under which the Company has
agreed to grant certain real property interests to Power Net Victoria.
"IKEA" means IKEA Deutschland Verkaufs - GmbH & Co. Einrichtungs KG, Am
Wandersmann 2-4, D-65719 Hofheim, Wallan, Federal Republic of Germany (formerly
named Ikea Einrichtungs - GmbH).
"IKEA LEASE" means the lease described in schedule 4.
"MATERIAL CONTRACT" has the meaning given that term in warranty 4.l(b) of
schedule 2.
"MAXIMUM CAPACITY" has the meaning given to that term in clause l9.2(a).
"MINING LICENCE" means the mining licence to be issued to the Company (to be
held on trust absolutely for the Buyers) under section 47A of the Electricity
Act in substantially and in all material respects in the same form as the draft
mining licence set out in Annexure F.
"NOMINEES" means Messrs Greaves, Drewett, Coughlin and McMahen.
"OFFICER" means a director or secretary of the relevant party or Company (as the
case may be).
"PARTNERSHIP DEED" means the partnership deed to be entered into by the Buyers
on or about the date of this agreement, as amended from time to time.
"PERMITTED TRANSFEREE" means as to any person or entity in respect of which
transfer is restricted under this agreement,
(a) any Group Member or Affiliate of such person or entity; or
(b) any other Buyer or Group Member or Affiliate of any other Buyer.
"POWER" means any right, power, authority, discretion or remedy conferred on the
parties by this agreement or any applicable law.
"PROHIBITED INTEREST" has the meaning given to that term in the Electricity Act.
"PURCHASE PRICE" means the price payable for the Shares under clause 4.l.
"RELEVANT AGREEMENT" has the meaning given to that term in the Electricity Act.
"RELEVANT INTEREST" has the meaning given to that expression in the Corporations
Law.
"RESPECTIVE BUYER" means, in relation to a Guarantor, the Buyer set out against
its name in schedule 1.
"SECURITY INTEREST" means an interest or power:
(a) reserved in or over an interest in any asset including, but not limited
to, any retention of title; or
<PAGE>
7
(b) created or otherwise arising in or over any interest in any asset under
a bill of sale, mortgage, charge, lien, pledge, trust or power,
by way of security for the payment of a debt or any other monetary obligation or
the performance of any other obligation and includes, but is not limited to, any
agreement to grant or create any of the above.
"SECV LOAN" means any liability pursuant to section l53F of the Electricity Act
(on such terms and conditions as apply on the Completion Date) of the Company to
the Seller arising as a result of a direction given by the Treasurer under sub-
section 153W(3) of the Electricity Act (which on the Completion Date shall not
exceed $456,478,955).
"SELLER'S WARRANTIES" means the warranties and representations of the Seller set
out in schedule 2.
"SHARES" means the fifteen issued ordinary shares of $1.00 each currently in the
capital of the Company and the further 985 ordinary shares in the Company to be
issued in accordance with clause 5.3(a).
"STATE EQUIVALENT TAX" means such amounts due to the Treasurer under section
88(1)(a) of the State Owned Enterprises Act 1992 in respect of tax (not being
sales tax) that would be payable by the Company if it were liable to pay taxes
under the law of the Commonwealth.
"STATION" has the meaning given to that term in clause 19.2(a).
"TARGET GROUP MEMBER" has the meaning given to that term in clause 5.4(f)(4).
"TARIFF ORDER" means any order made under section 158A of the Electricity Act.
"TAX" means any tax, levy, charge, impost, duty, fee, deduction or withholding
which is assessed, levied, imposed or collected by any State Governmental Agency
and includes, but is not limited to any interest, fine, penalty, charge, fee or
any other amount imposed on, or in respect of, any of the above and any amount
imposed under section 88 of the State Owned Enterprises Act 1992 but excludes:
(a) any Duty; and
(b) the SECV Loan.
"TCV" means Treasury Corporation of Victoria.
"TCV LOAN" means the sum of $142,025,344.52.
"THIRD PARTY CLAIM" has the meaning given to that term in clause 12.3.
"TREASURER" means the Treasurer of the State of Victoria.
"TREASURER'S ACCOUNTANTS" has the meaning given to that term in clause 8.1.
"ULTIMATE HOLDING VEHICLE" means:
(a) in relation to a body corporate, the same meaning as that given to
"Ultimate Holding Company" in the Corporations Law;
(b) in relation to any other investment vehicle (trust or otherwise), the
person who Controls that investment vehicle and is itself not Controlled
by any person; and
(c) in relation to Australian Power Partners CV shall mean Destec Energy,
Inc, a Delaware Corporation.
"VESTED HEDGING CONTRACT" means an agreement entered into between any two of the
following:
<PAGE>
8
(a) the persons holding distribution licences issued under Part 12 of the
Electricity Act;
(b) the persons holding generation licences issued under Part 12 of the
Electricity Act; and
(c) the Seller,
or between the Seller acting in one capacity and the Seller acting in
another capacity, entered into on or about 31 March 1995 which incorporate
the Master Vesting Terms and Conditions.
1.2 INTERPRETATION
In this agreement, unless the context otherwise requires:
(a) headings and underlinings are for convenience only and do not affect the
interpretation of this agreement;
(b) words importing the singular include the plural and vice versa;
(c) words importing a gender include any gender;
(d) other parts of speech and grammatical forms of a word or phrase defined
in this agreement have a corresponding meaning;
(e) an expression importing a natural person includes any company,
partnership, joint venture, association, corporation or other body
corporate and any Governmental Agency;
(f) a reference to a clause, party, annexure, exhibit or schedule is a
reference tO a clause of, and a party, annexure, exhibit and schedule
to, this agreement and a reference to this agreement includes any
annexure, exhibit and schedule;
(g) a reference to a statute, regulation, proclamation, ordinance or by-law
includes al1 statutes, regulations, proclamations, ordinances or by-laws
amending, consolidating or replacing it, and a reference to a statute
includes all regulations, proclamations, ordinances and by-laws issued
under that statute;
(h) a reference to a document includes all amendments or supplements to, or
replacements or novations of, that document;
(i) a reference to a party to a document includes that party's successors
and permitted assigns;
(j) where the day on or by which any thing is to be done is not a Business
Day, that thing must be done on or by the next Business Day;
(k) no rule of construction applies to the disadvantage of a party because
that party was responsible for the preparation of this agreement or any
part of it;
(l) a covenant or agreement on the part of two or more persons binds them
jointly and severally;
(m) a reference to an agreement other than this agreement includes an
undertaking, agreement or legally enforceable arrangement or
understanding whether or not in writing;
(n) a reference to an asset includes all property of any nature, including,
but not limited to, a business, and all rights, revenues and benefits;
(o) a reference to a document includes any agreement in writing, or any
certificate, notice, instrument or other document of any kind;
(p) a reference to liquidation includes appointment of an administrator,
compromise, arrangement, merger, amalgamation, reconstruction, winding-
up, dissolution, assignment for the benefit of creditors, scheme,
composition or arrangement with creditors,
<PAGE>
9
insolvency, bankruptcy, or any similar procedure or, where applicable,
changes in the constitution of any partnership or person, or death;
(q) terms used in this agreement and defined in the Corporations Law at the
date of this agreement have the meanings given to them in the
Corporations Law at that date;
(r) the benefit of this agreement to the extent it relates to any
undertaking given by the Buyers to the State in relation to
contributions to the Company's Fund, shall be held by the State
beneficially for itself and as trustee for all other contributing
employers to, and the trustee of, that Fund; and
(s) the benefit of this agreement to the extent it relates to a
representative of the Company or an Adviser, shall be held by the State
beneficially for itself and as trustee for that representative or
Adviser (as the case may be).
2. SALE AND PURCHASE
2.1 SALE OF SHARES
Subject to the terms of this agreement, the Seller must sell (and procure the
Nominees to sell) free of Security Interests and other third party rights and
the Buyers must buy the Shares for the Purchase Price on Completion, as
follows:
BUYER INTEREST IN SHARES
National Power Australia Investments Limited 51.94%
Hazelwood Pacific Pty Ltd 19.90%
Australian Power Partners C.V. 20.00%
Hazelwood Investment Company Pty Ltd 2.04%
CISL (Hazelwood) Pty Ltd 6.12%
The Seller and the Buyers agree that on Completion the Shares will be
transferred to National Power Australia Investments Limited as nominee for the
Buyers, to be held in accordance with the Partnership Deed.
2.2 TREASURER'S APPROVAL
For the purposes of section 12A(e) of the State Electricity Commission Act 1958,
the Treasurer (in his capacity as such) hereby approves the sale of the Shares
by the Seller on and subject to the terms of this agreement.
2.3 METHOD OF PAYMENT
All payments to be made under this agreement must be made by bank cheque or by
such other immediately available funds as may be agreed in writing between the
Seller and the Buyers.
2.4 DIVIDEND PAYMENT
The Seller shall procure that the board of directors of the Company comprising
nominees of the State declares, on the Completion Date, a dividend of
$1,181,400,551.13 to the Seller out of the accumulated profits (after State
Equivalent Tax) of the Company. The Buyers shall procure that the board of
directors of the Company comprising nominees of the Buyers pays, on Completion,
the amount of the dividend so declared.
<PAGE>
10
2.5 SECTION 205
The Seller shall pass, and procure that the Nominees ensure that the Company
passes, the resolutions relating to the Financial Assistance which have been
notified by the Buyers to the Seller prior to execution of this agreement. The
parties further agree that their respective responsibilities in relation to
obtaining all approvals, authorisations or other requirements set out in
sections 205 and 206 of the Corporations Law are as set out in annexure D.
3. DEPOSIT
3.1 PAYMENT
If Completion does not occur on the later of 13 September 1996 and the first
Business Day after the Approval Date then each Buyer must, on that date, pay to
the Seller its several proportion of the Deposit as referred to in Schedule 1,
unless the failure to Complete arises solely because of:
(a) a Court failing to make an order under sub-section 205(13) of the
Corporations Law if a person not associated with the Buyers makes an
application under sub-section 205(12) of the Corporations Law with respect
to the Financial Assistance; or
(b) a default by the State or the Seller in meeting their obligations to
complete under this agreement.
If any of the reasons specified in (a) or (b) above cease to prevent Completion
occurring then the Buyers must, on the first Business Day after the reason
ceases to prevent Completion occurring, pay to the Seller the Deposit.
3.2 NON-REFUND
The Deposit shall only be refunded to the Buyers (and the Seller must refund the
Deposit) if the Buyers are not in breach of this agreement and either the State
and the Seller, or the Buyers, exercise their rights to terminate this agreement
under clause 5.5. The Deposit shall be regarded as part of the payments which
the Seller and the State are expecting to receive on the Completion Date and not
merely a deposit on the Purchase Price subject to clause 3.6. The Buyers
acknowledge that it may be retained by the Seller in the circumstances mentioned
above even though many of the payments are expected to be made by the Company.
3.3 TERMINATION WHERE DEPOSIT RECEIVED
If the Deposit is paid as contemplated under clause 3.1:
(a) the State and the Seller may at their complete discretion and on such terms
as they see fit negotiate with persons other than the Buyers for the sale
and purchase of the Shares and all related transactions including the sale
of the Assets;
(b) the State and the Seller may terminate this agreement by notice in writing
any time after 31 October 1996 (and, if designated as a notice under this
clause, such termination shall be regarded as termination under this clause
and not clause 5.5); and
(c) after termination of this agreement, the Seller and the State may complete
the sale and purchase of the Shares and the sale of the Assets with another
person.
3.4 NOTICE OF TERMINATION WHERE NO DEPOSIT RECEIVED
If the Buyers do not pay to the Seller the Deposit as contemplated under clause
3.1, then the Seller may, at any time after 13 September 1996 give written
notice (the "First Notice") to the Buyers that it may terminate this agreement
(and the Asset Sale Agreement) by a further notice in writing to the Buyers, if
the Buyers do not pay the Deposit (together with interest calculated in
<PAGE>
11
accordance with clause 4.3) within three Business Days of receipt of the First
Notice by the Buyers.
3.5 TERMINATION IF DEPOSIT NOT PAID
If the Deposit and interest is not paid within such period then the Seller may
at any time after the expiration of the three Business Day period terminate this
agreement promptly by notice in writing to the Buyers. On termination of this
agreement, the Asset Sale Agreement shall automatically terminate.
3.6 REMEDIES
If this agreement is terminated under this clause 3 then in addition to any
other rights provided by law, the State and the Seller retain the rights they
have against the Buyers, including without limitation, the right to retain the
Deposit (on account of liquidated damages), to the extent of any deficiency upon
resale (including without limitation the time value of money) in the aggregate
proceeds of sale (however described) and any resulting expenses.
4. PURCHASE PRICE
4.1 AMOUNT
The price ("Purchase Price") payable is $1,000.
4.2 PAYMENT
On and subject to the terms and conditions of this agreement the Buyers must in
the proportions set forth in column B of schedule 1 pay the Purchase Price on
the Completion Date.
4.3 INTEREST ON SUMS PAYABLE
Subject to clause 4.4, if any party or the Company fails to pay any sum payable
by it under or in accordance with this agreement at the time and otherwise in
the manner provided in this agreement, the Buyers must pay interest on that sum
from the due date of payment until that sum is paid in full at the Base Rate
plus 4% except interest under this clause 4.4 shall not be payable by any party
on the TCV Loan and interest payable thereon pursuant to clause 6.l(b).
4.4 INTEREST WHERE COMPLETION IS DELAYED BECAUSE OF A FINANCIAL ASSISTANCE
APPLICATION
The parties acknowledge and agree that if Completion does not occur on 13
September 1996 solely because an application is made under section 205(12) of
the Corporations Law in respect of the Financial Assistance, then the Buyers
must pay interest on all sums payable by the Company and the Buyers on
Completion (less the Deposit paid) from that date until the sum is paid in full
at the rate equal to the Base Rate, except interest under this clause 4.3 shall
not be payable by any party on the TCV Loan or any interest payable thereon
pursuant to clause 6.1(b). Interest accrues from day to day and is payable on
demand.
4.5 SUBSEQUENT PAYMENTS OF VICTORIAN DUTY OR STATE EQUIVALENT TAX
The Seller:
(a) shall pay any State Equivalent Tax which becomes payable by the Company
after Completion and any State Equivalent Tax payable by the Company under
clause 11.8, and shall be entitled to collect the amount of any refund of
State Equivalent Tax payable to the Company after the Completion Date;
(b) shall pay any Victorian Duty payable by the Company or the Buyers after
Completion, and shall be entitled to collect the amount of any refund of
Victorian Duty payable to the
<PAGE>
12
Company or the Buyers after the Completion Date, where the Victorian Duty is in
respect of:
(l) the sale of the Assets by the Company to the Buyers;
(2) the sale of the Shares under this agreement; or
(3) any financing of the Company or the Buyers entered into on or before
Completion to finance the transactions contemplated by this agreement and
security granted on or before Completion to secure that financing.
For the avoidance of doubt, the obligations of the Seller to make the payments
described in this clause do not extend to the payments required to be made by
the Buyer or the Company under clauses 5.4(b) (other than State Equivalent Tax
referred to in l1.8 (if any)) and 5.4(c).
5. COMPLETION
5.1 DATE FOR COMPLETION
Completion must take place at 10 am on the Completion Date at the office of the
Seller's solicitors, Freehill Hollingdale & Page, 48th Floor, 101 Collins
Street, Melbourne.
5.2 DELIVERY OF DOCUMENTS RELATING TO THE COMPANY
At Completion, the Seller must:
(a) deliver to the Buyers share certificates for the Shares;
(b) deliver to the Buyers completed transfers of the Shares to the Buyers in
registrable form, pursuant to instructions provided by the Buyers, executed
by the Seller and, where applicable, the Nominees;
(c) deliver to the Buyers the certificate of incorporation, common seal and all
statutory, minute and share certificate books of the Company;
(d) deliver to the Buyers the written resignations of all directors of the
Company except those directors to whom the Buyers notify the Seller no later
than 8 September 1996 that it wishes to retain, to be effective on the
appointment of the directors to be appointed at the Board meeting to be
convened under clause 5.3;
(e) make available to the Buyers at the respective offices or places of business
of the Company:
(1) all ledgers, journals and books of account of the Company;
(2) all cheque books of the Company and a list of all bank accounts
maintained by the Company; and
(3) all documents in the possession of the Company relating to the ownership
and use of the assets of the Company;
(f) deliver to the Buyers:
(1) the Generation Licence;
(2) the Groundwater Licence;
(3) a certificate of the Treasurer pursuant to section 171A of the
Electricity Act with respect to PacifiCorp Holdings, Inc. and its
related corporations and the matters set out in paragraphs (a) and (b)
of that section;
<PAGE>
13
(4) a full discharge and release in respect of the Company's obligation to
pay the Financial Accommodation Levy; and
(5) the consent of the Generators controlled by the State to the Company
declaring that it holds the ETSA Agreements on trust for the Buyers;
and
(g) procure that the Financial Accommodation Levy is paid by the Company to the
State (and for the avoidance of doubt, this payment does not form part of
the total proceeds payable to the State and the Seller from the
transactions contemplated by this agreement).
5.3 MEETINGS
At Completion, the Seller must ensure that a meeting of the directors or
shareholders (as appropriate) of the Company is convened and conducts the
following business:
(a) allotment of 985 ordinary shares in the Company to the Seller credited as
fully paid out of the profits of the Company;
(b) approval of the registration of the Buyers as the holders of the Shares in
the books of the Company, subject to the payment of Duty on the transfer of
the Shares;
(c) appointment of the nominees of the Buyers as directors of the Company; and
(d) declaration of the dividend required to be paid pursuant to clause 2.4.
5.4 BUYERS' OBLIGATIONS AT COMPLETION
At Completion the Buyers must:
(a) pay the Seller the Purchase Price;
(b) procure that the Company pays to the State the Estimated State Equivalent
Tax;
(c) pay or procure the payment of the Estimated Victorian Duty payable by the
Company and the Buyers in respect of the matters set out in clause 4.5(b)(1)
to (3) (inclusive) which is equal to $133,515,027.48,
(d) procure that the Company pays to the Seller the dividend required to be paid
under clause 2.4;
(e) deliver to the State covenants (in form and substance satisfactory to the
State) from each shareholder in each Buyer (and each person who holds a
beneficial interest in the shares held by that shareholder) (not being a
person who holds that interest by virtue of its shareholding or investments
in an Ultimate Holding Vehicle listed on a recognised stock exchange or an
Exempt Person) that it will not, except with the prior written consent of
the Treasurer, for two years after the Completion Date and, except with the
prior written agreement of the Treasurer on timing (which agreement will not
be unreasonably withheld, having regard to other privatisations being
conducted by the State), for 3 years after the Completion Date:
(1) create, grant or issue any Equity Securities, units or other interests
in that Buyer (other than to a Permitted Transferee);
(2) dispose of any Equity Securities, units or other interests (or rights to
acquire Equity Securities, units or other interests) in that Buyer
(other than to a Permitted Transferee); or
(3) transfer, sell or otherwise dispose of any right, title or interest in
the whole or any substantial part of the undertaking or assets of that
Buyer (other than to a Permitted Transferee);
<PAGE>
14
(f) deliver to the State in respect of each Group, covenants (in form and
substance satisfactory to the State) from each Group Member (not being a
Group Member who holds that interest by virtue of its shareholding or
investment in an Ultimate Holding Vehicle listed on a recognised stock
exchange or an Exempt Person), that it will not, except with the prior
written consent of the Treasurer, for two years after the Completion Date
and, except with the prior written agreement of the Treasurer on timing
(which agreement will not be unreasonably withheld, having regard to other
privatisations being conducted by the State) for 3 years after the
Completion Date:
(1) create, grant or issue (or permit the creation, grant or issue of) any
Equity Securities, units or other interests in any Group Member it
Controls (other than to a Permitted Transferee); or
(2) dispose of any Equity Securities, units or other interests (or rights to
acquire Equity Securities, units or other interests) in any Group Member
it Controls (other than to a Permitted Transferee); or
unless
(3) it (the "CONTROLLING GROUP MEMBER") is able to show to the Treasurer,
that the book value at cost of the Group's investment in the Buyers
constitutes less than 50% of the book value at cost of the total assets
(excluding intangibles, cash and short term marketable securities) of
the Group Member it Controls ("TARGET GROUP MEMBER"),
in which event
(4) the Controlling Group Member may dispose of up to 49.9% of the Target
Group Member (or 49.9% of the Target Group Member after allowing for
full dilution on the creation, grant or issue of any Equity Securities,
units or other interests in the Target Group Member); and
(5) where the Controlling Group Member is the Ultimate Holding Vehicle of
the Target Group Member, any restriction that might otherwise be imposed
on the shareholders or investors in that Vehicle shall not apply;
(g) deliver to the State, in relation to each of the covenants delivered under
clauses 5.4(e) and (f) evidence (in form and substance satisfactory to the
State) of:
(1) each covenantor's power and authority to enter into the covenant;
(2) the due execution of the covenant by each covenantor; and
(h) deliver to the State (in form and substance satisfactory to the State):
(l) certified copies of the certificates of incorporation and memorandum and
articles of association or other constituent documents of each Buyer;
and
(2) certified copies of each power of attorney pursuant to which this
agreement and any document contemplated by this agreement is executed by
each Buyer and each Guarantor or evidence (in form and substance
satisfactory to the State) of each Buyer's and each Guarantor's power
and authority to enter into this agreement and any document contemplated
by this agreement and of the due execution of this agreement and any
such document by each Buyer and each Guarantor; and
5.5 TERMINATION BY LAPSE OF TIME
If:
<PAGE>
15
(a) this agreement has not already been terminated by the State under clause
3.3; and
(b) Completion has not occurred on or before 31 October 1996 (or such other date
as the parties may have agreed in writing),
then either the Buyers on the one part or the State and the Seller on the other
part may, if not in breach of this agreement, give written notice to the others
of their intention to terminate this agreement (and the Asset Sale Agreement)
after three Business Days of receipt of the notice. After such notice has been
delivered both parties shall use their best efforts to reach Completion within
the three day notice period. If Completion does not occur within such period
then this agreement and the Asset Sale Agreement shall automatically terminate
on an expiration of the three Business Day notice period.
5.5 REMEDIES
If this agreement is terminated under clause 5.5 then in addition to any other
rights provided by law:
(a) each party is released from its obligations to continue performance under
this agreement except those imposing obligations of confidentiality;
(b) each party retains the rights it has against any other party in respect of
any past breach; and
(c) the Buyers shall receive a refund of the Deposit.
6. POST COMPLETION MATTERS
6.1 REPAYMENT OF LOANS
Immediately after Completion:
(a) the Buyers shall ensure that the Company has available to it sufficient
funds to repay, and the Buyers shall procure that the Company repays:
(1) the SECV Loan; and
(2) the TCV Loan;
(b) (if Completion does not occur on 13 September 1996), the Buyers must pay
interest accrued on the TCV Loan at the Cash Rate plus 2% per annum, reset
and compounded daily from and including 13 September 1996 up to and
including the Completion Date;
(c) the Buyers shall ensure the Company has available to it sufficient funds to
pay and the Buyers shall procure that the Company pays (or the State, as the
case may be, shall procure TCV to pay) the following payments:
(1) if on the Completion Date the outstanding level of cash advances made by
TCV for working capital requirements on or after the 5 August 1996
exceeds the money standing to the credit of the Company with TCV in
respect of dealings with TCV on or after the 5 August 1996, then the
Company must pay to TCV the amount of the excess;
(2) all Accrued Interest; and
(3) all outstanding TCV administration fees (being an amount not to exceed
$3,000 per month);
(d) the State shall deliver to the Buyers a full discharge and release in
respect of the SECV Loan, the TCV Loan and any liability to the Treasurer
under section 153F of the
<PAGE>
16
Electricity Act and, if on the Completion Date, the level of money standing
to the credit of the Company with TCV in respect of dealings with TCV on or
after 5 August 1996 exceeds the level of outstanding cash advances made by
TCV for working capital requirements on or after 5 August 1996, then the
Seller shall procure that TCV shall pay to the Company the amount of the
excess; and
(e) the Seller will procure that the Mining Licence is issued to the Company.
6.2 DEFINITIONS
For the purposes of this clause 6:
(a) a certificate signed by an officer of TCV stating the aggregate amount of
such cash advances, deposits, all Accrued Interest and all TCV
administration fees is, in the absence of manifest error, conclusive
evidence of that value;
(b) "ACCRUED INTEREST" means in respect of transactions with TCV referred to in
clauses 6.1(c)(1) and 6.1(d) on or after 5 August 1996, the net amount of
interest which has accrued but remains unpaid to the account of TCV or the
Company from and including 5 August 1996 to the Completion Date. For the
purposes of calculating the accrued interest:
(1) interest shall be calculated each day on the balance owing to TCV or the
Company;
(2) where on the relevant day there is a cash advance owing from the Company
to TCV, the interest rate shall be the Cash Rate plus 0.05 per cent per
annum;
(3) where on the relevant day there is a deposit from the Company to TCV,
the interest rate shall be the Cash Rate less 0.05 per cent per annum;
and
(4) the aggregate amount of daily interest payable or receivable shall be
paid by TCV or the Company (as appropriate) on the last day of each
calendar month prior to Completion and on Completion (in respect of the
period from the first day of the month in which Completion occurs to
Completion); and
(c) "CASH RATE" means on the relevant date, the rate per cent per annum
determined by TCV by taking the rates quoted on the page entitled "II AM" on
the Reuters Monitor System at or about 11:00 am (Melbourne time).
7. INTERDEPENDENCY
7.1 INTERDEPENDENCY BETWEEN COMPLETIONS
It is the intention of the parties that:
(a) Completion under this agreement;
(b) subject to clause 7.3 of this agreement, completion under the Asset Sale
Agreement; and
(c) payment of the SECV Loan and TCV Loan under clause 6,
are interdependent, so that if the obligations of the parties in respect of
completion or payment under clause 6 are not satisfied, then no delivery or
payment which has been made, will be deemed to have been made.
7.2 DEEMED SEQUENCE
For the avoidance of doubt the parties acknowledge and agree that once
Completion under this agreement, completion under the Asset Sale Agreement and
the payments under clause 6 have
<PAGE>
17
occurred, as a chronological sequence of events, all deliveries and payments
will be deemed to have taken place in the order in which they occurred.
7.3 RESCISSION OF ASSET SALE AGREEMENT
For the avoidance of doubt, if:
(a) the Buyers rescind or purport to rescind or fail to complete the Asset Sale
Agreement for any reason including without limitation pursuant to any rights
conferred by section 32 of the Sale of Land Act 1962; or
(b) the Buyers do not accept title to the land or the Assets sold under the
Asset Sale Agreement,
the Buyers must still complete the sale and purchase of the Shares and comply
with their obligations under this agreement in accordance with its terms, save
that the amount of the dividend referred to in clause 2.4 shall be decreased by
an amount equal to the profit on sale of the Assets (after State Equivalent Tax)
and the Purchase Price shall be increased by the same amount. Any reduction in
State Equivalent Tax and Victorian Duty paid by the Company and the Buyers as a
result of the Assets not being sold shall result in a corresponding increase in
the Purchase Price under clause 4.1.
8. AUDITOR-GENERAL'S AUDIT
8.1 AUDIT BY AUDITOR-GENERAL
The Buyers acknowledge and agree that:
(a) they will procure that the Auditor-General is responsible for auditing the
financial statements for the Company for the year ended 30 June 1996 and
will ensure that the Company does not appoint any other auditor under
section 327 of the Corporations Law to audit those financial statements; and
(b) financial statements as nominated by the Treasurer for the period from l
July 1996 until the Completion Date may also be audited by the Auditor-
General (or his agent) and/or reviewed by independent accountants appointed
by the Treasurer ("TREASURER'S ACCOUNTANTS"), who may publish accounts for
any period up to and including the Completion Date or his (or their) report
on such accounts.
8.2 ACCESS TO BOOKS
The Buyers must grant, and procure that the Company grants, the Auditor-General
and/or the Treasurer's Accountants (and/or the agents of any of them) full and
free access at all reasonable times to those employees of the Company whose
knowledge or information is needed by the Auditor-General and/or the Treasurer's
Accountants (and/or the agents of any of them) and to all books, records and
other data pertaining to the Company, in order to enable the Auditor-General
and/or the Treasurer's Accountants to conduct his (or their) audit.
9. BUYERS' OBLIGATIONS
9.1 BUYERS' WARRANTIES
Each Buyer represents and warrants to the Seller and the State severally with
respect to itself and its Group Members as at:
(a) the date of this agreement and the Completion Date that, except as set out
in Annexure B, no person other than a person who holds that interest by
virtue of its shareholding or
<PAGE>
18
investments in an ultimate holding vehicle listed on a recognised stock
exchange or an Exempt Person has any legal or beneficial interest (or
obligation (actual, contingent or otherwise) to acquire a legal or
beneficial interest) in:
(1) the capital of the Buyer; or
(2) the capital of each Group Member;
(b) the date of this agreement and the Completion Date, that annexure B sets out
complete and accurate details of:
(1) all agreements, arrangements or understandings between or among a Group
Member or shareholder in a Buyer (or each person who holds a beneficial
interest in the shares held by that shareholder other than a person who
holds that interest by virtue of its shareholding or investments in an
ultimate holding vehicle listed on a recognised stock exchange or an
Exempt Person) and a Group Member or shareholder of any other Buyer
which have (directly or indirectly) an impact on or relate to:
(A) the financial and operating policies or management of the Company or
the Business;
(B) the activities of the Company as a licensee; or
(C) the exercise of any voting power in another Group Member; and
(2) the form and relative amount of the return to the Buyer and its Group
Members whether by way of dividend, fee or otherwise for the period of
three years from the Completion Date, together with al1 agreements,
arrangements or understandings relating to those returns;
(c) the date of this agreement and the Completion Date, that the Buyer has the
corporate power to enter into this agreement and has taken all necessary
action (including obtaining all shareholder approvals and Authorisations) to
authorise the execution, delivery and performance of this agreement;
(d) the date of this agreement and the Completion Date, that the agreement
constitutes a legally valid and binding obligation of the Buyer enforceable
in accordance with its terms;
(e) the date of this agreement and the Completion Date that, the Buyer will on
Completion have sufficient funds available to pay its share of the Purchase
Price and ensure that, with respect to the Buyer's share the Company has
sufficient funds available to it to repay the SECV Loan, the TCV Loan and
any other amounts owing to TCV, to pay the Estimated State Equivalent Tax,
to pay the dividend payable under clause 2.4 and to pay or procure the
payment of Estimated Victorian Duty as contemplated by clause 5.4(c) and
otherwise satisfy its obligations (and the Company's obligations) on
Completion;
(f) the date of this agreement and the Completion Date, that the execution,
delivery and performance of this agreement by the Buyer (and, subject to the
resolutions relating to the Financial Assistance being passed and no
successful application being made under section 205(12) of the Corporations
Law, the giving of the Financial Assistance) will not violate any provision
of:
(l) any law, regulation, order, rule or decree of any Governmental Agency of
the Commonwealth of Australia or any state or territory or, where the
Buyer is incorporated outside Australia, of the place of its
incorporation, or any recognised
<PAGE>
19
stock exchange on which its shares or the shares of any related body corporate
are listed;
(2) the memorandum or articles of association (or equivalent constituent
documentation) of the Buyer; and
(3) any security agreement, deed, contract, undertaking or other instrument
to which the Buyer is a party or which is binding on it and does not and
will not result in the creation or imposition of any security over any
of its assets pursuant to the provision of any such security agreement,
deed, contract, undertaking or other instrument;
(g) the Completion Date that:
(1) neither the Buyer nor any of its Associates will hold a Prohibited
Interest; and
(2) the Buyer is not aware of any fact, matter or circumstance (including
without limitation any pending or contemplated Relevant Agreement to
which it or any of its Associates is or may be a party) which might,
after the Completion Date, result in the Company acquiring a Prohibited
Interest or the Buyer or any Associate of the Buyer holding a
Prohibited Interest; and
(h) the date of this agreement, that the Buyer has (and on the Completion Date
it will have) disclosed to the State complete and accurate details of all
Relevant Agreements to which it or any of its Associates is or may be a
party under which a Prohibited Interest has or may be acquired.
9.2 CERTIFICATION
Subject to clause 9.1 (h), PacifiCorp Holdings, Inc. must before Completion
apply to the Treasurer for a certificate under section 171 A of the Electricity
Act.
9.3 CONTINUED HOLDING
Except with the prior written consent of the Treasurer, for the period of two
years commencing on the Completion Date and, except with the prior written
agreement of the Treasurer on timing (which agreement will not be unreasonably
withheld, having regard to other privatisations being conducted by the State),
for three years after the Completion Date, the Buyers must not, and must cause
the Company not to:
(a) create, grant or issue any Equity Securities, units or other interests in
the Company, other than to a Buyer or a Group Member of a Buyer;
(b) dispose of the Shares or any Equity Securities, units or other interests (or
rights to acquire shares, Equity Securities, units or other interests) in
the Company to any person, other than to a Buyer or a Group Member of a
Buyer; or
(c) transfer, sell or otherwise dispose of any right, title or interest in the
whole or any substantial part of the Business, provided that this shall not
prohibit the Buyers creating any security in relation to any bona fide loan
or debt, other than to the Buyer or a Group Member of a Buyer.
9.4 BUYERS' UNDERTAKINGS
The Buyers undertake to the State that they will:
(a) on and from the Completion Date ensure that the Company pays, in a timely
manner, al1 superannuation contributions imposed on the Company by the
trustee (acting on the advice of the actuary) of the Company's Fund;
<PAGE>
20
(b) during a period of three years commencing on the Completion Date promptly
notify the State in writing of any variations to the agreements,
arrangements and understandings set out in annexure B;
(c) ensure via terms of the Partnership Deed that:
(1) a person who holds office as an executive director of a company holding
an electricity distribution licence issued under Part 12 of the
Electricity Act is ineligible to hold office on the partnership board;
(2) a person who holds office as a non-executive director of a company
holding an electricity distribution licence issued under Part 12 of the
Electricity Act is eligible to hold office on the partnership board only
in a non-executive capacity; and
(3) as and when requested by the Treasurer or the Officer of the Regulator-
General the Buyers will make a copy of the then current Partnership Deed
available to the State or the Office of the Regulator General; and
(d) ensure that the Partnership Deed prohibits flows of Restricted Information
to Powercor Australia Ltd. For the purposes of this clause "Restricted
Information" means any information which relates to electricity hedging
contracts proposed to be entered into between the partners and any customers
other than Powercor Australia Ltd.
9.5 FINANCIAL ASSISTANCE
Notwithstanding the allocation of responsibilities in annexure D, the Buyers
undertake to the State that they will, on and from the date of this Agreement,
use their reasonable endeavours to procure the requirements under section 205 of
the Corporations Law are satisfied. The Buyers' obligations under this clause
9.5 are in addition to those under clause 2.5 and include, without limitation:
(a) taking all steps within their power to ensure that the Financial Assistance
can be given on the first Business Day after the 21 day notice period
referred to in section 205(12) of the Corporations Law has expired;
(b) where an application or applications are made under section 205(12), taking
all steps within their power to ensure each application is withdrawn or the
Court approves the giving of the Financial Assistance; and
(c) not taking any step to encourage or assist in any way directly or indirectly
any person to bring or carry on or to assist in the bringing or carrying on
of any such application.
9.6 BUYERS' INDEMNITIES
Without prejudice to clause 1l, each Buyer severally (in the proportions set out
in column B of schedule 1) indemnifies the Seller and the State against any
liability or loss suffered or incurred by one or both of them which arises from
(and any costs, charges or expenses incurred by one or both of them in
connection with):
(a) any breach of, or default under, this agreement by that Buyer; and
(b) any act or decision of the directors of the Company as requested by that
Buyer or failure to comply with section 205(10) of the Corporations Law.
10. EMPLOYEE EQUITY
The Buyers undertake to the State that if, at any time, the Company or the
Buyers (or any other company/trust which is controlled by the Buyers which owns
or conducts the Business or any substantial part of the assets used to conduct
any part of the Business) is listed on the Australian
<PAGE>
21
Stock Exchange Limited, they will ensure that as part of that listing, employees
of the Business will be given an opportunity to invest in the relevant company
or trust.
11. SELLER'S WARRANTIES
11.1 GIVING OF WARRANTIES
The Seller gives the Seller's Warranties in favour of the Buyers as at the date
of this agreement and, where specified in schedule 2, as at the Completion Date.
11.2 RELIANCE
The Buyers have entered into this agreement in reliance on the Seller's
Warranties and other terms of this agreement and nothing else.
11.3 ACKNOWLEDGMENT
The Buyers acknowledge and agree that:
(a) on the basis that the Disclosures have, to the knowledge and belief of the
State, been made in good faith and that the State has no knowledge that the
information therein is misleading or deceptive (but acknowledging that the
State is under no obligation to make any enquiries to verify that state of
knowledge) any statement, representation, term, warranty, condition, promise
or undertaking made, given or agreed to by the Seller, the State, a
representative of the Company or an Adviser in any prior negotiation,
arrangement, understanding or agreement, has no effect except to the extent
expressly set out or incorporated by reference in this agreement;
(b) they have entered into this agreement after satisfactory inspection and
investigation of the affairs of the Company based on the Disclosures and
other information available to them;
(c) no representation or warranty is made by the Seller or the State (nor has
the Seller or the State any liability whatsoever to the Buyers) in relation
to:
(1) the principles to be applied by the Officer of the Regulator-General or
its successor(s) or other Governmental Agencies with respect to the
regulation of the Victorian electricity industry and in particular
matters affecting prices and charges;
(2) the regulation of the Victorian electricity industry (including any act
or omission by the Officer of the Regulator-General, Victorian Power
Exchange, the Pool Consultative Committee, the Chief Electrical
Inspector or any responsible Minister of the Crown) and other industries
in Victoria (and the relationship of such other industry regulation to
the regulation of the Victorian electricity industry);
(3) the status of relations between the Company and its employees;
(4) the future wholesale price of electricity to be paid to, and its impact
on, the Company, other than the existence and terms of the Vested
Hedging Contracts entered into by the Company and contained in the Data
Room Documentation;
(5) the value of the Shares or the value ascribed by the Electricity Act and
Allocation Statement to each asset acquired by the Company (in
particular the Assets and land and mine development costs), for the
purposes of depreciation, amortisation, capital gains or otherwise;
<PAGE>
22
(6) the basis on which any allowance or deduction for depreciation of any of
the Assets and other assets of the Company may be calculated or allowed
for Federal tax purposes;
(7) the performance, future action, operation, profitability and commercial
direction of any entity participating in the Victorian wholesale
electricity market and, on the commencement of a "national" electricity
market involving some or all of the eastern States of Australia and the
Australian Capital Territory, of any entity participating in that
"national" electricity market; and
(8) the giving of the Financial Assistance by the Company;
(d) they have made their own enquiries about the structure and ambit of the
development of a "national" electricity market involving some or all of the
eastern States of Australia and the Australian Capital Territory and the
impact such a market and market rules would (or would be likely to) have on
the profitability or otherwise of the Company or the Business or any part
thereof and the position of the Station in relation to that market;
(e) the energy levy under the pool rules to the extent, if any, as modified by
the Energy Levy Orders is an integral part of the regulatory framework under
which the Company carries on the Business and accordingly the Buyers will
not, and will ensure the Company does not, challenge the appropriateness,
amount or basis of such levy at the rate set by or pursuant to, any law as
at the date of this agreement;
(f) the Buyers will not, and will ensure that the Company does not, challenge
the obligation of the Company to pay the Financial Accommodation Levy or the
appropriateness, amount or basis of the Financial Accommodation Levy at the
rate set by or pursuant to any law at the date of this agreement; and
(g) they are aware of the arrangements relating to the take or pay element of
Generation Victoria's gas supply contract and are aware of the approval
requirements imposed by the State on the electricity contracting activities
of the Company in the four month period prior to the date of this agreement.
11.4 REMEDIES
The sole remedy of the Buyers for breach of any Seller Warranty is to damages in
accordance with this clause 11 or the indemnities in accordance with clause 12,
and in no event are the Buyers to be entitled to rescind this agreement.
11.5 ABILITY TO CLAIM
The Buyers are precluded from bringing a claim for breach of any Seller Warranty
or under the indemnities in clause 12, to the extent:
(a) that the claim is based on any fact, matter or circumstance:
(1) set out in the Disclosures;
(2) within the actual knowledge of the Buyers or which ought to have been
known by the Buyers, having regard to their knowledge (and the knowledge
of their advisers) of the electricity industry (including, without
limitation, the mining of coal) and having regard to their opportunities
to make enquiries of the State and the Company; or
(3) which, before the date of this agreement, had been communicated in
writing to the Buyers;
<PAGE>
23
(b) that the claim arises or is increased directly as a result of action taken
(or not taken as the case may be) by the Seller or the Company on or after
the date of this agreement, after consultation with, and receipt of no
objection within a reasonable period from, the Buyers;
(c) that provision has been made in the Balance Sheet for any fact, matter or
circumstance on which the claim is based;
(d) to which the claim is recoverable (or would have been recoverable under
insurance if notified to the Seller or the insurers in a timely manner after
the date of this agreement);
(e) that the claim is based on any risk (actual or potential), fact, matter or
circumstance which was generally known in relation to the Victorian or
Australian electricity industry before the Completion Date;
(f) of any change after the Completion Date in any applicable law (other than
any act or subordinate legislation of the State) which has retrospective
effect;
(g) that either the Buyers have or the Company has failed to comply with the
procedures set out in clause 12.3, so that the State is effectively unable
to assume or conduct (or is materially prejudiced in so assuming or
conducting) any defence or other action contemplated by that clause; or
(h) that the claim is based on any forecasts, projections or representations as
to the future revenue or profits in respect of the Company or the Business
given by or on behalf of the Seller, the State, representatives of the
Company or the Advisers.
11.6 LIMITATION ON CLAIMS
The Buyers' right to claim under the Seller's Warranties and the indemnity in
clause 12.2 is limited to $1.00. The Buyers' right to claim under the
indemnities in clause 12.1 is limited as follows:
(a) the Buyers must give written notice to the State of the general nature of
the claim as soon as is reasonable after they become aware of the facts,
matters or circumstances on which the claim is based (and where the claim is
recoverable under insurance the time limits imposed by the relevant insurer
shall be taken into account in determining what is reasonable) and in any
event within 12 months after the Completion Date;
(b) in the case of a single claim, where the amount claimed exceeds $1,000,000
provided that no claim may be brought by the Buyers unless and until the
aggregate of all such claims exceeds $3,000,000 (and then only to the extent
of the excess); and
(c) the maximum aggregate amount which the Buyers may recover from the Seller
under the indemnity in clause 12.1 in respect of all claims is $40,000,000.
11.7 QUANTIFICATION OF CLAIMS
The quantum of any liability the Seller has to the Buyers under the Seller's
Warranties, clause 12 and otherwise under this agreement shall be determined
solely by reference to the direct financial impact on the Company or the Buyers
which results from the facts, matters or circumstances on which the claim is
based, not being as warranted and in no event will the Buyers be entitled to
claim a multiple of that direct financial impact.
11.8 STATE EQUIVALENT TAX
The State Equivalent Tax imposed on the Company with respect to the period
commencing on and from l July 1996 and ending on the Completion Date is
estimated to be as follows:
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24
(a) profit (before State Equivalent Tax) on sale of the Assets by the Company:
$486,579,121.87;
(b) operating profit (before State Equivalent Tax) earned by the Company in the
months of:
1 September to 13 September Nil
14 September to 30 September $2,500,000
October $2,500,000
(in aggregate the "ESTIMATED STATE EQUIVALENT TAX" with any amount referred to
in paragraph (b) being reduced proportionately if the period is less than the
relevant period set out above). The Buyers shall procure the Company does not
challenge the basis of the amounts specified above.
The Buyers shall procure that the Company lodges a return in respect of the
State Equivalent Tax payable by the Company for the above periods within 30 days
after the Completion Date. The Company must prepare the return consistently with
past practice and in particular consistent with binding tax rulings and
instructions of the Treasurer.
12. SELLER'S INDEMNITIES/COVENANTS
12.1 TAX INDEMNITY
The Seller indemnifies the Buyers as a continuing indemnity against any
liability or loss suffered or incurred by the Company which arises from (and any
costs, charges or expenses incurred by the Company in connection with) any
liability to pay Tax which is not fully provided for in the Balance Sheet and
which arises in respect of the period before 30 June 1996.
12.2 INDEMNITY
Subject to clauses 11.5, 11.6 and 11.7, the Seller indemnifies the Buyers
against any liability or loss suffered or incurred by the Buyers and arising
from (and any costs, charges or expenses incurred by the Buyers or in connection
with) any breach of, or default under, this agreement by the Seller.
12.3 CLAIMS PROCEDURE
On receipt of a notice under clause 11.6(a) which involves a Third Party Claim,
the State shall assume the defence of the claim unless the claim is covered by
insurance, in which event the defence will be conducted by the insurer's
lawyers. The Buyers shall have the right, at their own cost, to employ separate
lawyers or other advisers in any such action or claim and, subject to the
consent of the relevant insurance company, to participate in the defence. The
Buyers agree that:
(a) they shall not, and shall ensure the Company does not, pay or settle any
claim in respect of which an indemnity may be claimed under this clause 12
or make any admission in respect of any claim in respect of which an
indemnity may be claimed under this clause 12 without the prior written
consent of the State;
(b) they shall procure that the Company executes such forms and documents and
also makes such personnel and documents available to the State as the State
may reasonably require to enable the State to assume, defend or take such
other action in respect of any such Third Party Claim (including without
limitation the lodgment of an objection to the assessment or decision by the
Victorian Commissioner of State Revenue or other responsible person relating
to Tax within the time required by the relevant applicable law); and
<PAGE>
25
(c) they must promptly notify the State of receipt by it or the Company of any
advice, correspondence or other communication with the third party (or its
advisers) which relates to the Third Party Claim.
In this clause "THIRD PARTY CLAIM" means any liability of the Company to a third
party which arises out of or results from claims asserted against the Company
by a third party, and in respect of which the Seller or the State may be liable
to the Buyers under this agreement.
12.4 EBAC TRUST CONTRIBUTION
The State covenants that the State will pay the EBAC Trust Contribution to the
Fund Trustee on the Completion Date as defined by the EBAC Share Sale Agreement.
12.5 INDEMNITY
Notwithstanding anything contained in this Agreement the State indemnifies the
Buyers without limitation and as a continuing indemnity against any liability
incurred and against any loss or damage suffered by the Buyers arising from a
breach of clause 12.4.
13. ACTION PENDING COMPLETION
13.1 CARRYING ON OF BUSINESS
(a) Before Completion the Seller and the State will ensure that, except as
expressly contemplated by this agreement, the Company carries on the
Business (including payment of its debts as and when they fall due) in the
ordinary and normal course so as to preserve the value of the assets,
financial and trading position of the Business.
(b) The Seller and the State must also ensure that before Completion unless the
Buyers consent (or fail to object) in accordance with clause 13.2 or as
otherwise contemplated by this agreement:
(1) the Company does not enter into any contractual commitment requiring the
Company to pay:
(A) more than $1,000,000 (or commitments with a particular person where
the aggregate value of those commitments is more than $1,000,000);
or
(B) more than $200,000 per annum in any period more than 5 years from
the Completion Date, except as otherwise disclosed in the
Disclosures;
(2) the Company does not issue any shares, options or securities which are
convertible into shares in the Company, other than in accordance with
this agreement;
(3) the Company does not dispose of, or agree to dispose of or grant an
option to purchase, any material asset of the Company or the Business,
or any interest in such asset except pursuant to the Asset Sale
Agreement;
(4) the Company does not engage any new employee with an annual remuneration
package in excess of $100,000, (and, except in the ordinary course of
business) terminate any of the Employees or change the terms of
employment (including remuneration) of any of the Employees;
(5) the Company manages the working capital requirements and any liabilities
of the Company in the ordinary course of business (with both the Seller
and the Buyers
<PAGE>
26
having the right to have their respective representatives observe
management in carrying out such activities);
(6) the Company does not incur any expenditure or make any payment in excess
of $1,000,000;
(7) the Company does not incur any indebtedness except pursuant to the
Company's overdraft facilities or with TCV in the ordinary course of
business;
(8) the Company does not declare or pay any dividend or make any
distribution of profits or capital;
(9) the Company does not grant any mortgage or floating charge; and
(10) the Company does not acquire any assets outside the ordinary course of
business or acquire any Equity Security.
13.2 BUYERS' REPRESENTATIVE
(a) The Buyers must nominate a person ("BUYERS' REPRESENTATIVE") who has
authority to act on behalf of the Buyers in relation to any queries,
consents or approvals required under this agreement. The Buyers'
Representative shall be Mr. Bob Rollinson.
(b) If the Buyers' Representative does not consent or object to the entry into
of a particular contract or conduct of the type described in clause 13.1(b)
within 5 Business Days of being notified of the Company's intention to enter
into that contract or implement that conduct, the Buyers shall be deemed to
have consented to the entry into of that contract or implementation of that
course of conduct.
13.3 ACCESS
Before the Completion Date the Seller and the State must use reasonable
endeavours to:
(a) ensure that the Buyers are, and any person authorised by the Buyers is,
given all reasonable access during normal business hours to the assets,
properties, books of account, records and documents of the Company;
(b) promptly provide the Buyers with al1 explanations and information it
requests in respect of the Company or the Business;
(c) ensure that the Buyers are, and any person authorised by the Buyers is,
given reasonable access to senior management of the Company; and
(d) provide the Buyers' Representative with an office at the Company's offices
at the Station.
14. ANNOUNCEMENTS
14.1 LEGAL REQUIREMENTS
The Buyers may not disclose anything in respect of this agreement or the terms
of sale of the Shares or Assets except as required:
(a) by applicable law; or
(b) by the requirements of any recognised stock exchange on which its shares or
the shares of any related body corporate are listed,
but must consult with the State before making the disclosure; and the Buyers
must
(c) use reasonable endeavours to accommodate reasonable requests by the State as
to the form and content of the disclosure; and
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27
(d) claim and apply for, to the maximum extent possible, any exemptions or
rights of confidentiality that may be afforded the Buyers under such laws or
requirements.
14.2 DISCLOSURE TO OFFICERS AND PROFESSIONAL ADVISERS
A party may disclose anything in respect of this agreement or the terms of the
sale of the Shares or Assets to such of the Officers, employees and professional
advisers of that party and its related bodies corporate and to its lenders and
the lender's professional advisers as need to know that thing for the ordinary
business purposes of the Company or the Buyers but it must use its best
endeavours to ensure all matters disclosed are kept confidential.
14.3 FURTHER PUBLICITY
Subject to clauses l4.l and 14.2 the Buyers must not disclose the provisions of
this agreement, the Asset Sale Agreement, the terms on which the Shares are sold
or the terms on which the Assets are sold unless the State has first consented
in writing.
14.4 COMPANY'S COMPLIANCE WITH ELECTRICITY ACT
The Buyers, the Seller and the State each acknowledge that the Company is, while
it is a public generation company under the Electricity Act, under obligations
to provide information to the Minister or the Treasurer under sections 35 and 36
of the Electricity Act.
15. DUTIES, COSTS AND EXPENSES
15.1 PAYMENT OF DUTY
Subject to clauses 4.5 and 5.4 the Company must pay:
(a) any Duty in respect of the execution, delivery and performance of this
agreement and any document entered into or signed under this agreement; and
(b) any fine, penalty or other cost in respect of a failure to pay any Duty.
15.2 INDEMNITY
The Buyers indemnify the Seller against any amount payable under clause l5. 1.
15.3 COSTS AND EXPENSES
Subject to clause 4.5 and clause l5.l, each party must pay its own costs and
expenses in respect of the negotiation, preparation, execution, delivery,
stamping and registration of this agreement or other document described in
clause l5.l(a).
15.4 COSTS OF PERFORMANCE
Any action to be taken by a party in performing its obligations under this
agreement must be taken at its own cost and expense unless otherwise provided in
this agreement.
16. GUARANTORS' GUARANTEE AND INDEMNITY
16.1 GUARANTEE
Subject to clauses 16.2 and 16.6, each Guarantor unconditionally and irrevocably
severally, in the proportions set forth in column D of schedule l, guarantees to
the Seller and the State ("the Guarantee") the due and punctual performance of
its Respective Buyer's obligations under this agreement:
(a) to pay its proportion of the Deposit (if it is required to be paid pursuant
to clause 3); and
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28
(b) to make or procure to be made its proportion of the payments required to be
made by the Buyers and the Company at Completion.
16.2 ADDITIONAL FUNDING
Notwithstanding the fact that the Buyers and the Guarantors have arranged
funding facilities to enable the Buyers to meet their obligations under this
agreement (including payment of the Deposit and making the payments required to
be made by the Buyers and the Company on Completion), the Buyers and the
Guarantors acknowledge that the Buyers must meet those obligations even if the
funding facilities are not available. Furthermore, in the event that the funding
facilities are not available, and Hazelwood Investment Company Pty Ltd or CISL
(Hazelwood) Pty Ltd are not able to meet, or meet in full, their obligations
under this agreement, PacifiCorp Holdings, Inc. and National Power PLC shall
provide additional funding (to the extent of 22.22% and 77.78% respectively) to
enable the Buyers, collectively, to meet their obligations under this agreement.
16.3 INDEMNITY
Subject to clause 16.6, as a separate and independent principal obligation, each
Guarantor severally indemnifies (in the proportions set out in column D of
schedule 1) the Seller and the State against al1 liabilities, losses, damages,
costs or expenses incurred or suffered by the Seller or the State and al1
actions, proceedings, claims or demands made against the Seller or the State as
a result of default of its Respective Buyer in the performance of such Buyer's
obligation set forth in clause 16.1 or from any such express or implied
obligations being unenforceable.
16.4 EXTENT OF GUARANTEE AND INDEMNITY
(a) This clause 16 applies to this agreement, as amended, supplemented, renewed
or replaced.
(b) The obligations of the Guarantors under this clause 16 extend to any change
in the obligations of the Buyers as a result of:
(1) any amendment, supplement, renewal or replacement of this agreement; or
(2) the occurrence of any other thing.
(c) This clause 16.4 applies:
(l) regardless of whether the Guarantors are aware of, or have consented to,
or have given notice of, any amendment, supplement, renewal or
replacement of any agreement to which the Seller, the State or the
Buyers are a party or the occurrence of any other thing; and
(2) irrespective of any rule of law or equity to the contrary.
16.5 AVOIDANCE OF PAYMENTS
(a) If any payment, conveyance, transfer or other transaction relating to or
affecting any obligation of a Guarantor's Respective Buyer under this
agreement is:
(1) void, voidable or unenforceable in whole or in part; or
(2) is claimed to be void, voidable or unenforceable and that claim is
upheld, conceded or compromised in whole or in part,
the liability of that Guarantor under this clause 16 and any Power is the
same as if:
(3) that payment, transaction, conveyance or transfer (or the void, voidable
or unenforceable part of it); and
<PAGE>
29
(4) any release, settlement or discharge made in reliance on any thing
referred to in clause l6.5(a)(3),
had not been made and the Guarantor must immediately take all action and
sign all documents necessary or required by the Seller or the State to
restore to the Seller and the State this clause 16 and any Security Interest
held by the Seller or the State immediately before the payment, conveyance,
transfer or transaction.
(b) Clause 16.5(a) applies whether or not the Seller or the State knew, or ought
to have known of, anything referred to in that clause.
16.6 CONTINUING GUARANTEE AND INDEMNITY
This Guarantee and indemnity shall terminate and shall be of no further effect
upon Completion and the making of all payments required to be made by the Buyers
and the Company at Completion (including for the avoidance of doubt, the
payments to be made under clause 6).
16.7 WARRANTIES OF THE GUARANTORS
Each Guarantor severally represents and warrants that:
(a) it has the corporate power to enter into this guarantee and indemnity and
has taken all necessary action to authorise the execution, delivery and
performance of this agreement;
(b) this guarantee and indemnity constitutes a legally valid and binding
obligation of the Guarantor enforceable in accordance with its terms; and
(c) the execution, delivery and performance of this guarantee and indemnity will
not violate any provision of:
(l) any law or regulation or any order or decree of any Governmental Agency
of the Commonwealth of Australia or any state or territory;
(2) the memorandum or articles of association of the Guarantor or equivalent
constituent documents; and
(3) any security agreement, deed, contract, undertaking or other instrument
to which the Guarantor is a party or which is binding on it and does not
and will not result in the creation or imposition of any security over
any of its assets pursuant to the provision of any such security
agreement, deed, contract, undertaking or other instrument.
16A CBA GROUP UNDERTAKINGS
16A.1 HAZELWOOD INVESTMENT COMPANY PTY LTD UNDERTAKING
Hazelwood Investment Company Pty Ltd shall on the date of this agreement deliver
to the State and the Seller an undertaking given by Commonwealth Bank of
Australia (ACN 123 123 124) in the form set out in Schedule 5.
16A.2 CISL (HAZELWOOD) PTY LTD UNDERTAKING
CISL (Hazelwood) Pty Ltd shall on the date of this agreement deliver to the
State and the Seller an undertaking given by Commonwealth Investment Services
Ltd (ACN 003 049 830) in the form set out in Schedule 5.
<PAGE>
30
17. STATE'S GUARANTEE AND INDEMNITY
17.1 GUARANTEE
The Treasurer on behalf of the State at the request of the Seller, pursuant to
section 85B of the State Electricity Commission Act 1958, unconditionally and
irrevocably guarantees to the Buyers the due and punctual performance of the
Seller's obligations under this agreement (including any indemnities given in
favour of the Buyers).
17.2 INDEMNITY
As a separate and independent principal obligation, the State indemnifies the
Buyers against all liabilities, losses, damages, costs or expenses incurred or
suffered by the Buyers and al1 actions, proceedings, claims or demands made
against the Buyers as a result of default by the Seller in the performance of
any such obligation or from any such express or implied obligations being
unenforceable.
17.3 EXTENT OF GUARANTEE AND INDEMNITY
(a) This clause 17 applies:
(1) to the present and future obligations of the Seller under this
agreement; and
(2) to this agreement, as amended, supplemented, renewed or replaced.
(b) The obligations of the State under this clause 17 extend to any change in
the obligations of the Seller as a result of:
(1) any amendment, supplement, renewal or replacement of this agreement; or
(2) the occurrence of any other thing.
(c) This clause 17 is not affected, nor are the obligations of the State under
this agreement released or discharged or otherwise affected, by anything
which, but for this provision, might have that effect.
(d) This clause 17.3 applies:
(1) regardless of whether the State is aware of, or has consented to, or is
given notice of, any amendment, supplement, renewal or replacement of
any agreement to which the Buyers and the Seller are a party or the
occurrence of any other thing; and
(2) irrespective of any rule of law or equity to the contrary.
(e) The indemnity in clause 17.2 does not apply to the giving of the Financial
Assistance nor the resolutions to be passed by the Seller and the directors
of the Company as contemplated by this agreement.
17.4 AVOIDANCE OF PAYMENTS
(a) If any payment, conveyance, transfer or other transaction relating to or
affecting any obligation of the Seller under this agreement is:
(1) void, voidable or unenforceable in whole or in part; or
(2) is claimed to be void, voidable or unenforceable and that claim is
upheld, conceded or compromised in whole or in part,
the liability of the State under this clause 17 and any Power is the
same as if:
(3) that payment, transaction, conveyance or transfer (or the void, voidable
or unenforceable part of it); and
<PAGE>
31
(4) any release, settlement or discharge made in reliance on any thing
referred to in clause 17.4(a)(3),
had not been made and the State must immediately take all action and sign
all documents necessary or required by the Buyers to restore to the Buyers
this clause 17 and any Security Interest held by the Buyers immediately
before the payment, conveyance, transfer or transaction.
(b) Clause 17.4(a) applies whether or not the Seller knew, or ought to have
known of, anything referred to in that clause.
17.5 CONTINUING GUARANTEE AND INDEMNITY
This is a continuing obligation of the State, despite:
(a) any settlement of account; or
(b) the occurrence of any other thing,
and remains in full force and effect until:
(c) the obligations of the Seller under this agreement have been performed; and
(d) this clause 17 has been finally discharged by the Seller.
17.6 WARRANTIES OF THE STATE
The State represents and warrants that this guarantee and indemnity constitutes
a legally valid and binding obligation of the guarantor enforceable in
accordance with its terms.
18. NOTICES
18.1 GENERAL
Any notice or other communication including, but not limited to, any request,
demand, consent or approval, to or by a party to this agreement:
(a) must be in legible writing and in English addressed as shown:
(1) if to the Seller: The Administrator,
Address: State Electricity Commission of Victoria,
Level 5, 452 Flinders Street
Melbourne 3000
Attention: Mr G Brooke
Facsimile: (03) 9679 4747;
(2) if to the State: The Treasurer
Address: Office of the Treasurer
Level 4, 1 Treasury Place
East Melbourne 3002
Attention: Director of Energy Projects Division
Facsimile: (03) 965 l 3610;
(3) if to the Buyers: C/- Phillips Fox
Address: 120 Collins Street
Melbourne, 3000
<PAGE>
32
Attention: Judith Earls/Stephen Sawer
Facsimile: (03) 9274 5111; and
(4) if to the Guarantors: C/- Phillips Fox
Address: 120 Collins Street
Melbourne, 3000
Attention: Judith Earls/Stephen Sawer
Facsimile: (03) 9274 5111
or as specified to the sender by any party by notice;
(b) where the sender is a company, must be signed by an Officer or under the
common seal of the sender;
(c) is regarded as being given by the sender and received by the addressee:
(1) if by delivery in person, when delivered to the addressee; or
(2) if by facsimile transmission, when transmitted legibly to the addressee,
but if the delivery or receipt is on a day which is not a Business Day
or is after 4:00 pm (addressee's time) it is regarded as received at
9:00 am on the following Business Day; and
(d) can be relied upon by the addressee and the addressee is not liable to any
other person for any consequences of that reliance if the addressee believes
it to be genuine, correct and authorised by the sender.
18.2 LEGIBILITY OF FACSIMILE TRANSMISSION
A facsimile transmission is regarded as legible unless the addressee telephones
the sender within 2 hours after the transmission is received or regarded as
received under clause 18.1(c)(2) and informs the sender that it is not legible.
19. ON GOING OBLIGATIONS
19.1 CONTINUED ACCESS
The Buyers acknowledge that the State has continuing reporting obligations
under:
(a) the uniform budget presentation standards and Australian loan council
standards, as agreed from time to time by the Premiers of various States
within Australia; and
(b) the Financial Management Act 1994.
Accordingly, the Buyers must ensure that from Completion up until 30 June 1997:
(c) the State is granted full and free access at all reasonable times to those
employees of the Company whose knowledge or information is needed by the
State (together with all books, records and other data pertaining to the
Company and which are referrable to the period on and before the Completion
Date) to enable it to comply with these obligations;
(d) if, to comply with such reporting obligations, the Auditor-General or the
Treasurer requires the Company to prepare any accounts or other financial
information, the Company must, subject to any changes in the Australian
Accounting Standards Board accounting standards:
<PAGE>
33
(1) prepare such accounts or other financial information on a basis
consistent with the accounting policies and practices applied by the
Company in the 1995 Accounts; or
(2) prepare such accounts or other financial information on the basis of its
then current accounting policies and practices, but with a
reconciliation setting out the difference between its current accounting
policies and practices and those which applied in the 1995 Accounts; and
(e) the Company at all times keeps the State promptly informed on all rulings
received on key matters relating to federal tax.
19.2 [POWER STATION OPERATIONS
(a) As a transitional arrangement to the National Electricity Market, the Buyers
undertake to regulate the operation of the Company's power station (the
"STATION") so that the Station's generating capacity will be limited to 1250
MW ("MAXIMUM CAPACITY") which may be generated from any of the Station's 8
units. The restriction will apply on the basis and only at the times set out
in clauses 19.2(b) and 19.2(c).
(b) The limitation specified in clause (a) will commence on the Completion Date
and continue unti1 the earlier of:
(1) commencement of the National Electricity Market (for the purpose of
clauses 19.2(b) and (c) the commencement of the National Electricity
Market will occur when electricity produced in Victoria or New South
Wales is traded through common arrangements serving the two States
without operation of the Interconnection Operating Agreement); and
(2) 30 June 1997.
(c) The limitation specified in clause (a) shall not apply if at any time during
the period specified in clause (b) average Victorian pool prices are above
$38.05 per MWh (this test will be applied monthly on a continuous basis).
(For the purpose of this clause l9.2(c), the average pool price will be a
moving annual average (time weighted) calculated within 7 days of each month
end. If that average pool price is less than $38.05 the Station's capacity
specified in clause (a) will apply for the next month).]
19.3 IKEA LEASE
The Buyers and the State must use their best endeavours to effect the novation
of the IKEA Lease from Generation Victoria to the Buyers. In doing so, the
Buyers must use their best endeavours to provide any credit support personally
required by IKEA, as soon as reasonably practicable following Completion. If the
IKEA Lease cannot be novated to the Buyers the State must procure that
Generation Victoria declares that it holds its rights under the IKEA Lease upon
trust for the Buyers, subject to the Buyers indemnifying Generation Victoria in
respect of all liabilities under the IKEA Lease.
19.4 HEADS OF AGREEMENT
The Buyers acknowledge that the Company and Power Net Victoria have entered into
the Heads of Agreement and the Buyers and Seller must use their best endeavours
(and must procure that the Company uses its best endeavours) to document and
finalise the real property interests set out in the Heads of Agreement as soon
as reasonably practicable following Completion.
19.5 NOVATION OF ETSA AGREEMENTS
In the period up to Completion and in the three (3) month period following
Completion, the State will procure that the Generators controlled by the State
consent to the novation of the ETSA
[CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
34
Agreements from the Company to the Buyers within ten (10) Business Days receipt
of a request for such consent from the Buyers.
19.6 [ETSA HEDGE CONTRACT
The Buyers acknowledge that the Company and the Seller have entered into the
ETSA Hedge Contract and agree that:
(a) the Buyers will procure that the Company complies with clause 15 of the ETSA
Hedge Contract; and
(b) the Buyers will not, and will procure that parties associated with the
Buyers will not, enter into an agreement arrangement or understanding of the
sort prohibited by clause 15.2 of the ETSA Hedge Contract.]
20. GENERAL
20.1 GOVERNING LAW AND JURISDICTION
(a) This agreement is governed by the laws of Victoria. Each party irrevocably
submits to the exclusive jurisdiction of the courts of Victoria.
(b) Each party irrevocably waives any objection to the venue of any legal
process on the basis that the process has been brought in an inconvenient
forum.
20.2 WAIVERS
(a) Waiver of any right arising from a breach of this agreement or of any Power
arising upon default under this agreement must be in writing and executed by
the party granting the waiver.
(b) A failure or delay in exercise, of:
(l) a right arising from a breach of this agreement; or
(2) a Power created or arising upon default under this agreement,
does not result in a waiver of that right or Power.
(c) A party is not entitled to rely on a delay in the exercise or non-exercise
of a right or Power arising from a breach of this agreement or on a default
under this agreement as constituting a waiver of that right or Power.
(d) A party may not rely on any conduct of another party as a defence to
exercise of a right or Power by that other party.
(e) This clause 20.2 may not itself be waived except in writing executed by the
party granting the waiver.
20.3 VARIATION
A variation of any term of this agreement must be in writing and executed by the
parties.
20.4 FURTHER ASSURANCES
Each party must do all things, and execute all further documents, necessary to
give full effect to this agreement.
20.5 THIRD PARTY RIGHTS
No person (including, but not limited to, an Employee) other than a party to
this agreement and those persons expressly referred to in paragraphs (r) and (s)
of clause l.2 and an assignee
[CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
35
pursuant to the proviso to clause 20.7 has or is intended to have any right,
power or remedy or derives or is intended to derive any benefit under this
agreement.
20.6 THIS AGREEMENT SUPERSEDES OTHERS
This agreement and the Asset Sale Agreement embody the entire agreement between
the parties with respect to the subject matter of this agreement and supersede
any prior negotiation, arrangement, understanding or agreement with respect to
the subject matter or any term of this agreement.
20.7 ASSIGNMENT
A party may not assign its rights under this agreement without the consent of
the other parties provided that, this prohibition shall not apply to a person
wishing to provide security by way of an assignment of its interest in this
agreement.
EXECUTED by the parties as an agreement.
SIGNED by the Honourable Alan Robert
Stockdale for and on behalf of the
STATE OF VICTORIA in the presence of:
[signature appears here] /S/ ALAN ROBERT STOCKDALE
- ------------------------------- ---------------------------
Witness Alan Robert Stockdale
[Name appears here]
- -------------------------------
Name (please print)
THE COMMON SEAL of
STATE ELECTRICITY COMMISSION
OF VICTORIA was affixed to this [Seal appears here]
document in accordance with the
State Electricity Commission Act in
the presence of:
/S/ GRAHAM BROOKE /S/ N. J. MCMANEN
- ------------------------------- ---------------------------
Administrator Witness
N. J. McManen
---------------------------
Name (please print)
<PAGE>
36
SIGNED for NATIONAL POWER
AUSTRALIA INVESTMENTS LIMITED
by its duly authorised signatory:
[SIGNATURE APPEARS HERE] /s/ Max Hebert
- -------------------------------- -----------------------------
Witness Authorised Signatory
[NAME APPEARS HERE] Max Hebert
- -------------------------------- -----------------------------
Name (please print) Name (please print)
SIGNED for HAZELWOOD PACIFIC
PTY LTD by its attorney
in the presence of:
/s/ S.J.E. Uthmeyer /s/ Daniel L. Spalding
- -------------------------------- ------------------------------
Witness Attorney
Simon J.E. Uthmeyer Daniel L. Spalding
- -------------------------------- ------------------------------
Name (please print) Name (please print)
SIGNED for AUSTRALIAN POWER
PARTNERS C.V. by its attorney
in the presence of:
/s/ Reggie G. Rice /s/ Louis Dorey
- -------------------------------- ------------------------------
Witness Attorney
Reggie G. Rice Louis Dorey
- -------------------------------- ------------------------------
Name (please print) Name (please print)
<PAGE>
37
SIGNED for HAZELWOOD
INVESTMENT COMPANY
PTY LTD by its attorney
in the presence of:
/s/ J.C. Sheridan /s/ Carolyn Lawson-Kerr
- -------------------------------- -----------------------------
Witness Attorney
J.C. Sheridan Carolyn Lawson-Kerr
- -------------------------------- -----------------------------
Name (please print) Name (please print)
SIGNED for CISL (HAZELWOOD)
PTY LTD by its attorney
in the presence of:
/s/ J.C. Sheridan /s/ Susan Kalius
- -------------------------------- -----------------------------
Witness Attorney
J.C. Sheridan Susan Kalius
- -------------------------------- -----------------------------
Name (please print) Name (please print)
SIGNED for NATIONAL POWER
PLC by its attorney
in the presence of:
/s/ Simon J.E. Uthmeyer /s/ Max Hebert
- -------------------------------- ------------------------------
Witness Attorney
Simon J.E. Uthmeyer Max Hebert
- -------------------------------- ------------------------------
Name (please print) Name (please print)
<PAGE>
38
SIGNED for PACIFICORP
HOLDINGS, INC. by its
attorney in the presence of:
/s/ Simon J.E. Uthmeyer /s/ Daniel L. Spalding
- ------------------------------- -----------------------------
Witness Attorney
Simon J.E. Uthmeyer Daniel L. Spalding
- ------------------------------- -----------------------------
Name (please print) Name (please print)
SIGNED for DESTEC
ENERGY, INC. by its attorney
in the presence of:
/s/ Reggie G. Rice /s/ Louis Dorey
- ------------------------------- -----------------------------
Witness Attorney
Reggie G. Rice Louis Dorey
- ------------------------------- -----------------------------
Name (please print) Name (please print)
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1
DETAILS OF BUYERS AND GUARANTORS
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D
BUYER OWNERSHIP GUARANTOR MAXIMUM AMOUNT OF
INTEREST/SHARE GUARANTOR'S GUARANTEE OF
OF BUYERS' ITS RESPECTIVE BUYER'S
OBLIGATIONS OBLIGATIONS AUST $
- -----------------------------------------------------------------------------------------------------------------------------------
1 National Power Australia Investments 51.94% National Power PLC (Company No.:236693) $1,397,983,334
Limited (Company No.:2782480) Windmill Hill Business Park, Whitehill Way,
Windmill Hill Business Park Swindon, Wiltshire SN5 6PB, England
Whitehill Way, Swindon, Wiltshire SN5
6PB England
- ------------------------------------------------------------------------------------------------------------------------------------
2 Hazelwood Pacific Pty Ltd 19.90% PacifiCorp Holdings, Inc. 700 N.E. $470,416,666
(ACN 074 351 376) Multnomah Street, Suite 1600
Level 3, 77 Southbank Boulevard Portland, Oregon 97232-4116, USA
Southbank Victoria 3006
- ------------------------------------------------------------------------------------------------------------------------------------
3 Australian Power Partners C.V., 1077 20.00% Destec Energy, Inc. $450,000,000
WV Amsterdam, 2500 Citywest Boulevard,
Prinses Irenestraat 61, Suite 150, PO Box 4411
The Netherlands Houston, Texas, 7721-4411, USA
- ------------------------------------------------------------------------------------------------------------------------------------
4 Hazelwood Investment Company Pty Ltd 2.04% See Schedule 5
(ACN 075 041 360)
Level 19, 385 Bourke Street
Melbourne Victoria 3000
- ------------------------------------------------------------------------------------------------------------------------------------
5 CISL (Hazelwood) Pty Ltd 6.12% See Schedule 5
(ACN 074 747 185)
Level 19, 385 Bourke Street
Melbourne Victoria 3000
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 2
SELLER'S WARRANTIES
WARRANTY 1
SHARES AND CAPITAL
In this schedule and clause 11.3, a reference to the knowledge and belief or
opinion of the State or the Seller shall be limited to and constituted by the
knowledge and belief or opinion obtained or formed by the State or the Seller
(as the case may be) after due enquiry of Peter Troughton and Brian Leighs.
1.1 TITLE
The Seller will at Completion be the beneficial owner of the Shares (which are
free of all Security Interests and other third party interests or rights) with
the legal ownership of the Shares held as follows:
the Seller: 996 ordinary shares;
Mr. Graeme Greaves: one ordinary share;
Mr. John Drewett: one ordinary share;
Mr. Peter Coughlin: one ordinary share; and
Mr. Noel McMahen: one ordinary share.
1.2 CONSENTS
On Completion the Seller and Nominees will be able to sell and transfer the
Shares without the consent of any other person and free of any pre-emptive
rights or rights of first refusal.
1.3 ISSUED CAPITAL
On Completion the Shares will be all the issued Equity Securities in the capital
of the Company.
1.4 AUTHORISED CAPITAL
The authorised capital of the Company at the date of this agreement is
$500,000,000 divided into 500,000,000 ordinary shares of $1.00 each.
1.5 FULLY PAID
On Completion the Shares will be fully paid and no money will be owing in
respect of them.
1.6 ISSUE OF OTHER SECURITIES
The Company is not under any obligation to issue or allot, and has not granted
any person the right to call for the issue or allotment of, any shares or other
securities of the Company at any time.
1.7 NO LEGAL IMPEDIMENT
Except for those matters relating to the giving of the Financial Assistance by
the Company, the execution, delivery and performance by the Seller and the State
of this agreement complies with:
(a) each law, regulation, Authorisation, ruling, judgment, order or decree of
any Governmental Agency; and
(b) any Security Interest or document which is binding on the Seller.
<PAGE>
2
1.8 AUTHORISATIONS
The Treasurer has the power to execute this agreement on behalf of the State,
and, except for those matters relating to the giving of the Financial Assistance
by the Company, the Seller has taken all necessary action to authorise the
execution, delivery and performance of this agreement in accordance with its
terms.
WARRANTY 2
CORPORATE EXISTENCE
2.1 CORPORATE EXISTENCE
The Company:
(a) is a public limited company;
(b) has the power to own its assets and carry on its business as it is now
being conducted;
(c) is not registered and is not required to be registered in any place outside
its place of incorporation;
(d) does not carry on business in any place other than Australia; and
(e) is incorporated in the State of Victoria.
2.2 COMPLIANCE WITH CONSTITUENT DOCUMENTS
The business affairs of the Company have been conducted in accordance with its
memorandum and articles of association.
WARRANTY 3
THE 1995 ACCOUNTS
3.1 BASIS OF PREPARATION
The 1995 Accounts have been prepared in accordance with the Corporations Law and
on the basis set out in section 96 of the Electricity Act and have been prepared
in a manner consistent with all applicable accounting standards.
3.2 FAIR PRESENTATION
Subject to the qualifications set out in any auditors report which forms part of
the 1995 Accounts, the 1995 Accounts show a true and fair view of:
(a) the financial position and the assets and liabilities of the Company as at
the relevant balance date; and
(b) the income, expenses and results of the operations of the Company for the
financial period ended on the relevant balance date.
WARRANTY 4
PERIOD SINCE THE DRAFT BALANCE SHEET
4.1 CARRYING ON BUSINESS
Since 30 June 1996 and up to and including the date of this agreement:
(a) the Company has carried on the Business in the ordinary and normal course;
<PAGE>
3
(b) the Company has not entered into any contractual commitment requiring the
Company to pay:
(1) more than $1,000,000 (or commitments with a particular person where
the aggregate value of those commitments is more than $1,000,000); or
(2) more than $200,000 per annum in any period more than 5 years from the
Completion Date,
(each a "MATERIAL CONTRACT") except as otherwise specifically disclosed in
the Disclosures;
(c) the Company has not issued any Equity Securities in the Company;
(d) except for the sale of the Assets to the Buyers the Company has not
disposed of, or agreed to dispose of or grant an option to purchase, any
material asset of the Company or the Business, or any interest in such an
asset other than in the ordinary course of business;
(e) no dividend or other distribution of profits or capital has been made to
shareholders in the Company except for a dividend to be paid to the Seller
as contemplated under this agreement;
(f) the Company has not engaged any new employee with an annual remuneration
package in excess of $200,000 or, except in the ordinary course of the
Business or pursuant to an enterprise bargaining agreement (or interim
agreement), changed the terms of employment (including remuneration) of any
of the Employees; and
(g) the Company has not altered its memorandum or articles of association.
WARRANTY 5
ASSETS
5.1 TITLE TO ASSETS
All the assets used in the Business and appearing in the Company's fixed asset
register which still exist at the date of this agreement are or will, at
Completion, be:
(a) except for land of the Company currently leased or licensed to or the
subject of easements in favour of third parties, in the possession of the
Company or able to be accessed by the Company;
(b) except for telecommunications cabling and assets and other assets used by
telecommunications companies, water authorities, Integrated Systems
Solutions Corporation Australia Ltd (ACN 001 538 736), distribution
companies, Power Net Victoria, Victorian Power Exchange, other generators,
retailers, customers and site contractors and for land of the Company
currently leased to third parties, used solely by the Company;
(c) the absolute property of the Company free of al1 Security Interests; and
(d) except for land of the Company currently leased to third parties, not the
subject of any lease or hire purchase agreement or agreements for purchase
on deferred terms.
5.2 BOOK DEBTS
The Company will not assign or transfer in law or in equity any of its book
debts prior to Completion.
<PAGE>
4
WARRANTY 6
DISCLOSURE
6.1 DISCLOSURE
No trade secret or confidential information of the Company has been disclosed or
made available to any person except in the ordinary course of business or in the
course of the sale of the Shares.
WARRANTY 7
SECURED DEBT
The Company has not granted or created, or agreed to grant any mortgages or
floating charges.
WARRANTY 8
CONTRACTS
8.1 FOREIGN CURRENCY TRANSACTIONS
The Company is not party to any foreign currency transaction other than in the
ordinary course of business.
8.2 CHANGE OF CONTROL
The Company is not party to any Material Contract (other than certain property
leases) under which any third party is entitled, as a result of a change in
ownership of the Shares:
(a) to terminate the contract; or
(b) to impose or require the adoption of terms which are less favourable to the
Company than the current terms.
8.3 NO NOTICES
The Company has not received any written notice which might affect any rights of
the Buyers or the exercise of any rights by the Buyers in respect of any
Material Contract.
WARRANTY 9
DELEGATIONS AND OFFERS
9.1 POWERS OF ATTORNEY
No power of attorney given by the Company is in force except as disclosed in the
Disclosures.
9.2 OFFERS OUTSTANDING
Any offer, tender or quotation made by the Company in respect of the Business
which is outstanding and capable of acceptance by a third party, was made in the
ordinary course of the Business.
<PAGE>
5
WARRANTY 10
CREDITORS
10.1 OUTSTANDING NOTES
No cheque, promissory note or bill of exchange drawn, accepted or endorsed by
the Company is still outstanding, other than:
(a) bills drawn in the course of refinancing by the Company of debt owed to the
State or its instrumentalities; and
(b) cheques drawn to pay for obligations incurred by the Company in the
ordinary course of the Business.
WARRANTY 11
CORPORATE STRUCTURE
11.1 SHAREHOLDINGS
The Company is not the holder or the beneficial owner of any shares or other
capital or securities convertible into shares or other capital in any other
company other than 100 shares of $1.00 each in PowerWorks Pty Ltd.
11.2 PERMANENT ESTABLISHMENT
The Company does not have any permanent establishment (as that expression is
defined in any relevant taxation agreement to which Australia is a party)
outside Australia.
11.3 MEMBERSHIPS
The Company is not a member of any joint venture, partnership or unincorporated
association (including a recognised trade association) other than:
(a) Co-operative Research Centre for New Technologies for Power Generation from
Low Rank Coal; and
(b) Electricity Supply Association of Australia.
WARRANTY 12
EMPLOYEES
12.1 ALLOWANCES
Other than contributions to the Company's Fund and payments required under
personal employment contracts, the Company is not currently liable to pay any
annuity, superannuation benefit, pension or other like payment in respect of the
death, disability, retirement, resignation or dismissal of any Employee or any
former employee of the Company.
12.2 TERMINATION OF EMPLOYMENT
The employment of each Employee can be lawfully terminated by such notice as is
required by law without payment of any damages or compensation, including any
severance or redundancy payments, in excess of the amount (if any) required by
law.
12.3 EMPLOYEE PLANS
Except as set out in the Disclosures, the Company has no generally available
compensation plans, benefit plans or agreements for the benefit of any Employee.
<PAGE>
6
WARRANTY 13
SUPERANNUATION SCHEMES
13.1 LIST COMPLETE
The Company's Fund is the only superannuation scheme or other pension
arrangement:
(a) in operation by or in relation to the Employees; and
(b) to which the Company contributes which provides its directors or Employees
or their dependents with pensions, annuities or lump sum payments.
13.2 FUNDING
With respect to the Company's Fund:
(a) there were at 30 June 1996 no outstanding and unpaid contributions other
than as provided in the Balance Sheet on the part of the Company or any
Employee; and
(b) based on the actuarial reviews (copies of which form part of the
Disclosures) the Seller is not aware of any fact or circumstance which, if
included or taken into account in the preparation of those actuarial
reviews by William M Mercer Pty Ltd of the Company's Fund, would have led
to a different conclusion.
13.3 APPROVALS
Where the Company's Fund requires approval from any authority to obtain the
benefit of any reduced or concessional tax rate, the approval has been obtained
and is still current and the Seller has no reason to believe that it may be
revoked.
WARRANTY 14
UNIONS
14.1 AGREEMENTS
The Company is not a party to any agreement, arrangement or understanding with a
union or industrial organisation in respect of the Employees other than in
respect of:
(a) awards made by, agreements certified by, or agreements the
implementation of which has been approved by the Australian Industrial
Relations Commission under the Industrial Relations Act 1958 (Cth); and
(b) human resources policies.
14.2 AWARDS
No industrial awards apply to the Company other than:
(a) the State Electricity Commission of Victoria Electrical, Electronic and
Engineering Employees Award, 1989;
(b) the State Electricity Commission of Victoria Engine Drivers and Firemens
Award 1989;
(c) the State Electricity Commission of Victoria Metal Industry Employees
Award 1989;
(d) the Transport Workers (State Electricity Commission of Victoria) Award
1990; and
(e) the State Electricity Commission of Victoria, Maintenance and Services
Award 1989.
<PAGE>
7
WARRANTY 15
COMPLIANCE WITH LAW
15.1 COMPLIANCE WITH LAW
Save for the matters referred to in the "no-action" letter from the Office of
the Regulator-General to the Company dated l August 1996 the ownership and use
of the Company's assets by the Company comply with al1 applicable laws specific
to the electricity industry.
15.2 CONDUCT AND PRACTICES
The Company only engages in, and has at all times only engaged in, conduct or
practices which comply with al1 applicable laws concerning consumer transactions
which affect the Company's operations (including any consumer protection, fair
trading, restrictive trade practices or antitrust legislation).
15.3 LICENCES OBTAINED
(a) The Company has all necessary Authorisations required to conduct the
Business and has paid all fees due in relation to them and complied with
all conditions under them.
(b) There is no factor which might prejudice the continuance or renewal of any
such Authorisation.
WARRANTY 16
LITIGATION
16.1 COMPANY NOT A PARTY TO ANY LITIGATION
The Company is not:
(a) a party to any investigation, prosecution, litigation, arbitration
proceedings or any other form of mediation or dispute resolution; or
(b) subject to any audit or investigation by any Governmental Agency;
other than:
(c) the matters referred to in the "no-action" letter referred to in warranty
15.1; and
(d) workers compensation and personal injury claims previously disclosed in the
Disclosures.
16.2 NO LITIGATION PENDING OR THREATENED
No audit, investigation, prosecution, litigation, proceeding or any other form
of mediation or dispute resolution referred to in Warranty 16.1 is pending or
threatened, except as otherwise disclosed in the Disclosures.
WARRANTY 17
SOLVENCY
17.1 NO LIQUIDATION OR WINDING-UP
The Company has not gone into liquidation or passed a winding-up resolution nor
received a notice under sections 572 or 573 of the Corporations Law.
<PAGE>
8
17.2 NO PETITION
No petition or other process for winding-up has been presented or threatened
against the Company and there are no circumstances justifying a petition or
other process.
17.3 NO WRIT OF EXECUTION
No writ of execution has issued against the Company or the property of the
Company and there are no circumstances justifying a writ.
17.4 NO RECEIVER
No receiver, receiver and manager or administrator of any part of the
undertaking or assets of the Company has been appointed or is threatened or
expected to be appointed and there are no circumstances justifying an
appointment.
WARRANTY 18
RECORDS AND CONSTITUENT DOCUMENTS
18.1 RECORDS
All accounts, books, ledgers and financial and other records of the Company are
either:
(a) in the possession or under the control of the Company and located at the
Company's premises at Morwell and Melbourne;
(b) under the direction of the Company at Integrated Systems Solutions
Corporation Australia Ltd (ACN 001 538 736);
(c) under the direction and/or control of Australian Science Archives Project
in Carlton and Morwell and at other locations authorised by Australian
Science Archives Project; or
(d) held on behalf of the Company by various contractors for the purposes of
providing services to the Company.
18.2 MEMORANDUM AND ARTICLES
The Seller has supplied accurate and up-to-date copies of the memorandum and
articles of association of the Company to the Buyers.
18.3 REGISTER OF MEMBERS
The Company has not received notice of any application or intended application
for the rectification of its register of members or any other register which it
is required by law to maintain.
WARRANTY 19
TAXES AND DUTIES
19.1 PROVISIONING
Adequate provision is made in the Balance Sheet for any federal tax or Duty on
the Company which is payable or may become payable by the Company in respect of
the period before 30 June 1996 but which was unpaid at that date.
19.2 DOCUMENTS STAMPED
Any Duty payable in relation to any transaction or agreement to which the
Company is or has been a party or by which the Company derives or has derived a
substantial benefit has been paid.
<PAGE>
9
19.3 RETURNS SUBMITTED
The Company has submitted any necessary information, notices, computations,
returns, declarations and elections to the relevant Governmental Agency in
respect of any federal tax or any Duty relating to the Company.
WARRANTY 20
INSURANCES
20.1 PREMIUMS PAID
The Company's insurance policies as set forth in the Disclosures have been
validly entered into and all premiums due and payable under the Company's
insurance policies have been paid.
20.2 MAINTENANCE OF POLICIES
The Company's insurance policies will be maintained in full1 force and effect
until the Completion Date.
<PAGE>
SCHEDULE 3
DISCLOSURES
1. All Data Room Documentation.
2. All information which is available on public record up to and including 26
July 1996.
3. All information set out in the Information Memorandum dated 7 June 1996
(Volume 1 and 2) and 13 June 1996 (Volume 3).
4. All audit files made available for review by the Auditor-General regarding
the 1995 Accounts, as follows:
File 1 of 5 - Executive Summary File:
. Signed copy of the financial statements and Auditor-General's opinion;
. Official Report and client response;
. Management Letter and client response;
. General correspondence;
. Discussions with Management;
. Analytical Review; and
. Matters raised by Auditors.
File 2 of 5 - Financial Statements File:
. Trial Balance;
. Post Closing Journals;
. General Ledger and Journals;
. Statement of Cash Flows;
. Review of Notes to Financial Statements;
. Subsequent Events Review;
. Review of Minutes; and
. Issues.
File 3 of 5 - Current File:
. Cash;
. Debtors;
. Inventories;
. Investments; and
. Intangibles.
File 4 of 5 - Current File:
. Fixed Assets; and
. Other Assets.
<PAGE>
File 5 of 5 - Current File:
. Creditors;
. Payroll;
. Provisions;.
. Borrowings;
. Other Liabilities;
. Share Capital; and
. Contingencies and Commitments.
5. All slides and visual aides used as part of the executive presentations made
by the Company to the Buyers on the following dates (or other times as
arranged):
<TABLE>
<CAPTION>
________________________________________________________________________________________________________
DATE PRESENTER TOPIC VENUE
________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
17 June 96 2:00 pm Bernie Smith Corporate Summary 29/120 Collins
3:30 pm Ian Derham Mine 29/120 Collins
5:00 pm Graeme Dineen Power Station 29/120 Collins
18 June 96 12:00 pm Geo Eng Hazelwood mine 29/120 Collins
20 June 96 2:00 pm Garry Watkinson Human Resources 29/120 Collins
3:30 pm Brian Clark Finance 29/120 Collins
5:00 pm Alistair Tompkin Support Services 29/120 Collins
24 June 96 10:30 am Stephen Orr Sales and Marketing 29/120 Collins
26 June 96 9:00 am Rodney Ward/ NSW and progress 29/120 Collins
John Mather towards the National
Market
27 June 96 9:30 am Neville Henderson National Electricity 27/101 Collins
Market
11:00 am Jim Gallagher National Electricity 27/101 Collins
Market
Implementation
28 June 96 9:00 am Hugh Bannister Pool Prices 5/161 Collins (Rm 588)
11:00 pm David Stephens - Pool Price Outlook 5/161 Collins (Rm 588)
McKinsey & Co.
________________________________________________________________________________________________________
</TABLE>
<PAGE>
SCHEDULE 4
IKEA LEASE
The cross-border sale and lease-back arrangement relating to Bucket Wheel
Excavator Type S1500/25 and comprising the following agreements and guarantees:
1. Purchase agreement dated 31 August 1989 between the Seller and IKEA, with
the rights and obligations of the Seller having been assumed by Generation
Victoria ("GenVic") under letter agreement dated 29 December 1993.
2. Lease agreement dated 31 August 1989 between IKEA and the Seller with the
rights and obligations of SECV having been assumed by Genvic under letter
agreement dated 29 December 1993.
3. Accounts receivable purchase agreement dated 31 August 1989 between Inter
IKEA Finance S.A. and IKEA.
4. Accounts receivable purchase agreement dated 31 August 1989 between the
Seller and Inter IKEA Finance S.A., with the rights and obligations of the
Seller having been assumed by GenVic under letter agreement dated 29
December 1993.
5. Assumption agreement dated 3l August 1989 between the Seller and Cross
Leasing S.A. with the rights and obligations of the Seller having been
assumed by GenVic under letter agreement dated 29 December 1993.
6. Remarketing agreement dated 31 August 1989 between IKEA and Cross Leasing
S.A.
7. Remarketing agreement dated 31 August 1989 between Cross Leasing S.A. and
the Seller, with the rights and obligations of the Seller having been
assumed by GenVic under letter agreement dated 29 December 1993.
8. Guarantee dated 30 August 1989 from IKEA Verwaltungs - GmbH to the Seller
with the benefit of the Guarantee having been assigned to GenVic under a
deed of assignment dated 24 January 1994.
9. Guarantee dated 22 August 1989 from Ingka Holding B.V. and the Seller with
the benefit of the guarantee having been assigned to GenVic under a deed of
assignment dated 24 January 1994.
<PAGE>
Schedule 5
CBA Group Undertakings
<PAGE>
[COMMONWEALTH BANK LETTERHEAD APPEARS HERE]
2 August 1996
State Electricity Commission of Victoria and
The Honourable Alan Robert Stockdale in his capacity as Treasurer of the
State of Victoria for and on behalf of the Crown in right of the State
In pursuance of a broad investment approval by the board of Commonwealth Bank of
Australia ACN 123 123 124 ("CBA") at its July 1995 meeting, CBA undertakes that,
if the Share Sale Agreement relating to Hazelwood Power Corporation Ltd is
entered into by Hazelwood Investment Company Pty Ltd ACN 075 041 360 ("HICPL")
CBA will ensure that HICPL has sufficient moneys to fulfil its obligations under
the Share Sale Agreement:
(a) to pay when due the proportion of the Deposit payable by HICPL; and
(b) to pay when due its contribution towards the Purchase Price
provided that the total of those amounts does not exceed $25 million.
Yours sincerely
I.K. Payne
Executive Director
<PAGE>
[COMMONWEALTH FINANCIAL SERVICES LETTERHEAD APPEARS HERE]
TO: STATE ELECTRICITY COMMISSION OF VICTORIA
AND
THE HONORABLE ALAN ROBERT STOCKDALE IN HIS CAPACITY AS TREASURER OF THE
STATE OF VICTORIA FOR AND ON BEHALF OF THE CROWN IN RIGHT OF THE STATE
Commonwealth Investment Services Limited ACN 003 049 830 ("CISL") confirms that
as of the date hereof it has funds under its management in excess of $13 billion
on behalf of various clients.
CISL undertakes that, if the Share Sale Agreement relating to Hazelwood Power
Corporation Ltd is entered into by CISL (Hazelwood) pty Ltd ACN 074 747 185
("CHPL"), CISL will ensure that CHPL is provided with sufficient moneys from the
funds under CISL's management to fulfil its obligations under the Share Sale
Agreement:
(a) to pay when due the proportion of the Deposit payable by HIC; and
(b) to pay when due its contribution towards the Purchase Price
provided that such moneys shall be limited in aggregate, to $75 million.
Yours sincerely
JOHN RAWLINS
GENERAL MANAGER
<PAGE>
ANNEXURE A
1995 Accounts
<PAGE>
TABLE OF CONTENTS
Page
26 Directors' Report
28 Profit and Loss Account
29 Balance Sheet
30 Statement of Cash Flow
Notes To and Forming Part of the Financial Statements
31 Note 1 Summary of Significant Accounting Policies
34 Note 2 Revenue
34 Note 3 Operating Profit
34 Note 4 Abnormal Item
35 Note 5 Income Tax
36 Note 6 Current Assets - Cash
36 Note 7 Current Assets - Receivables
36 Note 8 Current Assets - Inventories
37 Note 9 Non-current Assets - Investments
37 Note 10 Non-current Assets - Inventories
37 Note 11 Non-current Assets - Property, Plant and Equipment
38 Note 12 Non-current Assets - Other
39 Note 13 Current Liabilities - Creditors and Borrowings
39 Note 14 Current Liabilities - Provisions
39 Note 15 Non-current Liabilities - Creditors and Borrowings
40 Note 16 Non-current Liabilities - Provisions
41 Note 17 Share Capital
41 Note 18 Cash Flow
42 Note 19 Expenditure Commitments
43 Note 20 Employee Entitlements
44 Note 21 Site Restoration Costs
45 Note 22 Provisions for Redundancies
45 Note 23 Contingent Assets and Liabilities
45 Note 24 Remuneration of Auditors
46 Note 25 Remuneration of Directors
46 Note 26 Remuneration of Executives
46 Note 27 Remuneration of Consultants
46 Note 28 Related Party Disclosures
47 DIRECTORS' STATEMENT
48 AUDITORS' REPORT
<PAGE>
In accordance with the Corporations Law, the Directors of Hazelwood Power
Corporation Ltd. submit their report for the year ended 30 June 1995.
DIRECTORS
The names of the Directors of Hazelwood Power Corporation Ltd. in office at the
date of this report are: Frank H. Osborn (Chairman), Randolph E. Creswell, Mark
W. Sibree, Nancy J. Hogan, and Roland P. Newman.
PRINCIPAL ACTIVITIES
The principal activities undertaken by Hazelwood Power Corporation Ltd. were the
mining of coal and the generation and sale of electricity. These activities
commenced on 1 February 1995.
RESULTS AND DIVIDENDS
$ 000
Operating profit after tax and abnormals 15,331
Dividends paid Nil
No dividend was provided as at 30 June 1995.
REVIEW OF OPERATIONS
The operating performance of Hazelwood Power Station during the five months to
June 1995 has been excellent with an available capacity factor of 92.6% for the
six unit operation.
Generation sent out of 1,908 GWh was 10% better than expected and revenue from
generation was 20% higher than anticipated and reflects the benefit of being
able to provide reserve plant to the market during times of high demand and/or
low availability of other plant. Total sales revenue (including sales of coal to
Energy Brix Australia Corporation) was 20% higher than expected.
The increase in sales of electricity consequently meant an increase in the
supply of coal and a total of 3,685 kt of coal was mined to satisfy demand by
Hazelwood Power Station and Energy Brix Australia Corporation at 100%
reliability of supply.
Profit After Tax of $15.3 M is a very satisfactory result given the constraints
of the initial allocation of electricity sales contracts following the
disaggregation of the generation sector.
In recognition of the company's ethical obligations in relation to the
environment, the Directors have made a commitment to the restoration of the
sites occupied by the power station and the mine to an acceptable environmental
standard at the end of their economic life. Provision for this is progressively
being made through the Profit and Loss Account over the remaining lives of the
power station and mine.
PERSONNEL
Personnel numbers reduced from 781 (as at 1 February 1995) to 657 as at 30 June
1995, a reduction of 124 or 16%. This reduction was achieved almost entirely
through a voluntary redundancy program. Lower workforce numbers are a key
factor in the restructuring and ongoing viability of the company.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
During the year, there have been a number of significant changes to the state of
affairs of the company. During the period 1 July 1994 to 18 January 1995, the
company, then known as Violet Tower Pty Ltd, lay dormant and did not trade. On
19 January 1995 the company changed its name to Hazelwood Power Corporation Pty
Ltd, and on 9 February 1995, it became a public company known as Hazelwood Power
Corporation Ltd.
Effective from 1 February 1995, Hazelwood Power Corporation Ltd, as per the
Allocation Statement pursuant to the Electricity Industry (Further Amendment)
Act 1994, had vested in it the assets and liabilities of Generation Victoria
associated with the mining and electricity generation facilities of the Morwell
Mine and Hazelwood Power Station, plus a corporate centre complex.
BOARD MEETINGS
The Directors for the period 1 July 1994 to 29 August 1994 were Mesdames S. M.
McGarry and K. M. Russell. They both attended the only meeting held during this
period and both resigned as Directors on 29 August 1994.
Messrs. J. B. Drewett and R. A. Evans were appointed Directors on 30 August
1994. Mr. J. B. Herbert was appointed a Director on 18 January 1995. These
Directors resigned on 30 January 1995. During this period, three Directors'
meetings were held, with Messrs. Drewett and Evans attending all three meetings.
Mr. Herbert attended the only meeting for which he was eligible. Messrs. F. H.
Osborn, R. E. Cresswell and M. W. Sibree were appointed Directors on 31 January
1995 to 30 June 1995 comprising six scheduled meetings and one special meeting.
Messrs. Osborn, Creswell and Sibree attended all meetings and Miss Hogan and Mr.
Newman attended the two meetings held following their appointment.
There were two Audit Commitee meetings held during the year. The members of the
committee are Mr. M. W. Sibree (Chairman), Mr. R. P. Newman and Mr. B. C. Clark.
The Board is also supported by an Environmental Compliance Committee which is
chaired by Mr. R. E. Cresswell.
<PAGE>
INSURANCE OF DIRECTORS AND OFFICERS
With effect from 1 February 1995, Directors (as named in this report) and
Officers of the company were insured for a sum of $ 50 M against certain
liabilities and costs which they may incur as a direct result of their position
in the company, for which they were not otherwise indemnified and which were not
unlawfully incurred, through a policy placed by the company with Utilities
Insurance Co Pty Ltd. The premium paid by the company for this cover was
$ 35 100.
ROUNDING
Amounts in this report have been rounded off to the nearest one thousand dollars
in accordance with section 311 of the Corporations Law and the Regulations
unless otherwise indicated.
Signed in accordance with a resolution of the Directors.
/s/ F.H. Osborn
- ---------------
F.H. Osborn
Chairman
/s/ M.W. Sibree
- ---------------
M.W. Sibree
Director
Melbourne
8 September 1995
<PAGE>
HAZELWOOD POWER CORPORATION LTD
PROFIT AND LOSS ACCOUNT
For the year ended 30 June 1995
<TABLE>
<CAPTION>
1995
Notes $ 000
<S> <C> <C>
Operating profit before abnormal items and income tax 2,3 17,375
Income tax attributable to operating profit before abnormal items 5 (6,381)
----------
OPERATING PROFIT AFTER INCOME TAX BEFORE ABNORMAL ITEMS 10,994
----------
Abnormal item before income tax 4 5,632
Income tax attributable to abnormal item 4,5 (1,295)
----------
ABNORMAL ITEM AFTER INCOME TAX 4,337
----------
OPERATING PROFIT AFTER INCOME TAX 15,331
Retained profits/(accumulated losses) at the beginning of the financial year -
----------
TOTAL AVAILABLE FOR APPROPRIATION 15,331
Dividends provided for or paid -
----------
RETAINED PROFITS AT THE END OF THE FINANCIAL YEAR 15,331
----------
The above profit and loss account should be read in conjunction with the accompanying notes.
</TABLE>
<PAGE>
HAZELWOOD POWER CORPORATION LTD
BALANCE SHEET
As at 30 June 1995
<TABLE>
<CAPTION>
1995
Notes $ 000
<S> <C> <C>
CURRENT ASSETS
Cash 6 9,204
Receivables 7 41,185
Inventories 8 4,974
-------
TOTAL CURRENT ASSETS 55,363
-------
NON-CURRENT ASSETS
Investments 9 39
Inventories 10 4,362
Property, plant and equipment 11 667,973
Other 12 6,761
-------
TOTAL NON-CURRENT ASSETS 679,135
-------
TOTAL ASSETS 734,498
-------
CURRENT LIABILITIES
Creditors and borrowings 13 518,958
Provisions 14 36,850
-------
TOTAL CURRENT LIABILITIES 555,808
-------
NON-CURRENT LIABILITIES
Creditors and borrowings 15 148,125
Provisions 16 15,234
-------
TOTAL NON-CURRENT LIABILITIES 163,359
-------
TOTAL LIABILITIES 719,167
-------
NET ASSETS 15,331
-------
SHAREHOLDERS' EQUITY
SHARE CAPITAL 17 0
RETAINED PROFITS 15,331
-------
TOTAL SHAREHOLDERS' EQUITY 15,331
-------
The above balance sheet should be read in conjunction with the accompanying notes.
</TABLE>
<PAGE>
HAZELWOOD POWER CORPORATION LTD
STATEMENT OF CASH FLOWS
For the year ended 30 June 1995
<TABLE>
<CAPTION>
1995
Notes $ 000
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 59,727
Payments to suppliers and employees (32,856)
Payments relating to redundant employee terminations (7,966)
---------
NET CASH INFLOW FROM OPERATING ACTIVITIES 18.1 18,905
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments to acquire property, plant and equipment (1,544)
Proceeds from sale of property, plant and equipment 47
---------
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (1,497)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Interest and other items of a similar nature received 66
Interest and other costs of finance paid (8,286)
Proceeds from borrowings 28,735
Repayment of borrowings (30,245)
---------
NET CASH OUTFLOW FROM FINANCING ACTIVITIES (9,730)
---------
INCOME TAX PAID -
---------
NET INCREASE IN CASH HELD 7,678
CASH FLOW EFFECT OF THE VESTING OF ASSETS AND LIABILITIES
AS PER THE ALLOCATION STATEMENT EFFECTIVE 1 FEBRUARY 1995 18.2 (242)
CASH AT BEGINNING OF THE FINANCIAL YEAR -
---------
CASH AT END OF THE FINANCIAL YEAR 6 7,436
---------
The above statement of cash flows should be read in conjunction with the accompanying notes.
</TABLE>
<PAGE>
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.1 BASIS OF ACCOUNTING
1.1.1 GENERAL SYSTEM OF ACCOUNTING
The financial statements are prepared on an accrual basis and in
accordance with the relevant Accounting Standards, the Corporations
Law and Schedule 5 to the Corporations Regulations, and the Victorian
Financial Management Act 1994 and the Financial Management
Regulations 1994. They are prepared in accordance with the historical
cost convention.
1.1.2 PRINCIPLES OF CONSOLIDATION
Hazelwood Power Corporation Ltd is not a "parent entity" and does not
have any controlled entities. Therefore, no consolidiated accounts
are presented.
1.1.3 ELECTRICITY SUPPLY INDUSTRY REFORM
As a result of the ongoing reform of the electricity supply industry
by the Victorian State Government, Generation Victoria was
disaggregated on 1 February 1995 and Hazelwood Power Corporation Ltd
became responsible for the operations of the Hazelwood Power Station
and Morwell Mine. Pursuant to the Allocation Statement of the
Electricity Industry (Further Amendment) Act 1994, the assets and
liabilities associated with the mining and electricity generation
facilities of the mine and power station plus the corporate centre
complex were vested in Hazelwood Power Corporation Ltd, effective
1 February 1995.
The financial statements, in effect, report the results for the
operations of the company for the five months from 1 February 1995 to
30 June 1995.
The balance sheets and capital structure (including the value
attributable to property, plant and equipment) were determined by the
shareholder (Victorian State Government) and reflect the economic
value of the business over the estimated remaining operating life of
the mine and power station of twenty-one years. This economic value
was based on the net present value of estimated future cash flows. As
part of the ongoing reform of the electricity supply industry in
Victoria, the State Government has announced its intention to sell
the generation entities.
1.2 ACCOUNTING FOR INCOME TAX
As a government business enterprise, Hazelwood Power Corporation Ltd
is exempt from Federal income tax, but is subject to the Victorian
State Government Tax Equivalent System pursuant to Section 88 of the
State Owned Enterprises Act 1992.
The company has adopted the liability method of tax-effect accounting
whereby income tax is regarded as an expense and is matched with the
accounting profit after allowing for permanent differences.
To the extent that timing differences occur between the point in time
when items are recognised in the accounts and when items are taken
into account in determining taxable income, the net related taxation
benefit or liability is disclosed as a future income tax benefit or a
provision for deferred income tax. These account balances are
calculated with reference to the rates of income tax which are
expected to apply when those timing differences reverse.
Future income tax benefits are not brought to account unless
realisation of the asset is assured beyond reasonable doubt. The
future income tax benefit arising from tax losses is only carried
forward as an asset when the benefit is virtually certain of being
realised.
Upon privatisation, the company will become subject to the Federal
income tax regime. The Federal Treasurer has announced that when a
tax exempt entity becomes taxable certain provisions (for example,
employee entitlements) carried forward will not give rise to
allowable deductions when settled. This means that the future income
tax benefit normally associated with these provisions is not assured
beyond reasonable doubt, and has not been carried forward.
1.3 CLASSIFICATION OF ASSETS AND LIABILITIES
Assets and liabilities are classified as current and non-current.
Current assets are cash or other assets that would, in the ordinary
course of business, be consumed or converted into cash within twelve
months. Current liabilities are liabilities that would, in the
ordinary course of business, be due and payable within twelve months.
1.4 INVENTORIES
Construction and maintenance stocks, general purpose materials, and
fuels are stated at the lower of cost and net realisable value. Cost
comprises the expenditure incurred in acquiring and bringing the
stock to its existing condition and location and includes an
appropriate proportion of fixed and variable overhead expenditure. In
each case, cost is determined on the basis of weighted average costs.
An estimate of items which are unlikely to be issued in the next
twelve months is classified as non-current.
1.5 ESTIMATED DOUBTFUL DEBTS
The value of estimated doubtful debts is reviewed annually on an
individual debtor basis, and an appropriate provision is made.
<PAGE>
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
1.6 CAPITAL PROJECT COSTS
The cost of non-current assets constructed by the company includes the
cost of all materials used in construction, direct labour on the
project, and, for a significant project (being those with an estimated
lead time of at least one year and direct expenditure in excess of
$ 100 M), interest and finance charges and foreign exchange differences
during construction and an appropriate portion of overheads.
1.7 DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
Depreciation is calculated using the straight line method to write off
the net cost or revalued amount of each item of property, plant and
equipment (excluding land) over its expected useful life. Estimates of
remaining useful lives are made on a regular basis for all assets.
Major spares purchased specifically for particular plant are included
in the cost of plant and are depreciated.
1.8 MINE DEVELOPMENT
Mine development expenditure for the initial establishment of access to
coal reserves is capitalised to the extent that the expenditure results
in significant future benefits. These amounts are amortised over the
current estimated lives of the coal fields to which they relate on a
production output basis.
1.9 RECOVERABLE AMOUNT OF NON-CURRENT ASSETS
The recoverable amount of an asset is the net amount expected to be
recovered through the net cash inflows arising from its continued use
and subsequent disposal. Where the carrying amount of a non-current
asset is greater than its recoverable amount, the asset is revalued to
its recoverable amount. Where net cash inflows are derived from a group
of assets working together, recoverable amount is determined on the
basis of the relevant group of assets. To the extent that a revaluation
decrement reverses a revaluation increment previously credited to, and
still included in the balance of, the asset revaluation reserve, the
decrement is debited directly to that reserve. Otherwise, the decrement
is recognised as an expense in the profit and loss account. The
expected net cash flows included in determining the recoverable amounts
of non-current assets are discounted to their present values using a
market-determined, risk-adjusted discount rate.
1.10 INVESTMENTS
Interests in listed and unlisted securities are brought to account at
cost and dividend income is recognised in the profit and loss account
when receivable. Information prepared on an equity accounting basis is
disclosed in the notes to the financial statements.
1.11 EMPLOYEE ENTITLEMENTS
1.11.1 WAGES AND SALARIES AND ANNUAL LEAVE
Liabilities for wages and salaries and annual (recreation) leave are
recognised, and are measured as the amount unpaid at the reporting date
at current pay rates in respect of employees' services up to that date
and include related on-costs.
1.11.2 LONG SERVICE LEAVE
A liability for long service leave is recognised, and is measured as
the present value of expected future payments to be made in respect of
services provided by employees up to the reporting date and include
related on-costs. Consideration is given to expected future wage and
salary levels, experience of employee departures, patterns of leave
taken and periods of service.
Expected future payments are discounted using interest rates attaching,
as at the reporting date, to national government guaranteed securities
with terms to maturity that match, as closely as possible, the
estimated future cash outflows.
1.11.3 REDUNDANCIES
A liability for redundancy costs is recognised and is measured as the
amount unpaid at the reporting date relating to employees who have left
the organisation up to that date and an estimate of the redundancy
payments, based on the employees' services up to that date, to be made
in relation to the number of employees required to depart the company
in order to meet targeted employee levels.
1.11.4 SUPERANNUATION
Hazelwood Power Corporation Ltd contributes towards the VEI
Superannuation Fund on behalf of its employees. These contributions are
charged as expense when they are paid or become payable. No further
liability is recognised in the accounts.
1.12 PROVISION FOR SITE RESTORATION FOR POWER STATION AND MINE
A liability for the cost of restoring the operating site (power station
and mine) to an acceptable environmental standard at the end of the
operation's useful life has been recognised.
The net present value of the estimated future site restoration costs is
expensed in annual increments over the estimated remaining life of the
site.
Expected future payments are discounted using interest rates attaching,
as at the reporting date, to national government guaranteed securities
with terms to maturity that match, as closely as possible, the
estimated future cash outflows.
<PAGE>
1.13 INSURANCE
Hazelwood Power Corporation Ltd takes out insurance cover for
catastrophic losses. For each potential catastrophic risk and insured
event, it carries an economically determined level of excess. Other
risks are self insured, except for certain specific items (such as,
WorkCover and third party motor vehicle). Provision is made in the
accounts for identified uninsured losses.
1.14 LEASES
Hazelwood Power corporation Ltd classifies its leases into finance and
operating leases. Finance leases are those which transfer from the
lessor to the company the majority of the risks and benefits incidental
to ownership of the leased non-current asset. Operating leases are those
under which the lessor effectively retains all such risks and benefits.
For operating leases, the payments are charged to the profit and loss
account in the periods in which they are incurred as this represents the
pattern of benefits derived from the leased assets. Finance leases are
capitalised. A lease asset and liability are established at the present
value of minimum lease payments. Lease payments are allocated between
the principal component of the lease liability and the interest
expense. The lease asset is amortised on a straight line basis over the
term of the lease or, where it is likely that the company will obtain
ownership of the asset, over the life of the asset.
1.15 DEFEASANCE OF DEBT ON LEASES
Agreements exist whereby the (finance) lease liability has been defeased
(extinguished). Any gains or losses on the defeasance of lease
liabilities are recognised in the profit and loss account at the time of
entering into the agreement.
1.6 PROFIT OR LOSS ON SALE OF ASSETS FOR LEASEBACK
Profit or loss on sale of assets for leaseback is classified as deferred
revenue or deferred expenditure, and amortised over the associated lease
period. Where the lease liability has been defeased, the profit or loss
on sale for leaseback of these assets is recognised in the period that
this occurs.
1.7 NEGOTIABLE SECURITIES ISSUED BY HAZELWOOD POWER CORPORATION LTD
Transacting of negotiable securities is conducted by Treasury
Corporation Victoria on behalf of Hazelwood Power Corporation Ltd.
Where interest is paid in advance on negotiable securities the interest
is recognised as an asset and progressively charged against the profit
and loss account over the term of those securities. Interest payable in
arrears is accrued over the term of each security in direct proportion
to the estimated amounts owing in the relevant accounting periods.
Discounts and premiums on face value on the issue of negotiable
securities are recognised as variations of the liability to which they
relate. The variations are amortised over the term of the issue, using
the effective yield method.
1.18 BUYBACKS OF NEGOTIABLE SECURITIES ISSUED BY HAZELWOOD POWER CORPORATION
LTD
Any gains or losses arising from the buyback of negotiable securities
are charged to the profit and loss account as incurred.
1.19 CASH
For the purposes of the statement of cash flows, cash includes cash on
hand and deposits at call which are readily convertible to cash, net of
outstanding bank overdrafts.
1.20 RESEARCH AND DEVELOPMENT EXPENDITURE
Expenditure on research and development is written off against earnings
as incurred, except that when a project reaches the stage where such
expenditure is expected to be recouped through development or sale, all
subsequent expenditures are capitalised.
Unamortised costs are reviewed at each balance date to determine the
amount (if any) that is no longer recoverable and any amount so
identified is written off.
1.21 COMPARATIVE FIGURES
Comparative figures are not included in each of the financial statements
or notes due to the amounts being immaterial. During the year ended
30 June 1994, the company had laid dormant and did not trade. As at
30 June 1994, the company had issued and paid up capital of $ 12 with an
equal amount deposited with the State Electricity Commission of
Victoria. There were no other assets or liabilities, contingent or real.
<PAGE>
2 REVENUE $ 000
SALES REVENUE
Electricity 82,839
Coal 1,691
OTHER REVENUE
Interest received/receivable 138
Proceeds from sale of non-current assets 41
Other 1,906
------
TOTAL REVENUE 86,615
3 OPERATING PROFIT
3.1 OPERATING PROFIT BEFORE INCOME TAX IS ARRIVED AT
AFTER CREDITING AND CHARGING THE FOLLOWING ITEMS
(REFER NOTE 4 FOR ABNORMAL ITEMS):
AFTER CREDITING AS REVENUE:
Interest received/receivable 138
Profit on sale of non-current assets 31
AFTER CHARGING/DEDUCTING AS EXPENSES:
Depreciation of property, plant and equipment 13,006
Amortisation
Mine development 131
Plant and equipment under finance lease 515
Bad debts written off-sundry debtors 33
Interest paid/payable 7,668
State government brown coal mining royalties 1,301
Rent expense relating to operating leases 301
Provisions
Employee entitlements (178)
Site restoration 927
Research and development expenditure 71
3.2 OPERATING PROFIT AFTER INCOME TAX IS DETERMINED
AS FOLLOWS:
Operating profit before abnormal items and income
tax 17,375
Abnormal item before income tax 5,632
------
Operating profit before income tax 23,007
Income tax attributable to operating profit (7,676)
------
OPERATING PROFIT AFTER INCOME TAX 15,331
------
4 ABNORMAL ITEM
Operating profit after income tax is arrived at
after crediting the following abnormal item:
Write back of provision for redundancy 5,632
Income tax attributable to abnormal item (1,295)
------
ABNORMAL ITEM AFTER INCOME TAX 4,337
------
<PAGE>
5 INCOME TAX $ 000
5.1 PRIMA FACIE INCOME TAX PAYABLE
The prima facie income tax payable on the operating
profit differs from income tax provided in the accounts
and is reconciled as follows:
5.1.1 OPERATING PROFIT BEFORE ABNORMAL ITEM 17,375
Prima facie income tax payable at 33% 5,734
Income tax attributable to profit before abnormal item 6,381
------
Variation from prima facie income tax 647
------
The following major items caused the charge for income tax
to vary from the prima facie income tax payable on reported
profit.
Permanent differences
Non-deductible restoration costs 927
Non-deductible depreciation and amortisation 209
Timing differences not brought to account 823
Sundry items (including entertainment) 3
------
Total permanent differences 1,962
Tax effect of permanent differences at 33% 647
Consequent increase in income tax charge 647
------
5.1.2 ABNORMAL ITEM 5,632
Prima facie income tax payable at 33% 1,858
Income tax attributable to abnormal item 1,295
------
Variation from prima facie income tax (563)
------
Change arising from restatement of deferred income tax
balances due to increase in the Australian tax rate from
33% to 36% (563)
CONSEQUENT DECREASE IN INCOME TAX CREDIT (563)
------
5.2 INCOME TAX PROVIDED
Income tax attributable to operating profit before abnormal
item 6,381
Income tax attributable to abnormal item 1,295
------
Income tax attributable to operating profit 7,676
------
5.3 ANALYSIS OF FUTURE INCOME TAX BENEFIT CARRIED FORWARD
Future income tax benefit arising from tax losses which
have been brought to account 4,973
Future income tax benefit arising from timing differences 10,580
Provision for deferred income tax offset (8,792)
------
Future income tax benefit 6,761
------
The future income tax benefit arising from tax losses is
mainly attributable to available tax depreciation deductions
being significantly greater than accounting depreciation.
<PAGE>
5 INCOME TAX (CONTINUED) $000
The benefit for tax losses will only be obtained if:
(i) the economic entity derives future assessable
income of a nature and of an amount sufficient
to enable the benefit from deductions for the
losses to be realised;
(ii) the economic entity continues to comply with the
conditions for deductibility imposed by tax
legislation; and
(iii) no changes of tax legislation adversely affect the
economic entity in realising the benefit from the
deduction for the losses.
6 CURRENT ASSETS--CASH
Cash on hand 4
Short term deposits and securities 9,200
------
Total cash 9,204
------
The above figure is reconciled to cash at the end of the
financial year as shown in the statement of cash flows,
as follows.
Balance as above 9,204
Less bank overdraft (1,768)
------
Cash at end of the financial year 7,436
------
7 CURRENT ASSETS--RECEIVABLES
Trade debtors 38,591
Sundry debtors 2,522
Interest receivable 72
------
Total current receivables 41,185
------
The trade debtors balance represents the amounts within
normal trading terms.
8 CURRENT ASSETS--INVENTORIES
Raw materials and stores--at cost 4,974
------
Total current inventories 4,974
------
<PAGE>
9 NON-CURRENT ASSETS--INVESTMENTS $000
9.1 INVESTMENT AT COST
The investments include:
Unlisted investments
Shares in associated companies at cost 0
Shares in other corporations at cost 39
------
Total investments 39
------
Shares in other corporations at cost represents an
investment in 13.9% of the issued capital of
Energy Business Centre Pty Ltd.
9.2 SHARE IN ASSOCIATED COMPANY
Principal Ownership Investment
Name of Entity Activity Interest Carrying Amount
PowerWorks Pty Ltd Information 33.3% $ 100
centre for
promotion of
Victorian
electricity
generation industry
The above investment is held by Hazelwood Power Corporation
Ltd and comprises the ordinary share capital of the associate.
There were no dividends received or receivable by Hazelwood
Power Corporation Ltd during the financial year. The balance
date of the associate is 30 June and it was incorporated in
Australia. There are no material post balance day events or
dissimilar accounting policies.
Investment in the associated company is accounted for on a cost
basis in the Hazelwood Power Corporation Ltd accounts.
10 NON-CURRENT ASSETS--INVENTORIES
Raw materials and stores--at cost 4,362
------
Total non-current inventories 4,362
------
11 NON-CURRENT ASSETS--PROPERTY, PLANT AND EQUIPMENT
11.1 LAND AND BUILDINGS
Land and buildings at cost 7,935
Less accumulated depreciation 85
------
7,850
------
11.2 PLANT AND EQUIPMENT
Coal production
At cost 128,346
Less accumulated depreciation 2,829
-------
125,517
<PAGE>
11 NON-CURRENT ASSETS--PROPERTY, PLANT AND
EQUIPMENT (CONTINUED) $ 000
Power generation
At cost 506,347
Less accumulated depreciation 9,714
-------
496,633
Vehicles
At cost 1,642
Less accumulated depreciation 87
-------
1,555
General
At cost 4,825
Less accumulated depreciation 291
-------
4,534
-------
Plant and equipment at cost 641,160
Less accumulated depreciation 12,921
-------
628,239
-------
11.3 PLANT AND EQUIPMENT UNDER FINANCE LEASE
Coal production
At cost 27,110
Less accumulated amortisation 515
-------
26,595
-------
Total plant and equipment at cost 668,270
Less accumulated depreciation/amortisation 13,436
-------
654,834
11.4 MINE DEVELOPMENT
Total mine development 5,420
Less accumulated amortisation 131
-------
5,289
-------
11.5 TOTAL
Total property, plant and equipment at cost 681,625
Total accumulated depreciation/amortisation 13,652
-------
Net book value 667,973
-------
12 NON-CURRENT ASSETS--OTHER
Future income tax benefit 6,761
-------
Total non-current assets other 6,761
-------
<PAGE>
13 CURRENT LIABILITIES--CREDITORS AND BORROWINGS $ 000
13.1 CURRENT CREDITORS AND BORROWINGS
Bank overdraft 1,768
Promissory notes 29,557
Inscribed stock 3,262
Interest accrued 4,083
Loan from shareholder 456,479
Trade creditors 23,352
Sundry creditors 457
-------
Total current creditors and borrowings 518,958
-------
Details of financial arrangements are set out in note 15.3
13.2 LOAN FROM SHAREHOLDER
Loan from shareholder is a non-interest bearing loan from
the State Electricity Commission of Victoria which represents
an equity position as far as the Government and the company
are concerned. The Victorian Treasurer can direct that the
loan be recalled at any time. It is unlikely that the debt
will be repaid unless privatisation occurs. In the event of
privatisation, the Victorian Treasurer would require the loan
to be repaid.
14 CURRENT LIABILITIES--PROVISIONS
Employee entitlements 10,416
Redundancies (refer note 22) 23,987
Site restoration (refer note 21) 675
Research and development 1,467
Uninsured losses 305
-------
Total current provisions 36,850
-------
15 NON-CURRENT LIABILITIES--CREDITORS AND BORROWINGS
15.1 NON-CURRENT CREDITORS AND BORROWINGS
Inscribed stock 148,088
Other 37
-------
Total non-current creditors and borrowings 148,125
-------
15.2 NET DEBT
Promissory notes 29,557
Inscribed stock 151,350
-------
180,907
Bank overdraft 1,768
Loan from shareholder 456,479
-------
Total debt 639,154
Short-term deposits and securities (9,200)
-------
Net debt 629,954
-------
The market value of the promissory notes and inscribed stock
as at 30 June 1995 was $195,286,000.
<PAGE>
15 NON-CURRENT LIABILITIES--CREDITORS AND BORROWINGS (CONTINUED) $ 000
15.3 FINANCING ARRANGEMENTS
Hazelwood Power Corporation Ltd has a bank overdraft facility
of $5,000,000 with the National Australia Bank to provide
for daily liquidity requirements.
Additional financing arrangements for Hazelwood Power
Corporation Ltd are arranged with the Treasury Corporation
of Victoria.
Access was available at 30 June 1995 to the following lines
of credit:
Total facilities
Bank Overdraft 5,000
Loan facilities 199,895
Used at balance date
Bank overdraft 1,768
Loan facilities 179,650
Unused at balance date
Bank overdraft 3,232
Loan facilities 20,245
Hazelwood Power Corporation Ltd obtains approval of borrowing
limits with the Department of Treasury and Finance on an
annual basis.
15.4 SECURITY FOR BORROWINGS
Legal liability for the borrowings disclosed by Hazelwood Power
Corporation Ltd rests with either the State Electricity Commission
of Victoria (SECV), or Treasury Corporation of Victoria (TCV),
depending on whether or not the debt has been novated to TCV,
or still remains as an SECV legal liability. These loans are
guaranteed by the State Government of Victoria.
For debt already novated to TCV, back-to-back loans have been
established between TCV and Hazelwood Power Corporation Ltd.
Pursuant to Section 36D of the Treasury Corporation of Victoria
(Debt Centralisation) Act 1933, Hazelwood Power Corporation Ltd
will reimburse TCV for all settlement amounts relating to these
loans.
For debt not yet novated to TCV, Hazelwood Power Corporation Ltd
effectively operates as a paying agent for the SECV, settling all
obligations direct with the investors or their paying agents.
16 NON-CURRENT LIABILITIES--PROVISIONS
Employee entitlements 3,392
Site restoration (refer note 21) 11,842
-------
Total non-current provisions 15,234
<PAGE>
17 SHARE CAPITAL $ 000
17.1 AUTHORISED CAPITAL
500,000,000 ordinary shares of $1.00 each 500,000
17.2 ISSUED AND PAID UP CAPITAL
15 ordinary shares of $1.00 each fully paid $15
On 30 June 1994, the company had on issue 12 ordinary shares,
fully paid. On 18 January 1995, an additional 3 ordinary
shares, fully paid were issued.
18 CASH FLOW
18.1 RECONCILIATION OF OPERATING PROFIT AFTER INCOME TAX TO NET
CASH INFLOW FROM OPERATING ACTIVITIES
Operating profit after income tax 15,331
Profit on sold and scrapped assets (37)
Interest received (66)
Interest and other costs of finance 7,668
Depreciation and amortisation 13,652
Income tax expense 7,676
Change in assets and liabilities:
Decrease in provisions (13,569)
Increase in trade and sundry creditors 14,208
Increase in trade and sundry debtors (26,736)
Decrease in prepayments 967
Increase in inventories (189)
-------
Net cash inflow from operating activities 18,905
-------
18.2 VESTING OF ASSETS AND LIABILITIES
On 1 February 1995, assets and liabilities from Generation
Victoria were vested in Hazelwood Power Corporation Ltd under
the Allocation Statement (refer note 1.2) as follows:
Consideration
The fair value of the net assets vested was $456,479,000.
The consideration provided by Hazelwood Power Corporation Ltd
for these net assets was the loan from the shareholder.
Fair value of net assets vested
Current assets
Cash 4
Receivables 14,450
Prepayments 967
Inventories 6,397
-------
Total current assets 21,818
-------
<PAGE>
18.2 ACQUISITION OF ASSETS AND LIABILITIES (CONTINUED) $ 000
NON-CURRENT ASSETS
Investments 39
Inventories 2,750
Property, plant and equipment 679,655
Other 14,437
------
TOTAL NON-CURRENT ASSETS 696,881
------
TOTAL ASSETS 718,699
------
CURRENT LIABILITIES
Creditors and borrowings 48,435
Provisions 49,742
------
TOTAL CURRENT LIABILITIES 98,177
------
NON-CURRENT LIABILITIES
Creditors and borrowings 148,283
Provisions 15,760
------
TOTAL NON-CURRENT LIABILITIES 164,043
------
TOTAL LIABILITIES 262,220
------
NET ASSETS - REPRESENTED BY LOAN FROM SHAREHOLDER 456,479
------
As part of the above net assets, Hazelwood Power Corporation Ltd
had vested in it a bank overdraft of $ 246,000.
19 EXPENDITURE COMMITMENTS
19.1 CAPITAL EXPENDITURE COMMITMENTS
Contracted commitments for capital expenditure not taken up in
the accounts at balance date are:
Not later than one year 1,685
Later than one year but not later than two years -
Later than two years but not later than five years -
Later than five years -
------
Total capital commitments 1,685
------
19.2 NON-CAPITAL EXPENDITURE COMMITMENTS
Contracted commitments for non-capital expenditure not taken
up in the accounts at balance date are:
Not later than one 7,971
Later than one year but not later than two years 2,553
Later than two years but not later than five years 1,126
Later than five years -
------
TOTAL NON-CAPITAL COMMITMENTS 11,650
------
<PAGE>
19.3 LEASE EXPENDITURE COMMITMENTS $ 000
Total commitments for lease expenditure not taken
up in the accounts at balance date are:
Not later than one year 311
Later than one year but not later than two years 45
Later than two years but not later than five years 49
Later than five years -
------
TOTAL LEASE COMMITMENTS 405
------
REPRESENTING:
Cancellable operating leases 405
Non-cancellable operating leases -
20 EMPLOYEE ENTITLEMENTS
20.1 EMPLOYEE ENTITLEMENT LIABILITY
Accrued wages and salaries 356
Provision for redundancy payments 23,987
Provision for employee entitlements (includes on-costs) 13,808
------
Employee entitlement liability 38 151
------
As explained in note 1.11.2 the amounts for long service
leave are measured at their present values. The following
assumptions were adopted in measuring the present values
of the entitlements which are not expected to be paid
or settled within 12 months of balance date.
Weighted average rate of increase in annual employee
entitlements to settlement of the liabilities 3.3%
Weighted average discount rate 8.9%
Weighted average term to settlement of the liabilities 9 years
20.2 SHARE OWNERSHIP PLANS
Hazelwood Power Corporation Ltd does not operate any share
ownership plans.
20.3 SUPERANNUATION FUND
All permanent employees of the company and casual employees
hired directly are entitled to benefits on termination from
the Victorian Electricity Industry Superannuation Fund.
Casual employees, some executives and all permanent employees
engaged after 31 March 1995 are members of an accumulation fund
known as Division D or other external accumulation funds. All
other permanent employees are members of Division B and C of
the Fund which provide defined benefits in the form of pensions
(Division B) or lump sums (Division C). Both defined benefit
schemes are closed to new members. Division B members contribute
at 6% of superannuation salary and Division C members can
contribute at 0%, 3% or 6%. During 1994/95 Hazelwood Power
Corporation Ltd contributed to the Fund at a rate of 10% for the
defined benefit schemes.
<PAGE>
20.3 SUPERANNUATION FUND (CONTINUED) $ 000
The effective date of the most recent detailed
valuation of the Fund was 30 June 1995. The
review was undertaken by Mr G.I. Burgess, FIA,
FIAA, of William M. Mercer Pty Ltd. Based on
that assessment, the situation for the company
as at 30 June 1995 was:
Present value of employees' accrued benefits 52,100
Net market value of assets held by the Fund to
meet future benefit payments 55,800
Excess of assets held to meet future benefits over
present value of employees' benefits 3,700
Vested benefits 53,700
The employer contributions to the Fund listed below relate
to the financial year ended 30 June 1995.
Standard employer contributions to the Fund 1,274
Additional contributions to the Fund to compensate for
differences between the resignation benefit and the
retrenchment benefit in relation to voluntary retrenchments. 1,289
-------
Total employer contributions to the Fund 2,563
-------
The present value of employees' accrued benefits is equal to
the past membership liability calculated in accordance with
Australian Accounting Standard AAS 25 "Financial Reporting
by Superannuation Plans".
Vested benefits are those benefits which would have been paid
on voluntary termination from the Fund.
Hazelwood Power Corporation Ltd has no legal liability to
rectify any deficiencies in the Fund. However, the company
will ensure that the Fund has sufficient assets to meet the
benefit payments of its employees as they fall due.
21 SITE RESTORATION COSTS
Provision for restoration of the mine and power station sites to
an acceptable environmental standard at the end of their economic
life is recognised in the accounts. The charge to the profit and
loss account during 1994/95 was $927,000. The total provision as
at 30 June 1995 is $12,517,000.
The total net present value of the estimated future cash
outflows attributable to site restoration is:
Mine 12,347
Power Station 46,825
-------
59,172
-------
The majority of the site restoration costs are expected to be
expended in the year 2016/17.
<PAGE>
22 PROVISION FOR REDUNDANCIES $000
A provision for redundancies amounting to $35,625,000 was
transferred from Generation Victoria on 1 February 1995 as
part of the assets and liabilities vested through the
Allocation Statement.
This provision was in recognition that the number of
employees allocated to Hazelwood Power Corporation Ltd was
higher than the number of employees that the company needed
to conduct its operations in a satisfactory manner. The
provision was intended to relieve the company of the cost of
future redundancy payments to the excess employees transferred
from Generation Victoria. The required reduction in employee
numbers was expected to occur before 30 June 1995.
As at 30 June 1995, the full reduction in employee numbers had
not been achieved due to the failure to conclude enterprise
agreement negotiations and a disappointing response from
excess employees to an enhanced voluntary departure offer
made by the company in June 1995.
The provision balance was reassessed at 30 June 1995 and, as
a result of changes to the voluntary departure package
arrangements, $ 5 632 000 was written back to the profit and
loss account and disclosed as an abnormal item.
The provision for redundancies of $ 23,987,000 as at 30 June
1995 represents the unpaid amounts relating to employees who
had left the company up to that date, plus a estimate of
redundancy payments, based on employees' service, to be made
in relation to the number of employees in excess of the
original number required by the company to operate at current
production levels. The Board of Directors have made a firm
commitment to reducing staffing levels to the numbers required
to efficiently operate the company.
23 CONTINGENT ASSETS AND LIABILITIES
As at 30 June 1995, Hazelwood Power Corporation Ltd has no
contingent liabilities.
As a consequence to a change to the electricity market pool
rules, the distribution companies have lodged a claim for
the retrospective application of the rule change. This
claim is being disputed by the company, but a reduction in
sales revenue and receivable of $5,388,706 has been included
in the accounts to reflect a conservative position on the
final outcome of this dispute.
24 REMUNERATION OF AUDITORS
Amounts received or due and receivable by the auditors for:
Audit of financial statements by Auditor-General 43
----
TOTAL REMUNERATION OF AUDITORS 43
----
<PAGE>
25 REMUNERATION OF DIRECTORS $000
Remuneration received, or due, and receivable by the
Directors 42
Number of Directors whose income from Hazelwood Power
Corporation Ltd was within the following bands:
$'000 $'000 Number
0 - 10 4
10 - 20 1
Aggregate amounts paid/payable to superannuation funds on
account of Directors 2
26 REMUNERATION OF EXECUTIVES
Remuneration received, or due and receivable, for the five
months to 30 June 1995, by executives of Hazelwood Power
Corporation Ltd 468
The numbers of executives of Hazelwood Power Corporation
Ltd as at 30 June 1995 whose income was within the specified
bands is listed below. Remuneration received includes
termination benefits for the two executives listed
$'000 $'000 Number
220 - 230 1
240 - 250 1
27 REMUNERATION OF CONSULTANTS
27.1 REMUNERATION OF CONSULTANTS IN EXCESS OF $ 50,000
Consultants name Consultancy details
Fish and Nankivell Senior Executive Recruitment 111
----
Total remuneration of consultants in excess of $ 50,000 111
There are no future commitments contracted with the
consultant disclosed above.
27.2 REMUNERATION OF CONSULTANTS BELOW $ 50,000
Total remuneration of consultants below $ 50,000 190
29 consultants with remuneration below $ 50,000 were
engaged during the financial year.
----
Total remuneration of consultants 301
----
28 RELATED PARTY DISCLOSURES
28.1 DIRECTORS
The directors who held office during the year were:
S.M. McGarry, K.M. Russell, J.B. Drewett, R.A. Evans, J.B.
Herbert, F.H. Osborn, R.E. Creswell, M.W. Sibree, N.J. Hogan
and R.P. Newman
Information on the remuneration of Directors is disclosed
in note 25.
No retirement benefits or loans were provided to the Directors.
There were no other transactions that occurred with the Directors
or director-related parties.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
28.2 TRANSACTIONS AND OUTSTANDING BALANCES WITH OTHER RELATED ENTITIES $000
</TABLE>
The Australian Securities Commission has, pursuant to subsection 313(2)
of the Corporations Law, made an order relieving the Directors of Hazelwood
Power Corporation Ltd from compliance with paragraphs 28-36 of Accounting
Standard AASB 1017: Related Party Transactions, as required by section 298 of
the Corporations Law, in so far as those paragraphs require disclosure in the
financial statements for the year ended 30 June 1995 of transactions which:
(i) relate to the generation of electricity and the purchase of
operating supplies and other related services;
(ii) occurs within a customer or supplier relationship on normal
commercial terms and conditions which are at arm's length; and
(iii) do not have the potential to adversely affect decisions about the
allocation of scarce resources made by user of the accounts, or
the discharge of accountability by the Directors,
on condition that details of the relief are included in the
accounts.
DIRECTORS' STATEMENT
In the opinion of the Directors:
(a) the financial statements set out on pages 28 to 47 are drawn up in
accordance with applicable Accounting Standards, Divisions 4, 4A and 4B of
Part 3.6 of the Corporations Law and the Financial Management Act 1994 so
as to give a true and fair view of the results and cash flows for the
financial year ended 30 June 1995, and the state of affairs at 30 June
1995, of Hazelwood Power Corporation Ltd;
(b) at the date of this statement there are reasonable grounds to believe that
the company will be able to pay its debts as and when they fall due.
The financial statements disclose an excess of current liabilities over
current assets as at 30 June 1995. A large portion of the current
liabilities relates to the loan from the shareholder. The Directors are of
the opinion that the company will be able to pay its debts as and when they
fall due as the loan from the shareholder represents an equity position as
far as the Government and the company are concerned, and is unlikely to be
recalled before privatisation. The company will generate sufficient cash
flows to meet the other debts.
(c) at the date of this statement there were no circumstances which would
render any particulars in the financial statements to be misleading or
inaccurate.
This statement is made in accordance with a resolution of the Directors.
<TABLE>
<S> <C> <C> <C>
F.H. Osborn M.W. Sibree
Chairman [signature appears here] Directors [signature appears here]
B.R. Smith B.C. Clark
Chief Executive Officer [signature appears here] Chief Financial Officer [signature appears here]
</TABLE>
Melbourne
8 September 1995
<PAGE>
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF HAZELWOOD POWER CORPORATION LTD
Audit Scope
The accompanying financial statements of Hazelwood Power Corporation Ltd for the
financial year ended 30 June 1995, comprising a profit and loss account, balance
sheet, statement of cash flows and notes to the financial statements, have been
audited. The company's directors are responsible for the preparation and
presentation of the financial statements and the information they contain. An
independent audit of these financial statements has been carried out in order to
express an opinion on them to the members of the company as required by the
Corporations Law and the Audit Act 1994.
The audit has been conducted in accordance with Australian Auditing
Standards to provide reasonable assurance as to whether the financial statements
are free of material misstatement. The audit procedures included an
examination, on a test basis, of evidence supporting the amounts and other
disclosures in the financial statements, and the evaluation of accounting
policies and significant accounting estimates. These procedures have been
undertaken to form an opinion as to whether, in all material respects, the
financial statements are presented fairly in accordance with applicable
Accounting Standards and other mandatory professional reporting requirements and
comply with the Corporations Law, so as to present a view which is consistent
with my understanding of the company's financial position and the results of its
operations and its cash flows.
The audit opinion expressed on the financial statements has been formed
on the above basis.
Audit Opinion
In my opinion, the financial statements of Hazelwood Power Corporation Ltd are
properly drawn up:
(a) so as to give a true and fair view of:
(i) the company's state of affairs as at 30 June 1995 and of its profit
and cash flows for the financial year ended on that date; and
(ii) the other matters required by Divisions 4, 4A and 4B of Part 3.6 of
the Corporations Law to be dealt with in the financial statements;
(b) in accordance with the Corporations Law; and
(c) in accordance with applicable Accounting Standards and other mandatory
professional reporting requirements.
C.A. Baragwanath
Auditor-General [signature appears here]
Melbourne
28 September 1995
<PAGE>
Annexure B
Agreements etc. between Group Members/Shareholders in the Buyers
<PAGE>
DATED 1996
- -------------------------------------------------------------------------------
NATIONAL POWER AUSTRALIA INVESTMENTS LTD
and
HAZELWOOD PACIFIC PTY LTD
and
AUSTRALIAN POWER PARTNERS CV
and
HAZELWOOD INVESTMENT COMPANY PTY LTD
and
CISL (HAZELWOOD) PTY LTD
HAZELWOOD POWER PARTNERSHIP
PARTNERSHIP DEED
[ ] PHLLLIPS FOX [ ]
SOLICITORS
120 Collins Street
MELBOURNE VIC 3000
Tel: 9274 5000 Fax: 9274 5111
Ref:JAJE:PAC19000-014
[CONFIDENTIAL TREATMENT REQUESTED
WITH REGARD TO ENTIRE ANNEX]
<PAGE>
INDEX
<TABLE>
<CAPTION>
Page
<C> <S> <C>
1. Interpretation 2
2. Bid and Post Bid Procedure 15
3. Transactions of the Effective Date 19
4. Nature of Business 19
5. Partnership Name and Intellectual Property 20
6. Place of Business 20
7. Partnership Meetings/Matters 21
8. HPC Shares 27
9. Key Executives and Secondment of Employees 28
10. Books of Account 29
11. Banking 30
12. Business Plan, Capital Expenditure Plan and Budget 30
13. Accounts 31
14. Expenses 33
15. Capital 33
16. Allocation of Profits and Losses 36
17. Distributions 36
18. Transfers 36
19. Partners Duties 42
20 Limits of Authority 43
21. Indemnity 44
22. Undertakings Concerning Partnership Business 44
23. No Associate Support 45
24. Third Party Assurance 45
25. Insurance 46
26. Duration 46
27. Dissolution 47
28. Time and Indulgence 47
29. Dispute Resolution 47
30. Notices 48
31. General 50
32. Proper Law and Submission to Jurisdiction 50
33. Costs 51
34. General Provisions 51
</TABLE>
<PAGE>
THIS PARTNERSHIP DEED is made as of the 2nd day of August 1996
AMONG:
NATIONAL POWER AUSTRALIA INVESTMENTS LTD (Company Number: 2782480)
a company incorporated in England and having its registered office
at Windmill Hill Business Park, Whitehill Way, Swindon, Wiltshire,
England SN5 6PB
(hereinafter referred to as "National Power") of the first part;
AND
HAZELWOOD PACIFIC PTY LTD (ACN 074 351 376) a company incorporated
in the State of Victoria, Australia and having its registered
office at 50th Floor, 120 Collins Street, Melbourne, Victoria,
Australia
(hereinafter referred to as " H-Pac") of the second part;
AND
AUSTRALIAN POWER PARTNERS CV a limited liability partnership under
the law of The Netherlands and having its registered office at c/o
ING, 1077 WV Amsterdam, Prinses Irenestraat 61, The Netherlands
(hereinafter referred to as " APP") of the third part;
AND
HAZELWOOD INVESTMENT COMPANY PTY LTD (ACN 075 041 360) a company
incorporated in the State of Victoria and having its registered
office at Level 19, 385 Bourke Street, Melbourne, Victoria,
Australia (hereinafter referred to as "HIC") AND CISL (HAZELWOOD)
PTY LTD (ACN 074 747 l85) a company incorporated in the State of
Victoria and having its registered office at Level 19, 385 Bourke
Street, Melboume, Victoria, Australia (hereinafter referred to as
"CHPL")
(hereinafter together referred to as "CHaz") of the fourth
part;
(And hereinafter together referred to as "the Partners")
WHEREAS:
A. The Victorian electricity supply industry has been reformed from a State
owned vertically integrated industry to a new competitive structure split
into independent generation, distribution and retail businesses.
B. Pursuant to a competitive bid process being administered by CS First
Boston, the State of Victoria now proposes to privatise one of the
generation companies, Hazelwood Power Corporation Ltd (ACN 065 381 204)
("HPC") which operates a
<PAGE>
2
1,600MW installed capacity brown coal fired thermal power station and an
adjacent brown coal mine.
C. The Partners have resolved to form the Partnership for the purposes of
carrying on the Partnership Business. National Power will also acquire the
whole of the issued share capital in HPC to be held in trust for the
benefit of the Partnership in order that HPC may be continued in existence
for the purpose of holding legal title to certain licences and agreements.
D. The bid is required to be lodged with CS First Boston by 2 August 1996 and
the parties are desirous of setting out in this Deed the terms and
conditions upon which they will form the Partnership to lodge the bid, how
the Partnership will be financed and their respective rights and
obligations as Partners if the bid is successful.
E. The Panners have entered into arrangements with certain banks to arrange
loan finance for the bid via a limited liability partnership owned by
Associates of National Power, H-Pac and APP, or any of them, and via a
limited liability company incorporated in Victoria and this Deed also sets
out the relationship between the Partnership and the limited liability
partnership.
NOW THIS PARTNERSHIP DEED WITNESSES as follows:
1. INTERPRETATION
l. l In this Deed and the schedules to it the following terms shall unless
the context otherwise requires have the following meanings:
"ACCEPTANCE" has the meaning ascribed to that term in Clause 18.6;
"ACCEPTANCE the period of 30 days commencing on the date on
PERIOD" which a Transfer Notice is served or deemed to have been
served on the Partners;
<PAGE>
3
"ACCOUNTANTS" the firm of major international chartered accountants
approved by the Partners to be appointed as accountants to
the Partnership in accordance with the terms of this Deed;
"ACCOUNTING Generally accepted accounting principles, policies and
STANDARDS" practices of Australia;
"ACCOUNTS" the accounts of the Partnership prepared and audited in
accordance with Clause l3;
"ACQUISITION the contracts for the purchase of shares in HPC and
DOCUMENTS" the purchase of assets and assumption of liabilities of
HPC to be included as part of the Bid;
"ASSOCIATE" any Person that has a relationship with a designated
Person whereby either of such Persons directly or
indirectly controls, is controlled by or is under common
control with the other. For this purpose, the term
"control" means the power, direct or indirect, of one
Person to direct or cause the direction of the management
or policies of another, whether by contract, through
voting securities or otherwise and in the case of CISL
includes CHPL and in the case of CHPL includes CISL;
"AUDITORS" the firm of major international chartered accountants
approved by the Partners to be appointed as auditors to
the Partnership in accordance with the terms of this Deed;
"BALANCING in respect of each Partner, the amount set out against its
CAPITAL name in the second column of Schedule 3;
CONTRIBUTION"
"BANKS" those parties which will make funds available to finance
the Bid;
"BID" the bid referred to in Clause 2.l, a copy of which has
been initialled by or on behalf of the Partners for the
purposes of identification;
<PAGE>
4
"BUDGET" the budget of the Partnership prepared for each successive
financial year as described in Clause 12;
"BUSINESS the annual business plan of the Partnership prepared for
PLAN" each successive Financial Year as described in
Clause 12;
"CAPITAL the capital accounts established in accordance with
ACCOUNT" Clause 15.1;
"CAPITAL in respect of a Partner, the aggregate of the Deposit
CONTRIBUTION" Capital Contribution, Balancing Capital Contribution,
Purchase Price, Capital Contribution Capital Expenditure
Contribution and any Further Capital Contribution made by
that Partner;
"CAPITAL in respect of a Partner, the amounts made as capital
EXPENDITURE contributions pursuant to the Deferred Equity Subscription
CONTRIBUTION" Agreements, the maximum amount of which is set out against
its name in the fourth column of Schedule 2;
"CAPITAL the annual capital expenditure plan of the Partnership
EXPENDITURE prepared for each successive financial year as described
PLAN" in Clause 12;
"CHAIRMAN" the Chairman of Partners appointed pursuant to the terms
of this Deed;
"CHANGE IN the acquisition by any Person, either alone or
CONTROL" acting in concert with any other Person, of an interest
(either direct or indirect) in more than fifty per cent
(50%) of the issued voting capital of a Partner or any
holding company of that Partner other than the Ultimate
Holding Company of that Partner; provided however, that
a"Change in Control" shall not include such an acquisition
if such acquisition is part of a reorganization,
restructuring or other transaction that results in a
change of ownership of assets exceeding in book value 25%
of the book value of all assets of the relevant Ultimate
Holding Company and provided further, that neither a
dividend or other
<PAGE>
5
distribution to its shareholders that includes an interest
in the issued voting capital of the Partner nor a listing
of any Person that includes an interest in the issued
voting capital of a Partner shall be a "Change in
Control";
"CHIEF the senior officer responsible for the overall operation
EXECUTIVE of the Partnership Business;
OFFICER"
"CHIEF the senior officer reporting to the Chief Executive
FINANCIAL Officer responsible for the financial affairs of the
OFFICER" Partnership Business;
"COMPETENT any government, government department, or govemmental,
AUTHORITY" quasi-governmental, supranational, statutory or regulatory
body or court;
"COMPLETION shall have the meaning ascribed to that expression by the
DATE" Acquisition Documents;
"CONTINUING each Partner other than the Transferring Partner or
PARTNERS" an Incoming Partner;
"CS FIRST CS First Boston Australia Pty Ltd;
BOSTON"
"CURRENT the current accounts established in accordance with Clause
ACCOUNTS" 16.1;
"DEED" this Partnership deed as the same may be amended or
supplemented from time to time;
"DEFERRED the agreements to be entered into by each of the Partners
EQUITY as required pursuant to Clause 2.8 being in such form as
SUBSCRIPTION shall be approved by the Banks to record the terms of
AGREEMENTS" Capital Expenditure Contributions by each Partner;
"DEPOSIT" has the meaning ascribed to that term in the Acquisition
documents;
<PAGE>
6
"DEPOSIT in respect of each Partner, the amount set out against
CAPITAL its name in the first column of Schedule 2;
CONTRIBUTION"
"DEPOSIT the rate of interest that the Partners may from time to
RATE" time resolve by the Requisite Majority;
"EVENT OF I. In the case of a company incorporated in Victoria:
DEFAULT"
1. that company entering into any composition or
arrangement with its creditors generally or being
unable to pay its debts within the meaning of
Section 589(4) of the Corporations Law of Victoria
l990;
2. an encumbrancer lawfully taking possession or an
administrator or receiver being validly appointed
over the whole or any part of the undertaking,
property or assets of that company;
3. an order being made or resolution being passed or a
notice being issued convening a meeting for the
purpose of passing a resolution or any analogous
proceedings are taken for the appointment of an
administrator of or the winding-up of that company;
or
II. In the case of a Person incorporated or established
under the laws of a jurisdiction other than Victoria,
if anything equivalent to or analogous with the
matters referred to in sub-Clause I occurs under the
laws of the jurisdiction of its incorporation or
establishment;
"EXEMPT a Person who holds or will hold a beneficial interest in
PERSON" the Partnership Interest held by CHPL by virtue of its
investment or interest in:
<PAGE>
7
(a) a regulated superannuation fund,an approved deposit
fund or a pooled superannuation fund in each case
within the meaning of the Superannuation Industry
(Supervision) Act 1993;
(b) or arising out of, a life policy within the meaning
of the Life Insurance Act 1955; or
(c) prescribed interests issued pursuant to a deed which
is an approved deed as defined in section 1066 of the
Corporations Law;
"FAIR MARKET the value of an Ownership Percentage or portion thereof as
VALUE" determined in accordance with Schedule 3;
"FINANCE those agreements and other documents to be entered into
DOCUMENTS" among inter alia the Banks, the Partnership, the Partners
and LLP to finance the acquisition of the assets and
liabilities of HPC and the Shares;
"FINANCIAL the period from 1 April in one year to 31 March in the
YEAR" next year (inclusive) or for such other period as the
Partners may agree from time to time and includes the
period from the date hereof to 31 March 1997 (as being the
first Financial Year) and the date between 1 April last
occurring before the date of dissolution of the
Partnership and the date of dissolution of the Partnership
(as being the last Financial Year);
"FURTHER any partnership capital contributed by a Partner pursuant
CAPITAL to Clause 15.6 and not refunded pursuant to Clause 15.7;
CONTRIBUTION"
"GOOD the exercise of that degree of skill, diligence, prudence,
OPERATING financial and operational foresight and operating
PRACTICE" practice which would reasonably and ordinarily be
expected from a skilled operator engaged in the same
type of undertaking as the Partnership Business under
the same or similar circumstances, including a
<PAGE>
8
contracting and business strategy generally consistent
with the Business Plan;
"HPC" Hazelwood Power Corporation Limited (ACN 065 38l 204);
"INCOMING any Person other than a Continuing Partner to whom all or
PARTNER" part of a Sale Interest or Partnership Interest is sold or
transferred;
"INTELLECTUAL any intellectual or industrial property of a Partner (or
PROPERTY" an Associate) including patents, patent applications,
trade marks, trade mark applications, trade names, service
marks, trade secrets, registered designs, confidential
information, and a licence or other right to use or grant
the use of any of these things;
"LLP" the limited liability partnership referred to in
Clause 2.6;
"Loan" in respect of a Transferring Partner, all monies advanced
by that Transferring Partner to the Partnership pursuant
to Clause 15.8 and pursuant to the relevant Deferred
Equity Subscription Agreement which remain unpaid at the
date of the sale of the Partnership Interest by that
Transferring Partner;
"MINE the senior officer reporting to the Chief Executive
MANAGER" Officer primarily responsible for the management of the
mine;
"NET CASH for the applicable period means:
FLOW"
(A) the sum of:
(i) gross receipts from the Partnership from all
sources; and
(ii) any Net Cash Flow from a prior period not
distributed by reason of Clause 17.2 of this Deed
but not now subject to Clause 17.2;
<PAGE>
9
less (B) the sum of:
(i) all costs and expenses which the Partnership paid
during such period including capital expenditures;
(ii) all principal and interest paid or payable for the
applicable period on secured or unsecured
indebtedness of the Partnership (but excluding
principal and interest paid or payable for the
applicable period on loans from Partners); and
(iii) contributions to reserve funds and accounts
required under the Finance Documents and
additional reserves for future costs, expenses and
payments (including the replenishments of such
reserves ) as set out in the Budget;
"NET CASH FLOW Net Cash Flow that is permitted to be distributed to the
AVAILABLE FOR Partners pursuant to the terms and conditions of the
DISTRIBUTION" Finance Documents;
"NOMINATED the rate of interest as the Partners may from time to
INTEREST RATE" time resolve by the Requisite Majority;
"OWNERSHIP in respect of a Partner, the percentage set out
PERCENTAGE" against its name in the fifth column of Schedule 2, as
amended to reflect any sale, assignment, disposition or
acquisition of a Partnership Interest in accordance with
the terms hereof or any amendments agreed with the
unanimous consent of all Partners upon the making of any
Further Capital Contribution;
<PAGE>
10
"PARTNER the person duly nominated by each Partner in accordance
REPRESENTATIVE" with Clause 7.6 to attend Partners Meetings;
"PARTNERS" the parties to this Deed and such other persons as may
be admitted to the Partnership;
"PARTNERSHIP" the partnership carried on under this Deed;
"PARTNERSHIP such bank as the Partners may from time to time
BANK" resolve by the Requisite Majority;
"PARTNERSHIP the accounts to be opened by the Partners with the
BANK ACCOUNTS" Partnership Bank;
"PARTNERSHIP
BUSINESS" (a) the lodging of the Bid;
(b) the financing of the Bid;
(c) the execution, delivery and performance of the
Acquisition Documents;
(d) the execution, delivery and performance of the
Finance Documents and the Security Documents;
(e) the business of the generation and supply of
electricity, the exploration for, mining, production
and supply of coal and other raw products used in
the supply of electricity, the supply of coal to
other Persons, the acquisition and trade of
electricity, coal and other raw products used in the
generation of electricity and the provision of
related field, technical and engineering services,
including the construction and operation of power
stations; and
(f) the execution, delivery and performance of any
contracts or financial instruments relating to the
<PAGE>
11
foregoing and including any incidental or ancillary
activities in conjunction with the foregoing;
"PARTNERSHIP with respect to any Partner at any time, the entire legal
INTEREST" and beneficial interest held by such Partner in the
Partnership, including such Partner's Capital Account,
voting interest and right to share in profits and losses,
cash distributions, surplus after the realisation of the
Partnership Property on dissolution of the Partnership
and all other benefits and liabilities of the Partnership
as determined in accordance with the terms of the Deed,
together with such Partner's obligations to comply with
the terms of the Deed;
"PARTNERSHIP the name mentioned in Clause 5. l or such other name as
NAME" may be chosen as the Partnership Name under that Clause
from time to time;
"PARTNERSHIP all rights, benefits, interests and assets of the
PROPERTY" Partnership owned legally and beneficially from time to
time by the Partners;
"PARTNERSHIP the tax return for each Financial Year of the Partnership
TAX RETURN" prepared in accordance with Clause l3;
"PARTNERS a meeting of the Partners or resolution in writing of the
MEETING" Partners in accordance with Clause 7;
"Person" an individual, proprietorship, trust, estate,
partnership, joint venture, association, company, limited
liability company, corporation or other entity;
"POWER the senior officer reporting to the Chief Executive
STATION Officer primarily responsible for the power station;
MANAGER"
"POWERCOR" Powercor Australia Ltd (ACN 064 651 109);
<PAGE>
12
"PROFITS" the profits of the Partnership in any Financial Year as
shown in the Accounts;
"PROPOSING has the meaning ascribed to that term in Clause 18.3;
TRANSFEROR"
"PURCHASE in respect of each Partner, the amount set out against
PRICE its name in the third column of Schedule 2;
CAPITAL
CONTRIBUTION"
"QUARTERLY the meetings of the Partners as referred to in
PARTNERS Clause 7.10;
MEETINGS"
"RELEVANT in relation to a Partner:
EVENT"
(a) a Change in Control of that Partner, other than a
Change in Control of which the Requisite Majority
have approved or, in the case of CHaz, a Change in
Control arising from the transfer of a Partnership
Interest between HIC and CHPL or to an Exempt Person;
(b) that Partner, or any Person holding in excess of 50%
of the equity of, or ownership interests in, that
Partner for the time being suffering an Event of
Default;
"RELEVANT the proportion determined by dividing the amount of a
PROPORTION" Partnership Interest to be acquired by a Person by the
total amount of the Partnership Interest held by the
Transferring Partner prior to the transfer of the
Partnership Interest;
"REQUISITE (a) in respect of a matter set out in Schedule 2, the
MAJORITY" majority specified in Schedule 2 in relation to that
matter; and
<PAGE>
13
(b) in respect of any other matter, Partners holding a
simple majority of the total Ownership Percentages
entitled to vote;
"SALE has the meaning ascribed to that term in Clause 18.5.1;
INTEREST"
"SALE PRICE" has the meaning ascribed to that term in Clause 18.5.2;
"SECURITY the documents to be signed by the Partners, LLP and other
DOCUMENTS" parties for the purposes of providing security to the Banks
in connection with the financing of the acquisition of the
assets and liabilities of HPC and the Shares;
"SECURITY in the case of National Power means National Power PLC
PROVIDER" (Company Number: 2366963). In the case of H-Pac means
PacifiCorp Holdings, Inc. In the case of APP means Destec
Energy, Inc. In the case of HIC means Commonwealth Bank of
Australia (ACN 123 123 124). In the case of CHPL means
Commonwealth Investment Services Limited (ACN 003 049
830);
"SHARES" the whole of the issued capital in HPC;
"TAX" all form of taxation and statutory, governmental, state,
provincial, local governmental or municipal impositions,
duties and contributions and levies, whenever and wherever
imposed and all penalties, charges, costs and interest
relating thereto;
"TAX where a right of an indemnity causes a liability to pay tax
ADJUSTED by the Person indemnified, reduces a tax loss of the Person
BASIS" indemnified or reduces the cost base or indexed cost base
of an asset of the Person indemnified or the Person
indemnified suffers some other disadvantageous tax result
by virtue of the right of indemnity (a "Tax Disadvantage"),
the indemnifier shall pay such additional amounts to the
Person indemnified as may be necessary in order that the
person indemnified be placed in the
<PAGE>
14
position it would have been had it not suffered the Tax
Disadvantage. "Person" includes the Partnership for the
purposes of this definition. For the avoidance of doubt,
where there is any right of indemnity on a Tax Adjusted
Basis nothing herein shall operate to require the person
indemnified to be indemnified for tax on its share of the
net income of the Partnership.
"TAXATION any notice, agreement or election (and including any
NOTICE variation, amendment or revocation of such notice,
OR ELECTION" agreement or election) for the purposes of the Income Tax
Assessment Act 1936 (Commonwealth of Australia) as
amended, including but not limited to notices, elections
or agreements pursuant to Section 36A, Section 59AA,
Section l22R, Section 123F and Section l24W of the said
Act;
"TECHNICAL the agreements to be entered into between National Power
SUPPORT PLC and the Partnership and between PacifiCorp Energy, Inc
AGREEMENTS" and the Partnership as agreed between the Partners and
approved by the Banks and as referred to in Clause 2.8;
"TERM SHEET" the term sheet annexed hereto and initialled by the
Partners for the purposes of identification;
"TRANSFER means a notice served in accordance with Clause 18.3;
NOTICE"
"TRANSFERRING means a Partner who is transferring all or any part of
PARTNER" its Partnership Interest in accordance with Clause 18.2;
"TREASURER" the treasurer of the State of Victoria for the time being;
"ULTIMATE means:
HOLDING
COMPANY" (a) in relation to National Power, National Power PLC;
(b) in relation to H-Pac, PacifiCorp, an Oregon
corporation;
<PAGE>
15
(c) in relation to APP, Destec Energy, Inc, a Delaware
corporation;
(d) in relation to CHPL, Commonwealth Investment
Services Limited (ACN 003 049 830); and
(e) in relation to HIC, Commonwealth Bank of Australia
(ACN 123 123 124).
"VENDOR" the State Electricity Commission of Victoria;
"WITHDRAWAL the date on which any Transferring Partner ceases to be a
DATE" Partner.
1.2 Unless the context otherwise requires, any reference to a statutory
provision shall include such provision as from time to time modified or re-
enacted or consolidated so far as such modification or re-enactment or
consolidation applies or is capable of applying to any transactions entered
into hereunder;
l.3 References to Recitals, Clauses, sub-Clauses, and Schedules are to
recitals, clauses, sub-clauses and schedules of this Deed;
l.4 The headings are for convenience only and shall not affect the
interpretation hereof; and
l.5 Unless the context otherwise requires, words importing the singular only
shall include the plural and vice versa.
2. BID AND POST BID PROCEDURE
2.1 The Partners shall lodge the Bid with CS First Boston on 2 AUGUST 1996.
2.2 If there are negotiations after the Bid is lodged but before it is accepted
by the Vendor relating to:
2.2.1 Bid price; and/or
2.2.2 terms and conditions of the Bid;
<PAGE>
l6
then National Power shall have the exclusive conduct of those negotiations
and shall be entitled to amend the Bid (including without limitation the
Acquisition Documents) in such manner as it thinks fit both as to price
and/or its other terms and conditions and to propose amendments to Capital
Contributions to fund the revised Bid; provided that National Power shall
have no right or authority to bind or purport to bind any of the other
Partners and shall notify the Vendor that it has no such right or
authority and it shall be within the sole discretion of each other Partner
to determine whether to participate in any revised Bid, to make a Capital
Contribution, to fund a revised Bid or to execute or enter into any
amended Acquisition Document.
2.3 If there are negotiations after the Bid is lodged as referred to in Clause
2.2 then National Power will as soon as reasonably practicable inform the
other Partners of the negotiations and its decision as to the terms of the
revised Bid. Each of the Partners shall on the signing hereof nominate in
writing to the other Partners a representative, who shall be available on
a 24 hour "on call" basis until the successful bidder is announced by CS
First Boston, to receive any communications from National Power in
relation to the revised Bid (including any amendment to the Acquisition
Documents), and who shall have full authority to bind that Partner and its
respective Guarantor (as defined in the Acquisition Documents) as to the
terms of participation or withdrawal from the revised Bid.
2.4 National Power shall, when notifying the other Partners of the terms of
the revised Bid, state a deadline by which each other Partner must notify
National Power whether or not it accepts those terms. The deadline stated
must be reasonable having regard to the time constraints which may apply
to any such further negotiations. Each Partner shall respond within the
time stated by National Power as the required deadline to respond and
shall specify whether it accepts the revised terms and the timing and
amount of the contribution of capital which that Partner is required to
contribute to the revised Bid or whether it declines to participate in the
revised Bid. Failure to respond within such required time period
confirming acceptance of the revised terms and the capital to be
subscribed will result in such Partner being excluded from the revised
Bid. That Partner shall cease to be a Partner on the date it declines to
participate or fails to respond as provided in this Clause 2.4 and, in
such event, shall be released from all obligations
<PAGE>
l7
under this Deed (except for obligations under Clauses 33 and 34.3)
including, but not limited to, all obligations to make Capital
Contributions and, in the case of H-Pac, all obligations under Clause 2.6,
and shall have no claim or right of action against any of the other
Partners except in respect of Clauses 33 and 34.3. National Power shall as
soon as possible notify the Vendor and the other Partners of the withdrawal
of that Partner from the Partnership and the Bid.
2.5 In the event that one or more Partners declines pursuant to Clause 2.4 to
participate any further in the Partnership, the remaining Partners shall
(provided that the remaining Partners revised aggregate Capital
Contributions combined with the facilities to be arranged under the Finance
Documents permits the Partnership to continue to satisfy the requirements
of the revised Bid), do, execute, acknowledge and deliver all such acts,
deeds and documents (including without limitation the negotiation in good
faith of a supplemental Partnership deed) to reflect the remaining
Partners' obligations under the revised Bid and the revised Capital
Contributions. In the event that following the retirement of any Partners
pursuant to the provisions of Clause 2.4 the requirements of the revised
Bid cannot be satisfied, the Partnership shall automatically terminate and
all Parties to this Deed shall be released from all obligations hereunder
(except for obligations under Clauses 33 and 34.3) and shall have no claim
or right of action against any of the other Partners save in respect of
those Clauses. National Power shall as soon as possible notify the Vendor
of the termination of the Partnership.
2.6 Each of the Partners who does not cease to be a Partner pursuant to Clause
2.4 undertakes, as soon as reasonably practicable following acceptance by
the Vendor of the Bid or any revised Bid, to execute and to procure that
its respective Guarantor (as defined in the Acquisition Documents) executes
the Acquisition Documents in the form submitted with the Bid or the revised
Bid.
As soon as practicable after the Vendor has announced that the Bid has been
accepted, National Power, H-Pac and APP (or any of them) unless they have
ceased to be a Partner shall each procure that its relevant Associate
respectively negotiate in good faith to establish LLP. The parties to this
Deed acknowledges that:
<PAGE>
18
(i) National Power's Associate shall have 74.9% of the total capital of
and be a general partner in LLP and H-Pac's Associate and APP's
Associate (or either of them) shall have in the aggregate the
remaining 25.1 % of the total capital of LLP;
(ii) the constitutional documents, level of capitalisation and the
arrangements to be put in place between the LLP and the Partnership
shall require the unanimous approval of all Partners and be on terms
acceptable to the Banks; and
(iii) the costs of formation of LLP shall be borne by the Partnership on
terms acceptable to the Banks,
2.7 Following acceptance by the Vendor of the Bid:
2.7.1 National Power shall have the exclusive conduct of the negotiation
and finalisation with the Banks of the Finance Documents and the
Security Documents provided that National Power shall not, without
the consent of each Partner (who has not ceased to be a Partner
pursuant to Clause 2.4), agree to any term or provision that requires
any Partner or its Security Providers to grant any security, assume
any obligation or provide any assurance or indemnity not specifically
contemplated in the Term Sheet. National Power shall send copies of
each draft of the Finance Documents and/or Security Documents to the
other Partners and National Power shall consider any amendments to
such documents proposed by the other Partners. National Power shall
at all times keep the Partners fully informed as to the state of
negotiations of the Finance Documents and Security Documents with the
Banks;
2.7.2 The Partners shall negotiate and agree upon the form of the Deferred
Equity Subscription Agreements which shall provide inter alia for the
following on the terms resolved by the Partners and acceptable to the
Banks:
2.7.2.l an amount up to a figure to be set out therein for
subscription by each Partner which shall be the amount of
each Partner's Capital Expenditure Contributions;
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2.7.2.2 for security to be given in respect of each of the Partners
by their Security Provider to secure its obligations under
the Deferred Equity Subscription Agreements;
2.7.2.3 for amounts payable under the Deferred Equity Subscription
Agreements to be at call on 30 days notice at any time
resolved by the Partnership within three years of the
Completion Date;
2.7.2.4 for a reasonable time period in respect of default by any
Partner in payment of money due from that Partner bearing
interest at the Nominated Rate; and
2.7.2.5 for a release of the Partners from obligations to pay any
amount for which they may be liable under the Deferred
Equity Subscription Agreements if not called.
2.8 Each of the Partners hereby undertakes to negotiate in good faith and
execute the Deferred Equity Subscription Agreements, Finance Documents,
Security Documents and Technical Support Agreements to which it is a party,
as the case may be, on or before the Completion Date, if such Deferred
Equity Subscription Agreements, Finance Documents, Security Documents and
Technical Support Agreements are consistent, in all material respects with
the provisions of this Deed or, if applicable, the provisions of the Term
Sheet.
3. TRANSACTIONS ON THE COMPLETION DATE
3.1 On or before the Completion Date, the Partners shall convene a Partners
Meeting in England and to the extent not already done shall:
3.1.1 approve the Budget, Business Plan and Capital Expenditure Plan for
the first Financial Year of the Partnership;
3.l.2 appoint the Accountants, Auditors and the Partnership Bank;
3.1.3 open the Partnership Bank Accounts; and
3.1.4 take all necessary steps to satisfy all conditions precedent under
the Finance
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20
Documents and the Security Documents.
4. NATURE OF BUSINESS
4.1 The Partnership shall with effect from the date hereof carry on the
Partnership Business.
4.2 Subject to the provisions of this Deed, the Partners understand and agree
that the Partnership shall use all reasonable and proper means to conduct
the Partnership in accordance with the Budget, Business Plan and Capital
Expenditure Plan.
5. PARTNERSHIP NAME AND INTELLECTUAL PROPERTY
5.1 The Partnership Name of the Partnership shall be HAZELWOOD POWER
PARTNERSHIP and the Partnership shall be known by and contract in the name
of and conduct the Partnership Business using only the Partnership Name as
the same may be amended from time to time in accordance with the provisions
of this Deed. Each of the Partners acknowledges that all proprietary and
other rights in the Partnership Name are vested exclusively in the
Partnership.
5.2 Each of the Partners agrees that the use by it of the Partnership Name
shall immediately cease upon it ceasing to be a Partner or upon dissolution
of the Partnership except as regards any Partner who has acquired the
Partnership Business and Partnership Property.
5.3 The Partnership agrees that if any Partner makes any Intellectual Property
available to the Partnership or introduces any Intellectual Property into
the Partnership Business then:
(a) all proprietary rights to that Intellectual Property will remain the
sole property of the relevant Partner;
(b) the Partnership must not use the Intellectual Property for any purpose
other than the Partnership Business; and
(c) upon the termination of this Deed the Partnership must cease to use
the Intellectual Property and must return to the relevant Partner
all manuals or
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other records (including records in electronic or digital form) which
embody the Intellectual Property.
6. PLACE OF BUSINESS
The Partnership Business shall be carried on at Morwell in the La Trobe
Valley in the State of Victoria and National Power's premises in Swindon,
England and such other premises as the Partners shall resolve by the
Requisite Majority.
7. PARTNERSHIP MEETINGS/MATTERS
7.1 National Power shall be responsible for the day-to-day operation of the
Partnership Business within the parameters set out by a Requisite Majority
at a Partners Meeting provided that National Power in conducting such day-
to-day operation shall exercise the degree of skill, care, diligence and
prudence as would ordinarily be expected from a skilled manager of
international standing in respect of the same type of undertaking as the
Partnership Business having regard to those parameters.
7.2 National Power shall not be in breach of its obligations in Clause 7.1 to
the extent that any matters arise in the Partnership Business, and such
matter is related directly or indirectly to the other Partners':
7.2.1 failure to provide National Power upon its request with sufficient
operational control to manage the Partnership Business;
7.2.2 failure to accept a reasonable recommendation of National Power;
7.2.3 failure to approve a reasonable request for a capital or maintenance
expenditure; and
7.2.4 negligence or wilful acts or omissions.
7.3 Those matters set out in Schedule 2 shall be decided only at a duly convened
Quarterly Partners Meeting (or at any other Partners Meeting held in
England) by the Requisite Majority.
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22
7.4 The Partners shall not hold themselves out as having any power or authority
to bind the Partnership and nor shall they bind the Partnership save as and
to the extent permitted by this Deed.
7.5 National Power shall appoint the Chairman from time to time by notice in
writing to the Partners and the Chairman shall, in the event of equality of
votes at a Partners Meeting not have a second or casting vote. If at any
time the Chairman is not present within fifteen minutes after the time of
the meeting, the National Power Partner Representative present shall act as
Chairman for that meeting and any adjourned meeting.
7.6 Each Partner shall have the right from time to time to appoint and remove a
Partner Representative to act on behalf of such Partner at Partners
Meetings provided that HIC and CHPL shall only have the right to appoint
one Partner Representative to act on behalf of both of them. Each Partner
may appoint and remove one or more alternates to act in the absence of the
regular Partner Representative. Any alternate appointed by a Partner shall
act only in the event that the Partner Representative for whom he or she is
appointed as alternate is not present at a Partners Meeting in which event
he shall be for the purposes therefore be deemed to be that Partner
Representative. Appointments shall be made or changed by written notice to
the other Partners.
7.7 The Partnership shall bear the reasonable costs of each Partner
Representative attending a Partners Meeting. In addition, the Partnership
shall bear the reasonable costs of four other representatives of National
Power, one other representative of H-Pac and one other representative of APP
attending the Partners Meeting. A Partner Representative may be accompanied
by such other technical or other advisers at a Partners Meeting as the
Partner sees fit and the Partner shall bear the costs of such attendance
itself, unless the adviser's attendance has been notified in accordance with
Clause 7.9.2 and approved by the Chairman.
7.8 Each Partner, acting through its Partner Representative, shall have a vote
equal to its Ownership Percentage on any resolution put to the Partners or
in the case of the Partner Representative appointed by CHaz (on behalf of
both HIC and CHPL) equal to the ownership percentage of CHaz. Each Partner's
vote may be exercised by its Partner's Representative or, in his absence, by
his or her alternate.
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23
7.9 Partners Meetings shall be convened on not less than l4 days' written notice
given to each of the Partners and the following shall apply:
7.9.l Subject to Clause 7.12, each notice of meeting shall be prepared and
issued by the Chairman and shall contain the date, time and location
of the meeting and an agenda of the matters and proposals to be
considered and voted upon as nominated by the Chairman.
7.9.2 A Partner may by notice in writing to all other Partner
Representatives given not less than seven days prior to any meeting
add any additional matters to the agenda for a meeting and nominate
any additional technical or other adviser it wishes to be present at
that meeting.
7.9.3 On the request of a Partner Representative and with the unanimous
consent of all other Partners Representatives, the Partner
Representatives may consider any matter not contained in any meeting
agenda.
7.9.4 No notice of a Partners Meeting or previously distributed agenda shall
be necessary when all Partner Representatives are present and agree to
the meeting to be held and the agenda to be discussed.
7.10 At least one Quarterly Partners Meeting shall be held in each quarter of
each calendar year. It is intended that at such meetings the Partner
Representatives will discuss and decide the major strategic, business and
financial issues facing the Partnership. Unless otherwise agreed by the
Chairman, each Quarterly Partners Meeting shall be convened by the Chairman
and shall be held in England. A majority in number of the Partner
Representatives shall attend Quarterly Partners Meetings in person and not
by telephone.
7.11 It shall be part of the normal duties of the Chairman to call such Partners
Meetings (in addition to the Quarterly Partners Meetings) as he or she
shall consider appropriate.
7.12 Notwithstanding Clause 7.10, any Partner may convene any other Partners
Meeting on not less than 14 days written notice given to each of the
Partners which notice shall
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24
contain the date, time and location of the meeting and an agenda of the
matters and proposals to be voted upon as nominated by such Partner.
7.l3 The quorum for the transaction of business at each Partners Meeting,
shall be 2 Partner Representatives representing at least 50% of the
aggregate Ownership Percentages. If a quorum is not present within one hour
after the arranged time and place, the meeting shall be adjourned to the
same time the following week unless all the Partner Representatives
unanimously agree otherwise. The Partner Representatives as are present at
such adjourned meeting shall be a quorum. Any decision made with the
agreement of those Partner Representatives present at an adjourned meeting
shall be binding on all of the Partners subject to being passed by the
Requisite Majority at such adjourned meeting. Notice of any adjourned
meeting shall be given to the Partners whose Partner Representatives are
not present at the meeting at which the adjournment occurred.
7.14 In respect of any arrangement, agreement or contract to be entered into on
behalf of the Partnership, the following shall apply:
7.14.1 the interest whether direct or indirect of any Partner or any of
its Associates must be declared by the relevant Partner
Representative at the Partners Meeting at which the arrangement,
agreement or contract is first taken into consideration if the
interest of that Partner or any of its Associates then exists or in
any other case at the first Partners Meeting after the acquisition
of any such interest;
7.14.2 a Partner Representative, notwithstanding the interest of the
Partner who appointed the Partner Representative, may be counted in
the quorum present at any meeting of the Partners but may not vote
in respect of any arrangement, agreement or contract in which that
Partner or any of its Associates is interested whether directly or
indirectly;
7.14.3 any arrangement, agreement or contract in which a Partner or any of
its Associates is interested whether directly or indirectly must be
approved by the Requisite Majority of all the Ownership Percentages
other than the Ownership Percentage of the interested Partner;
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25
7.14.4 it will be the duty of the secretary to the Partnership to
record in the Partnership minutes any declaration made of any
interest given by any Partner pursuant to this Clause 7.14.
7.15 Subject to Clause 7.l0, any Partner may through its Partner
Representative participate in a Partners Meeting by telephone or
other means of communication. All the provisions in this Deed
applicable to meetings of the Partners, shall apply to such meetings
in which one or more Partners participate by telephone or other means
of communication (save for Clause 7.10 relating to the place of
meetings) and such meetings by telephone or by other means of
communications shall be deemed to be a Partners Meeting and further
provided that:
7.15.1 all Partners at the time being entitled to receive notice of a
Partners Meeting have received requisite notice of the
meeting;
7.15.2 each Partner Representative taking part in the meeting by
telephone or by other means of communication must be able to
hear and be heard by each of the other Partner Representatives
taking part at the commencement and at all times during the
meeting;
7.15.3 at the commencement of the meeting each Partner
Representative must acknowledge his or her presence for the
purpose of a Partners Meeting to all other Partner
Representatives taking part;
7.15.4 minutes of the proceedings of such meeting by telephone or by
other means of communication shall be sufficient evidence of
such proceedings and of the observance of all necessary
formalities if certified by the Chairman to be true and
accurate minutes of the meeting;
7.15.5 a Partners Meeting conducted by telephone or by other means of
communication is deemed to be held at the place at which
Partners Representatives representing the greatest aggregate
Ownership Percentages were physically present, failing which
at the place agreed upon by the Partner Representatives
attending the meeting, provided at least one of the Partner
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26
Representatives present at the meeting was at that place for
the duration of the meeting.
7.16 If all the Partner Representatives have signed a document and the document
shows that 100 per cent of the Ownership Percentages have been voted in
favour of a resolution of the Partners in the terms set out in the
document, a resolution in those terms shall be deemed to have been passed
at a Partners Meeting held on the day on which the document was signed and
at the time at which the document was last signed by a Partner
Representative approving the resolution or, if the Partner Representatives
signed the document on different days, on the day on which, and at the time
at which, the document was last signed by a Partner Representative
approving the resolution.
7.17 For the purposes of Clause 7.16 two or more separate documents containing
statements in identical terms each of which is signed by one or more
Partner Representatives shall together be deemed to constitute one
document.
7.18 A record of each decision made at any Partners Meeting shall be kept,
signed by the Chairman and distributed to all Partners within 14 days of
the meeting at which that decision was made.
7.19 The Partners may establish by resolution approved in accordance with Clause
7, such committees as such resolution shall prescribe to assist in the
conduct of the Partnership Business. Such resolution shall determine inter
alia:
7.19.1 the functions of the Committee;
7.19.2 the membership of the Committee and how members are to be appointed
and replaced, and casual vacancies filled;
7.19.3 the voting procedures relevant to the Committee, provided that the
Committee shall not be entitled to finally determine a matter which
requires a Requisite Majority without such a Requisite Majority
being obtained;
7.19.4 the terms of and limits on authority of the Committee which shall be
consistent with the requirements for approval by a Requisite
Majority;
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27
7.19.5 the reporting requirements of the Committee; and
7.19.6 the location in which meetings of the Committee are to be held which
shall, unless the Chairman advises otherwise, be held in England.
7.20 The levels of authority of senior managers and others to bind the
Partnership (including without limitation to sign cheques and to operate
the Partnership Bank Accounts) from time to time shall be as resolved by
the Partners by the Requisite Majority.
7.21 If any Partner shall be in default of its obligations to make any Capital
Contribution then that Partner's right to vote at any meeting of the
Partners shall be suspended whilst such default continues and shall be
reinstated upon cure of such default. That Partner Representative shall be
entitled to attend Partners Meetings but shall not be counted for the
purposes of determining a quorum.
7.22 If National Power ceases to be the Partner which holds the greatest
Ownership Percentage or its right to vote is suspended under Clause 7.21,
those powers exercisable by it under Clause 7.5 shall be exercised by that
Partner who holds from time to time the greatest Ownership Percentage, or
next greatest if National Power's right to vote is suspended and, in such
case, during the period of such suspension only. If two or more Partners
each hold an Ownership Percentage of an equal amount, then those powers
shall be exercised in such manner as shall be resolved by the Partners at a
duly convened meeting.
7.23 Notwithstanding any other provision of this Deed:
7.23.1 a Person who holds office as an executive director of a company
holding an Electricity Distribution Licence issued under the
Electricity Distribution Act 1993 is ineligible for appointment as a
Partner Representative or other representative of a Partner at a
Partners Meeting.
7.23.2 a Person who holds office as a non-executive director of a company
holding an Electricity Distribution Licence issued under the
Electricity Distribution Act 1993 is eligible to be appointed as a
Partner Representative or other
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28
representative of a Partner but may not hold any executive or senior
management position in the Partnership.
7.24 The Partners agree that if the Treasurer so requests they shall deliver to
the Treasurer a copy of the then current Deed.
7.25 No Partner shall transfer any Restricted Information to any employee or
director of Powercor (other than to a non-executive director of Powercor
also holding a nonexecutive post in the Partnership). For the purposes of
this clause "Restricted Information" means any information which relates to
electricity hedging contracts proposed to be entered into between the
Partners and any customers other than Powercor.
8. HPC SHARES
8.l National Power shall acquire and be registered as the holder of the
Shares for the benefit of the Partners in proportion to their respective
Ownership Percentages pursuant to a trust agreement which shall reflect the
following terms:
8.1.1 Each Partner shall have the right to direct National Power to vote
that proportion of Shares as is equivalent to such Partner's
Ownership Percentage and National Power shall vote all Shares as
directed by each Partner in proportion to such Partner's Ownership
Percentage at such time and the approval of any matter so voted upon
shall require the affirmative vote of that proportion of Shares equal
to the Requisite Majority required if such matter was submitted for
approval at a Partners Meeting. National Power shall not exercise
votes in respect of any Shares held by it as nominee unless so
directed to vote in respect of those Shares pursuant to this Clause.
8.1.2 Each Partner shall have the right to direct National Power to appoint
one director of Hazelwood, save that CHPL and HIC shall between them
have the right to direct National Power to appoint only one director
to HPC. Each such director shall have the number of votes on any
resolution of the Board equivalent to the number of votes that the
Partner appointing him or her would have at a Partnership meeting in
respect of its Ownership Interest if the matter
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29
was raised at a Partners meeting. The approval of any matter so voted
upon shall require the affirmative number of votes equal to the
number of votes required to procure the Requisite Majority required
if such matter was submitted for approval to a Partners Meeting.
8.1.3 Each of the Partners shall exercise their vote or cause votes under
their control to be exercised to direct National Power to adopt a new
objects clause for the Memorandum of Association and new Articles of
Association of HPC. Such Articles of Association shall reflect the
provisions of 8.1.1. and 8.1.2. Such Articles of Association shall
also reflect Clause 18.1 as though reference to Partnership Interest
was a reference only to the Shares and a further provision will be
included that, subject to the provisions of the Finance Documents and
the Security Documents, no Shares or interest therein or any asset of
HPC may be transferred, pledged, mortgaged or otherwise encumbered
without the unanimous approval of all Partners.
8.1.4 National Power shall be authorised to mortgage and otherwise charge
and encumber the Shares in accordance with the Finance Documents and
Security Documents.
9. APPOINTMENT OF KEY EXECUTIVES AND SECONDMENT OF EMPLOYEES
9.1 National Power so long as its Ownership Percentage is not less than 35%
shall nominate the Chief Executive Officer and Power Station Manager from
time to time and shall have the right to request the removal of any such
appointee. The Partnership shall appoint the nominee to the relevant
position unless the Requisite Majority of the other Partners considers, on
reasonable grounds, that the nominee does not have the necessary skill,
knowledge and expertise to satisfactorily fulfil the positions. If requested
by National Power and provided that a replacement has been nominated, the
Partnership shall remove any such appointee. The Chief Executive Officer
and/or Power Station Manager shall be invited to attend each of the
Quarterly Partners Meetings described in Clause 7.7 and at least one of them
shall attend each such meeting.
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30
9.2 H-Pac so long as its Ownership Percentage is not less than 19.9% shall have
the right to nominate the Mine Manager from time to time and have the right
to request the removal of any such appointee. The Partnership shall appoint
the nominee as the Mine Manager unless the Requisite Majority of the other
Partners considers, on reasonable grounds, that the nominee does not have
the necessary skill, knowledge and expertise to satisfactorily fulfil the
position. If requested by H-Pac and provided that a replacement has been
nominated, the Partnership shall remove any such appointee.
9.3 APP so long as its Ownership Percentage is not less than 19.9% shall have
the right to nominate the Chief Financial Officer from time to time and
have the right to request the removal of any such appointee. The
Partnership shall appoint the nominee as the Chief Financial Officer unless
the Requisite Majority of the other Partners considers, on reasonable
grounds, that the nominee does not have the necessary skill, knowledge and
expertise to satisfactorily fulfil the position. If requested by APP and
provided that a replacement has been nominated, the Partnership shall
remove any such appointee.
9.4 National Power and H-Pac will from time to time second employees to the
Partnership; provided that the employees so seconded shall have the
necessary skill, knowledge and expertise to fulfil the position required
and provided that the aggregate remuneration paid to those employees is
within the limits set out in, or is otherwise consistent with the
objectives of, the Business Plan and is within the Budget or is otherwise
approved by the Requisite Majority.
10. BOOKS OF ACCOUNT
10.1 Proper books of account shall be kept by the Partnership showing all
receipts and payments on behalf of the Partnership and all such other
matters transactions and things as are usually written and entered into
similar books of account. Each Partner shall by itself or by its duly
authorised representatives have free access to such records and shall be
entitled to take copies of them for the period during which it is a Partner
and subject to Clause 18.17, after it ceases to be a Partner.
10.2 The Partners shall permit any Partner Representative or other
representative designated by a Partner in writing, at the requesting
Partner's expense, to discuss with the Auditors and Accountants the
affairs, finances and accounts of the Partnership at such time as
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3l
may reasonably be requested. Any information obtained as a consequence of
such discussions shall be kept strictly confidential in accordance with
Clause 34.3.
11. BANKING
All Partnership Property comprising money and securities shall be paid into
the Partnership Bank Accounts or deposited for safe custody with the
Partnership Bank. All cheques on the Partnership Bank Accounts shall be
drawn in the name of the Partnership.
12. BUSINESS PLAN, CAPITAL EXPENDITURE PLAN AND BUDGET
12.1 At least 45 business days prior to the commencement of each Financial Year,
the Partner entitled to nominate the Chief Executive Officer pursuant to
Clause 9.1 shall, in consultation with the Chief Executive and the other
Partners, prepare and distribute to the other Partners a Budget, Business
Plan and Capital Expenditure Plan for the following Financial Year.
12.2 The Budget shall specify major items of revenue and expenditure (in
accordance with the Capital Expenditure Plan), and include a cash flow
forecast and a balance sheet showing the projected position of the
Partnership at the end of the following Financial Year.
12.3 The Capital Expenditure Plan shall specify each projected item of capital
expenditure in excess of an amount determined by the Requisite Majority for
the following Financial Year.
12.4 The Business Plan shall specify the strategic direction of the Partnership
Business, the number of employees, the level of remuneration of executive
employees of HPC and/or the Partnership, the projected operational
programmes for the Partnership, the bidding strategy in relation to the
electricity pool to be adopted by the Partnership, the material contracts
proposed to be entered into by the Partnership and such other information
as any of the other Partners may reasonably require for the following
Financial Year.
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12.5 The Partners shall discuss and consider the Budget, Business Plan and
Capital Expenditure Plan at the Quarterly Partners Meeting next following
their distribution to the Partners.
13. ACCOUNTS
13.1 National Power shall cause unaudited monthly, quarterly and half yearly
management accounts to be circulated to all Partners, in the case of
monthly accounts, within 14 days of the end of the month to which they
relate, and in the case of the quarterly and half yearly accounts, within
28 days of the end of such period, such accounts to include a detailed
profit and loss account, balance sheet and cash flow statement, an analysis
of Capital Contributions and other revenue, a review of the budget together
with a reconciliation of results with revenue and capital budgets for the
corresponding period, and (if so required by National Power) a statement of
the source and application of funds for such period and shall include, in
quarterly and half yearly reports, comments with respect to material
operational issues including but not limited to environmental,
occupational, health and safety and insurance issues.
13.2 In addition to the accounts and reports referred to in Clause 13.1,
National Power will notify all Partners as soon as reasonably practicable
of the occurrence of any event which has or may have a significant
financial impact on the Partnership and its view as to the likely
consequences of that event and shall keep the Partners informed of the
actual impact and consequences of that event.
13.3 National Power shall provide copies of all reports provided to the Banks
pursuant to the Finance Documents and the Security Documents and any other
information as any of the Partners may reasonably require from time to
time.
13.4 The Partnership shall instruct the Accountants to prepare:
13.4.1 an account of the assets and liabilities of the Partnership as at
the last day of each Financial Year and of all dealings and
transactions of the Partnership during the Financial Year and of all
matters and things usually contained in accounts of a like nature
taken by persons engaged in a like business (the "Accounts");
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13.4.2 a tax return for the Partnership showing the profits or losses
attributable to each Partner (the "Partnership Tax Return");
The Accounts and Partnership Tax Return shall be prepared for approval by
the Requisite Majority at a Quarterly Partners Meeting within 3 months of
the end of the Financial Year to which they relate and the Accounts shall
be certified by the Auditors as giving a true and fair view of the
Partnership's affairs and profit and loss in the Financial Year.
13.5 The Partnership shall, as and when requested by any Partner, instruct the
Accountants to prepare further tax returns for the Partnership which
correspond with such requesting Partner's year end.
13.6 Such Accounts shall be prepared in accordance with the Accounting Standards
and shall include:
13.6.1 a balance sheet of the Partnership showing its assets and
liabilities;
13.6.2 a statement of the income and expenditure of the Partnership during
that Financial Year;
13.6.3 a statement of each Partner's Current Account and Capital Account;
13.6.4 the accounting policies used in the preparation of the Accounts;
13.6.5 a statement of Capital Contributions and other revenue;
13.6.6 a statement of the source and application of funds; and
13.6.7 such further information as National Power shall deem appropriate or
any other Partner may reasonably require.
13.7 If the Accounts and Partnership Tax Return are approved by the Requisite
Majority the balance sheet shall be signed by all of the Partners and the
Accounts shall then become binding on each of them except that any Partner
may require the rectification of any material error subsequently discovered
in the Accounts or the Partnership Tax Return.
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34
13.8 If the Accounts and Partnership Tax Return are not approved by the
Requisite Majority within 2 months of being submitted to them the Partners
shall refer any point of dispute for resolution by an independent chartered
accountant nominated by the President at the time being of the Institute of
Chartered Accountants (Victorian Division) whose ruling on the point of
dispute shall be final and binding on all Partners. In considering any such
point of dispute such independent chartered accountant shall be acting as
an expert and not as an arbitrator.
14. EXPENSES
Each Partner shall be reimbursed for all reasonable costs and expenses
properly incurred on Partnership Business, including the reasonable costs
and expenses actually incurred by National Power in carrying out its
management functions and reporting duties under this Deed, provided that
all such costs and expenses are duly claimed and accompanied by appropriate
written evidence of such expenditure and are consistent with an approved
Budget or approved by the Requisite Majority. For the avoidance of doubt
any reasonable remuneration actually paid and any reasonable expenses
actually incurred by National Power or any of its Associates or H-Pac or
any of its Associates in respect of employees seconded to the Partnership
in accordance with Clause 9.4 shall be deemed to be expenses of the
Partnership properly incurred.
15. CAPITAL
15.1 A Capital Account shall be established and maintained for each Partner
during the term of the Partnership to which the Deposit Capital
Contribution, Balancing Capital Contribution, Purchase Price Capital
Contribution, Capital Expenditure Contribution and any Further Capital
Contributions of the Partner shall be credited and which will be adjusted
to reflect any withdrawal or repayment of such Capital Contributions of
that Partner in accordance with this Deed.
15.2 If the Deposit becomes due and payable by the Partnership pursuant to the
Acquisition Documents:
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15.2.1 Each Partner shall contribute its Deposit Capital Contribution on
the due date to the Partnership by depositing its Deposit Capital
Contribution into the appropriate Partnership Bank Account; and
15.2.2 On the Completion Date each Partner shall contribute its Balancing
Capital Contribution to the Partnership by depositing its
Balancing Capital Contribution into the appropriate Partnership
Bank Account.
15.3 If the Deposit has not been required to be paid pursuant to the
Acquisition Documents, on the Completion Date each Partner shall
contribute its Purchase Price Capital Contribution by depositing its
Purchase Price Capital Contribution into the appropriate Partnership Bank
Account.
15.4 Each Partner shall contribute its share of the Capital Expenditure
Contribution to the Partnership when called upon to do so pursuant to the
Deferred Equity Subscription Agreements by depositing the required amount
of its Capital Expenditure Contribution into the appropriate Partnership
Bank Account.
15.5 All Partnership Property shall belong to the Partners jointly in
proportion to their respective Ownership Percentages from time to time,
and (if vested in any individual Partner), shall be held by it in trust
for all of the Partners in proportion to their respective Ownership
Percentages and the Partnership shall indemnify such Partner on a Tax
Adjusted Basis against all liability which may arise whether directly or
indirectly out of such ownership except where such liability arises out of
that Partner's own gross negligence or wilful act or omission. If the
liability does arise out of that Partner's own gross negligence or wilful
act or omission, that Partner shall indemnify the Partnership against all
such liability.
15.6 If National Power is of the opinion that the Partnership requires Further
Capital Contributions, it shall present a written request specifying the
date by which the Further Capital Contributions are required (together with
a financial report explaining the circumstances necessitating the proposed
further equity subscription) to the Partners and shall convene a Partners
Meeting to consider such request. If the request is approved by the
Requisite Majority, a call for the approved Further Capital Contribution
shall be made which specifies the date by which such contribution must
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36
be made provided always that nothing in this Clause 15.6 shall oblige any
Partner to subscribe any Further Capital Contribution.
15.7 If any Partner is unable or unwilling to subscribe or does not subscribe
for Further Capital Contributions in accordance with any call for Further
Capital Contributions made in accordance with Clause 15.6, the call shall
be deemed to have been cancelled. Any Further Capital Contributions made
pursuant to such call shall be refunded to those Partners who subscribed
them together with interest at the Deposit Rate calculated from the date
of payment of such Further Capital Contributions to the date of refund
thereof, both days included.
15.8 If the Partners are unable or unwilling to make Further Capital
Contributions on terms that are, in all respects, acceptable to all the
Partners, Partners may, but shall not be obligated to, make a cash loan to
the Partnership to provide funds requested pursuant to Clause 15.6 upon
approval by a Requisite Majority, of the term and conditions of the loans
including, without limitation, as to the amount and provisions for
repayment. Each such loan shall be subordinated in right of payment to all
obligations and liabilities owed under or in connection with the Finance
Documents and the Security Documents on terms satisfactory to the Banks
and shall bear interest at the lesser of the highest rate permitted by law
or 2 per cent over the "prime" rate announced from time to time by the
Partnership Bank compounded annually. Such loans to the Partnership shall
not be considered Capital Contributions and shall not result in any
increase in the Capital Account of the lending Partner. The amount of any
such loan shall be a debt of the Partnership to the lending Partner and
shall be payable only out of the assets of the Partnership.
15.9 Subject always to the terms of the Finance Documents and except as
provided in Clause 15.7 or with the agreement of all the other Partners,
no Partner may withdraw capital from the Partnership.
15.10 No interest shall be payable upon the capital of any Partner but interest
at the Nominated Rate shall be calculated and payable to the Partnership
on any Capital Contribution or part thereof due but unpaid until paid in
full, such interest to be paid on the date of payment of the outstanding
Capital Contribution in full.
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37
16. ALLOCATION OF PROFITS AND LOSSES
16.1 A Current Account shall be established and maintained for each Partner
during the term of the Partnership to which all Profits and losses shall
be allocated in accordance with the provisions of this Deed.
16.2 The Profits and losses for each Financial Year shall be allocated to the
Partners at least calendar quarterly in proportion to their respective
Ownership Percentage from time to time and shall to the extent so resolved
by the Partners be distributed in accordance with Clause 17 .
17. DISTRIBUTIONS
17.1 Except as prohibited by law, the Partnership shall pay or distribute, as
the case may be, its Net Cash Flow Available for Distribution as soon as
reasonably practicable following the end of each calendar quarter in the
following priority:
17.1.1 first, to pay the principal and interest on any outstanding Partner
Loans;
17.1.2 second, to Partners in accordance with their Ownership Percentage.
17.2 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 Finance Documents and agree that, should they
receive any such payment, they shall promptly pay the same over to the
Partnership.
18. TRANSFERS
18.1 Except as permitted in Clause 18.2, no Partner shall:
18.1.1 save as required by or pursuant to the Finance Documents or
Security Documents, pledge, mortgage, charge (whether by way of
fixed or floating charge) or otherwise encumber all or any part of
its Partnership Interest (or any legal or beneficial interest
therein); or
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38
18.1.2 sell, transfer, assign or otherwise dispose of or deal with its
Partnership Interest or any part of such Partnership Interest (or
any legal or beneficial interest therein); or
18.1.3 enter into any agreement or arrangement in respect of its
Partnership Interest or the Shares except for the purposes of the
Finance Documents and the Security Documents; or
18.1.4 agree or attempt, whether or not subject to any condition
precedent or subsequent, to do any of the foregoing.
18.2 Subject to this Deed, the Finance Documents, the Security Documents and
the Acquisition Documents, a Partner may transfer on, and as at, the last
day of a calendar quarter or as otherwise required by law the whole or
any portion of its Partnership Interest if the transfer is:
18.2.1 made in accordance with this Clause 18;
18.2.2 to one or more of its Associates; or
18.2.3 with the prior written consent of all Partners.
18.3 A Partner proposing to sell or transfer all or any of its Partnership
Interest other than pursuant to Clauses 18.2.2; 18.2.3 or 18.13 (a
"Proposing Transferor") shall give notice to the Continuing Partners that
it desires to sell or transfer that part of its Partnership Interest.
18.4 A Proposing Transferor may not sell or transfer all or any of its
Partnership Interest unless it also assigns to the transferee of that
Partnership Interest the Relevant Proportion of its Loan.
18.5 A Transfer Notice shall be irrevocable except with the unanimous consent
of the Partners and shall state:
18.5.1 the amount of the Partnership Interest proposed to be sold or
transferred (the "Sale Interest");
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39
18.5.2 the price at which the Proposing Transferor wishes to sell the Sale
Interest (the "Sale Price"); and
18.5.3 if the Proposing Transferor has received an offer to purchase the
Sale Interest, the name of the offeror and any other terms of the
offer.
18.6 Subject to Clause 18.7, a Partner may, at any time during the Acceptance
Period, lodge with the Chairman a notice in writing (an "Acceptance")
stating the amount of the Sale Interest that it is willing to purchase at
the equivalent proportion of the Sale Price.
18.7 No Partner may lodge an Acceptance in respect of an amount of the Sale
Interest which, if it were to be sold and transferred to that Partner,
would result in a breach of the cross ownership provisions of the
Electricity Industry Act l993 of the State of Victoria.
18.8 At the end of the Acceptance Period, the Chairman shall give to the
Proposing Transferor and each other Partner a notice in writing specifying
the names of any Partners who have lodged an Acceptance and the amount of
the Sale Interest that each such Partner is willing to purchase at the
equivalent proportion of the Sale Price.
18.9 If the aggregate of the amounts of the Sale Interest for which Partners
have lodged Acceptances is less than the whole of the Sale Interest, the
Proposing Transferor may, within the period of 90 days after the end of the
Acceptance Period, sell and transfer the whole of the Sale Interest to the
Person named as offeror in the Transfer Notice or, if an offeror is not
named in the Transfer Notice, to any Person in a bona fide sale provided
that:
18.9.1 the transferee is reasonably acceptable to the Continuing Partners;
18.9.2 the price shall be not less than the Sale Price;
18.9.3 the Proposing Transferor may not sell or transfer less than the
whole of the Sale Interest; and
18.9.4 the Partners shall be entitled to all such documentary or other
evidence as they may reasonably require to establish that the Sale
Interest is being transferred in
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40
pursuance of a bona fide sale for not less than the Sale Price without
any deduction, rebate or allowance whatsoever to the transferee.
18.10 If the aggregate of the amounts of the Sale Interest for which Partners
have lodged Acceptances is equal to the whole of the Sale Interest, the
Proposing Transferor shall within 30 days after the end of the Acceptance
Period sell and transfer to the Partners who have lodged Acceptances the
Relevant Proportion of the Sale Interest for which they have lodged
Acceptances.
18.11 If the aggregate of the amounts of the Sale Interest for which Partners
have lodged Acceptances exceeds the whole of the Sale Interest, the
Chairman of Partners shall specify the amount of the Sale Interest to be
sold and transferred to each of the Partners who have lodged Acceptances,
such amount to be in proportion to their respective Partnership Interests
but so that no Partner is required to acquire a greater amount of the Sale
Interest than it specified in its Acceptance. The Proposing Transferor
shall within 30 days after the end of the Acceptance Period sell and
transfer to the Partners who have lodged Acceptances the amount of the
Sale Interest so specified by the Chairman.
18.12 A transfer by a Transferring Partner of all or any part of its Partnership
Interest shall not be effective unless:
18.12.1 each transferee agrees in writing with the Continuing Partners
to assume, observe, perform and satisfy its Relevant Proportion
of the liabilities and obligations of the Transferring Partner
pursuant to or arising under or by virtue of this Deed, the
Financing Documents, the Security Documents and the Acquisition
Documents;
18.12.2 the Transferring Partner assigns the Relevant Proportion of the
Loan to the transferee;
18.12.3 the transfer of that part of the Partnership Interest will not
result in a breach of the cross ownership provisions of the
Electricity Industry Act 1993, or the provisions of the Finance
Documents or the Acquisition Documents or any applicable laws;
<PAGE>
4l
18.12.4 the transferee pays, or makes adequate and acceptable provision
for payment of, the Relevant Proportion of any moneys certified
by the Continuing Partners as owing by the Transferring Partner
pursuant to this Deed; and
18.12.5 the transferee has complied with all applicable laws including,
without limitation, the provisions of the Foreign Acquisitions
and Takeovers Act 1975 and any other statutory requirements
which may apply in respect of the transfer of the Relevant
Proportion of the Partnership Interest.
18.13 Notwithstanding any other provision of this Clause 18, neither National
Power nor HPac shall serve a notice pursuant to Clause 18.3, until it has
first offered to sell or transfer the Sale Interest to the other at the
Sale Price and the other has not accepted the offer in relation to the
whole of the Sale Interest within 30 days of the offer being served on it.
18.14 Upon the happening of any Relevant Event, the Partner in question shall be
deemed to have immediately given a Transfer Notice in respect of all of
the Partnership Interest held by it which shall be deemed to specify as
the Sale Price the Fair Market Value of the Partnership Interest.
18.15 Upon a transfer by the Transferring Partner of all or part of its
Partnership Interest pursuant to this Clause 18 becoming effective the
transferee, if it is not already a Partner, shall be and become a Partner.
Any transferee shall acquire the Relevant Proportion of the Transferring
Partners' Partnership Interest including its right to repayment of its
Capital Contributions . The Continuing Partners shall, if requested by the
Transferring Partner, and the Transferring Partner shall, if requested by
the Continuing Partners and any Incoming Partner if relevant, do, execute,
acknowledge and deliver all such further acts, deeds, assignments and
assurances as are severally required to:
(i) perfect the transfer by the Transferring Partner of all or the
Relevant Proportions of its Partnership Interest and the assumption of
all or a Relevant Proportion of the Transferring Partner's liabilities
and obligations under this Deed as are the subject of the transfer;
and
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42
(ii) the admission, if relevant, of the Incoming Partner as a Partner.
18.16 The Continuing Partners and any Incoming Partner shall pay and discharge
in the ordinary course of the Partnership Business all debts and
liabilities of the Partnership accruing on or after the Withdrawal Date
(except any debt or liability in respect of income tax attributable to the
Transferring Partner's share of the Profits and except any debt or
liability in respect of any claim arising from any negligent or wrongful
act or omission of the Transferring Partner to the extent that such claim
is not covered by insurance) and shall keep the Transferring Partner
indemnified on a Tax Adjusted Basis from and against such debts and
liabilities. The Continuing Partners and any Incoming Partners shall use
all reasonable endeavours to have all contracts under which the
Transferring Partner is liable in connection with the Partnership Business
novated to the Continuing Partners and any Incoming Partner as soon as
practicable after the Withdrawal Date.
18.17 Subject to such confidentiality deeds as may be reasonably required by the
Continuing Partners and any Incoming Partner, following the Withdrawal
Date the Transferring Partner or its duly authorised agent shall be
permitted by appointment to inspect the books of account, records, letters
and other documents of the Partnership during normal business hours
insofar as they relate to any period preceding the Withdrawal Date and all
information which the Transferring Partner or its duly authorised agent
shall thereby obtain shall be kept strictly confidential by the
Transferring Partner and by such duly authorised agent except as permitted
by the confidentiality deeds, and the Transferring Partner shall indemnify
and keep the Continuing Partners and Incoming Partner indemnified from and
against all losses, damages and costs which they may suffer arising
directly or indirectly out of a failure to comply with this restriction.
18.18 The Transferring Partner shall sign, execute and do all such documents,
deeds, acts and things as the Continuing Partners and any Incoming Partner
may reasonably request for the purpose of enabling the Partners to recover
and get in the book debts and other assets of the Partnership or for the
purpose of appointing a new trustee of any of the Partnership Property or
for the purpose of conveying, assigning or transferring to the Continuing
Partners and any Incoming Partner any of the Partnership Property which
<PAGE>
43
immediately prior to the Withdrawal Date is vested in the Transferring
Partner or held by the Transferring Partner on trust for the Partnership.
18.19 At the request of the Continuing Partners, any Transferring Partner shall
join with the Continuing Partners and any Incoming Partner on the
Withdrawal Date or at any time within twelve months of the date thereof in
signing any Taxation Notice or Election which maybe recommended by the
Accountants. Unless a Requisite Majority of the Partners agree otherwise,
upon any change in Partnership Interest arising under Clause 18 the
Partners shall also sign any requisite Taxation Notice or Election as may
be recommended by the Accountants. The Continuing Partners and any
Incoming Partner shall keep the relevant Transferring Partner indemnified
on a Tax Adjusted Basis from and against any amounts of Tax suffered by
the Transferring Partner which it would not have suffered if it had not
joined in making the election referred to in this Clause.
19. PARTNERS' DUTIES
19.1 Subject to Clause 21.1, to the maximum extent permissible at law, no
Partner shall be liable to the Partnership or to the other Partners for
any action taken or omitted to be taken by Relevant Partner or for any
action taken or omitted to be taken by the other Partners with respect to
the Partnership, except to the extent that any such act or omission was
attributable to the Relevant Partner's wilful misconduct, bad faith,
gross negligence or breach of this Deed.
19.2 No Partner shall carry on any other business or incur any other liabilities
save in respect of the Partnership Business, it being the intention of the
Partners that each of the Partners shall comprise "Special Purpose
Vehicles" incorporated and acting only in relationship to the Partnership
Business.
19.3 The Partnership shall indemnify to the fullest extent permitted by law each
Partner and each of the employees, directors, officers, partners,
shareholders and agents of each Partner (collectively, the "Indemnified
Party") from and against all reasonable costs and expenses (including
reasonably incurred lawyer's fees and expenses), claims, demands,
liabilities, causes of action, judments, fines, settlements (where such
settlement has been approved by the Requisite Majority) and/or liabilities
reasonably incurred by or imposed upon any Indemnified Party in connection
with, or resulting from, the
<PAGE>
44
management or administration of the affairs of the Partnership or the
conduct of the Partnership Business including but not limited to,
investigating, preparing or defending any action, suit, or proceeding
whether civil, criminal, administrative, investigative, legislative or
otherwise to which any Indemnified Party may be a party or become otherwise
involved or with which any Indemnified Party may be threatened, in each case
by reason of such Partner being or having been involved in the activities of
the Partnership, provided that the same were the result of action or
inaction of the Indemnified Party which it, in good faith, determined was in
the best interests of the Partnership and which course of conduct did not
constitute wilful misconduct, bad faith, gross negligence or a breach of
this Deed. None of the provisions of this Clause 19.3 shall or be deemed to
create or grant any rights in favour of anyone other than Indemnified
Parties. The rights of this indemnification granted hereunder shall survive
the termination, dissolution and winding-up of the Partnership and in the
case of a Partner leaving the Partnership ceasing to be a Partner. Each
Partner holds the benefit of this Clause on trust for each of its employees,
directors, officers, partners, shareholders and agents and may enforce this
Clause on their behalf.
20. LIMITS OF AUTHORITY
20.1 No Partner shall:
20.l.l lend any of the money of the Partnership to any person or persons
or use the Partnership Name or any other Partnership Property;
20.1.2 give any security or promise for the payment of money on account of
the Partnership or enter into any guarantee for the indebtedness of
the Partnership except with the unanimous approval of the other
Partners;
20.l.3 knowingly cause or suffer to be done or omitted to be done anything
whereby the Partnership may be prejudiced;
20.l.4 draw, accept or indorse any cheque or other bill of exchange or
promissory note on account of the Partnership unless authorised in
accordance with the then current mandate of the Partnership Bank
Accounts; and
<PAGE>
45
20.l.5 compromise, compound or release any debt due to the Partnership.
21. INDEMNITY
2l.1 Any Partner committing a breach of any of the provisions of this Deed,
the Finance Documents or the Security Documents shall indemnify and keep
the other Partners indemnified on a Tax Adjusted Basis from and against all
losses, damages, actions, proceedings, costs and expenses arising directly
or indirectly out of such breach . The provisions of this Clause 21.1 shall
continue to apply a Transferring Partner who has left the Partnership.
21.2 The Partners hereby acknowledge and agree that the Partnership will enter
into a deed of indemnity to indemnify HPC and each of its directors from
time to time against all losses, damages, actions, proceedings, costs and
expenses arising directly or indirectly out of:
2l.2.l HPC being the employer of certain employees as trustee for the
Partnership;
21.2.2 HPC being the signatory to any contract with a third party on
behalf of the Partnership;
21.2.3 HPC holding on trust for the Partnership any generation, mining or
groundwater licence issued to HPC or holding in trust any other
contract so directed by the Partners; or
21.2.4 HPC complying with the directions of the Partnership.
22. UNDERTAKINGS CONCERNING PARTNERSHIP BUSINESS
At all material times during the continuation of the Partnership Business
the Partnership shall duly observe in connection therewith:
22.2.1 the provisions of the Finance Documents, Security Documents and
Technical Support Agreements;
22.2.2 Good Operating Practice; and
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46
22.2.3 the Business Plan, the Budget and the Capital Expenditure Plan.
23. NO SUPPORT
Except in relation to the Deferred Equity Subscription Agreements, the
Partners agree that the basis of the structure of the Bid and the future
conduct of the Partnership Business will at all times be subject to the
principle that no financial or other support shall be forthcoming from any
Partner or any Associate of any of the Partners whether in relation to the
financing of the Partnership Business or otherwise.
24. THIRD PARTY ASSURANCE
24.1 Should the Partnership Bank or any other person request one or more of the
Partners to guarantee the Partnership's indebtedness (present or future,
actual or contingent) or require one or more of the Partners to stand as
surety for any such indebtedness the decision to accede to such a request
shall require the approval of the Requisite Majority.
24.2 Following a decision to give a third party assurance:
24.2.1 the Partnership shall indemnify the Partners who give such a third
party assurance from any liability actually incurred from the giving
of the third party assurance or which may arise in the future under
such assurance;
24.2.2 a Transferring Partner shall be released from liability under this
Clause at the time it ceases to be a Partner in accordance with the
terms of this Deed for all liability accruing in or after the date
of its withdrawal as a Partner, and in the event that it is one of
the persons who gave the third party assurance the Continuing
Partners shall use all their reasonable endeavours to procure that
it is formally released from it. Pending such release the Continuing
Partners and any other Incoming Partner shall indemnify the
Transferring Partner and keep it indemnified on a Tax Adjusted Basis
from and against all losses, damages, claims, proceedings, costs and
expenses which it suffers as a result of delay in obtaining or
failure to obtain such release.
<PAGE>
47
25. INSURANCE
The Partnership shall effect and maintain in its name and, as appropriate,
in the name of the Partners and HPC all such insurance policies required
under the Finance Documents and all such additional policies as the
Partners shall resolve by the Requisite Majority that, it would be prudent
to maintain in a business similar to that of the Partnership Business.
26. DURATION
26.1 Subject to the Partnership Act 1958 of the State of Victoria and this
Clause 26, the Partnership shall continue for so long as the Partnership
Business is carried on by the Partnership or until the Partners shall
agree by the Requisite Majority to dissolve the Partnership.
26.2 Except as provided in Clause 26.3 the Partners agree that the partnership
will not be dissolved upon the happening of any of the events set out in
Sections 36 or 37 of the Partnership Act 1958 save with the agreement of
the Requisite Majority.
26.3 The Partnership shall dissolve and commence winding up and liquidating
upon the first to occur of any of the following events with respect to any
Partner:
26.3.1 in the case of a Partner who is a natural person, the death of the
Partner or the entry of an order by a court of competent
jurisdiction adjudicating the Partner incompetent to manage the
Partner's person or estate;
26.3.2 the expulsion of a Partner;
26.3.3 the bankruptcy of a Partner;
26.3.4 in the case of a Partner that is a separate entity other than a
corporation, the dissolution and commencement of winding up of the
separate entity; or
26.3.5 in the case of a Partner that is a corporation, the filing of
articles of dissolution or the equivalent for the corporation or the
revocation of its charter.
<PAGE>
48
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,
Partners holding a simple majority of Ownership Percentages agree in
writing, at a time when there are then at least two Partners, to continue
the business and affairs of the Partnership.
27. DISSOLUTION
On the dissolution of the Partnership the Partners shall use all
reasonable endeavours to realise and get in all the Partnership Property
and shall apply the Partnership Property in meeting the liabilities of the
Partnership and then in repaying the Capital Accounts and if any excess
remains after paying such liabilities and Capital Accounts it shall be
divided between the Partners in relation to their respective Ownership
Percentages at the date of dissolution.
28. TIME AND INDULGENCE
The failure of any of the Partners at any time or from time to time to
require performance of any provision of this Deed shall in no way affect
its right to enforce such provision at a later time. No waiver or
indulgence by any Partner shall be binding unless in writing. No waiver by
any Partner of any condition or waiver of the breach of any term or
covenant contained in this Deed whether by conduct or otherwise in any one
or more instances shall be deemed to be or construed as a further or
continuing waiver of any such condition or breach or as the breach of any
other term or covenant in this Deed.
29. DISPUTE RESOLUTION
If any dispute or difference arises between the Partners or any of them
then the following will apply:
29.1 Each of the parties to the dispute shall give notice in writing to
the other Partners that a dispute or difference has arisen,
outlining their understanding of what the dispute or difference
relates to, and their suggested resolution of the dispute or
difference.
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49
29.2 Within seven (7) days of service of such a notice, each Partner shall
nominate a director of its Ultimate Holding Company to act in
relation to a possible resolution of the dispute or difference and
shall within that seven day period notify each of the other Partners
of the name of its director so nominated.
29.3 The Partners shall cause their nominated directors to within fourteen
(l4) days of their nomination meet face to face with the other
Partners' nominated directors at a venue to be agreed by them or in
default of agreement in London, England. The Partners shall instruct
their nominated directors to act in good faith to attempt to resolve
the dispute or difference in a manner acceptable to all Partners.
29.4 If such dispute or difference is not so resolved within seven (7)
days of the meeting of the nominated directors, a Partner may take
any such action as it considers necessary.
29.5 No Partner shall commence or bring any action or proceeding against
any other Partner without having first followed the procedure set out
in Clause 29.1 to 29.4 to attempt to resolve the matter.
30. Notices
Any notice given by any of the Partners shall be served by personal
delivery or by prepaid recorded delivery post or by telex or by facsimile
transmission to the address or number of the Partner to be served as
follows:
TO: NATIONAL POWER
Address: Windmill Hill Business Park, Whitehill Way, Swindon,
Wiltshire, SN56PB, England
Fax: 01793 892831
Telephone: 01793 877777
Attention: The Australian Regional Director
Copied to: The Company Secretary
TO: H-Pac
Address: Level 3, 77 Southbank Boulevard, Melbourne, Victoria 3006
Fax: 9679 5666
Telephone: 9679 4592
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50
Attention: President
TO: APP
Address: Destec Energy, Inc.
2500 City West Boulevard, Suite 150
Houston, Texas, 77042
Fax: (713) 735 4201
Telephone: (713) 735 4400
Attention: Marion M. Davenport
Secretary
TO: CHPL
Address: Level 6,309 George Street, Sydney, NSW
Fax: (02) 9378 2224
Telephone: (02) 9378 2000
Attention: Senior Manager, Infrastructure Investments
TO: HIC:
Address: Level 4,48 Martin Place, Sydney, NSW
Fax: (02) 9378 2534
Telephone: (02) 9378 3079
Attention: Carolyn Kerr/Mark Phillips
or as may be notified for that purpose from time to time. Any such notice
shall be deemed to be effectively served:
30.1 if served personally, on the date of service, if served on a business
day in the place of receipt or, if not served on a business day, in
the place of receipt on the next business day;
30.2 if served by telex or facsimile transmission, on the next business
day in the place of receipt following the date on which the telex or
facsimile transmission was sent;
and in each case notice shall be deemed given both in the jurisdiction of
despatch and in that of receipt. A notice given by more than one Partner
may be in one or more copies each signed by one or more of them.
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51
30.3 Each Partner shall, in the absence of notice to the contrary, be
entitled to assume that any notice purporting to be signed by or
on behalf of a Partner is valid and has been duly authorised.
31. GENERAL
3l.l Termination of this Deed for any cause shall not release a party from
any liability which, at the time of termination, has already
accrued or which thereafter may accrue in respect of any act or
omission prior to such termination.
31.2 The termination, cessation or suspension of this Deed howsoever
caused shall be without prejudice to any obligations or rights of any
of the parties hereto which have accrued prior to such termination,
cessation or suspension and shall not affect any provision of this
Deed which is expressly or by implication provided to come into
effect on or to continue in effect after such termination, cessation
or suspension.
3l.3 Save as required by the Finance Documents or Security Documents and
except as provided in Clause 18, the benefit of this Deed may not be
assigned by any Partner.
3l.4 Every covenant or agreement in this Deed given by any Partner shall
be deemed to have been given by that Partner to each other .
32. PROPER LAW AND SUBMISSION TO JURISDICTION
This Deed and any other document or contract contemplated by, or
executed pursuant to this Deed shall be governed by and construed in
accordance with the laws of the State of Victoria, Australia. The
parties agree to submit to the jurisdiction of the Courts of the
State of Victoria, Australia in respect of all matters arising under
or in connection with this Deed, and the Deferred Equity Subscription
Agreements, or under or in connection with any other document or
contract contemplated by, or executed pursuant to this Deed and the
Deferred Equity Subscription Agreements.
33. COSTS
33.1 All third party costs, expenses and disbursements incurred by each of
National Power, H-Pac and APP in relation to the development,
preparation and submission of the Bid
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52
and the termination of the Partnership, including without limitation
all legal, accounting, professional, financial and technical advisers
costs together with, subject to clause 33.3, the legal and
subsistence and travel expenses incurred by CHaz (together the "Bid
Costs") shall be borne by the Partners in the following proportions:
***
33.2 The Partners shall, as soon as reasonably practicable, in good faith
agree the level of Bid Costs incurred by each Partner. To the extent
that the Bid Costs actually incurred by the Partners are not in the
proportions set out in clause 33.1, the Partners shall make balancing
payments to one another as appropriate to achieve such proportionate
cost sharing.
33.3 If the Bid is not accepted by the State of Victoria, Bid Costs shall
not include the legal, subsistence and travel expenses incurred by
CHaz.
33.4 If any Partner withdraws from the Partnership pursuant to Clause 2.4
or the Partnership is terminated pursuant to Clause 2.5 and the Bid
or any revised Bid is not ultimately accepted by the State, the
relevant Partners shall remain liable to each other for their
respective share of the Bid Costs as set out in Clause 33.1.
34. GENERAL PROVISIONS
34.1 If any provision of this Deed or part thereof is rendered void,
illegal or unenforceable in any respect under any law, the validity,
legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
34.2 Time shall be of the essence as regards the provisions of this Deed,
both as regards the times and periods mentioned herein and as regards
any times or periods which may, by agreement between the Partners, be
substituted for them.
34.3 This Deed and all communications between the Partners and all
information and other material supplied or received by any Partner
from another Partner pursuant to this Deed which is either marked
"confidential" or which concerns the business, transactions or
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53
the financial affairs of the Partnership, or of the disclosing
Partner or any Person with whom any of them is in a confidential
relationship shall be kept confidential and used only in connection
with matters relating to this Deed and, except with the prior written
consent of the disclosing party (as appropriate), the recipient shall
not disclose such information to any third party other than its
Associates without the prior written consent of the disclosing party
(as appropriate) except (1) to the extent such information is
requested by a Competent Authority and the recipient reasonably
considers that it is obliged to make such disclosure to such a
Competent Authority or disclosure to such a Competent Authority is
reasonable in the circumstances and upon disclosure the Competent
Authority is advised that such information is confidential, or (2) to
the extent that such disclosure is required by law or any relevant
stock exchange or (3) to its legal or financial advisers or to its
insurers or (4) to enable it to preserve or enforce its rights
pursuant to this Deed or (5) unless or until the receiving party can
reasonably demonstrate that any such communication, information and
material is, or part of it is, in the public domain otherwise than
through a breach of this Clause 34.3 whereupon to the extent that it
is in the public domain this obligation shall cease. The obligations
contained in this Clause 34.3 shall endure, even after dissolution of
the Partnership, without limit in point of time except and until any
confidential information enters the public domain as set out above.
34.4 This Deed shall be binding on the parties hereto and their respective
successors and assigns.
34.5 This Deed (together with the Schedules hereto), and any documents
contemplated by this Deed to be executed by or on behalf of the
Partners constitutes the entire agreement between the Partners as to
the subject matter hereof and save as otherwise expressly provided no
modification, amendment or waiver of any of the provision of this
Deed, or any such documents hereinbefore referred to, shall be
effective unless made in writing specifically referring to this Deed,
and duly signed by the parties thereto.
34.6 Except as previously provided to the contrary in this Deed, all
warranties and conditions which would otherwise be implied in this
Deed or which may be alleged to have arisen, from any negotiations or
communications between the Partners or any of
<PAGE>
54
them prior to the execution of this Deed are expressly excluded to
the maximum extent permitted by law. The Partners acknowledge that
each has relied upon its own enquiries or shall be deemed to have
relied on its own enquiries in determining whether and on what terms
it entered into this Deed and that no Partner shall have any claim
against any other in respect of any act matter or thing done or
omitted to be done in connection with any Partner resolving to enter
into this Deed.
IN WITNESS WHEREOF, THE UNDERSIGNED HAVE CAUSED THIS AGREEMENT TO BE
EXECUTED AND DELIVERED AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.
NATIONAL POWER AUSTRALIA INVESTMENTS LTD
BY______________________________________
TITLE___________________________________
HAZELWOOD INVESTMENT COMPANY PTY LTD
BY______________________________________
TITLE___________________________________
CISL (HAZELWOOD) PTY LTD
BY______________________________________
TITLE___________________________________
HAZELWOOD PACIFIC PTY LTD
BY______________________________________
TITLE___________________________________
<PAGE>
55
AUSTRALIAN POWER PARTNERS CV
BY______________________________________
TITLE___________________________________
<PAGE>
SCHEDULE 1
REQUISITE MAJORITY
66% decisions
No action shall be taken or resolution passed in respect of any of the
matters described below except with approval at a Partners Meeting of
Partner Representatives or their alternates holding Ownership. Percentages
totalling, in the aggregate, 66%.
l. The introduction or variation of the terms and conditions of
appointment of senior employees of HPC or the Partnership;
2. The adoption of any bonus or profit-sharing scheme for employees;
3. Approval of any standard form employment contract for use by the
Partnership;
4. The sale, disposal, or entry into any agreement to sell or dispose of
any assets of the Partnership for a total price per transaction of
more than A$2 million other than as contemplated in the Business Plan,
Capital Expenditure Plan or Budget;
5. Subject to the Finance Documents, the borrowing by the Partnership of
an aggregate amount per annum of more than A$1 million other than as
contemplated in the Business Plan, Capital Expenditure Plan or Budget;
6. The commencement or settlement of any litigation, arbitration or other
proceedings which are material in the context of the Business;
7. Contracts for differences involving 500,000MW hours per year or
involving 400,000MW hours per year for a term of two years or more;
8. The effecting of any insurance policies additional to the requirements
of the Finance Documents.
<PAGE>
75% decisions
No action shall be taken or resolution passed in respect of any of the
matters described below except with approval at a Partners Meeting of
Partner Representatives or their alternates holding Ownership Percentages
totalling in the aggregate, 75%.
l. A request for Further Capital Contributions from the Partners and
approval of any loan by a Partner pursuant to Clause 15.8;
2. The approval of the Partnership Tax Return, Accounts and any amendment
to the accounting policies;
3. Any change to the name of the Partnership;
4. The appointment of, or any change in, the Auditors, Accountants or
Partnership Bank;
5. Any amendments to the constitutional documents of HPC;
6. The approval of the Business Plan, Budget and the Capital Expenditure
Plan and the setting of any relevant financial limits in respect of
each;
7. The acquisition by the Partnership of any assets or property (other
than as provided for in the Business Plan or Capital Expenditure Plan)
at a total cost to the Partnership per transaction, or series of
related transactions, in excess of A$2.5 million;
8. Subject to the Finance Documents and Security Documents the creation
of any charge or other security over Partnership Property in respect
of an amount per annum in aggregate in excess of A$1.5 million;
9. The making of any loan or advance to any Person, in an amount per
transaction, or series of related transactions, in excess of A$2
million other than as contemplated in the Business Plan, Capital
Expenditure Plan or Budget;
l0. The entry into or material amendment by the Partnership of any
contract (other than the Finance Documents, Security Documents and
Technical Support Agreements) which provides for revenues or payments
in an amount (per contract) in excess of A$5 million;
<PAGE>
11. The entry into, or making of any material amendment to, a contract
material to the business of the Partnership, including without
limitation, any amendment to the generating or mining licenses, the
Use of System Agreement, Connection Agreement, the Metering Agreement
and the ETSA Contract;
12. The early repayment of any indebtedness of an amount per annum
totalling, in the aggregate, in excess of A$2 million;
13. A decision to defer or modify in amount any Capital Expenditure
Contributions.
14. The levels of authority of senior managers and others to bind the
Partnership (including, without limitation, to sign cheques and to
operate the Partnership Bank Accounts);
15. The approval of the secondment of employees pursuant to Clause 9.4;
l6. Subject to the Finance Documents, the borrowing by the Partnership of
an aggregate amount per annum of more than A$5 million other than as
contemplated in the Business Plan, Capital Expenditure Plan or Budget;
17. The sale, disposal or entry into any agreement to sell or dispose of
any assets of the Partnership for a total price per transaction of
more than A$4 million other than as contemplated in the Business Plan,
Capital Expenditure Plan or Budget;
18. A decision not to follow the Accountant's recommendation for the
purposes of Clause 18.19;
l9. The determination that the Finance Documents and the Security
Documents are consistent in all material respects with the Term Sheet.
20. The parameters for National Power's day-to-day operation for the
purposes of Clause 7. l.
95% DECISIONS
No action shall be taken or resolution passed in respect of any of the
matters described below except with approval at a Partners' Meeting of
Partner Representatives or their alternates holding Ownership Percentages
totalling, in the aggregate, 95%.
<PAGE>
1. The consolidation or amalgamation of the Partnership with any other
business, firm or company;
2. Any material change in the nature or place of the Partnership
Business, and any material amendment to the Technical Support
Agreements, Finance Documents or Security Documents;
3. The corporatisation of the Partnership or any Partnership Business;
4. The listing of the Partnership or any Partnership Business on any
Stock Exchange;
5. The cessation of the Partnership Business;
6. A sale of all or substantially all of the assets of the Partnership;
7. The dissolution of the Partnership.
8. The change of the Partnership and LLP situs for tax purposes.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 2
CAPITAL CONTRIBUTIONS AND OWNERSHIP PERCENTAGES
Deposit Balancing Purchase Maximum Ownership
Capital Capital Price Capital Capital Percentage
Contribution Contribution Contribution Expenditure
Contribution
A$ A$ A$ A$ %
<S> <C> <C> <C> <C> <C>
NATIONALPOWER
H-PAC
APP * * *
HIC
CHPL
</TABLE>
<PAGE>
SCHEDULE 3
FAIR MARKET VALUE
Fair Market Value means:
(a) the amount agreed by the unanimous consent of all the Partners to be
the fair market value of the interest, being the price that a willing
but not anxious buyer, acting at arm's length, with adequate
information, would be prepared to pay and a willing but not anxious
seller to accept; or
(b) if the Partners cannot agree on an amount within 30 days of the matter
being first referred to them, the amount shall be determined by an
independent expert appointed with the unanimous agreement of all
Partners who shall be instructed to determine the amount within 60 days
of receiving the instructions;
(c) if the Partners cannot agree as to the expert to be appointed within 7
days of the matter being first referred to them, the amount so
determined either by:
(i) the valuation group of one of the "Big Six" certified public
accounting firms,
(ii) the valuation group of an engineering firm having worldwide
revenues in excess of US$1 billion; or
(iii) an internationally recognised investment bank or management
consultant, having experience in such valuations, in any event
such party to be nominated by the then Chairman of the Australian
Stock Exchange Limited, who shall be instructed to determine the
amount within 60 days of receiving instructions.
The Partners shall provide any such expert, investment bank or
management consultant with access to all the information reasonably
required to determine the amount. The independent expert or the
investment bank or consultant appointed pursuant to (b) or (c) above
shall use valuation techniques generally accepted by developers,
lenders and operators of merchant generating plants and no minority
discount shall be applied in determining the pro rata portions of value
applicable to the Transferring Partner's Partnership Interest.
<PAGE>
ANNEXURE D
SECTION 205 PROCEDURES
SELLER'S RESPONSIBILITIES BUYERS' RESPONSIBILITIES
. Approve the form of the section 205 . Propose to the Seller the form
resolution, notice of meeting and of the section 205 resolution,
advertisement notice of meeting and
advertisement
. Procure the Company and the Seller to . Procure new directors to provide
pass the approved section 205 section 206(6) certificate
resolutions (if necessary)
. Administer section 205(10)(a)-(j) . All other things necessary for
compliance: section 205 compliance
- relevant resolutions
- ASC lodgment
- Advertisement
. Court searches (Supreme Court,
Melbourne and Federal Court, Melbourne)
to ensure no applications filed
<PAGE>
Annexure E
Draft Groundwater Licence
<PAGE>
WATER ACT 1989
SECTION 51
GROUNDWATER LICENCE NO 2007412
(Licence to take and use groundwater)
OBJECTIVE
The objective of this licence is to allow the efficient depressurising of the
Morwell open cut mine whilst minimising adverse impacts on the Gippsland
Groundwater Basin.
DEFINITIONS
In this licence-
"MINING LICENCE" means a mining licence issued under the provisions of the
Electricity Industry Act 1993.
"APPROVED WORK PLAN" means the mining licence work plan applicable to Mining
Licence No 5004
"REGIONAL MONITORING PROGRAM" means the monitoring program described in Part B
of the approved work plan.
"REHABILITATION PLAN" means a rehabilitation plan approved under the provisions
of the Electricity Industry Act 1993.
PREAMBLE
The extraction of groundwater for the purpose of achieving safe and stable
conditions in the Morwell open cut mine is authorised under this Groundwater
Licence issued by the Minister responsible for the Water Act, 1989. The
administration of the licence may be delegated by the Minister to the Gippsland
and Southern Rural Water Authority
The extraction of groundwater at mine sites in the Latrobe Valley results in a
regional cone of depression of the groundwater and in ground subsidence.
The monitoring and reporting of regional groundwater and land level trends is to
be carried out by the licensee as part of the approved work plan under the
Mining Licence.
The Minister or his delegate may set annual charges under this licence to
recover the costs incurred in:
. ensuring compliance with licence conditions;
. assessing and reviewing the regional monitoring program; and
. managing and administering the licence.
LICENCE AUTHORISATION
<PAGE>
HAZELWOOD POWER CORPORATION LIMITED OF PO BOX 195 MORWELL 3840 is authorised
to take and use groundwater subject to the following conditions:
1. This licence is valid for a period of thirty years from 1 September 1995.
2. The licensee is authorised to take and use groundwater to facilitate mining
for coal and generation of electrical energy and purposes incidental
thereto.
3. The licensee is authorised to extract groundwater from the aquifers at
quantities and during the times specified in the First Schedule or on
application by the licensee such other quantities and during such other
times as from time to time approved by the Minister or his delegate.
4. The licensee may vary the maximum monthly rate of extraction from any
particular aquifer or the maximum annual volume to be extracted from any
particular aquifer provided that the total monthly rate of extraction and
the total annual volume from all aquifers is not exceeded and shall report
at monthly intervals such variations as they occur to the Minister or his
delegate.
5. The licensee may only take and use groundwater under this licence on the
land with respect to which the licensee holds a mining licence for the
Hazelwood Power mine.
6. Annual fee at date of issue S19,300.
7. The licensee shall pay annual charges for the forthcoming year due under
the licence in quarterly installments or on an annual basis as agreed
between the licensee and the Minister or his delegate.
8. The licensee shall meter all groundwater extractions and shall keep an
accurate record of the quantity of groundwater taken or used under this
licence and allow the Minister or his delegate to inspect this record
during normal business hours and to provide a copy of such record to the
Minister or his delegate within seven days of a notice given by post to the
licensee at the address contained in this licence.
9. The licensee shall provide to the Minister or his delegate annually details
of the location of each bore from which groundwater is extracted under this
licence.
10. By the issue of this licence the Minister or his delegate in no way accepts
any liability for injury to any party arising as a consequence of any
adverse effects that may be deemed to have been caused by the extraction of
groundwater under the licence.
11. The licensee shall compensate any person whose existing authorised use of
water is adversely and materially affected by the taking of water under
this licence. The
<PAGE>
compensation may be either financial or may be constituted by the making
available of, or granting access to, water. If the licensee is unable
to or unwilling to make compensation by the making available of or granting
access to water in the quantities previously enjoyed by the person so
affected then the amount of financial compensation payable shall be that as
determined by a Valuer nominated by the President of the Victorian Division
of The Australian Institute of Valuers and Land Economists (Inc)
12. The licensee shall undertake a regional monitoring program of the nature
scope and extent as that previously undertaken by the State Electricity
Commission of Victoria as detailed in the approved work plan and the
information is to be provided on request to the Minister or his delegate
and as required under the work plan.
13. All information obtained from the regional monitoring program belongs to
the generation companies, the State Electricity Commission of Victoria and
the Minister jointly.
14. The licensee must maintain the existing data bases, and undertake
additional work that may be required from time to time by the Minister or
his delegate to maintain the effectiveness of the regional monitoring
program.
15. If the licensee fails to provide the information required under condition
12 the Minister or his delegate may undertake any necessary work to obtain
the information and recover the costs of such work from the licensee.
16. The regional monitoring program and any remedial measures must be
incorporated in the approved work plan and the rehabilitation plan to the
satisfaction of the Minister or his delegate.
17. The licensee shall comply with the provisions in its mining licence,
approved work plan and the rehabilitation plan dealing with the regional
monitoring program and remedial action.
PATRICK JOHN McNAMARA
MINISTER FOR AGRICULTURE AND RESOURCES
Date
<PAGE>
FIRST SCHEDULE
<TABLE>
<CAPTION>
M1 AQUIFER M2 AQUIFER
YEAR ----------------------------- ------------------- TOTAL ANNUAL
RATE OF ANNUAL VOLUME RATE OF ANNUAL VOLUME
EXTRACTION ML EXTRACTION VOLUME ML
ML/MONTH ML/MONTH ML
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 367 3,212 1,640 19,680 22,892
- --------------------------------------------------------------------------
1997 367 3,212 1,640 19,680 22,892
- --------------------------------------------------------------------------
1998 367 3,212 1,640 19,680 22,892
- --------------------------------------------------------------------------
1999 367 3,212 1,640 19,680 22,892
- --------------------------------------------------------------------------
2000 367 3,212 1,640 19,680 22,892
- --------------------------------------------------------------------------
2001 367 3,212 1,640 19,680 22,892
- --------------------------------------------------------------------------
2002 367 3,212 1,640 19,680 22,892
- --------------------------------------------------------------------------
2003 367 3,212 1,640 19,680 22,892
- --------------------------------------------------------------------------
2004 367 3,212 1,640 19,680 22,892
- --------------------------------------------------------------------------
2005 367 3,212 1,640 19,680 22,892
- --------------------------------------------------------------------------
2006 367 3,212 1,640 19,680 22,892
- --------------------------------------------------------------------------
2007 367 3,212 1,640 19,680 22,892
- --------------------------------------------------------------------------
2008 367 3,212 1,606 19,272 22,484
- --------------------------------------------------------------------------
2009 367 3,212 1,606 19,272 22,484
- --------------------------------------------------------------------------
2010 367 3,212 1,606 19,272 22,484
- --------------------------------------------------------------------------
2011 367 3,212 1,606 19,272 22,484
- --------------------------------------------------------------------------
2012 367 3,212 1,606 19,272 22,484
- --------------------------------------------------------------------------
2013 367 3,212 1,606 19,272 22,484
- --------------------------------------------------------------------------
2014 367 3,212 1,606 19,272 22,484
- --------------------------------------------------------------------------
2015 367 3,212 1,606 19,272 22,484
- --------------------------------------------------------------------------
2016 367 3,212 1,606 19,272 22,484
- --------------------------------------------------------------------------
2017 367 3,212 1,606 19,272 22,484
- --------------------------------------------------------------------------
2018 367 3,212 1,606 19,272 22,484
- --------------------------------------------------------------------------
2019 367 3,212 1,606 19,272 22,484
- --------------------------------------------------------------------------
2020 367 3,212 1,439 17,268 20,480
- --------------------------------------------------------------------------
2021 367 3,212 1,439 17,268 20,480
- --------------------------------------------------------------------------
2022 367 3,212 1,439 17,268 20,480
- --------------------------------------------------------------------------
2023 367 3,212 1,439 17,268 20,480
- --------------------------------------------------------------------------
2024 367 3,212 1,439 17,268 20,480
- --------------------------------------------------------------------------
2025 367 3,212 1,439 17,268 20,480
- --------------------------------------------------------------------------
</TABLE>
<PAGE>
ELECTRICITY INDUSTRY ACT 1993
MINING LICENCE NO 5004
This mining licence is granted to HAZELWOOD POWER CORPORATION LIMITED C/- PO BOX
195 MORWELL 3840. This licence is granted under section 47A of the Act, for a
term of thirty years from the date of issuing this licence by the Generation
Council.
This licence is subject to the following Conditions and Schedule of Conditions
attached:
1. The authority given under this licence applies only within the land
indicated on the attached plan and is subject to the depth restrictions, if
any, indicated on that plan under Section 15(9) or 16(5) of the Mineral
Resources Development Act 1990.
2. The licensee must keep a copy of -
(a) this licence; and
(b) any approved work plan or approved variation to a work plan; and
(c) any registered authority to commence work at a location near the
licensed area; so that an Inspector and any other authorised officer
can readily inspect them.
3. On receiving a registered authority to commence work, the licensee must
notify an Inspector of Mines and if required by that Inspector must arrange
an on-site briefing for any people the Inspector may nominate.
4. On discovering additional economic deposits of minerals, the licensee must
report the occurrence to the Minister giving the estimated size, grade,
suitability for mining, and an estimate of value at the time of discovery.
5. Pursuant to Section 47A of the Electricity Industry Act 1993 the work plan,
including the rehabilitation plan and the authority to commence work are
deemed to be registered from the date of issuing of this licence by the
Governor in Council.
<PAGE>
[MAP OF SHIRE OF LATROBE APPEARS HERE]
<PAGE>
ANNEXURE F
DRAFT MINING LICENCE
<PAGE>
SCHEDULE OF CONDITIONS
MINING LICENCE NO. 5004
1. WORK PLANS & ENVIRONMENTAL MANAGEMENT
1.1 Work shall be carried out in accordance with the aproved work plan,
(incorporating a rehabilitation plan) as amended from time to time in
accordance with the Mineral Resources Development Act 1990 (MRD Act).
Where any inconsistency occurs between the work plan and other licence
conditions or regulations, the licence conditions and regulations have
precedence.
1.2 The licensee shall, within 60 days of being requested by the Executive
Director, Minerals and Petroleum of the Department of Natural Resources
and the Environment, submit a report on the status of work as per Schedule
14 of the MRD Act.
1.3 An Environmental Review Committee (ERC) shall be formed, comprising
appropriate representatives from the Department of Natural Resources and
the Environment (DNRE), representatives of the licensee, the Environment
Protection Authority, the responsible water authority and a representative
of the Minister responsible for the Water Act 1989, the LaTrobe Council
and any other relevant agency with an interest or control over the site or
operations. The community shall also be represented, with nominations to
come from the Latrobe Council. Up to two community representatives may be
selected for renewable fixed terms. The ERC shall be convened at least
once in every 6 months to review environmental effects of the project.
1.4 Results of environmental monitoring conducted under the Environmental
Monitoring Program (EMP) shall be regularly reported to the ERC in a
format agreed to by the Committee to enable it to assess environmental
performance.
1.5 The ERC may from time to time recommend variations to the EMP and licence
conditions where appropriate. Any variations to the EMP as accepted by the
licensee and DNRE shall be registered as a variation to the work plan and
shall be implemented.
2. FENCING AND SECURITY
2.1 Where public access is a safety hazard within the mining licence, the
licensee must fence and signpost the area to ensure public safety is
maintained.
2.2 When directed by an Inspector of Mines (hereinafter referred to as an
Inspector), a fence or fences shall be erected around specified work site
areas to a written specification which may include time limits. Gates of a
similar standard shall be provided when directed. Gates and fences shall
be maintained during the term of the licence to the satisfaction of an
Inspector.
<PAGE>
3. ROADS
3.1 Internal roads additional to those shown in the working plan shall be sited
as approved or directed by an Inspector after consultation with the
Department of Natural Resources and the Environment in the case of Crown
land.
3.2 Subject to the approval of the Mine Manager and appropriate site induction
any such road may be used:
(a) officers of or persons authorised by the DNRE or employees or persons
engaged in fire control. (Mine Managers approval not required by
authorised fire fighters in an emergency provided they are under the
supervision of a mine employee).
(b) for the extraction of forest produce or for mining purposes by any
other licensee under the MRD Act 1990 or Forests Act 1958 (or any
successor legislation) under such conditions as may be determined by
agreement between the parties concerned; and
(c) by the landowners or their agents where the licence covers private
land.
3.3 The licensee shall ensure that all internal roads are properly formed,
drained, surface treated and maintained to the satisfaction of an Inspector
and that any dust nuisance originating from use of the roads by the
licensee shall be controlled to the satisfaction of an Inspector.
4. SURFACE DISTURBANCE
4.1 The area of surface disturbance must be kept to a minimum.
4.2 Adequate provision shall be made for the separate stockpiling or immediate
utilisation for rehabilitation of any soils. These materials, if stored,
are to be stored in neat and tidy dumps not exceeding 2 metres in height
and such dumps are to be protected from erosion.
4.3 No area shall be opened up for exploration, mining and ancillary
operations, except where approved as part of the approved work plan.
4.4 Where the licence covers Crown land, all surface activity may be subject to
compliance with the Forests Act 1958 and Regulations.
4.5 Where the licence covers private land, such fire fighting equipment and
appliances shall be kept on site in working order as may be required by the
Country Fire Authority. With respect to public land, the Forest Fire
Regulations 1992 require the provision of fire fighting equipment and the
provision of spark arrestors on engine powered equipment.
4.6 Burning of any timber at the site shall be done in accordance with any
requirements of the Local Municipality, DNRE and the Country Fire
Authority.
<PAGE>
5. DRAINAGE AND DISCHARGE CONTROL
5.1 Any discharges from the licence area shall be minimised and any water
discharged must be as free as possible of pollutants, save as provided by
any licence issued pursuant to the Environment Protection Act.
5.2 All discharges shall meet the standards required under the State
Environment Protection Policies under the Environment Protection Act 1970.
5.3 Sediment retention structures, including dams, shall be constructed in
accordance with the approved work plan. An Inspector may also direct such
works to be undertaken, where necessary, to control drainage from any
disturbed area.
5.4 Rainfall and other natural waters shall be diverted away from works area so
as to control erosion, pursuant to Condition 7. However, such works shall,
as far as practicable, not cause undue alteration to the general drainage
pattern beyond the licensed area.
6. TAILING DAMS
6.1 All proposed work associated with the construction of tailing dams or other
tailing impoundment areas, shall be subject to written approval by the
Chief Administrator (or his delegate) following certification by an
approved geotechnical engineer.
7. GROUNDWATER
7.1 Any aquifer dewatering and/or depressurisation must be carried out in
accordance with the conditions specified in the Groundwater Licence issued
by the Minister responsible for the Water Act 1989.
7.2 A monitoring program consistent with the programs previously carried out by
the State Electricity Commission of Victoria and Generation Victoria to
determine the impacts of dewatering/depressurisation both on site and
regionally must be maintained to the satisfaction of an Inspector and the
responsible Minister under the Water Act 1989 or his delegate.
The licensee shall ensure that results of the monitoring program are
reported to the responsible Minister under the Water Act 1989 or his
delegate and the Environmental Review Committee annually and at whatever
times required by the Groundwater Licence.
7.3 In the event that the monitoring program in 7.2 indicates material adverse
impacts beyond those evident at the date of issue of the licence which are
attributable to the dewatering/depressurisation by the licensee after the
date of issuing of the licence then the licensee must institute such
reasonable remedial action as may be required by the Inspector and the
responsible Minister under the Water Act 1989 or his delegate to ameliorate
these effects, proportionate to the licensee's contribution.
<PAGE>
7.4 For the purposes of 7.3 material adverse impacts comprise effects on
aquifers in the LaTrobe Valley such that the interests of other users are
materially prejudiced or subsidence on a significant scale occurs as a
direct result of ground water extraction which materially adversely affects
private property or public lands.
7.5 Any remedial action under 7.3 must be to the satisfaction of the Inspector
and the responsible Minister under the Water Act 1989 or his delegate.
8. EROSION
8.1 The licensee shall undertake all necessary works to ensure that the
potential for erosion of land affected by mining is minimised.
8.2 Should erosion occur, the licensee shall take all practical steps to
minimise the erosion to the satisfaction of an Inspector.
9. HYDROCARBONS
9.1 Storage of hydrocarbons shall be undertaken in general accordance with AS
1940. Bunding or other methods to the satisfaction of an Inspector, capable
of containing 125% of the maximum volume stored, shall be constructed
around all fuel and lubricant storage facilities.
9.2 Any drainage from an area that may be subject to hydrocarbon spillage, such
as a machinery maintenance area, shall be free from hydrocarbon
contamination and directed to a sump or interceptor trap.
10. DUST EMISSIONS
10.1 Dust control measures must be in place to minimise dust generation so that
detriment is not caused to surrounding areas and residents.
10.2 Dust resulting from all operations including extraction, loading,
transport, and stockpiling shall be controlled to the satisfaction of an
Inspector. The licensee must install any dust control measures to the
satisfaction of an Inspector.
11. NOISE
11.1 Precautions to the satisfaction of an Inspector shall be taken to ensure
that noise emissions comply with the provisions of any regulations under
the MRD Act as they relate to noise exposure to workmen. Noise emissions
measured at any residence within the vicinity of the licensed area shall
comply with limits set using the procedures described in State Environment
Protection Policy No. N1 (SEPPN-1) or any other limit set under the
Environment Protection Act where SEPP N-1 is not applicable.
11.2 The mines are permitted to operate 24 hours per day 7 days per week.
<PAGE>
12. PARKING AREAS
Parking areas are to be provided within the licensed area for all vehicles
used in connection with the operation, including private vehicles used by
employees and visitors.
13. DERELICT AND REDUNDANT PLANT
All derelict and redundant plant, vehicles, machinery and equipment shall
be either:
. removed from the licensed area and deposited at an appropriate waste
disposal site; or
. properly stored/stockpiled on the licensed area in a location and
manner approved by an Inspector.
14. BUFFER ZONES AND VISUAL SCREENING
14.1 No excavation shall take place within 20 metres of the licence boundary,
expect that this requirement shall not apply with respect to any common
licence boundary with an adjacent mining licence.
14.2 Existing vegetation outside of the area subject to surface disturbance
shall be preserved and maintained provided due regard is taken of fire
protection arrangements.
14.3 The licensee shall supplement existing vegetation by additional planting
to provide a screen for mining and allied operations as required by the
rehabilitation plan and any additional plantings as required by an
Inspector. The fire protection at the site shall be considered.
14.4 Unless otherwise approved by an Inspector, the licensee shall take
precautions to ensure that no species inconsistent with the surrounding
vegetation are introduced to the area.
15. PROGRESSIVE REHABILITATION
15.1 Progressive reclamation will be conducted as per the rehabilitation plan.
In addition, any further rehabilitation work will be carried out at the
direction of an Inspector.
15.2 As and when directed by an Inspector of Mines, despite any compensation
agreements between the licensee and the owner of any private land in the
licence, the licensee shall undertake progressive reclamation of land on
the area subject to surface disturbance.
16. FINAL REHABILITATION
16.1 Final reclamation will be in accordance with the rehabilitation plan and
any additional requirements as directed by an Inspector.
<PAGE>
16.2 Failure to complete works in accordance with the rehabilitation plan or in
accordance with the directions of an Inspector, shall constitute grounds
upon which the rehabilitation bond may be forfeited either in whole or in
part in accordance with Section 83 of the MRD Act.
17. HERITAGE SITES
17.1 Any significant historic sites or relics that are to be removed shall be
accurately mapped and documented prior to the commencement of any mining
or allied operations. Such documentation shall be made available to the
relevant section of the Department of Natural Resources and the
Environment.
17.2 Tenure of this licence does not exempt the holder from the following
provisions of the Archaeological and Aboriginal Relics Preservation Act
1972:
Section 21(1) - "A person who wilfully or negligently defaces or damages
or otherwise interferes with a relic or carries out an act likely to
endanger a relic shall be guilty of an offence against this Act"; and
Section 23(1) - "A person who discovers a relic shall forthwith report the
discovery ... unless he has reasonable grounds to believe that the relic
is recorded in the register ...". Reports in compliance with Section 23(1)
should be submitted to:
The Director
Aboriginal Affairs Victoria
Department of Human Services
2nd Floor
115 Victoria Parade
FITZROY VIC 3065
(Telephone (03) 9412 7498)
18. BUILDINGS
18.1 No buildings shall be erected before any relevant building permits have
been obtained.
18.2 All fixed plant and buildings shall be painted or surface treated in a
colour to blend with the surroundings to the satisfaction of an Inspector
in consultation with the local municipality and in the case of Crown land,
Department of Natural Resources and the Environment.
19. ROYALTY
19.1 Each mining company must pay to the Minister for payment to the
Consolidated Fund in each financial year an amount equal to the prescribed
amount in respect of each gigajoule unit of coal produced from its brown
coal workings in the State and used or sold by the company in the last
preceding financial year.
<PAGE>
19.2 For the purposes of 19.1, a gigajoule unit of coal is a quantity of coal
which, when mined, has a net wet specific energy content of 1 gigajoule.
19.3 The net wet specific energy content of coal produced by a company from its
brown coal workings and used or sold by the company in a financial year
shall be calculated in such manner and in accordance with such method of
sampling as is agreed to by the Minister and the company or as is, in
default of the agreement, determined by the Governor in Council.
19.4 For the purposes of 19.1, the prescribed amount shall be the amount
derived by multiplying $0.0239 by
A where-
B
A is the consumer price index number in respect of the relevant
quarter; and
B is the consumer price index in respect of the quarter ending
on 30 June 1993.
19.5 The payment of the amount to the Minister under 19.1 shall be made in
accordance with the Mineral Resources (Royalties) Regulations 1991.
19.6 In this section -
"CONSUMER PRICE INDEX NUMBER" means the all groups consumer price index
number for Melbourne published by the Commonwealth Statistician in respect
of the quarter ending on 30 June in each year or, if that statistic is no
longer calculated, the nearest substitute for it;
"RELEVANT QUARTER" means the quarter ending on 30 June immediately
preceding the financial year in relation to which the prescribed amount is
being calculated.
20. REHABILITATION BOND
20.1 The licensee shall lodge with the DNRE a rehabilitation bond as described
in Section 80(1) of the Act when required in accordance with these
conditions. The bond must be lodged in the form of a bank guarantee issued
by a bank licensed under the Banking Act 1959 (Cth).
20.2 The licensee shall be required to lodge that bond upon the licensee
ceasing to be a State Owned Corporation and upon being directed to do so
by the Minister for Agriculture and Resources.
20.3 The level of this bond has initially been assessed at $15 million.
21. APPLICATION OF REGULATIONS
21.1 The Mineral Resources (Health and Safety for large Open Cut Mines)
Regulations 1995 will apply to the licensee.
21.2 Any subsequent Regulations issued under the act will also apply.
<PAGE>
AUTHORITY TO COMMENCE WORK
Sec 42 of the MRD ACt 1990
MINING LICENCE NUMBER: Mining Licence 5004
NAME(S) OF LICENSEE(S): Hazelwood Power Corporation Ltd
ADDRESS(S) OF LICENSEE(S): P O Box 195 Morwell Vic 3840
AREA TO WHICH AUTHORITY As per workplan dated 1.6.95
TO COMMENCE WORK RELATES:
LOCATION OF LICENCE: La Trobe Valley
AN AUTHORITY TO COMMENCE WORK IS HEREBY GRANTED
Date of Registration
/ /
--------------------
Time of Registration
am/pm
---------------
MINING REGISTRAR
MRDA 1990
<PAGE>
EXHIBIT 2.2
HAZELWOOD POWER CORPORATION LTD
ACN 065 381 204
and
HAZELWOOD POWER PARTNERSHIP
NATIONAL POWER CONSORTIUM
ASSET SALE AGREEMENT
Freehill Hollingdale & Page
Solicitors
l0l Collins Street
Melbourne VIC 3000
Australia
Telephone: (03) 288 1234
Facsimile: (03) 288 1567
Reference: RWN/BCF/1810621
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS AND INTERPRETATION 1
1.l Definitions l
l.2 Interpretation 6
2. SALE AND PURCHASE 7
2.l Sale of Assets 7
2.2 Dates for Payment 7
2.3 Method of Payment 7
3. COMPLETION 7
3.1 Date for Completion 7
3.2 Delivery of documents 7
3.3 Asset Buyer's obligations at Completion 8
3.4 Property and Risk 8
3.5 Interdependency between this agreement and Share Sale Agreement 8
3.6 Inconsistencies 8
3.7 Exercise of Rights 8
3.8 Termination 8
4. EMPLOYEES 8
4.1 Employment Contracts held on trust 8
4.2 Asset Buyer's Indemnity with respect to Employees 8
5. OUTGOINGS AND EXPENSES 9
6. ASSUMPTION OF LIABILITIES AND CREDITORS 9
7. CONTRACTS 9
7.l Assignment of Contracts 9
7.2 Novation of Contracts 9
7.3 Asset Buyer's obligations after Completion 9
7.4 Non-assignment of the Contract 9
7.5 Asset Buyer's indemnity in respect of the non-assignment
of the Contract l0
7.6 Equipment Leases l0
7.7 Transfer of the Real Property Leases l0
8. LICENCES 10
8.l Transfer l0
8.2 Further Acts 10
9. INDEMNITY 10
10. DECLARATION OF TRUST 10
l0.l Declaration of Trust 10
10.2 Indemnity 11
11. MINING LICENCE 11
ll.l Tender 11
<PAGE>
2
11.2 Trust 11
12. LAND 11
12A TRADE DEBTS 11
13. ASSET BUYER'S WARRANTIES 11
13.1 Asset Buyer's Warranties 11
13.2 Acknowledgment 12
14. DUTIES, COSTS AND EXPENSES 12
14.1 Payment of Duty 12
14.2 Indemnity 12
14.3 Costs and expenses 12
14.4 Costs of performance 12
15. NOTICES 12
l5.1 General 12
15.2 Legibility of facsimile transmission 13
16. GENERAL 13
16.1 Governing law and jurisdiction 13
16.2 Waivers l3
16.3 Variation 14
16.4 Further assurances l4
16.5 Third party rights 14
16.6 This agreement supersedes others 14
<PAGE>
THIS ASSET SALE AGREEMENT is made on 4 August 1996 between the following
parties:
1. HAZELWOOD POWER CORPORATION LTD ACN 065 381 204 of Commercial Road, Morwell,
Victoria 3840 ("Seller"); and
2. HAZELWOOD POWER PARTNERSHIP a partnership pursuant to the Partnership Act
1958 (Vic.) between:
NATIONAL POWER AUSTRALIA INVESTMENTS LTD a company incorporated in England
and having its registered office at Windmill Hill Business Park, Whitehill
Way, Swindon, Wiltshire, England SN5 6PB;
HAZELWOOD PACIFIC PTY LTD (ACN 074 351 376) a company incorporated in the
State of Victoria, Australia and having its registered office at Level 3, 77
Southbank Boulevard, Southbank, Victoria, Australia;
AUSTRALIAN POWER PARTNERS CV a limited liability partnership under the laws
of Netherlands and having its registered office at 1077 WV Amsterdam,
Prinses Irenestraat 61, The Netherlands;
HAZELWOOD INVESTMENT COMPANY PTY LIMITED (ACN 075 041 360) a company
incorporated in the State of Victoria, Australia and having its registered
office at Level l9, 385 Bourke Street, Melbourne, Victoria;
and
CISL (HAZELWOOD) PTY LTD (ACN 074 747 185) a company incorporated in the
State of Victoria, Australia and having its registered office at Level l9,
385 Bourke Street, Melbourne, Victoria
(together the "ASSET BUYER").
RECITALS:
A. The Seller is the owner of the Assets.
B. The Seller agrees to sell and the Asset Buyer agrees to buy the Assets on
the terms and conditions set out in this agreement.
THE PARTIES AGREE as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"ALLOCATION STATEMENT" means, in relation to the Seller, any statement which,
for the purposes of section 153B of the Electricity Act, is an allocation
statement pursuant to which any property, rights or liabilities of Generation
Victoria were vested in the Seller and includes the Generation Victoria
allocation statement dated 31 January 1995 (as amended on 23 August 1995 and 29
February 1996) (the "GV ALLOCATION STATEMENT").
"ASSETS" means:
(a) Plant and Equipment;
(b) Business Records;
<PAGE>
2
(c) Contract Benefits;
(d) Core Technology;
(e) Land;
(f) Intellectual Property Rights;
(g) Licences;
(h) all the Seller's entitlements under the Real Property Leases;
(i) inventories, raw materials and stores;
(j) future income tax benefit;
(k) cash on hand and deposits and securities in the name of the Seller;
(l) Equipment Lease Benefits;
(m) Business Records, and
(n) all other tangible or intangible assets owned by the Seller whether or not
listed in the balance sheet of the Seller at Completion,
other than Specified Licences, Specified Contracts, Trade Debts and the Mining
Licence.
"ASSET BUYER'S WARRANTIES" means the warranties and representations of the
Asset Buyer set out in clause 13.1.
"AUTHORISATION" includes:
(a) any consent, registration, filing, agreement, notarisation, certificate,
licence, approval, permit, authority or exemption from, by or with a
Governmental Agency; and
(b) in relation to anything which may be proscribed or restricted in whole or
in part by law or otherwise if a Governmental Agency intervenes or acts in
any way within a specified period after lodgement, registration or other
notification of anything, the expiration of that period without the
intervention or action by that Governmental Agency.
"BUSINESS" means the businesses of the generation and supply of electricity, the
exploration for, mining, production and supply of coal and other raw products
used in the supply of electricity, the supply of coal to other persons, the
acquisition and trade of electricity, coal and other raw products used in the
generation of electricity and the provision of related field, technical and
engineering services carried on by the Seller, including the construction and
operation of power stations.
"BUSINESS DAY" means a day on which banks are open for business in Melbourne,
excluding a Saturday or a Sunday or a public holiday.
"BUSINESS RECORDS" means all of the Seller's financial and business data,
employee data, technical data and all the Seller's other records, data,
information and documents.
"COMPLETION" means completion of the sale and purchase of the Assets under
clause 3.
"COMPLETION DATE" is the day on which Completion (as defined in the Share Sale
Agreement) occurs under the Share Sale Agreement.
"CONTRACT BENEFITS" means all express or implied rights, benefits and interests
of the Seller pursuant to the Contracts.
"CONTRACTS" means all oral or written contracts, agreements and arrangements to
which the Seller is a party except for the Specified Contracts.
<PAGE>
3
"CONTRACT LIABILITIES" means al1 express or implied liabilities, obligations and
burdens of the Seller pursuant to the Contracts which arise in relation to the
performance or failure in performance of such Contracts.
"CORE TECHNOLOGY" has the meaning given to that term in section 73B of the
Income Tax Assessment Act 1936 as amended.
"CREDITORS" means all amounts owing by the Seller including al1 provisions in
the accounts of the Seller including provisions for site restoration, diminution
in the value of inventory, research and development, uninsured losses, deferred
income tax (other than in respect of plan; and equipment), employee
entitlements, redundancies and all bank overdraft arrangements.
"DEBTOR" means a person who owes a Trade Debt.
"DOLLARS" "A$" and "$" means the lawful currency of the Commonwealth of
Australia.
"DUTY" means any stamp, transaction or registration duty or similar charge
imposed by any Governmental Agency and includes, but is not limited to, any
interest, fine, penalty, charge or other amount imposed in respect of the above,
but excludes any Tax.
"ELECTRICITY ACT" means the Electricity Industry Act 1993.
"EMPLOYEES" means al1 employees of the Seller.
"EMPLOYMENT CONTRACTS" means the employment contracts between the Seller and the
Employees.
"EQUIPMENT LEASE" means each and every agreement relating to the finance,
leasing, hire or hire purchase of equipment and motor vehicles used in the
Business.
"EQUIPMENT LEASE BENEFITS" means the benefits and rights arising pursuant to the
Equipment Leases.
"ETSA AGREEMENTS" means the deeds described in clauses 17.2 and 17.10
(inclusive) of the Generation Licence.
["ETSA HEDGE CONTRACT" means the agreement titled Hedging Contract of today's
date between the Seller and the Asset Buyer under which the Seller and the
Asset Buyer establish electricity hedging arrangements.]
"GENERATION LICENCE" means the generation licence issued to the Seller under
Part 12 of the Electricity Act in the from set out in Annexure A.
"GIPPSLAND WATER SUPPLY AGREEMENT" means the agreement in the form set out in
Annexure D.
"GOVERNMENTAL AGENCY" means the government of any country or the government of
any state, territory, municipality or other political subdivision of a country,
and any minister, administrative or judicial body, department, commission,
authority, instrumentality, tribunal, agency or entity of any such government.
"GROUNDWATER LICENCE" means the licence to be issued to the Seller under section
5l of the Water Act 1989 in substantially and all material respects the same
form as the draft groundwater licence set out in Annexure C.
"HEDGING CONTRACTS" means al1 the contracts listed in Annexure F and any other
contract of a similar nature to which the Seller is a party.
"INTELLECTUAL PROPERTY RIGHTS" means the rights of the Seller to al1 patents,
copyrights or designs; and
(a) rights under Licence in respect of such patents, copyrights or design; and
[CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
4
(b) equitable rights in respect of such patents, copyrights or designs or such
licences.
"LAND" means the land described in Crown Grant Volume 10248 Folio 674 including
fixtures and capital improvements of the Seller and the Hazelwood Cooling Pond
and the Seller's interest in the water in it.
"LICENCES" means every licence, permit, registration or other authority
whatsoever which is held by the Seller and which is necessary to properly and
efficiently carry on the Business, except the Specified Licences and the Mining
Licence.
"LOSS" means any and all losses (including loss of profit and loss of expected
profit), claims, actions, liabilities, damages, expenses, diminutions in value
or deficiencies of any kind or character (whether consequential or otherwise or
whether or not known or asserted on or before the Completion Date) including,
without limitation, all interest and other amounts payable to third parties, all
liabilities on account of Taxes and al1 legal (on a full indemnity basis) and
other expenses reasonably incurred in connection with investigating or defending
any claims or actions, whether or not resulting in any liability and all amounts
paid in settlement of claims or actions.
"METERING AGREEMENT" means the agreement to be entered into by the Seller and
Victorian Power Exchange in relation to metering and connection points.
"MINING LICENCE" means the licence to be issued to the Seller under Section 47A
of the Electricity Act in substantially and in all material respects the same
form as the draft mining licence set out in Annexure B.
"MINING LICENCE CASH BIDDING PAYMENT" means $50,000,000.
"OFFICER" means a director or secretary of the relevant party (as the case may
be).
"PLANT AND EQUIPMENT" means all plant, equipment and articles owned by the
Seller including without limitation all mining equipment, equipment used for the
conveyance and storage of coal, turbines, generators, pumps, boilers and boiler
plant, precipitators, mills, electricity transmission lines, power poles,
cables, stations, substations, switch yard equipment and al1 other plant and
equipment used in the mining and transportation of coal and in the generation,
reticulation, transformation or metering of electrical power which, in its
ordinary use, is located in a fixed position wherever located, but excludes any
of the foregoing that are:
(a) any improvements, buildings or fixtures;
(b) motor vehicles owned or leased by the Seller; and
(c) the Hazelwood Cooling Pond,
and, for the avoidance of doubt, does not include capital works in progress
"POWER" means any right, power, authority, discretion or remedy conferred on the
parties by this agreement or any applicable law.
"REAL PROPERTY INTERESTS" means all rights and benefits of the Seller under the
Real Property Leases.
"REAL PROPERTY INTERESTS" means all agreements pursuant to which the Seller
leases or licences or is the lessee or licensee of real property.
"SECURITY INTEREST" means an interest or power:
(a) reserved in or over an interest in any asset excluding any retention of
title; or
(b) created or otherwise arising in or over any interest in any asset under
a bill of sale, mortgage, charge, lien, pledge, trust or power,
<PAGE>
5
by way of security for the payment of a debt or any other monetary obligation or
the performance of any other obligation and includes, but is not limited to, any
agreement to grant or create any of the above.
"SECV LOAN" has the meaning given to that term in the Share Sale Agreement.
"SHARE SALE AGREEMENT" means the agreement so titled to be entered into between
State Electricity Commission of Victoria, the State of Victoria, the Asset Buyer
and National Power PLC, PacifiCorp Holdings, Inc. and Destec Energy, Inc. under
which the Asset Buyer shall acquire, inter alia, all the issued ordinary shares
in the capital of the Seller.
"SPECIFIED CREDITORS" means the TCV Loan and the SECV Loan.
"SPECIFIED CONTRACTS" means:
(a) the Connection AGREEMENT dated 3 October 1994 between Generation Victoria
and Power Net Victoria (allocated to the Seller under the Allocation
Statement);
(b) the Use of System Agreement dated 3 October 1994 between Generation
Victoria and Power Net Victoria (allocated to the Seller under the
Allocation Statement);
(c) the Ancillary Services Agreement dated 3 October 1994 between Generation
Victoria and Victorian Power Exchange (allocated to the Seller under the
Allocation Statement);
(d) all Vesting Contracts entered into by the Seller;
(e) the Gippsland Water Supply Agreement;
(f) all Hedging Contracts to which the Seller is a party;
(g) the Metering Agreement;
(h) the ETSA Agreements; and
(i) [the ETSA Hedge Contract.]
"SPECIFIED LICENCES" means the Generation Licence and Groundwater Licence.
"TAX" means any tax, levy, charge, impost, duty, fee, deduction or withholding
which is assessed, levied, imposed or collected by any State Government Agency
and includes, but is not limited to, any interest, fine, penalty, charge, fee or
any other amount imposed on, or in respect of, any of the above and any amount
imposed under section 88 of the State Owned Enterprises Act 1992 but excludes
any Duty.
"TCV" MEANS TREASURY CORPORATION OF VICTORIA.
"TCV LOAN" has the meaning given to that term in the Share Sale Agreement.
"TOTAL PURCHASE PRICE" means $2,399,999,000 being the sum of the value of the
Assets, Mining Licence, the Trade Debts specified by the Asset Buyer pursuant to
clause l2A, and the fair value, if any, of the declaration of trust of the
rights attached to those items set out in clause l0.l(a) to (f) net of Contract
Liabilities and Creditors (excluding Specified Creditors) assumed under this
agreement.
"TRADE DEBTS" means each and every amount due to the Seller on the Completion
Date in connection with the Business by or in respect of trade debtors, payments
in advance, trade bills receivable and like trade obligations and includes
sundry debtors, prepayments and other receivables.
"TRADE DEBT VALUE" MEANS the full face value of the Trade Debts at the time of
assignment less any provision for doubtful debts recorded in the accounts of the
Seller at the time of such assignment.
[CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
6
"VESTING CONTRACT" MEANS AN AGREEMENT entered into between any two of the
following:
(a) the persons holding distribution licences issued under Part 12 of the
Electricity Act;
(b) the persons holding generation licences issued under Part 12 of the
Electricity Act; and
(c) the State Electricity Corporation of Victoria
or between the State Electricity Corporation of Victoria acting in one capacity
and the State Electricity Corporation of Victoria acting in another capacity,
entered into on or about 31 March 1995 which incorporate the Master Vesting
Terms and Conditions.
1.2 INTERPRETATION
In this agreement, unless the context otherwise requires:
(a) headings and underlinings are for convenience only and do not affect the
interpretation of this agreement;
(b) words importing the singular include the plural and vice versa;
(c) words importing a include any gender;
(d) other parts of speech and grammatical forms of a word or phrase defined
in this agreement have a corresponding meaning;
(e) an expression importing a natural person includes any company, partnership,
joint venture, association, corporation or other body corporate and any
Governmental Agency;
(f) a reference to a clause, party, annexure, exhibit or schedule is a reference
to a clause of, and a party, annexure, exhibit and schedule to, this
agreement and a reference to this agreement includes any such annexure,
exhibit and schedule;
(g) a reference to a statute, regulation, proclamation, ordinance or by-law
includes all statutes, regulations, proclamations, ordinances or by-laws
amending, consolidating or replacing it, and a reference to a statute
includes all regulations, proclamations, ordinances and by-laws issued
under that statute;
(h) a reference to a document includes all amendments or supplements to, or
replacements or novations of, that document;
(i) a reference to a party to a document includes that party's successors and
permitted assigns;
(j) where the day on or by which any thing is to be done is not a Business Day,
that thing must be done on or by the next Business Day;
(k) no rule of construction applies to the disadvantage of a party because that
party was responsible for the preparation of this agreement or any part of
it;
(1) a covenant or agreement on the part of two or more persons binds them
jointly and severally;
(m) a reference to an agreement other than this agreement includes an
undertaking, agreement or legally enforceable arrangement or understanding
whether or not in writing;
(n) a reference to an asset includes all property of any nature, including, but
not limited to, a business, and all rights, revenues and benefits;
(o) a reference to a document includes any agreement in writing, or any
certificate, notice, instrument or other document of any kind;
(p) a reference to liquidation includes appointment of an administrator,
compromise,
<PAGE>
7
for the benefit of creditors, scheme, composition or arrangement with
creditors, insolvency, bankruptcy, or any similar procedure or, where
applicable, changes in the constitution of any partnership or person, or
death; and
(q) terms deemed in the Corporations Law at the date of this agreement have
the meanings given to them in the Corporations Law at that date.
2. SALE AND PURCHASE
2.1 SALE OF ASSETS
Subject to the terms of this agreement, to the extent permissible by law, the
Seller must sell free of Security Interests and the Asset Buyer must buy the
Assets on the Completion Date. The parties agree that the allocation of the
Total Purchase Price is as follows:
(a) ASSETS (OTHER THAN PLANT & EQUIPMENT AND LAND) = the aggregate fair
value of such assets;
(b) MINING LICENCE = the Mining Licence Cash Bidding Payment;
(c) CONTRACT LIABILITIES AND CREDITORS (EXCLUDING SPECIFIED CREDITORS) =
the book value of such liabilities;
(d) THE TRADE DEBTS SPECIFIED BY THE ASSET BUYER PURSUANT TO CLAUSE 12A =
so much of the Trade Debt Value that relates to the Trade Debts
specified by the Asset Buyer under clause 12A;
(e) the fair value, if any, of the declaration of trust of the rights
attached to those items set out in clause l0.l(a) to (f);
(f) PLANT & EQUIPMENT AND LAND = the Total Purchase Price PLUS the amount
of the Contract Liabilities and Creditors (excluding Specified
Creditors) LESS the sum of:
(l) the aggregate fair value at Completion of all Assets other than the
Plant & Equipment and Land);
(2) Mining Licence Cash Bidding Payment; and
(3) the amounts referred to in clause 2.l(d) and clause 2.l(e).
2.2 DATES FOR PAYMENT
On and subject to the terms of this agreement the Asset Buyer must pay the Total
Purchase Price on the Completion Date.
2.3 METHOD OF PAYMENT
All payments to be made under this agreement must be made by bank cheque or in
such other method as may be agreed in writing between the Seller and the Asset
Buyer.
3. COMPLETION
3.1 DATE FOR COMPLETION
Completion must take place on the Completion Date at l0 am at the office of the
Seller's solicitors, Freehill Hollingdale & Page, l0l Collins Street, Melbourne.
3.2 DELIVERY OF DOCUMENTS
At Completion, the Seller must deliver to the Asset Buyer a copy of the special
resolution passed by the State Electricity Commission of Victoria (as
shareholder) approving the sale of Assets and
<PAGE>
8
the Trade Debts specified by the Asset Buyer pursuant to clause 12A by the
Seller on and subject to the terms of this agreement.
3.3 ASSET BUYER'S OBLIGATIONS AT COMPLETION
At Completion the Asset buyer must pay the Seller the Total Purchase Price as
described in clause 2.
3.4 PROPERTY AND RISK
Property and risk in the Assets shall pass to the Asset Buyer at Completion.
3.5 INTERDEPENDENCY BETWEEN THIS AGREEMENT AND SHARE SALE AGREEMENT
It is the intention of the parties that:
(a) subject to clause 7.3 of the Share Sale agreement, completion under this
agreement;
(b) completion under the Share Sale Agreement; and
(c) payment of the SECV Loan and TCV Loan and any other amounts owing to
TCV under clause 6 of the Share Sale Agreement,
are interdependent, so that if the obligations of the parties in respect of a
particular completion or payment under clause 6 of the Share Sale Agreement are
not satisfied, then no delivery of payment which has been made, will be deemed
to have been made.
For the avoidance of doubt the parties acknowledge and agree that once
Completion under this agreement, completion under the Share Sale Agreement and
the payments under clause 6 of the Share Sale Agreement have occurred, as a
chronological sequence of events, all deliveries and payments will be deemed to
have taken place in the order in which they occurred.
3.6 INCONSISTENCIES
In the event there are any inconsistencies between this agreement and the Share
Sale Agreement, the provisions of the Share Sale Agreement shall prevail.
3.7 EXERCISE OF RIGHTS
With effect from completion, the Seller shall exercise all of its statutory and
other rights with respect to the Assets including, without limitation, its
rights under Part 3 of the Electricity Act, consistently with ownership of the
Assets having been vested in the Asset Buyer and shall act in accordance with
any directions given by the Asset Buyer to the Seller as to the manner of
exercise of such rights.
3.8 TERMINATION
This agreement shall automatically terminate on termination of the Share Sale
Agreement.
4. EMPLOYEES
4.1 EMPLOYMENT CONTRACTS HELD ON TRUST
Following completion, the Seller agrees to hold the benefit of the Employment
Contracts upon trust absolutely for the Asset Buyer pursuant to clause 10.
4.2 ASSET BUYER'S INDEMNITY WITH RESPECT TO EMPLOYEES
Without limiting the generality of clause 9, following Completion, the Asset
Buyer indemnifies the Seller against all Losses incurred by the Seller in
respect of any entitlement to salary, annual leave, holiday pay, redundancy pay,
long service leave, commissions or other incentive
<PAGE>
9
entitlements claimed against the Seller by any Employee employed by the Seller
as at and after Completion.
5. OUTGOINGS AND EXPENSES
The Asset Buyer shall indemnify and continue to indemnify the Seller against any
Loss in respect of the period following Completion including, arising from
outgoings and expenses, without limitation, payments in respect of land tax,
council rates, water rates, garbage disposal and all services of the Business
for electricity, oil heating, gas or otherwise and the amount of any deposit
paid in respect of such services.
6. ASSUMPTION OF LIABILITIES AND CREDITORS
Following Completion, the Asset buyer assumes with effect from Completion all
liabilities of the Seller to the Creditors and agrees to pay all Creditors in
the normal course of business for obligations of the Seller existing before and
after the Completion Date and without limiting the generality of clause 9, the
Asset Buyer indemnifies and shall keep the Seller indemnified against all Losses
incurred by the Seller arising from the non-payment of Creditors.
7. CONTRACTS
7.1 ASSIGNMENT OF CONTRACTS
Subject to clause 7.4, the Seller, with effect from Completion, assigns to the
Asset Buyer all its right, title and interest in the Contract Benefits.
7.2 NOVATION OF CONTRACTS
Following Completion, the Seller shall use its best endeavours, at the Asset
Buyer's expense and request, to procure the novation to the Asset Buyer of all
Contracts and Equipment Leases in addition to making an assignment of the
benefit of Contracts under clause 7.1.
7.3 ASSET BUYER'S OBLIGATIONS AFTER COMPLETION
(a) Following Completion, the Asset Buyer shall duly carry out and perform all
obligations under the Contracts and Equipment Leases.
(b) The Asset Buyer shall assume responsibility for the Contract Liabilities
from Completion and keep the Seller indemnified against any Loss arising
from the performance or non-performance of the Contract Liabilities after
Completion.
7.4 NON-ASSIGNMENT OF THE CONTRACT
Following Completion, if any other party to a Contract objects or refuses to
consent to an assignment or novation of a Contract to the Asset Buyer.
(a) the Asset Buyer shall duly perform the Contracts on behalf of the Seller at
the Asset Buyer's expense;
(b) the Seller shall enforce the Contract against the other party to the
Contract in such manner as the Asset Buyer may reasonably direct the Seller
from time to time and the Seller shall pay all benefits arising therefrom
to the Asset Buyer;
(c) the Seller shall not agree to any amendment of the Contract or waiver of
the Seller's rights thereunder without the prior written approval of the
Asset Buyer; and
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10
(d) the Seller shall hold the Contract upon trust for the Asset Buyer pending
consent to an assignment or novation.
7.5 ASSET BUYER'S INDEMNITY IN RESPECT OF THE NON-ASSIGNMENT OF THE CONTRACT
Following Completion, the Asset Buyer indemnifies the Seller against all Losses
incurred by the Seller under any Contract which arises or relates to the
performance or non-performance of the Contracts whether assigned or novated in
favour of the Asset Buyer or not.
7.6 EQUIPMENT LEASES
Following Completion, the Asset Buyer shall, subject to the consent of the other
parties to the Equipment Leases, accept an assignment or novation of all of the
Equipment Leases and assume full and on-going liability for all monies remaining
due and unpaid under the Equipment Leases whether by leasing installments,
residual payments or otherwise.
7.7 TRANSFER OF THE REAL PROPERTY LEASES
Following Completion, the Seller shall use reasonable endeavours to novate or
assign (with the written consent of each of the lessors and mortgagees (if any)
of the Real Property) as soon as practically possible the Real Property Leases
to the Asset Buyer.
8. LICENCES
8.1 TRANSFER
Following Completion, the Seller shall, to the extent that the Licences are
transferable, use all reasonable endeavours to transfer or cause to be
transferred to the Asset Buyer the Licences at the cost and expense of the Asset
Buyer.
8.2 FURTHER ACTS
If the Asset Buyer does not acquire good title to the Licences following the
actions described in clause 8.1, the Seller undertakes to do any further acts or
things reasonably requested by the Asset Buyer to effect a valid and effectual
transfer of the Licences within a reasonable time.
9. INDEMNITY
Following Completion, the Asset Buyer indemnifies the Seller in respect of all
liabilities arising and debts incurred connection with the Business and the
Assets.
10. DECLARATION OF TRUST
10.1 DECLARATION OF TRUST
The Seller hereby declares that on and from the Completion Date it holds and
will hold:
(a) the Specified Contracts;
(b) the Specified Licences;
(c) the Mining Licence when issued;
(d) the Employment Contracts;
(e) motor vehicles owned or leased by the Seller; and
(f) any other Assets received by, or Licences issued to, the Seller after the
Completion Date to the extent that they cannot be assigned, novated or
transferred to the Asset Buyer.
<PAGE>
11
upon trust for the Asset Buyer and agrees to account for benefits thereof and to
transfer and deal with all the rights attaching thereto in such manner as the
Asset Buyer shall from time to time direct.
10.2 INDEMNITY
The Asset Buyer will at all times following Completion indemnify and keep
indemnified the Seller against all liabilities which the Seller may incur by
reason of this declaration of trust. Without limiting the generality of the
foregoing, the Asset Buyer Specifically indemnifies and will keep indemnified
the Seller against all liabilities which the Seller may incur by reason of the
Specified Contracts and Specified Licences being so registered in the name of
the Seller.
11. MINING LICENCE
11.1 TENDER
Pursuant to the Asset Buyer's bid letter dated 2 August 1996 the Asset Buyer
tendered a Mining Cash Bidding Payment for the issue of the Mining Licence. The
State has consented to the issue of the Mining Licence to the Seller to hold on
trust absolutely for the Asset Buyer.
11.2 TRUST
The Seller hereby declares that it shall on and from the issue of the Mining
Licence hold the Mining Licence on trust for the Asset Buyer and hereby agrees
to account for all benefits therefrom and to transfer and deal with all rights
attaching thereto in such manner as the Asset Buyer shall from time to time
direct.
12. LAND
The Conditions set out in Annexure E will apply to this agreement so far as it
relates to the sale of the Land.
12A TRADE DEBTS
On Completion, the Seller shall transfer to the Asset Buyer completely and
unconditionally any Trade Debts owing to the Seller which the Asset Buyer
specifies to the Seller at the Completion Date.
13 ASSET BUYER'S WARRANTIES
13.1 ASSET BUYER'S WARRANTIES
The Asset Buyer represents and warrants to the Seller as at the date of this
agreement and as at Completion that:
(a) it has corporate power to enter into this agreement and has taken all
necessary action (including all shareholder approvals and Authorisations)
to authorise the execution, delivery and performance of this agreement;
(b) the agreement constitutes a legally valid and binding obligation of the
Asset Buyer enforceable in accordance with its terms; and
(c) the execution, delivery and performance of this agreement will not violate
any provision of:
<PAGE>
12
(1) any law, regulation, order, rule or decree of any Governmental
Agency of the Commonwealth of Australia or any state or
territory or any recognised stock exchange on which its shares
or the shares of any related body corporate are listed;
(2) the memorandum or articles of association (or equivalent
constituent documentation) of the Asset Buyer; and
(3) any security agreement, deed, contract, undertaking or other
instrument to which the Asset Buyer is a party or which is
binding on it does not and will not result in the creation or
imposition of any security over any of its assets pursuant to
the provision of any such security agreement, deed, contract,
undertaking or other instrument.
13.2 ACKNOWLEDGMENT
The Seller acknowledges and agrees that in no event is it entitled to rescind
this agreement or claim damages under this agreement.
14 DUTIES, COSTS AND EXPENSES
14.1 PAYMENT OF DUTY
The Seller must pay:
(a) any Duty in respect of the execution, delivery and performance of this
agreement and any document entered into or signed under this agreement;
and
(b) any fine, penalty or other cost in respect of a failure to pay any Duty.
14.2 INDEMNITY
The Asset Buyer indemnifies the Seller against any amount payable under clause
14.1.
14.3 COSTS AND EXPENSES
Subject to clause 14.1, each party must pay its own costs and expenses in
respect of the negotiation, preparation, execution, delivery, stamping and
registration of this agreement or other document described in clause 14.1(a).
14.4 COSTS OF PERFORMANCE
Any action to be taken by a party in performing its obligations under this
agreement must be taken at its own cost and expense unless otherwise provided in
this agreement.
15. NOTICES
15.1 GENERAL
Any notice or other communication including, but not limited to, any request,
demand, consent or approval, to or by a party to this agreement:
(a) must be in legible writing and in English addressed as shown:
(1) if to the Seller: The Secretary,
Address: Hazelwood Power Corporation Ltd,
Commercial Road
Morwell Vic 3840
Attention: Mr B. Clark
<PAGE>
13
Facsimile: (051) 35 3185;
(2) if to the Asset Buyer: Hazelwood Power Partnership
Address: C/-Phillips Fox
120 Collins Street
Melbourne, 3000
Attention: Judith Earls
Facsimile: 9274 5111,
or as specified to the sender by any party by notice;
(b) where the sender is a company, must be signed by an Officer or under the
common seal of the sender;
(c) is regarded as being given by the sender and received by the addressee:
(1) if by delivery in person, when delivered to the addressee;
(2) if by post within Australia, 3 Business Days from and including the
date of postage; or
(3) if by facsimile transmission, when transmitted legibly to the
addressee,
but if the delivery or receipt is on a day which is not a Business Day
or is after 4.00 pm (addressee's time) it is regarded as received at
9.00 am on the following Business Day; and
(d) can be relied upon by the addressee and the addressee is not liable to
any other person for any consequences of that reliance if the addressee
believes it to be genuine, correct and authorised by the sender.
15.2 LEGIBILITY OF FACSIMILE TRANSMISSION
A facsimile transmission is regarded as legible unless the addressee telephones
the sender within 2 hours after the transmission is received or regarded as
received under clause 15.1(c)(3) and informs the sender that it is not legible.
16. GENERAL
16.1 GOVERNING LAW AND JURISDICTION
(a) This agreement is governed by the laws of Victoria. Each party
irrevocably submits to the exclusive jurisdiction of the courts of
Victoria.
(b) Each party irrevocably waives any objection to the venue of any legal
process on the basis that the process has been brought in an
inconvenient forum.
16.2 WAIVERS
(a) Waiver of any right arising from a breach of this agreement or of any
Power arising upon default under this agreement must be in writing and
executed by the party granting the waiver.
(b) A failure or delay in exercise, of:
(1) a right arising from a breach of this agreement; or
(2) a Power created or arising upon default under this agreement, does
not result in a waiver of that right or Power.
<PAGE>
14
(c) A party is not entitled to rely on a delay in the exercise or non-
exercise of a right or Power arising from a breach of this agreement or
on a default under this agreement as constituting a waiver of that right
or Power.
(d) A party may not rely on any conduct of another party as a defence to
exercise of a right or Power by that other party.
(e) This clause 16.2 may not itself be waived except by writing executed by
the party granting the waiver.
16.3 VARIATION
A variation of any term of this agreement must be in writing and executed by the
parties.
16.4 FURTHER ASSURANCES
Each party must do all things, and execute all further documents, necessary to
give full effect to this agreement.
16.5 THIRD PARTY RIGHTS
No person other than a party to this agreement is intended to have any right,
power or remedy or derives or is intended to derive any benefit under this
agreement.
16.6 THIS AGREEMENT SUPERSEDES OTHERS
This agreement and the Share Sale Agreement embody the entire agreement between
the parties with respect to the subject matter of this agreement and supersede
any prior negotiation, arrangement, understanding or agreement with respect to
the subject matter or any term of this agreement.
<PAGE>
15
EXECUTED by the parties as an agreement.
THE COMMON SEAL of HAZELWOOD POWER
CORPORATION LTD
was affixed to this
document in the presence of:
/s/ Brian C. Clark /s/ Frank H. Osborn
______________________________ _____________________________
Secretary Director
Brian C. Clark Frank H. Osborn
______________________________ _____________________________
Name (please print) Name (please print)
SIGNED for HAZELWOOD
PACIFIC PTY LIMITED by
its attorney in the presence of:
/s/ S.J.E. Uthmeyer /s/ Daniel L. Spalding
______________________________ _____________________________
Witness Attorney
Simon J.E. Uthmeyer Daniel L. Spalding
______________________________ _____________________________
Name (please print) Name (please print)
SIGNED
for NATIONAL POWER
AUSTRALIA INVESTMENTS LTD
by its attorney in
the presence of:
/s/ S.J.E. Uthmeyer /s/ Max Herbert
______________________________ ____________________________
Witness Authorized Representative
Simon J.E. Uthmeyer Max Herbert
______________________________ _____________________________
Name (please print) Name (please print)
<PAGE>
16
SIGNED for AUSTRALIAN POWER
PARTNERS CV by its attorney
in the presence of:
/s/ Reggie G. Rice /s/ Louis Dorey
______________________________ _____________________________
Witness Attorney
Reggie G. Rice Louis Dorey
______________________________ _____________________________
Name (please print) Name (please print)
SIGNED for HAZELWOOD
INVESTMENT COMPANY
PTY LIMITED by its attorney
in the presence of:
/s/ J.C. Sheridan /s/ C. Lawson-Kerr
______________________________ _____________________________
Witness Attorney
J.C. Sheridan C. Lawson-Kerr
______________________________ _____________________________
SIGNED for CISL (HAZELWOOD) Name (please print)
PTY LIMITED by its attorney
in the presence of:
/s/ J.C. Sheridan /s/ Susan Kalius
______________________________ _____________________________
Witness Attorney
J.C. Sheridan Susan Kalius
______________________________ _____________________________
Name (please print) Name (please print)
<PAGE>
ANNEXURE A
GENERATION LICENCE
<PAGE>
GENERATION
LICENCE
issued to
HAZELWOOD POWER CORPORATION LTD
ACN 065 381 204
OFFICE OF THE REGULATOR - GENERAL
<PAGE>
GENERATION LICENCE
1. DEFINITIONS AND INTERPRETATION
1.1 In this licence, words and phrases appearing in italics have the meaning
ascribed to them in part 1 of schedule 1.
1.2 This licence must be interpreted in accordance with the rules set out in
part 2 of schedule 1.
2. GRANT OF LICENCE
2.1 The Office, in exercise of the powers conferred by section 162 and section
168 of the Act, licenses the Licensee to:
(a) generate electricity for supply and sale at; and
(b) supply and sell electricity generated at,
the licensed power station subject to the conditions set out in this
licence.
3. TERM
3.1 This licence takes effect on and from the date on which the first
allocation statement prepared in accordance with section 153B of the Act
becomes effective (31 January 1995).
3.2 The Office may at any time agree with the Licensee that this licence should
be revoked, in which case the term of this licence ends on the day agreed.
3.3 The Office may at any time give at least 20 business days notice of
revocation to the Licensee if the Licensee does not comply with an
enforcement order or an undertaking, and the Office decides that it is
necessary or desirable to revoke this licence in order to achieve the
policy objectives, in which case the term of this licence ends, subject to
clause 3.4, on the expiration of the period of the notice.
3.4 The term of this licence does not end at the expiration of the period of a
notice of revocation given under clause 3.3 if, before the expiration, the
Licensee complies with the enforcement order or the undertaking (as the
case may be).
4. OBLIGATION TO OFFER TO PROVIDE ANCILLARY SERVICES
4.1 Whenever requested to do so by Victorian Power Exchange, the Licensee must
state to Victorian Power Exchange the terms, which must be fair and
reasonable in the opinion of the Office, on which the Licensee will provide
ancillary services including, without limitation, automatic generation
control capability.
4.2 The Licensee must on request from Victorian Power Exchange provide
ancillary services of the kind specified in clause 4.1 on the terms stated
to Victorian Power Exchange pursuant to clause 4.1
4.3 In determining whether or not the terms on which the Licensee will provide
ancillary services are fair and reasonable, the Office will have regard to
clause 4.4 of the Tariff Order, which limits the amount which Victorian
Power Exchange may seek to recover
<PAGE>
2
through Victorian Power Exchange's Pool fees for meeting the costs of
ancillary services provided to Victorian Power Exchange.
5. COMPLIANCE WITH CODES AND RULES
5.1 The Licensee must comply with applicable provisions of the Wholesale
Metering Code, the System Code, the Distribution Code and the Pool Rules.
5.2 Subject to any limitation on the Licensee's ability to do so under any of
the codes or rules referred to in clause 5.1, if the Licensee becomes
aware of a material breach of any of the codes or rules by the Licensee,
the Licensee must notify the Office of the material breach in accordance
with any guidelines issued by the Office or, in the absence of such
guidelines, as soon as practicable.
5.3 The Office may, on application of the Licensee, make a determination that
the provisions of any of the codes or rules referred to in clause 5.1 are
to apply in relation to the Licensee, either generally or in a particular
case or class of cases, as if a specified provision or provisions were
omitted or were modified or varied in a specified manner and, subject to
section 27 of the Office of the Regulator-General Act 1994, when such a
determination is made, the relevant code or rule applies accordingly.
5.4 An application by the Licensee under clause 5.3 must set out a draft of
the determination the Licensee seeks.
5.5 If:
(a) the Office has received an application from the Licensee for a
determination under clause 5.3 and Victorian Power Exchange has
received a copy of the application; and
(b) at the end of 20 business days after the day on which the later of
those two events occurred the Office has not:
(1) made a determination; or
(2) advised the Licensee that a determination will not be made,
then the Office will be deemed to have made a determination in the form of
the draft determination set out in the application.
6. ENERGY TO BE SOLD THROUGH THE POOL
The Licensee must ensure that all electricity generated at a power station
forming part of the licensed power station is dealt with in one or a
combination of the following ways:
(a) sold through the Pool in accordance with the Pool Rules; or
(b) consumed by the Licensee in the operation of plant or equipment which
is:
(1) necessary for the generation of electricity at the power
station; or
(2) used in mining activities at an open cut mine where the majority
of the coal produced at the mine is used in the generation of
electricity at the power station; or
<PAGE>
3
(3) used in activities conducted solely at the power station or the
open cut mine referred to in paragraph (2) relating to the
operation or maintenance of the power station or that open cut
mine; or
(4) used in activities relating to the management of the Licensee
conducted solely at the power station or on land belonging to
the Licensee which is adjacent to the power station; or
(c) consumed in a manner approved by the Office after consultation with
all persons holding a licence issued under part 12 of the Act.
For the purposes of paragraph (b)(4), the reference to the power station
and land adjacent to the power station will be taken not to include any
land acquired by the Licensee after 1 July 1996.
7. STANDARDS AND PROCEDURES
7.1 At the written request of the Office, the Licensee must participate to the
extent specified by the Office in the development, issue and review of any
standards and procedures specified by the Office.
7.2 The Licensee must in accordance with guidelines published by the Office
under the Office of the Regulator-General Act 1994, or as directed by the
Office, report to the Office on its performance against applicable
standards and procedures.
7.3 If the Office considers that:
(a) the Licensee has failed to comply with clause 7.1; or
(b) standards and procedures applicable to the Licensee have been shown
to be insufficient to prevent abuses by the Licensee of any monopoly
power it enjoys,
the Office may issue standards and procedures applicable to the Licensee
and with which the Licensee must comply.
8. ACCOUNTS
The Licensee must ensure that its accounts are prepared in accordance with
guidelines set by the Office, and must maintain its accounting records
accordingly.
9. PROVISION OF INFORMATION TO VICTORIAN POWER EXCHANGE
9.1 Following a request in writing from Victorian Power Exchange, the Licensee
must provide to Victorian Power Exchange such documents or information as
Victorian Power Exchange may reasonably require to perform its functions
and exercise its powers under the Act.
9.2 A question as to the reasonableness of a requirement by Victorian Power
Exchange for documents or information as contemplated by clause 9.1 shall
be decided by the Office on the basis of the Office's opinion of the
reasonableness of the requirement.
9.3 If a document or information is provided to Victorian Power Exchange
following a request under clause 9.1, Victorian Power Exchange must only
use the document or information for the purpose for which it was provided
and must not disclose the
<PAGE>
4
document or information to any other person except to the Office under
Victorian Power Exchange's Wholesale Electricity Market and Transmission
Licence, or as required by a law or the lawful requirement of a government
or government authority or with the agreement of the Licensee. If
Victorian Power Exchange is required to disclose a document or information
provided to Victorian Power Exchange following a request under clause 9.1
to the Office or by law or the lawful requirement of a government or
government authority, then Victorian Power Exchange must notify the
Licensee before so disclosing the document or information.
10. PROVISION OF INFORMATION TO THE OFFICE
The Licensee must provide to the Office, in the manner and form decided by
the Office such information as the Office may from time to time require.
11. PAYMENT OF LICENCE FEES
11.1 The Licensee must pay the fees and charges in respect of this licence
determined by the Minister under section 163(4) of the Act.
11.2 The licence fee determined by the Minister under section 163(4) of the Act
in respect of this licence must be paid in four equal installments on the
last days of January, April, June and October in each year in the manner
notified to the Licensee by the Office.
11.3 A fee or charge determined by the Minister under section 163(4) of the Act
in respect of this licence (other than the licence fee referred to in
clause 11.2) must be paid at the times and in the manner notified to the
Licensee by the Office.
12. ADMINISTRATOR
12.1 If an administrator is appointed to the Licensee's business under section
166 of the Act, the administrator must exercise its functions and powers
in such a manner as may be specified by the Office in the instrument of
appointment.
12.2 The Licensee is responsible for the acts and defaults of the
administrator.
13. COMPLIANCE WITH LAWS
The Licensee must comply with all applicable laws including but not
limited to the Tariff Order.
14. VARIATION
14.1 This licence may be varied in accordance with:
(a) the procedures specified in section 164 of the Act; or
(b) section 167(8) of the Act; or
(c) clause 14.2 or 14.3.
14.2 The Office may, if it considers it expedient, vary this licence to provide
for arbitration of disputes between the Licensee and other persons
regarding the terms and conditions of access to any essential facilities
in the Victorian electricity supply industry.
14.3 The Treasurer of the State of Victoria may, by notice to the Licensee,
vary the conditions of this licence at any time prior to completion
occurring under a contract for the sale of
<PAGE>
5
all of the issued shares in the Licensee by the State Electricity
Commission of Victoria and the nominees of the State Electricity
Commission of Victoria.
5. TRANSFER OF LICENCE
This licence may be transferred in accordance with section 167 of the Act.
6. COMMUNICATIONS
6.1 Unless the context otherwise requires, a communication must be in writing.
6.2 A communication is to be regarded as having been given by the sender and
received by the addressee:
(a) when delivered in person to the addressee;
(b) 3 business days after the date of posting, if the communication is
posted within Australia;
(c) 7 business days after the date of posting, if the communication is
posted outside Australia; or
(d) when, according to the sender's transmission report, received by
facsimile transmission by the addressee.
7. GENERATOR CO-INSURANCE SCHEME AND SUPPORT ARRANGEMENTS
7.1 The Licensee must, by 30 June 1995, enter into a contract entitled
Generator Co-Insurance Scheme contract in a form certified by the Minister
and expiring no later than 30 September, 1996.
7.2 The Licensee must enter into deed entitled "ETSA Contract: Generator
Contribution Deed" with Generation Victoria in a form certified by the
Minister if directed by the Minister in writing to do so.
7.3 The Licensee must enter into a deed entitled "ETSA Contract: Generator
Contribution Deed" with Loy Yang Power Limited (ACN 065 381 240) in a form
certified by the Minister if directed by the Minister in writing to do so.
7.4 The Licensee must enter into a deed entitled "ETSA Contract: Generator
Contribution Deed" with Southern Hydro Limited (ACN 065 325 091) in a form
certified by the Minister if directed by the Minister in writing to do so.
7.5 The Licensee must enter into a deed entitled "ETSA Contract: Generator
Contribution Deed" with Energy Brix Australia Corporation Pty Ltd
(ACN 074 735 833) in a form certified by the Minister if directed by the
Minister in writing to do so.
7.6 The Licensee must enter into a deed entitled "ETSA Contract: Generator
Contribution Deed" with the State Electricity Commission of Victoria (in
its capacity as IOA Trader) in a form certified by the Minister if
directed by the Minister in writing to do so.
7.7 The Licensee must enter into a deed entitled "ETSA Contract: Generator
Contribution Deed" with the State Electricity Commission of Victoria (in
its capacity as LYB Trader) in a form certified by the Minister if
directed by the Minister in writing to do so.
7.8 The Licensee must enter into a deed entitled "IOA Trader: Support Deed"
with the State Electricity Commission of Victoria (in its capacity as IOA
Trader) in a form certified by the Minister if directed by the Minister in
writing to do so.
<PAGE>
6
7.9 The Licensee must enter into a deed entitled "ETSA Contract: SECV Shell
Contribution Deed" with the State Electricity Commission of Victoria (in
its capacity as IOA Trader) in a form certified by the Minister if
directed by the Minister in writing to do so.
7.10 The Licensee must enter into a deed entitled "ETSA Contract Support
Agreement" with the State Electricity Commission of Victoria (in its
capacity as IOA Trader) in a form certified by the Minister if directed by
the Minister in writing to do so.
COMMON SEAL of )
OFFICE OF THE )
REGULATOR-GENERAL )
affixed pursuant to )
authority of the Office )
31 January 1995 )
ROBIN C. DAVEY
Regulator-General
<PAGE>
7
SCHEDULE 1: DEFINITIONS AND INTERPRETATION
8. DEFINITIONS
In this licence:
8.1 "Act" means the Electricity Industry Act 1993;
(a) "administrator" means an administrator appointed by the Office
under section 166 of the Act in respect of the business carried on
by the Licensee under this licence;
(b) "business day" means a day on which banks are open for general
banking business in Melbourne, excluding a Saturday or Sunday;
(c) "communication" means any notice, agreement, consent, direction,
representation, advice, statement or other communication required
or given pursuant to or in connection with this licence;
(d) "customer" means a person, other than a retailer, who buys or
wishes to buy electricity directly through the Pool or from a
retailer;
(e) "distribute", in relation to electricity, means to distribute
electricity using a distribution system;
(f) "Distribution Code" means the code of that name dated 3 October
1994 which:
regulates:
(1) the supply of electricity to or from distributors'
distribution systems; and
(2) the way in which customers' electrical installations affect
the distribution system to which they are connected; and
(3) is certified by the Office;
(g) "distribution licence" means a licence to distribute and supply
electricity granted under section 162 of the Act;
(h) "distribution system" means in relation to a distributor a system
of electric lines (generally at nominal voltage levels of 66kV or
below) which that distributor is licensed to use to distribute
electricity for supply under its distribution licence.
(i) "distributor" means a holder of a distribution licence or a person
who has been exempted from (?????) requirement to obtain a
distribution licence under section 160 of the Act;
(j) "electrical installation" means any electrical equipment at a
customer site that is not part of a distributor's electrical
system;
(k) "electricity transmission system" means a transmission system in
Victoria (generally at nominal voltage levels of 66kV or above),
which the holder of a transmission licence may use to transmit
electricity;
(l) "enforcement order" means a provisional or final order made and
served by the Office under section 35 of the Office of the
Regulator-General Act 1994;
(m) "generation licence" means a licence to generate electricity for
supply or sale granted under section 162 of the Act;
<PAGE>
8
(n) "generator" means a holder of a generation licence or a person who has
been exempted from requirement to obtain a generation licence under
section 160 of the Act;
(o) "licensed power station" means Hazelwood power station;
(p) "licensee" means Hazelwood Power Corporation Ltd ACN 065 381 204;
(q) "Minister" means the person who is the Minister for the purposes of
section 163(4) of the Act;
(r) "Office" means the Office of the Regulator-General under the Office of
the Regulator-General 1994;
(s) "policy objectives" means the objectives specified in section 157 of the
Act and section 7 of the Office of the Regulator-General Act 1994 and,
to the extent the context requires, in a statement (????) government
policy under section 10 of the Office of the Regulator-General Act 1994;
(t) "Pool" means the market for wholesale trading in electricity operated
and administered by Victorian Power Exchange;
(u) "Pool Rules" means rules prepared by Victorian Power Exchange and
certified by the Office relating to, among other things, the operation
and administration of the Pool;
(v) "Retailer" means a holder of a retail licence or a person who has been
exempted from the requirement to obtain a retail licence under section
160 of the Act;
(w) "Retail licence" means a licence to sell electricity otherwise than
through the Pool granted under section 162 of the Act;
(x) "Standards and procedures" means overall performance standards which are
issued by the licensee under clause 7.1 or by the Office under clause
7.3;
(y) "Supply", in relation to electricity, means the delivery of electricity;
(z) "System Code" means the code prepared by Victorian Power Exchange and
certified by the office relating to, among other things:
the achievement of a secure system;
the operation of an electricity transmission system and
equipment connected to an electricity transmission system;
design and technical requirements for connection to an
electricity transmission system and quality of supply standards
which apply at points of connection to an electricity
transmission system; and
technical performance requirements that are placed on
generators, distributors and certain customers;
(aa) "Tariff Order" means the Victorian Electricity Supply Industry Tariff
Order made under section A of the Act;
(bb) "Transmission licence" means a licence to transmit electricity granted
under section 162 of the Act.
(cc) "Transmit", in relation to electricity, means to transfer electricity in
bulk;
(dd) "Undertaking" means an undertaking given by the Licensee under section
35(5)(a) of the Office of the Regulator-General Act 1994;
<PAGE>
9
(ee) "Wholesale Metering Code" means the code prepared by Victorian Power
Exchange and certified by the Office relating to, amongst other things,
the provision of metering of electrical energy transfers used in
connection with wholesale trading of electricity in the Pool; and
(ff) "writing" includes any mode of representing or reproducing words,
figures, drawings or symbols in a visible form.
9. INTERPRETATION
In this licence, unless the context otherwise requires:
(a) headings are for convenience only and do not affect the interpretation of
this licence;
(b) words importing the singular include the plural and vice versa;
(c) words importing a gender include any gender;
(d) an expression importing a natural person includes any company, partnership,
trust, joint venture, association, corporation or other body corporate and
any governmental agency;
(e) a reference to a condition, clause, schedule or part is to a condition,
clause, schedule or part of this licence;
(f) a reference to terms of an offer or agreement is to terms, conditions or
provisions thereof;
(g) a reference to any statute, regulation, proclamation, order in council,
ordinance or by-law includes all statutes, regulations, proclamations,
order in council, ordinances or by-laws varying, consolidating, re-
enacting, extending or replacing them and a reference to a statute includes
all regulations, proclamations, orders in council, ordinances, by-laws and
determinations issued under that statute ;
(h) a reference to a document or a provision of a document includes an
amendment or supplement to, or replacement or novation of, that document or
that provision of that document;
(i) a reference to a person includes that person's executors, administrators,
successors, substitutes (including, without limitation, persons taking by
novation) and permitted assigns;
(j) when italicised, other parts of speech and grammatical forms of a word or
phrase defined in this licence have a corresponding meaning;
(k) a period of time:
(1) which dates from a given day or the day of an act or event is to be
calculated exclusive of that day; or
(2) which commences on a given day or the day of an act or event is to be
calculated inclusive of that day; and
(l) an event which is required under this license to occur on or by a
stipulated day which is not a business day may occur on or by the next
business day.
<PAGE>
ANNEXURE B
MINING LICENCE
<PAGE>
ELECTRICITY INDUSTRY ACT 1993
MINING LICENCE NO 5004
This mining licence is granted to HAZELWOOD POWER CORPORATION LIMITED C/-PO BOX
195 MORWELL 3840. This licence is granted under section 47A of the Act, for a
term of thirty years from the date of issuing this licence by the Generation
Council.
This licence is subject to the following Conditions and Schedule of Conditions
attached:-
1. The authority given under this licence applies only within the land
indicated on the attached plan and is subject to the depth
restrictions, if any, indicated on that plan under Section 15(9) or
16(5) of the Mineral Resources Development Act 1990.
2. The licensee must keep a copy of -
(a) this licence; and
(b) any approved work plan or approved variation to a work plan; and
(c) any registered authority to commence work at a location near the
licensed area;
so that an Inspector and any other authorised officer can readily
inspect them.
3. On receiving a registered authority to commence work, the licensee
must notify an Inspector of Mines and if required by that Inspector
must arrange an on-site briefing for any people the Inspector may
nominate.
4. On discovering additional economic deposits of minerals, the licensee
must report the occurrence to the Minister giving the estimated size,
grade, suitability for mining, and an estimate of value at the time of
discovery.
5. Pursuant to Section 47A of the Electricity Industry Act 1993 the work
plan, including the rehabilitation plan and the authority to commence
work are deemed to be registered from the date of issuing of this
licence by the Governor in Council.
<PAGE>
Department of PLAN OF AREA
Energy and APPLIED FOR ON LICENCE
Minerals under Mineral Resources Development Act 1990 MIN. NO 5004
Hazelwood Power Corporation Ltd.
- -------------------------------------------------------------------------------
SHIRE OF LATROBE TOTAL AREA +/- 2725 Hectares
NET AREA Hectares
- -------------------------------------------------------------------------------
[MAP APPEARS HERE]
*General Location Plan (Subject to survey
*Land Ownership Detail Not Shown
*Hazelwood Power Station Excluded from this Licence
<PAGE>
SCHEDULE OF CONDITIONS
MINING LICENCE NO. 5004
1. WORK PLANS & ENVIRONMENTAL MANAGEMENT
1.1 Work shall be carried out in accordance with the aproved work plan,
(incorporating a rehabilitation plan) as amended from time to time in
accordance with the Mineral Resources Development Act 1990 (MRD Act). Where
any inconsistency occurs between the work plan and other licence conditions
or regulations, the licence conditions and regulations have precedence.
1.2 The licensee shall, within 60 days of being requested by the Executive
Director, Minerals and Petroleum of the Department of Natural Resources and
the Environment, submit a report on the status of work as per Schedule 14
of the MRD Act.
1.3 An Environmental Review Committee (ERC) shall be formed, comprising
appropriate representatives from the Department of Natural Resources and
the Environment (DNRE), representatives of the licensee, the Environment
Protection Authority, the responsible water authority and a representative
of the Minister responsible for the Water Act 1989, the LaTrobe Council and
any other relevant agency with an interest or control over the site or
operations. The community shall also be represented, with nominations to
come from the LaTrobe Council. Up to two community representatives may be
selected for renewable fixed terms. The ERC shall be convened at least once
in every 6 months to review environmental effects of the project.
1.4 Results of environmental monitoring conducted under the Environmental
Monitoring Program (EMP) shall be regularly reported to the ERC in a format
agreed to by the Committee to enable it to assess environmental
performance.
1.5 The ERC may from time to time recommend variations to the EMP and licence
conditions where appropriate. Any variations to the EMP as accepted by the
licensee and DNRE shall be registered as a variation to the work plan and
shall be implemented.
2. FENCING AND SECURITY
2.1 Where public access ia a safety hazard within the mining licence, the
licensee must fence and signpost the area to ensure public safety is
maintained.
2.2 When directed by an Inspector of Mines (hereinafter referred to as an
Inspector), a fence or fences shall be erected around specified work site
areas to a written specification which may include time limits. Gates of a
similar standard shall be provided when directed. Gates and fences shall be
maintained during the term of the licence to the satisfaction of an
Inspector.
<PAGE>
3. ROADS
3.1 Internal roads additional to those shown in the working plan shall be sited
as approved or directed by an Inspector after consultation with the
Department of Natural Resources and the Environment in the case of Crown
land.
3.2 Subject to the approval of the Mine Manager and appropriate site induction
any such road may be used:
(a) Officers of or persons authorized by the DNRE or employees or persons
engaged in fire control. (Mine Managers approval not required by
authorised fire fighters in an emergency provided they are under the
supervision of a mine employee).
(b) for the extraction of forest produce or for mining purposes by any
other licensee under the MRD Act 1990 or Forests Act 1958 (or any
successor legislation) under such conditions as may be determined by
agreement between the parties concerned; and
(c) by the landowners or their agents where the licence covers private
land.
4. SURFACE DISTURBANCE
4.1 The area of surface disturbance must be kept to a minimum.
4.2 Adequate provision shall be made for the separate stockpiling or immediate
utilisation for rehabilitation of any soils. These materials, if stored,
are to be stored in neat and tidy dumps not exceeding 2 metres in height
and such dumps are to be protected from erosion.
4.3 No area shall be opened up for exploration, mining and ancillary
operations,except where approved as part of the approved work plan.
4.4 Where the licence covers Crown land, all surface activity may be subject to
compliance with the Forests Act 1958 and Regulations.
4.5 Where the licence covers private land, such fire fighting equipment and
appliances shall be kept on site in working order as may be required by the
County Fire Authority. With respect to public land, the Forest Fire
Regulations 1992 require the provision of fire fighting equipment and the
provision of spark arrestors on engine powered equipment.
4.6 Burning of any timber at the site shall be done in accordance with any
requirements of the Local Municipality, DNRE and the Country Fire
Authority.
<PAGE>
5. DRAINAGE AND DISCHARGE CONTROL
5.1 Any discharges from the licence area shall be minimised and any water
discharged must be as free as possible of pollutants, save as provided by
any licence issued pursuant to the Environment Protection Act.
5.2 All discharges shall meet the standards required under the State
Environment Protection Policies under the Environment Protection Act 1970.
5.3 Sediment retention structures, including dams, shall be constructed in
accordance with the approved work plan. An Inspector may also direct such
works to be undertaken, where necessary, to control drainage from any
disturbed area.
5.4 Rainfall and other natural waters shall be diverted away from works area so
as to control erosion, pursuant to Condition 7. However, such works shall,
as far as practicable, not cause undue alteration to the general drainage
pattern beyond the licensed area.
6. TAILING DAMS
6.1 All proposed work associated with the construction of tailing dams or other
tailing impoundment areas, shall be subject to written approval by the
Chief Administrator (or his delegate) following certification by an
approved geotechnical engineer.
7. GROUNDWATER
7.1 Any aquifer dewatering and/or depressurisation must be carried out in
accordance with the conditions specified in the Groundwater Licence issued
by the Minister responsible for the Water Act 1989.
7.2 A monitoring program consistent with the programs previously carried out by
the State Electricity Commission of Victoria and Generation Victoria to
determine the impacts of dewatering/depressurisation both on site and
regionally must be maintained to the satisfaction of an Inspector and the
responsible Minister under the Water Act 1989 or his delegate.
The licensee shall ensure that results of the monitoring program are
reported to the responsible Minister under the Water Act 1989 or his
delegate and the Environmental Review Committee annually and at whatever
times required by the Groundwater Licence.
7.3 In the event that the monitoring program in 7.2 indicates material adverse
impacts beyond those evident at the date of issue of the licence which are
attributable to the dewatering/depressurisation by the licensee after the
date of issuing of the licence then the licensee must institute such
reasonable remedial action as may be required by the Inspector and the
responsible Minister under the Water Act 1989 or his delegate to ameliorate
these effects, proportionate to the licensee's contribution.
<PAGE>
7.4 For the purposes of 7.3 material adverse impacts comprise effects on
aquifers in the LaTrobe Valley such that the interests of other users
are materially prejudiced or subsidence on a significant scale occurs as
a direct result of ground water extraction which materially adversely
affects private property or public lands.
7.5 Any remedial action under 7.3 must be to the satisfaction of the
Inspector and the responsible Minister under the Water Act 1989 or his
delegate.
8. EROSION
8.1 The licensee shall undertake all necessary works to ensure that the
potential for erosion of land affected by mining is minimised.
8.2 Should erosion occur, the licensee shall take all practical steps to
minimise the erosion to the satisfaction of an Inspector.
9. HYDROCARBONS
9.1 Storage of hydrocarbons shall be undertaken in general accordance with
AS 1940. Bunding or other methods to the satisfaction of an Inspector,
capable of containing 125% of the maximum volume stored, shall be
constructed around all fuel and lubricant storage facilities.
9.2 Any drainage from an area that may be subject to hydrocarbon spillage,
such as a machinery maintenance area, shall be free from hydrocarbon
contamination and directed to a sump or interceptor trap.
10. DUST EMISSIONS
10.1 Dust control measures must be in place to minimise dust generation so
that detriment is not caused to surrounding areas and residents.
10.2 Dust resulting from all operations including extraction, loading,
transport and stockpiling shall be controlled to the satisfaction of an
Inspector. The licensee must install any dust control measures to the
satisfaction of an Inspector.
11. NOISE
11.1 Precautions to the satisfaction of an Inspector shall be taken to ensure
that noise emissions comply with the provisions of any regulations under
the MRD Act as they relate to noise exposure to workmen. Noise emissions
measured at any residence within the vicinity of the licensed area shall
comply with limits set using the procedures described in State
Environment Protection Policy No. N1 (SEPPN-1) or any other limit set
under the Environment Protection Act where SEPP N-1 is not applicable.
11.2 The mines are permitted to operate 24 hours per day 7 days per week.
<PAGE>
12. PARKING AREAS
Parking areas are to be provided within the licensed area for all
vehicles used in connection with the operation, including private
vehicles used by employees and visitors.
13. DERELICT AND REDUNDANT PLANT
All derelict and redundant plant, vehicles, machinery and equipment
shall be either:
. removed from the licensed area and deposited at an appropriate
waste disposal site; or
. properly stored/stockpiled on the licensed area in a location
and manner approved by an Inspector.
14. BUFFER ZONES AND VISUAL SCREENING
14.1 No excavation shall take place within 20 metres of the licence boundary,
except that this requirement shall not apply with respect to any common
licence boundary with an adjacent mining licence.
14.2 Existing vegetation outside of the area subject to surface disturbance
shall be preserved and maintained provided due regard is taken of fire
protection arrangements.
14.3 The licensee shall supplement existing vegetation by additional planting
to provide a screen for mining and allied operations as required by the
rehabilitation plan and any additional plantings as required by an
Inspector. The fire protection at the site shall be considered.
14.4 Unless otherwise approved by an Inspector, the licensee shall take
precautions to ensure that no species inconsistent with the surrounding
vegetation are introduced to the area.
15. PROGRESSIVE REHABILITATION
15.1 Progressive reclamation will be conducted as per the rehabilitation
plan. In addition, any further rehabilitation work will be carried out
at the direction of an Inspector.
15.2 As and when directed by an Inspector of Mines, despite any compensation
agreements between the licensee and the owner of any private land in the
licence, the licensee shall undertake progressive reclamation of land
on the area subject to surface disturbance.
16. FINAL REHABILITATION
16.1 Final reclamation will be in accordance with the rehabilitation plan and
any additional requirements as directed by an Inspector.
<PAGE>
16.2 Failure to complete works in accordance with the rehabilitation plan or
in accordance with the directions of an Inspector, shall constitute
grounds upon which the rehabilitation bond may be forfeited either in
whole or in part in accordance with Section 83 of the MRD Act.
17. HERITAGE SITES
17.1 Any significant historic sites or relics that are to be removed shall be
accurately mapped and documented prior to the commencement of any mining
or allied operations. Such documentation shall be made available to the
relevant section of the Department of Natural Resources and the
Environment.
17.2 Tenure of this licence does not exempt the holder from the following
provisions of the Archaeological and Aboriginal Relics Preservation Act
1972:
Section 21(1) - "A person who wilfully or negligently defaces or damages
or otherwise interferes with a relic or carries out an act likely to
endanger a relic shall be guilty of an offence against this Act"; and
Section 23(1) - "A person who discovers a relic shall forthwith report
the discovery .... unless he has reasonable grounds to believe that the
relic is recorded in the register ....". Reports in compliance with
Section 23(1) should be submitted to:
The Director
Aboriginal Affairs Victoria
Department of Human Services
2nd Floor
115 Victoria Parade
FITZROY VIC 3065
(Telephone (03) 9412 7498)
18. BUILDINGS
18.1 No buildings shall be erected before any relevant building permits have
been obtained.
18.2 All fixed plant and buildings shall be painted or surface treated in a
colour to blend with the surroundings to the satisfaction of an
Inspector in consultation with the local municipality and in the case of
Crown land, Department of Natural Resources and the Environment.
19. ROYALTY
19.1 Each mining company must pay to the Minister for payment to the
consolidated Fund in each financial year an amount equal to the
prescribed amount in respect of each gigajoule unit of coal produced
from its brown coal workings in the State and used or sold by the
company in the last preceding financial year.
<PAGE>
19.2 For the purposes of 19.1, a gigajoule unit of coal is a quantity of coal
which, when mined, has a net wet specific energy content of 1 gigajoule.
19.3 The net wet specific energy content of coal produced by a company from
its brown coal workings and used or sold by the company in a financial
year shall be calculated in such manner and in accordance with such
method of sampling as is agreed to by the Minister and the company or as
is, in default of the agreement, determined by the Governor in Council.
19.4 For the purposes of 19.1, the prescribed amount shall be the amount
derived by multiplying $0.0239 by
Awhere-
-
B
A is the consumer price index number in respect of the
relevant quarter; and
B is the consumer price index in respect of the quarter
ending on 30 June 1993.
19.5 The payment of the amount to the Minister under 19.1 shall be made in
accordance with the Mineral Resources (Royalties) Regulations 1991.
19.6 In this section-
"CONSUMER PRICE INDEX NUMBER" means the all groups consumer price index
number for Melbourne published by the Commonwealth Statistician in
respect of the quarter ending on 30 June in each year or, if that
statistic is no longer calculated, the nearest substitute for it;
"RELEVANT QUARTER" means the quarter ending on 30 June immediately
preceding the financial year in relation to which the prescribed amount
is being calculated.
20. REHABILITATION BOND
20.1 The licensee shall lodge with the DNRE a rehabilitation bond as
described in Section 80(1) of the Act when required in accordance with
these conditions. The bond must be lodged in the form of a bank
guarantee issued by a bank licensed under the Banking Act 1959 (Cth).
20.2 The licensee shall be required to lodge that bond upon the licensee
ceasing to be a State Owned Corporation and upon being directed to do so
by the Minister for Agriculture and Resources.
20.3 The level of this bond has initially been assessed at $15 million.
21. APPLICATION OF REGULATIONS
21.1 The Mineral Resources (Health and Safety for large Open Cut Mines)
Regulations 1995 will apply to the licensee.
21.2 A subsequent Regulations issued under the act will also apply.
<PAGE>
AUTHORITY TO COMMENCE WORK
Sec 42 of the MRD Act 1990
MINING LICENCE NUMBER: Mining Licence 5004
NAME(S) OF LICENSEE(S): Hazelwood Power Corporation Ltd
ADDRESS(S) OF LICENSEE(S): PO Box 195 Morwell Vic 3840
AREA TO WHICH AUTHORITY As per workplan dated 1.6.95
TO COMMENCE WORK RELATES:
LOCATION OF LICENCE La Trobe Valley
AN AUTHORITY TO COMMENCE WORK IS HEREBY GRANTED
___________________________
| |
| Date of Registration |
| ___/_____/___/ |
| |
| Time of Registration |
| _________am/pm |
| |
| MINING REGISTRAR |
| MRDA 1990 |
|_________________________|
<PAGE>
ANNEXURE C
GROUNDWATER LICENCE
<PAGE>
DRAFT HAZELWOOD LICENCE
________________________________________________________________________________
WATER ACT 1989
SECTION 51
GROUNDWATER LICENCE NO 20027412
(LICENCE TO TAKE AND USE GROUNDWATER)
OBJECTIVE
The objective of this licence is to allow the efficient depressurising of the
Morwell open cut mine whilst minimising adverse impacts on the Gippsland
Groundwater Basin.
DEFINITIONS
In this licence-
"MINING LICENCE" means a mining licence issued under the provisions of the
Electricity Industry Act 1993.
"APPROVED WORK PLAN" means the mining licence work plan applicable to Mining
Licence No 5004
"REGIONAL MONITORING PROGRAM" means the monitoring program described in Part B
of the approved work plan.
"REHABILITATION PLAN" means a rehabilitation plan approved under the provisions
of the Electricity Industry Act 1993.
PREAMBLE
The extraction of groundwater for the purpose of achieving safe and stable
conditions in the Morwell open cut mine is authorised under this Groundwater
Licence issued by the Minister responsible for the Water Act, 1989. The
administration of the licence may be delegated by the Minister to the Gippsland
and Southern RURAL Water Authority
The extraction of groundwater at mine sites in the Latrobe Valley results in a
regional cone of depression of the groundwater and in ground subsidence.
The monitoring and reporting of regional groundwater and land level trends is to
be carried out by the licensee as part of the approved work plan under the
Mining Licence.
The Minister or his delegate may set annual charges under this licence to
recover the costs incurred in:
. ensuring compliance with licence conditions;
. assessing and reviewing the regional monitoring program; and
. managing and administering the licence.
LICENCE AUTHORISATION
<PAGE>
DRAFT HAZELWOOD LICENCE
________________________________________________________________________________
HAZELWOOD POWER CORPORATION LIMITED OF PO BOX 195 MORWELL 3840 is authorised to
take and use groundwater subject to the following conditions:
1. This licence is valid for a period of thirty years from 1 September 1995
2. The licensee is authorised to take and use groundwater to facilitate mining
for coal and generation of electrical energy and purposes incidental
thereto.
3. The licensee is authorised to extract groundwater from the aquifers at
quantities and during the times specified in the First Schedule or on
application by the licensee such other quantities and during such other
times as from time to time approved by the Minister or his delegate.
4. The licensee may vary the maximum monthly rate of extraction from any
particular aquifer or the maximum annual volume to be extracted from any
particular aquifer provided that the total monthly rate of extraction and
the total annual volume from all aquifers is not exceeded and shall report
at monthly intervals such variations as they occur to the Minister or his
delegate.
5. The licensee may only take and use groundwater under this licence on the
land with respect to which the licensee holds a mining licence for the
Hazelwood Power mine.
6. Annual fee at date of issue $19,300.
7. The licensee shall pay annual charges for the forthcoming year due under
the licence in quarterly installments or on an annual basis as agreed
between the licensee and the Minister or his delegate.
8. The licensee shall meter all groundwater extractions and shall keep an
accurate record of the quantity of groundwater taken or used under this
licence and allow the Minister or his delegate to inspect this record
during normal business hours and to provide a copy of such record to the
Minister or his delegate within seven days of a notice given by post to the
licensee at the address contained in this licence.
9. The licensee shall provide to the Minister or his delegate annually details
of the location of each bore from which groundwater is extracted under this
licence.
10. By the issue of this licence the Minister or his delegate in no way accepts
any liability for injury to any party arising as a consequence of any
adverse effects that may be deemed to have been caused by the extraction of
groundwater under the licence.
11. The licensee shall compensate any person whose existing authorised use of
water is adversely and materially affected by the taking of water under
this licence. The
<PAGE>
DRAFT HAZELWOOD LICENCE
________________________________________________________________________________
compensation may be either financial or may be constituted by the making
available of, or granting access to, water. If the licensee is unable to or
unwilling to make compensation by the making available of or granting
access to water in the quantities previously enjoyed by the person so
affected then the amount of financial compensation payable shall be that as
determined by a Valuer nominated by the President of the Victorian Division
of the Australian Institute of Valuers and Land Economists (Inc)
12. The licensee shall undertake a regional monitoring program of the nature
scope and extent as that previously undertaken by the State Electricity
Commission of Victoria as detailed in the approved work plan and the
information is to be provided on request to the Minister or his delegate
and as required under the work plan.
13. All information obtained from the regional monitoring program belongs to
the generation companies, the State Electricity Commission of Victoria and
the Minister jointly.
14. The licensee must maintain the existing data bases, and undertake
additional work that may be required from time to time by the Minister or
his delegate to maintain the effectiveness of the regional monitoring
program.
15. If the licensee fails to provide the information required under condition
12 the Minister or his delegate may undertake any necessary work to obtain
the information and recover the costs of such work from the licensee.
16. The regional monitoring program and any remedial measures must be
incorporated in the approved work plan and the rehabilitation plan to the
satisfaction of the Minister or his delegate.
17. The licensee shall comply with the provisions in its mining licence,
approved work plan and the rehabilitation plan dealing with the regional
monitoring program and remedial action.
PATRICK JOHN MCNAMARA
MINISTER FOR AGRICULTURE AND RESOURCES
DATE
<PAGE>
DRAFT HAZELWOOD LICENCE
________________________________________________________________________________
FIRST SCHEDULE
<TABLE>
____________________________________________________________________________
M1 AQUIFER M2 AQUIFER
YEAR _____________________________________________________ TOTAL ANNUAL
RATE OF ANNUAL VOLUME RATE OF ANNUAL VOLUME
EXTRACTION ML EXTRACTION VOLUME ML
ML/MONTH ML/MONTH ML
____________________________________________________________________________
<S> <C> <C> <C> <C> <C>
1996 367 3,212 1,640 19,680 22,892
____________________________________________________________________________
1997 367 3,212 1,640 19,680 22,892
____________________________________________________________________________
1998 367 3,212 1,640 19,680 22,892
____________________________________________________________________________
1999 367 3,212 1,640 19,680 22,892
____________________________________________________________________________
2000 367 3,212 1,640 19,680 22,892
____________________________________________________________________________
2001 367 3,212 1,640 19,680 22,892
____________________________________________________________________________
2002 367 3,212 1,640 19,680 22,892
____________________________________________________________________________
2003 367 3,212 1,640 19,680 22,892
____________________________________________________________________________
2004 367 3,212 1,640 19,680 22,892
____________________________________________________________________________
2005 367 3,212 1,640 19,680 22,892
____________________________________________________________________________
2006 367 3,212 1,640 19,680 22,892
____________________________________________________________________________
2007 367 3,212 1,640 19,680 22,892
____________________________________________________________________________
2008 367 3,212 1,606 19,272 22,484
____________________________________________________________________________
2009 367 3,212 1,606 19,272 22,484
____________________________________________________________________________
2010 367 3,212 1,606 19,272 22,484
____________________________________________________________________________
2011 367 3,212 1,606 19,272 22,484
____________________________________________________________________________
2012 367 3,212 1,606 19,272 22,484
____________________________________________________________________________
2013 367 3,212 1,606 19,272 22,484
____________________________________________________________________________
2014 367 3,212 1,606 19,272 22,484
____________________________________________________________________________
2015 367 3,212 1,606 19,272 22,484
____________________________________________________________________________
2016 367 3,212 1,606 19,272 22,484
____________________________________________________________________________
2017 367 3,212 1,606 19,272 22,484
____________________________________________________________________________
2018 367 3,212 1,606 19,272 22,484
____________________________________________________________________________
2019 367 3,212 1,606 19,272 22,484
____________________________________________________________________________
2020 367 3,212 1,439 17,268 20,480
____________________________________________________________________________
2021 367 3,212 1,439 17,268 20,480
____________________________________________________________________________
2022 367 3,212 1,439 17,268 20,480
____________________________________________________________________________
2023 367 3,212 1,439 17,268 20,480
____________________________________________________________________________
2024 367 3,212 1,439 17,268 20,480
____________________________________________________________________________
</TABLE>
